HomeMy WebLinkAboutSpecial Tax Refunding Bonds Series 2008 CFD No. 91-1 CITY OF PALM DESERT/PALM DESERT FINANCING AUTHORITY
STAFF REPORT
REQUEST: CONSIDERATION OF THE AUTHORIZATION OF ISSUANCE OF
SPECIAL TAX REFUNDING BONDS, SERIES 2008, OF CITY OF PALM
DESERT COMMUNITY FACILITIES DISTRICT (CFD) NO. 91-1 (INDIAN
RIDGE PUBLIC IMPROVEMENTS) AND APPROVAL OF RELATED
DOCUMENTS
SUBMITTED BY: DAVE YRIGOYEN, DIRECTOR OF REDEVELOPMENT/HOUSING
DATE: DECEMBER 13, 2007
CONTENTS: RESOLUTION NO. 07-79
PALM DESERT FINANCING AUTHORITY RESOLUTION NO. FA-�
FORM OF BOND INDENTURE
FORM OF ESCROW AGREEMENT
FORM OF BOND PURCHASE AGREEMENT
FORM OF PRELIMINARY OFFICIAL STATEMENT (INCLUDES FORM
OF CONTINUING DISCLOSURE AGREEMENT)
Recommendation:
Waive further reading and adopt:
• Resolution No. 07-79 , 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. 91-1 (Indian Ridge Public Improvements)
to authorize the issuance of its special tax refunding bonds, Series 2008, in
a principal amount not-to-exceed twelve million dollars ($12,000,000) and
approving certain da(�uments and taking certain other actions in connection
therewith.
Waive further reading and adopt:
• Resolution No. FA-�, a resolution of the Palm Desert Financing Authority
making certain findings and determinations in connection with its 1997
revenue bonds (Assessment Districts Nos. 92-1 and 94-1 and Community
Facilities District No. 91-1).
Executive SummarY:
Approval of the attached documents in substantially the form presented is required in order for
the City of Palm Desert Community Facilities District No. 91-1 (Indian Ridge Public
Improvements) (the "Indian Ridge CFD") to issue a series of refunding special tax bonds (the
"Series 2008 Bonds") to refinance the Palm Desert Financing Authority's outstanding 1997
Revenue Bonds (the "1997 Authority Bonds"). The total net present value savings will be
G�roaW�a Scott�Wortl F�ies�StaH Replsun0�an R�tlge 2008 Reb Dec t3 200�DOC
Staff Report
Adoption of City/Financing Authority Resolutions for Issuance of Special Tax Refunding
Bonds — CFD No. 91-1 (Indian Ridge Public Improvements)
Page 2 of 5
December 13, 2007
10.08% or $1,604,567. This will be an annual savings of $761 per household for a total savings
of $9,132 per household, over the twelve year life of the bonds.
BackAround:
The 1997 Authority Bonds were issued in 1997 to purchase and assist in the refinancing of
three separate, smaller series of prior bonds issued to finance the public infrastructure to serve
the properties within the Indian Ridge CFD, Assessment District No. 92-1 [Tierravista], and
Assessment District No. 94-1 [Bighorn]. The Tierravista and Bighorn assessment district bonds
have been previously prepaid, leaving only the Indian Ridge CFD bonds outstanding as sources
of revenue for repayment of the 1997 Authority Bonds. The current outstanding principal
amount of the 1997 Authority Bonds is $16,260,000.
The monies remaining in the improvement fund established in connection with the 1997
Authority Bonds and with respect to the Indian Ridge CFD amount to approximately $5,020,741,
which amount includes investment earnings accumulated on the fund. The Director of Public
Works of the City and the Treasurer of the Authority have determined that the works of
improvement with respect to the Indian Ridge CFD (and, therefore, the 1997 Authocity Bonds)
have been completed, and all costs thereof have been paid from the improvement fund. The
indenture of trust governing the 1997 Authority Bonds authorizes amounts remaining in the
improvement fund to be used for prepayment of the underlying Indian Ridge CFD bonds.
Therefore, the remaining balance in the improvement fund will be used to prepay a portion of
the outstanding underlying Indian Ridge CFD bonds, which in turn will prepay a portion of the
outstanding 1997 Authority Bonds.
If adopted, Resolution No. 07-79 will authorize the Indian Ridge CFD to issue bonds in an
aggregate principal amount not-to-exceed $12,000,000 designated as the "City of Palm Desert
Community Facilities District No. 91-1 (Indian Ridge Public Improvements) Special Tax
Refunding Bonds, Series 2008" to refinance and defease the outstanding 1997 Authority Bands
and defease the related underlying Indian Ridge CFD bonds, provided the overall interest rate
does not exceed 6.00% 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.
As is typical for special tax bonds issued by community facilities districts established under the
Act and assessment district bonds, the 1997 Authority Bonds were considered speculative in
nature, due to the relationship of these bonds to real estate development, especially given the
early stages of development and construction at the time of their issuance. Due to the foregoing
factors, the 1997 Authority Bonds were unrated and uninsured.
At this time, however, the development in the Indian Ridge development has since been
completed and the homeownership diversified among many individual homeowners, rather than
concentrated under the ownership of a single developer, thereby reducing certain of the risks
attendant to the development and the bonds. The Mello-Roos Community Facilities Act of
2
Staff Report
Adoption of City/Financing Authority Resolutions for Issuance of Special Tax Refunding
Bonds— CFD No. 91-1 (Indian Ridge Public Improvements)
Page 3 of 5
December 13, 2007
1982, under which the Series 2008 bonds will be issued, and the City's related Goals and
Policies statement require a minimum 3 to 1 value-to-special tax lien ratio. Upon the refunding
of the 1997 Authority Bonds, the assessed value-to-special tax lien ratio on the property is
estimated to be at approximately 67.99 to 1, based upon projections prepared by the City's
financial advisor, Del Rio Advisors, LLC. Therefore, it is expected that the Indian Ridge CFD
will be able to obtain a rating(s) and a municipal bond insurance policy to insure payment of
principal, interest, and redemption premium, if any, on the Series 2008 Bonds. The investors
are expected to be institutional investors (such as mutual funds), and the undenNriters (Stinson
Securities, LLC, and Kinsell, Newcomb & De Dios, Inc.) will sell the Series 2008 Bonds in a
public offering to such investors.
Due to the expected municipal bond insurance policy and related ratings to be obtained on the
Series 2008 Bonds, together with the currently favorable interest rate market, the projections
prepared by Del Rio Advisors, LLC, calculate projected gross savings on debt service payments
(principal plus interest) to total approximately $9.76 million. Due to the availability of amounts
remaining in the improvement fund and other funds related to the 1997 Authority Bonds and
underlying Indian Ridge CFD bonds, which will reduce the amount of outstanding debt, the total
net present value savings will be 10.08% or $1,604,567. This will be an annual savings of $761
per household for a total savings of $9,132 per household, over the twelve year life of the
bonds.
Again, per the projections prepared by Del Rio Advisors, LLC the average interest rate on the
prior bonds is 6.25%, and the average interest rate for the new bonds is projected to be 4.05%.
Resolution No. 07- 79 will also appoint the financing team with respect to the Series 2008
Bonds, who are Del Rio Advisors, LLC, as financial advisor; Stinson Securities, LLC, and Kinsell
Newcomb & De Dios, Inc., as underwriters for the bonds; Richards Watson 8� Gershon, A
Professional Corporation, as Bond Counsel; Lofton & Jennings, as Disclosure Counsel; Wells
Fargo Bank, National Association, as trustee and escrow agent; and MuniFinancial, Inc. as
special tax consultant.
Resolution No. 07- 79 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 Indian Ridge CFD and Wells Fargo Bank, National
Association, as trustee (provides for the terms of the bonds)
(2) Escrow Agreement, by and among the Palm Desert Financing Authority, the City, the
Indian Ridge CFD, and Wells Fargo Bank, National Association, as Escrow Agent
(provides for the escrow and transfer of monies to refund the 1997 Authority Bonds and
the underlying Indian Ridge CFD bonds)
3
Staff Report
Adoption of City/Financing Authority Resolutions for Issuance of Special Tax Refunding
Bonds — CFD No. 91-1 (Indian Ridge Public Improvements)
Page 4 of 5
December 13, 2007
(3) Bond Purchase Agreement by and among the fndian Ridge CFD, Stinson Securities,
LLC, and Kinsell, Newcomb & De Dios, Inc., as unden�vriters for the bonds (provides for
the sale of the bonds by the Indian Ridge CFD to the underwriter)
(4) Preliminary Official Statement and final Official Statement for the bonds (offering
documents used by the underwriter to market and sell the bonds to investors)
(5) Continuing Disclosure Agreement (attached as Appendix E to the Preliminary Official
Statement) by and among the Indian Ridge CFD, Wells Fargo Bank, National
Association, as trustee, and MuniFinancial, Inc., as dissemination agent (governs the
Indian Ridge CFD's and dissemination agent's provision of certain financial and special
tax-related information on a continuing basis to the bond market).
The Series 2008 Bonds will be repaid from special taxes levied on the parcels within the Indian
Ridge CFD, in accordance with the rate and method of apportionment approved by the vote of
the qualified electors within the Indian Ridge CFD and by this City Council. The payment of
special taxes is secured by each taxable parcel in the Indian Ridge CFD. In the event special
taxes become delinquent under circumstances described in the Bond Indenture, this City
Council, as legislative body of the Indian Ridge 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 to be 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 Series 2008 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 at the time of formation of the Indian Ridge CFD, 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 Series 2008 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.
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 Indian Ridge CFD and City under
Government Code Section 53601. The authorized types of investments will be disclosed to
investors in the offering document.
No future actions will be necessary.
4
Staff Report
Adoption of City/Financing Authority Resolutions for Issuance of Special Tax Refunding
Bonds — CFD No. 91-1 (Indian Ridge Public Improvements)
Page 5 of 5
December 13, 2007
Staff recommends that the issuance of the Series 2008 Bonds to provide for the refunding of the
1997 Authority Bonds and underlying Indian Ridge CFD bonds, as outlined in the report, be
authorized.
Submitted by: Approval:
v� �
David Yrigo e J ti McCarthy
Director edevelopmenUHousing ACM edevelopment
Approval:
Carlos L. Orte , City Manager aul S. Gibson, Director of Finance
CITY COUNCIL ACTION:
APPROVFD ✓ DENIED
RECFIVED OTHERf o�G�£�
. �� • -7 un�1 F/�- �/
MEBTING DATE �_�3_ -�
AYES: �- • �� ,��
NOES:
ABSENT;
RBSTAIN: (
VERIFIED By;
Original on File wi' City Clerk's Of�ice
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RESOLUTION NO. 07-79
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. 91-1 (INDIAN
RIDGE PUBLIC IMPROVEMENTS) TO AUTHORIZE THE
ISSUANCE OF ITS SPECIAL TAX REFUNDING BONDS,
SERIES 2008, IN A PRINCIPAL AMOUNT NOT TO
EXCEED TWELVE MILLION DOLLARS ($12,000,000)
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 DistricY'), has heretofore undertaken proceedings and declared
the necessity of City of Palm Desert Community Facilities District No. 91-1 (Indian
Ridge Public Improvements) (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, based upon Resolution Nos. 92-22 and 92-23 adopted by the
legislative body of the District on March 12, 1992 and an election held March 12, 1992
authorizing the levy of a special tax and the issuance of bonds by the District, the
District is authorized to issue bonds for one or more series, pursuant to the Act, in an
aggregate principal amount not to exceed $35,000,000; and
WHEREAS, on July 7, 1992, the District issued its $11,870,000 aggregate initial
principal amount Special Tax Bonds, Series 1992A (the "1992A Bonds"); and
WHEREAS, on December 12, 1995, the District issued its $12,385,000
aggregate initial principal amount Series 1995 Special Tax Bonds (the "1995 Bonds");
and
WHEREAS, on December 11, 1997, the District issued its $22,989,000
aggregate initial principal amount Limited Obligation Refunding Bonds (Property
Secured Only — No Issuer Liability), Series 1997 (the "1997 Local Obligations"), which
refinanced the 1992A Bonds and the 1995 Bonds and which were sold to the Palm
Desert Financing Authority (the "Authority"); and
WHEREAS, concurrently with the District's issuance of the 1997 Bonds, the
Authority issued its $30,915,000 aggregate initial principal amount 1997 Revenue
Bonds (Assessment District Nos. 92-1 [Tierravista] and 94-1 [Bighorn] and Community
Facilities District No. 91-1 [Indian Ridge]) (the "1997 Authority Bonds"); and
��xxn��.�
WHEREAS, at this time, the Authority and the legislative body of the District
intend to refinance the 1997 Authority Bonds and the 1997 Local Obligations through
the issuance of refunding bonds in an aggregate principal amount not to exceed
$12,000,000, designated as the "City of Palm Desert Community Facilities District
No. 91-1 (Indian Ridge Public Improvements) Special Tax Refunding Bonds, Series
2008" (the "Series 2008 Bonds"); and
WHEREAS, the legislative body of the District has determined that it is prudent in
the management of its fiscal affairs to issue the Series 2008 Bonds; and
WHEREAS, the value of the real property in the District subject to the special tax
to pay debt service on the Series 2008 Bonds is not less than three times the principal
amount of the Series 2008 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 Series 2008 Bonds; and
WHEREAS, in order to effect the issuance of the Series 2008 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 Series 2008 Bonds and to approve the forms
of, and authorize the execution and delivery of, a Bond Indenture, an Escrow
Agreement, a Bond Purchase Contract, and a Continuing Disclosure Agreement for the
Series 2008 Bonds, the forms of which are on file with the City Clerk.
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. 91-1 (INDIAN RIDGE PUBLIC
IMPROVEMENTS), 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. 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
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 Series 2008 Bonds is not less than
three times the principal amount of the Series 2008 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 full cash value of the real property within the District as shown on the ad
valorem assessment roll. �
3. The issuance of the Series 2008 Bonds in an aggregate principal amount not
to exceed $12,000,000 is hereby authorized, with the exact principal amount of the
Series 2008 Bonds to be determined by the official signing the Bond Purchase Contract
in accordance with Section 7 below. In that regard, the City and the District hereby
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appoint Del Rio Advisors, LLC, to act as financial advisor in connection with the
issuance of such bonds; Stinson Securities, LLC, and Kinsell, Newcomb & De Dios, Inc.
to act as underwriter of the bonds (collectively, the "Underwriter"); Lofton & Jennings to
act as disclosure counsel; Richards, Watson & Gershon, A Professional Corporation, to
act as bond counsel ("Bond Counsel"); and MuniFinancial to act as special tax
consultant. The legislative body of the District hereby determines that it is prudent in the
management of its fiscal affairs to issue the Series 2008 Bonds. The Series 2008
Bonds shall mature on the dates and pay interest at the rates set forth in the Bond
Purchase Contract to be executed on behalf of the District in accordance with Section 7
hereof. The Series 2008 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 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 Series 2008 Bonds, the manner of investment of any 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, funds designated to pay the costs of issuance
the Series 2008 Bonds, and other terms of the Series 2008 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 Contract described in Section 7 below and Official
Statement described in Section 8 below and delivered to the purchasers of the Series
2008 Bonds. Capitalized terms used in this Resolution which are not defined herein
have the meanings ascribed to them in the Indenture.
4. The Series 2008 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. The appointment of Wells Fargo Bank, National
Association, as trustee (the "Trustee") under the Indenture and as escrow agent (the
"Escrow Agent") under the Escrow Agreement described in Section 6 is hereby
approved.
5. 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 Series 2008 Bonds, such
foreclosure action to be commenced and pursued as more completely set forth in the
Indenture.
3
9�X75�1.3
6. The Escrow Agreement (the "Escrow Agreement"), proposed to be entered
into by and among the District, the Authority and the Escrow Agent, in the form
presented and on file in the office of the City Clerk, is hereby approved. Each
Authorized Officer, acting singly, is hereby authorized and directed, for and in the name
and on behalf of the Authority and the District, to execute and deliver the Escrow
Agreement in substantially said form, with such changes therein as the Authorized
Officer executing the same may approve (such approval to be conclusively evidenced
by such officer's execution and delivery thereof). The date on which the 1997 Local
Obligations and the 1997 Authority Bonds shall be defeased and no longer deemed to
be outstanding shall be as provided in the Escrow Agreement as finally executed.
7. The form of the Bond Purchase Contract by and among the City (on behalf of
the District) and the Underwriter presented at this meeting, on file with the City Clerk
and incorporated herein by reference (the "Bond Purchase ContracY'), is hereby
approved, and any one of the Authorized Officers is hereby authorized to execute the
Bond Purchase Contract 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 Contract; provided,
however, that the Bond Purchase Contract shall be signed only if the Series 2008
Bonds are purchased by the Underwriter at an overall interest rate that does not exceed
6.00% 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 Series 2008 Bonds. The
legislative body of the District hereby finds and determines, pursuant to Section 53360.4
of the Act, that the sale of the Series 2008 Bonds at negotiated sale to the Underwriter,
as contemplated by the Bond Purchase Contract, 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 Series 2008 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. The authorization and powers
delegated to such officer by this Section 7 shall be valid for a period commencing from
the date of adoption of this Resolution, through and including February 15, 2008.
8. 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 Series 2008 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
4
9HR759.3
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 Series 2008 Bonds
and any supplement thereto to the purchasers thereof upon its execution on behalf of
the District as described above.
9. 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.
10. All actions heretofore taken by the officers and agents of the City and the
District with respect to the establishment of the District, the issuance and sale of the
Series 2008 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 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 Series 2008 Bonds in accordance
with the provisions of this Resolution; (b) the transactions contemplated by the
Indenture, the Bond Purchase Contract, and the Continuing Disclosure Agreement,
including without limitation establishing and determining such provisions as may be
required by the terms of the bond insurance policy, if any, or debt service reserve surety
bond(s), if any, purchased in connection with the issuance of the Series 2008 Bonds;
and (c) the fulfillment of the purposes of the Series 2008 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.
5
982i759.3
11. 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 13th day of December, 2007, by the following
vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Richard S. Kelly, Mayor
ATTEST:
Rachelle D. Klassen,City Clerk
City of Palm Desert
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RESOLUTION NO. FA-61
RESOLUTION OF THE PALM DESERT FINANCING AUTHORITY
MAKING CERTAIN FINDINGS AND DETERMINATIONS IN
CONNECTION WITH ITS 1997 REVENUE BONDS
(ASSESSMENT DISTRICTS NOS. 92-1 AND 94-1 AND
COMMUNITY FACILITIES DISTRICT NO. 91-1)
RECITALS:
WHEREAS, the City Council of the City of Palm Desert (the "City") has
heretofore caused the City of Palm Desert Community Facilities District No. 91-1 (Indian
Ridge Public Improvements) (the "Indian Ridge CFD") to issue its $11,870,000
aggregate initial principal amount Special Tax Bonds, Series 1992A (the "1992A
Bonds"), and its $12,385,000 aggregate initial principal amount Series 1995 Special Tax
Bonds (the "1995 Bonds"); and
WHEREAS, the Palm Desert Financing Authority (the "Authority") has heretofore
issued its $30,915,000 aggregate initial principal amount 1997 Revenue Bonds
(Assessment District Nos. 92-1 [Tierravista], Assessment District No. 94-1 [Bighorn],
and Community Facilities District No. 91-1 [Indian Ridge]) (the "1997 Bonds"); and
WHEREAS, in connection with the issuance of the 1997 Bonds, the 1992A
Bonds and the 1995 Bonds were refunded and defeased, and the funds at that time on
deposit in the improvement fund established in connection with the issuance of the
1992A Bonds and the 1995 Bonds were deposited and transferred to the City of Palm
Desert Community Facilities District No. 91-1 (Indian Ridge Public Improvements)
Improvement Fund (the "Improvement Fund") established by the indenture of trust (the
"1997 Indenture") with respect to the 1997 Bonds, as a separate fund to be held by the
fiscal agent under the 1997 Indenture;
NOW, THEREFORE, THE PALM DESERT FINANCING AUTHORITY DOES
HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. In consultation with the Director of Public Works of the City, the
Treasurer of the Authority, an authorized officer of the Authority, has certified that in
connection with the Indian Ridge CFD and the 1997 Bonds, the works of improvement
have been completed and all costs thereof have been paid from the Improvement Fund,
and moneys on deposit in the Improvement Fund are not needed to complete such
works of improvement or reimburse the cost thereof.
Section 2. The amount of surplus remaining in the improvement fund is
$5,020,741.68. Such amount shall be used for the purposes described in 1997
Indenture.
P6401-1037\ 1013404v 1.doc
1
PASSED, APPROVED, and ADOPTED this 13th day of December 2007
by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Attest:
Rachelle D. Klassen, Secretary
Richard S. Kelly, President
P6401-I037\1013404vI.doe
2
BOND INDENTURE
By and Bctwccn
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 91-1
(INDIAN RIDGE PUBLIC IMPROVEMENTS)
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
with reference to
$�10,720,000]
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 91-1
(INDIAN RIDGE PUBLIC IMPROVEMENTS)
SPECIAL TAX REFUNDING BONDS
SERIES 2008
Dated as of January 1, 2008
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Tablc ot�C'ontcnts
Pdi;c
ARTICLE I DEFINITInNS...................................................................................................................2
Section1.1. Dcfinitions........................................................................................................2
ARTICLE II GENERAL AUTHORIZATION AND BOND TERMS................................................ 14
Section 2.1. Amount, Issuancc, Purposc and Naturc of Bonds and Parity Bonds..............14
Scction 2.2. Type and Nature of Bonds and Parity Bonds ................................................. 14
Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Taxes ......................15
Section 2.4. Description of Bonds; Interest Rates.............................................................. 15
Section 2.5. Place and Fonn ol�Payment............................................................................16
Section 2.6. Form of Bonds and Parity Bonds.................................................................... 17
Section 2.7. Execution and Authentication......................................................................... 17
Scction2.8. Bond Register.................................................................................................17
Section 2.9. Registration of�Exchange or Transler.............................................................18
Section 2.10. Mutilated, Lc�st, Destroycd or Stolcn Bonds or Parity Bonds ........................ I 8
Section 2.1 1. Validity ot�Bonds and Parity Bonds...............................................................19
Section 2.12. Book-Entry System......................................................................................... 19
Section 2.13. Representation Letter......................................................................................20
Section 2.14. Transfers Outside Book-Entry Systcm...........................................................20
Section 2.15. Paymcnts to the Nominee...............................................................................20
Section 2.16. Initial Dcpository and Nominec......................................................................20
ARTICLE III CREATION OF FUNDS AND APPLICATION OF PROCEEDS ..............................20
Section 3.1. Crcation of Funds; Application of Proceeds...................................................20
Section 3.2. Deposits to and Disburscments from Special Tax Fund.................................21
Section 3.3. Administrative Expcnses Account of thc Special Tax Fund ..........................22
Section 3.4. lnterest Account and Principal Account of�the Special Tax Fund..................23
Section 3.5. Redemption Account of the Special Tax Fund...............................................23
Section 3.6. Reserve Account of�the Special Tax Fund......................................................24
Section3.7. Rcbate Fund....................................................................................................26
Section3.8. Surplus Fund...................................................................................................28
Scction 3.9. Costs of�[ssuance Fund...................................................................................29
Section3.10. ]nvestmcnts.....................................................................................................29
ARTICLE IV REDEMPTION OF BONDS AND PARITY BONDS.................................................31
Section 4.1. Redemption of Bonds. ....................................................................................31
Section 4.2. Selection of Bonds and Parity Bonds for Rcdemption...................................32
Section 4.3. Notice of Redemption.....................................................................................33
Section 4.4. Partial Redemption of Bonds or Parity Bonds................................................34
Section 4.5. Effect of Notice and Availability of Redemption Money...............................34
ARTCCLE V COVENANTS AND WARRANTY ..............................................................................34
Scction5.I. Warranty.........................................................................................................34
Secti�n 5.2. Covenanis .......................................................................................................35
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Tablc of Conienis
(continucd)
Pa�;c
ARTICLE VI AMENDMENTS TO INDENTURE ............................................................................38
Section 6.1. Supplemental Incientures or Ordcrs Not Requiring Bondowner
Consent...........................................................................................................38
Scction 6.2. Supplemental Indentures or Orders Rcyuiring Bondowner Consent..............38
Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or
ParityBonds....................................................................................................39
ARTICLE VII TRUSTEE....................................................................................................................40
Section7.1. Trustee............................................................................................................40
Section 7.2. Removal of Trustee.........................................................................................40
Section 7.3. Resignation of�Trustee....................................................................................41
Section 7.4. Liability of�Trustce.........................................................................................41
Section 7.5. Merger or Consolidation.................................................................................42
ARTICLE VIII EVENTS OF DEFAULT; REMEDIES .....................................................................42
Section 8.1. Events of Default............................................................................................43
Section 8.2. Remedies of Owners.......................................................................................43
Scction 8.3. Application of Revenues and Other Funds After Default...............................44
Section 8.4. Power of Trustee to Control Proceedings.......................................................44
Seciion 8.5. Appointment of Receivers..............................................................................45
Section8.6. Non-Waiver....................................................................................................45
Section 8.7. Limitations on Rights and Remedies of Owners............................................45
Section 8.8. Termination of Proceedings............................................................................46
ARTICLE IX BOND INSURANCE....................................................................................................46
ARTICLE X DEFEASANCE AND PARITY BONDS ......................................................................4G
Section 10.1. Defeasance......................................................................................................46
Scction 10.2. Conditions for thc Issuancc of Parity Bonds and Other Additional
Indebtedness ...................................................................................................48
ARTICLE XI MISCELLANEOUS .....................................................................................................50
Section I I.I. Cancellation ot�Bonds and Parity Bonds........................................................50
Section 1 1.2. Execution of Documents and Proof of�Ownership.........................................50
Scction 1 1.3. Unclaimed Moncys.........................................................................................50
Section 1 1.4. Provisions Constitute Contract.......................................................................51
Section 1 1.5. Future Contracts..............................................................................................51
Section 11.6. Further Assurances.........................................................................................51
Section11.7. Severability.....................................................................................................51
Section1 1.8. Notices............................................................................................................51
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Table o1�Contents
(continued)
Pa�e
EXHIBITS:
EXHIBIT A FORM (�F SPECIAL TAX REFUNDING BOND, SERIES 2008 ..........................A-1
EXHIBIT B FORM nF REQUISITION FOR DISBURSEMENT nF PROJECT COSTS ........B-1
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BONDINDENTURE
THIS BOND [NDENTURE dated as of January 1, 2008, by and between CITY OF PALM
DESERT COMMUNITY FACILITIES DISTRICT NO. 91-1 (INDIAN RIDGE PUBLIC
IMPROVEMENTS) (thc"District") and WELLS FARGO BANK, NATIONAL ASSOCIATION, as
trustcc (the"Trustee"), govcrns the tenns of thc Spccial Tax Rcfunding Bonds, Series 2008, of City
of Palm Desert Community Facilitics District No. 91-1 (Indian Ridge Public Improvcmcnts) and any
Parity Bonds issued in accordancc hcrcwith from timc to time.
REClTAI.S:
WHEREAS, the City Council oCthe 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 Mcllo-Roos Community Facilitics Act of 1982, as
amended, being Chapter 2.5, Part l, Division 2, Title 5, of'the Government Code of the State of
California(thc"Act"); and
WHEREAS, based upon Resolution Nos. 92-22 and 92-23 adopted by the lcgislative body of
the District on March 12, 1992 and an election held March 12, 1992 authori�ing the levy of a special
tax and the issuance of bonds by the District, thc District is authorized to issue bonds for one or more
scries, pursuant to the Act, in an aggregate principal amount not to exceed $35,000,000; and
WHEREAS, on July 7, 1992, the District issued its $11,870,000 aggrcgate initial principal
amount Special Tax Bonds, Series 1992A (the"1992A Bonds"); and
WHEREAS, on December 12, 1995, the District issued its $12,385,000 aggregate initial
principal amouni Series 1995 Special Tax Bonds (the"1995 Bonds"); and
WHEREAS, on December 1 l, 1997, the District issued its $22,989,000 aggregate initial
principal amount Limited Obligation Refunding Bonds (Property Secured Only - No Issuer
Liability), Series 1997 (the"1997 Local Obligations"), which refinanced the 1992A Bonds and the
1995 Bonds and which were sold to the Palm Desert Financing Authority(the"Authority"); and
WHEREAS, concurrcntly with thc District's issuance of thc 1997 Bonds, the Authority
issued its $30,915,000 aggregate initial principal amount 1997 Rcvcnue Bonds(Asscssment District
Nos. 92-1 [Tie�Yavista] and 94-1 [Bighorn] and Cocnmunity Facilitics District No. 91-1 [Indian
Ridge]) (the "1997 Authority Bonds"); and
WHEREAS, the Authority and thc legislative body of the District intend to refinance the
1997 Authority Bonds and the 1997 Local Obligations through the issuance of refunding bonds in an
aggre�;ate principal amount of$[10,720,000] designatcd as the "City of Palm Desert Co►nmunity
Facilities District No. 91-1 (Indian Ridge Public Improvements) Special Tax Refunding Bonds,
Series 2008" (the "Series 2008 Bonds"); and
WHEREAS, the District has detennined that all requirements of the Act for the issuance of
the Series 2008 Bonds havc bccn satisficd;
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NnW, THEREFnRE, in order to estahlish the terms and conditions upon and subject to
which the Series 2008 Bonds are to be issued, and in consideration of the premises and �f the mutual
covenants contained hercin and of the purchase and acceptance of the Series 2008 Bo►lds by the
Owners thereof, and for other valuable consideration, the receipt of which is hereby acknowledged,
�he District does hereby covenant and agree, for thc bcncfit of the Owners of the Series 2008 Bonds
and any Parity Bonds (as defined hercin) which may be issued hereunder from time to timc, as
follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following ternls shall
have the following meanings:
"Account" means any account created pursuant to this Indenture.
"Act" means the Mello-Roos Cornmunity Facilities Act of 1982, as amended, being Section
5331 1 c�t sc�q. of the California Government Code.
"Acquisition Agree►nent" means that certain Funding and Acquisition Agreement, dated as of
May 14, 1992, by and between the City and Sunrise Desert Partners, a California limited partnership.
"Administrativc Expenses" means thc administrative costs with respect to the calculation and
collection of the Special Taxes, including all attorncys' fees and other costs relatcd thereto, the fecs
and expenses of the Trustce, 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 thc 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 Expenscs Priority Cap" means an amount equal to $ pei-Bond
Year, escalating by 2% each Bond Year commencin�;July I, 2008.
"Alternative Penalty Account" means the account by that name crcated 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 payablc on any Outstandin� Bonds or Parity Bonds in such Bond Year, if the Bonds and any
Parity Bonds are retired as scheduled.
"Authority" means the Palm Desert Financing Authority, a joint exercise of powers authoriiy
fornled pursuant to a Joint Exercise of Powers Agreement, dated as of January 12, 1989, by and
bctween the City and the Palm Desert Redevelopment Agency.
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"Authorized [nvestments" means any of thc following which at the time of investment are
legal investments under the laws of�the State ior the moncys proposed to be investcd thercin:
(1) (A) Direct obligations (other than an obligation subject to variation in
pi•incipal rcpayment) of the United States o1�America ("United States Treasury Obligations");
(B) obligations lully and unconditionally guaranteed as to timely payment of principal and
interest by the Unitcd Statcs of America; (C) obligations i'ully and unconditionally
guaranteed as to timely payment of principal and intei•est by any agency or instrumentality of
the United States of Amcrica when such obligations are backed by the full faith and credit of
the United Statcs 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 ofthe investment is thc 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 thc custodian may be obligated.
(2) Federal Housing Administration debentures.
(3) The listcd obligations of government-sponsorcd agencies which are not
backed by thc full faith and credit of the United States of America:
- Federal Home Loan Mortgage Corporation (FHLMC)
Participation certificates (excluded are stripped mortgage securities which ai•e
purchased at prices exceeding their principal amounts)
Senior Debt obligations
- Farm Crcdit 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)
Consolidatcd dcbt obligations
- Federal National Mortgage Association (FNMA)
Scnior debt obligations
Mortgage-backed securities (excluded are stripped mortgage securities which
are purchased at prices exceeding their principal amounts)
- Studcnt 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)
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- Financing C�rp�ration (FICn)
Dcbt obligations
- Rcsolution Funding Co�poration (REFCORP)
Dcbt obligations
(4) Unsccured certificates of deposit, time deposits, and bankers' acceptances
(having maturitics of not morc than 30 days) of any bank (including thc Trustcc and any
afGliate) the short-te�m obligations of which are rated "A-1" or better by Standard & Poor's.
(5) Dcposits the aggregate amount of which are fully insured by the Federal
Deposit Insurance Corporation (FDIC), in banks (including the Trustee and any al�filiate)
which have capital and surplus of at lcast $5 million.
(6) Commercial paper(having original maturities of not more than 270 days rated
"A-1+" by Standard & Poor's and "Primc-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 commcrcial paper, if�any, that is rated "A" or higher by Standard & Poor's
or Moody's; or
(B) the entity(i) is organized within thc 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"A 1" by Moody's.
(7) Money market tunds rated "AAm" or"AAm-G" by Standard 8c Poor's, or
better(including thosc of thc Trustee or its affiliates).
(8) "Statc nbligations," which means:
(A) Direct general obligations ot'any state of the United Statcs ol'
America or any subdivision or agency thereof to which is pledged thc full faith and
credit of a state the unsecured gencral obligation debt of'which is ratcd "A3" by
Moody's and "A" by Standard & Poor's, or bettcr, or any obligation fully and
unconditionally guaranteed by any state, subdivision or agency whose unsecured
general obligation debt is so rated.
(B) Direct gener•al 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-1" by Moody's.
(C) Special Revenue Bonds (as defined in the United States Bankruptcy
Code) of any state, state agency c�r subdivision described in (A) above and rated
"AA" or bctter by Standard & Poor's and "Aa"or better by Moody's.
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(9) Pre-retundcd municipal obligations ratcd "/\AA" by S & P and "Aaa" by
Moody's mceting the following rcquiremcnts:
(A) the municipal obligations are (1) not subjcct to redemption prior to
cnaturity or(2) the trustee for the municipal obligations has been given it-��cvocable
instructions concerning thcir call and redemption and the issuer of the municipal
obligations has covcnanted not to redcem such municipal obligations other than as sct
forth in such instructions;
(B) the ►nunicipal obligations are secured by cash or Unitcd States
Treasury Obligations which may be applied only to payment of the principal ot;
interest and premium on such municipal obligations;
(C) the principal ol'and interest on the United States Treasury Obligations
(plus any cash in thc cscrow) has been verificd by thc rcport of indcpcndent certified
public accountants to bc sufficient to pay in full all principal of, interest, and
premium, if any, due and to becomc 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 (or owners of
the municipal obligations;
(E) no substitution ol�a Unitcd States Treasury Obligation shall be
permitted except with another United Statcs Treasury Obligation and upon dclivcry
of a new Verification; and
(F) the cash or United States Treasury Obligations are not available to
satisfy any other claims, includinb 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-dealcr with"retail custoiners" or a rclatcd affiliate thereof which
broker-dealer has, or the parcnt company(which guarantees the provider) of which
has, long-tenn dcbt rated at least "A" by Standard c4c 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 & P��r'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 translerred by the Trustee to the
provider of the repurchase agreement plus accrued interest with the collatcral
being valued weekly and marked-to-market at one current market price plus
accrued interest;
(b) The Tiustee or a third party acting solely as agent therefor or
for the District (the "Holder of thc Collateral") has possession of�the
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cc�llatcral or thc collatcral has bcen transfcrred to thc Holder of thc Collatcral
in accordance with applicable state and Cederal laws(other than by means of
enti-ies cm the ti•ansferor's hc��ks);
(c) The repurchasc agreement shall state and an opinion of
counscl shall be rendered at the time such collateral is delivered that the
Holder of the Collateral has a perfectcd first priority sccurity 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 c7r
suspended or ialls bclow "A-" by Standard 8c. Poor's or"A3" by Moody's, as
appropriaie, 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
Trustcc.
(B) Notwithstanding the above, if a repurchase agreement has a tcrm of
270 days or less (with no evergreen provision), collateral levels need not be as
specified in(a) above, so long as such collatera! levels are 103%or better and thc
provider is rated at least "A"by Standard & Poor's and Moody's, respectively.
(1 1) Investment agreements with a domestic or foreign bank or corporation (other
than a lifc or property casualty insurance company) the long-term debt of which or, in the
case of a guarantccd 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 thc tcrms of the investcnent
agreement:
(A) intcrest payments are to bc made to the Trustee at times and in
a►nounts as necessary to pay dcbt service on the Bonds;
(B) thc invested funds are available for withdrawal without penalty or
premiutn, 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 agrcement so as to rcceive funds thereunder with no penalty
or premium paid;
(C) the invcstment agreement shall state that is the unconditional and
general obligation of; and is not subordinated to any other obligation of, the provider
thercof, or, in the case of a bank, that the obligation of�the bank to �nake payments
undcr 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 thc Trustee) that such
invest►ncnt agreement is legal, valid, binding and enforceable upon the provider in
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accordance with its tcrms and of farcign counscl (if applicable) in form and substancc
acceptable, and addressed to, the District;
(E) thc investment agrecment shall provide that if during its tenn.
(1) the provider's rating by cither Standard & Poor's or Mc�ody's
falls bclow "AA-" or"Aa3", respectively, the provider shall, at its option,
within 10 days of reccipt of publication of such downgrade, either
(i)collatcralize the inveslment 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 frec
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" ratin� 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 suspcnded or falls below "A-" or"A3", respectively, the
provider must, at the direction of thc 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 Trustce; 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
Holdcr of the Collateral has a perfected first priority security interest in the collatcral,
any substituted collateral and all proceeds thereof(in the case of bearer securities, this
means the Holder of the Collatcral is in possession); and
(G) the investment agrcement must provide that if during its term
(1) the provider shall deiault in its payment obligations, the
provider's obligations under the investment agreement shall, at the direction
of the District or the Trustee, bc accelerated and amounts invested and
accrucd but unpaid interest thereon shall be repaid to the District or Trustee,
as appropriatc, 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 Agcncy Investmcnt Fund; providcd that the
Trustee may restrict invcstments in such Fund to the cxtent necessary to keep moneys
available for the purposes of�this [ndenture.
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(I 3) Calilornia Asset Managemcnt Program (CAMP).
"Authorized Represcntative of the City" means the City Managcr of�ttie City, the Finance
Director-Tt•casurer ol�thc City, or any other person or persons designated by the City Managcr or thc
Finance Director-Treasurer by a written ccr-tificatc signed by the City Manager or the Financc
Director-Treasurer and containing the specimen signature of each such person.
"Authorized Rcpresentativc of�the District" means the City Manager of the City, the Financc
Director-Trcasurer of the City, or any other person or persons designatcd by the City Manager or the
Finance Director-Treasurer by a written certificate signed by thc City Managcr or the Financc
Director-Treasurer and containing the spccimen signaturc of each such �erson.
"Bond Counsel" means an attorncy at law or a firm of attorneys selected by the District of
nationally recognized standing in matters pertaining to thc tax-exempt nature of interest on bonds
issued by states and thcir political subdivisions duly admitted to the practice of law bel'ore thc highest
court of�any state of the United States of America or the District oi�Columbia.
"Bond Registcr" means the books which the Trustee shall keep or cause to bc kept on which
the registration and transfer of the Bonds and any Parity Bonds shall be recorded.
"Bondowncr" or"Owner" means the person or persons in whose name or names any Bond or
Parity Bond is registered.
"Bonds•" means the Series 2008 Bonds.
"Bond Year" mcans the twelvc month period commencing on nctober 2 of cach year and
ending on October 1 of the i'ollowing year, cxcept 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 October 1 which is not more
than 12 months after the Delivery Datc.
"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 oftice
of the Trustee is located, are not required or authorized to remain closed.
"Certiticate of an Authorized Representative" means a written certificate executed by an
Authorized Representative of the City or District, as applicable.
"Certificate ol'the Special Tax Administrator" means a ccrtificate of an Authori�ed
Representative of the District, or any successor cntity appointed by the City, to administer the
calculation and collection of�the Special Taxes.
"City" means the City of Palm Descrt, California.
"Code" means the Intcrnal 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 Scrvice interpreting and construing it.
"Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement
dated as of January I, 2008 between the City, on behalf oi'the District, and MuniFinancial, as
dissemination agcnt, together with any amendments thcreto.
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"Costs of Issuance" mcans the costs and expenses incurred in connection with the fo�mation
ofthe District and the issuancc and sale ofthe Bonds or any Parity Bonds, including the acceptancc
and initial annual fees and expenses�f the'1'rustcc, legal fecs and expenses, costs of printing the
Bonds and Parity Bonds and thc �reliminary and tinal official statements for the Bonds and Parity
Bonds, fees o('(inancial consultants and all other rclated fees and cxpenses, as set forth in a
Certificatc of an Authori�ed Represcntative of�the City.
"Costs of Issuance Fund" means the fund by that name created and established pursuant to
Section 3.1 hereof.
"Delivcry Date" means, with respect to the Bonds and each issuc of Parity Bonds, the date on
which the bonds of such issue wcrc issued and dclivered to thc initial purchasers thereof.
"Depository" shall mean The Depository Tcust Company, New York, New York, and its
successors and assigns as securities depository for the Certificates, or any other securities depository
acting as Dcpository under Article II hereot:
"Developed Property" shall have the meaning ascribed to such term in the Rate and Method.
"District" means City of Palm Desert Community Facilitics District No. 91-1 (Indian Ridgc
Public Improvements) established pursuant to the Act and the Resolution of Fortnation.
"Escrow Agreemenf' means the Escrow Agreement, datcd as of even date herewith, by and
among the Authority, the City, the District, and Wells Fargo Bank, National Association, as escrow
agent, relating to the refunding of the remaining outstanding portion of the Authority's 1997 Revcnue
Bonds(Assessment District Nos. 92-1 [Tierravista] and 94-1 [Bighorn] and Community Facilities
District No. 91-1 [Indian Ridge]), scheduled to mature on October 1, 2008 and thereafter through
October 1, 2020.
"Escrow Bonds" means the principal amount of any Parity Bonds deposited in an escrow
account established by a Supplemcntal [ndenture which are not sccured by a pledge of the Nct Taxes
while on deposit therein.
"Escrow Fund" means thc fund by that name established under the Escrow Agrcement.
"Event of Default"means an "event of default"describcd in Section 8.1 hereof.
"Federal Securities" means any of the following: (a) non-callable direct obligations of thc
United States of A►nerica ("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 in�erest and has the righi to proceed
directly and individually against the obligor and the undcrlying Treasuries arc not available to any
person claiming through the custodian or to whom the custodian may be obligated, and
(c) pre-refundcd municipal obligations rated "AAA" and "Aaa" by Standard & Poor's and Moody's,
respcctively(or any combination therco�.
"Fiscal Year" means the period beginning on July 1 of cach year and ending on the ncxt
following Junc 30.
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"Gross Taxes" means the amount ofall Spccial Taxes receivcd by the DisU-ict, to�ether with
the proceeds collected ti•om the sale�f property pursuant to lhe f�>reclosure provisions of this
Indenture for the delinyucncy of such Spccial Taxes remaining atter the payment �f all costs related
to such foreclosurc actions.
"Indenture" means this Bond Indenture, together with any Supplemcntal Indenture approved
pu►•suant to Article 6 hercof.
"Independent Financial Consultant" means a financial consultant or firm of such consultants
generally recognized to be well yualitied in the financial consulting field, appointed and paid by the
District, who, or cach 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 thc District or the
City; and
(3) is not connected with the District or thc City as a member, of'iicer oi•
employcc of the District or the City, but who may be rcgularly retaincd to ►nake annual or
other reports to the District or the City.
"Insurance Policy" means the municipal bond insurance policy issued by the Insurer insuring the
payment when due of the principal of and interest on the Bonds.
"Insurer" means , and its successors and assigns.
"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 April 1 and October 1, commencing October 1, 2008;
provided, however, that, if�any such day is not a Business Day, interest up to the Interest Payment
Date will be paid on thc Business Day next succeeding such date.
"Invest►nent Agrecment" mcans one or more agreements for the investment of funds of the
District complying with the criteria therefor as sct forth in Subsection (1 1) of the definition of
Authorized Investments herein.
"Maximum Annual Debt Service"means the inaximum sum obtained for any Bond Year
prior to the final maturity of the Bonds and any Parity Bonds by adding the follawing for each Bond
Year:
(1) the principal a►nount 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 arc rctired as
schcduled.
"Moody's" means Moody's Investors Service, its successors and assigns.
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"Net Taxes" mcans Gr-oss Taxcs minus amounts set asidc to pay Administrative Expenses n�t
to cxceed thc Adminish-ative Lxpenses Priority Cap.
"1992A Bonds" means the Disti-ict's $1 1,870,000 aggregate initial principal a►nount S�ecial
Tax Bonds, Series 1992A.
"1995 Bonds" means thc District's $12,385,000 aggregatc initial principal amount Series
1995 Spccial Tax Bonds.
"1997 Authority Bonds" means the Authority's $30,915,000 aggregatc initial principal
amount 1997 Revenue Bonds (Assessmcnt District Nos. 92-1 [Tie�ravista] and 94-1 [Bighorn] and
Community Facilitics District No. 91-1 [Indian Ridge]).
"1997 Local Obligations" mcans the District's $22,989,000 aggregate initial principal
amount Limited Obligation Refunding Bonds (Property Secured Only—No lssuer Liability), Scries
1997.
"No►ninee" shall mcan the nomince of the Dcpository, which may be the Dcpository, as
determincd f'rom time to time pursuant to Section 2.16 hereof.
"Ordinancc" means Ordinance No. 674 adopted by the Icgislative body of thc District on
March 26, 1992,providing for the levying ofthe Spccial Tax.
"Outstanding" or"Outstanding Bonds and Parity Bonds" means all Bonds and Parity Bonds
theretofore issued by the Districi, except:
(I) Bonds and Parity Bonds theretofore cancelled or surrendered for cancellation
in accordance with Section 11.1 hereof;
(2) Bonds and Parity Bonds for payment or redcmption of which moneys shall
have been theretofore deposited in trust (whcther 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 havc
been given as provided in this Indenture or any applicable Supplemental [ndenture for Parity
Bonds; and
(3) Bonds and Parity Bonds which have been surrcndered to the Trustcc lor
transter or exchange pursuant to Section 2.9 hereof or for which a re�lacement has been
issued pursuant to Section 2.10 he►•eof.
"Parity Bonds" means all bonds, notes or other similar evidcnces of indebtedncss hereafter
issued, payable out of the Nct Taxes and which, as provided in this Indenture or any Supplemental
Indenture, rank on a parity with the Bonds.
"Participants" shall cncan those broker-dealers, banks and other financial institutions from
time to time for which the Depository holds Bonds or Parity Bonds as sccurities depository.
"Pcrson" means natural persons, firms, corporations, partnerships, associations, trusts, public
bodies and other entities.
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"Pre�ayments" mcans any amounts paid by thc District to the T»stec and dcsignated by tllc
District as a prepayment of Special Taxes for one or morc parccls in the DisU•ict made in accordance
with the Rate and Method.
"Principal Account" mcans thc account by that name created and established in the Spccial
Tax Fund pursuant to Scction 3.1 hercof.
"Principal Officc of the Trustee" means the coi-�orate ttust ofticc of thc Trustce located in
Los Angeles, California, or such other office or offices as the Trustee may designate ti•om time to
time, or the office of any successor Trustec whcre it principally conducts its business of scrving as
trustee under indentur-es pursuant to which municipal or governmental obligations are issucd.
"Prior Local Obligations Account" means the account within the Escrow Fund established
and held by the Escrow Agcnt pursuant to thc Escrow Agreement.
"Project" means those public facilities described in the Resolution oi�Formation which are to
be acquired or constructcd within and outsidc 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 yualified electors within the District Irom time to time.
"Project C�sts" mcans thc amounts nccessary to finance the Project, to create and replcnish
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 othcr fces
and expenses relating to the issuancc of the Bonds or any Parity Bonds and the formation of the
District, and to pay any other"incidental expcnses"of the District, as such term is defined in the Act.
"Ratc and Method" means thc ratc 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 thc Rebate
Eund 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 Seciion 3.1 hereof.
"Rebate Regulations" mcans any final, temporary or proposcd Rcgulations promulgatcd
under Section 148(t) of thc Code.
"Record Date" means the fiftccnth day of the month prcccding an Intcrest Payment Date,
regardless of whether such day is a Business Day.
"Redemption Account" means the account by that name creatcd and cstablished in the
Special Tax Fund pursuant to Scction 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 Scction 103 of the Codc.
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"Representation Lettcr" shall mcan the Blanket Letter of Representations fi-om 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 hcreol�.
"Reserve Requirement"means that amount as of�any date of calculation equal to the lesscr of
(i) 10% of the initial principal amount ol�thc Bonds and Parity Bonds, if any, (ii) Maximum Annual
Deb� Service on the then Outstanding Bonds and Parity Bonds, if any; and (iii) 125% of average
Annual Debt Service on thc then Outstanding Bonds and Parity Bonds, if any.
"Resolution of Formation" means Resolution No. 92-2 adopted by the City Council of the
City on March 12, 1992, pursuant to which the City Cormed the District.
"Series 2008 Bonds" means the District's Spccial Tax Refunding Bonds, Series 2008, issucd
on their Delivery Date in the aggre�;ate principal amount of�[10,720,000].
"Sinking Fund Payment" means tlie annual payment to be deposited in the Redemption
Account to redeem a portion of the Term Bonds in accordance with the schedules set f'orth in
Section 4.1(b) hcreof�and any annual sinking fund paycnent schedule to retirc any Parity Bonds
which are designated as Term Bonds.
"Six-Month Pcriod" means the period of time bcginning 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 thercafter until the latest maturity datc of the Bonds and the Parity Bonds (and any
obligations that reCund an issue of the Bonds or Parity Bonds).
"Special Tax Fund" means the fund by that name creatcd 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 March 12, 1992 election in the District, including any scheduled payments
and any Prepayments thereof, thc net proceeds of the redemption or sale of property sold as a result
of foreclosure�f the lien of the Special Taxes to the amount �f said lien, and penalties and interest
thec•con.
"Standard & Poor's" means Standard & Poor's Ratinbs Group, a division ot'McGraw-Hill,
its successors and assigns.
"Subaccount" means any subaccount created pursuant to this Indenture.
"Supplcmental lndcnture"means any supplemental indenture amending or supplementing
this [ndenture.
"Surplus Fund" means the i'und by lhat name created and established pursuant to Section 3.1
hereof.
"Tax Certificate" means the Certiticate Regarding Compliance with Cei-tain Tax Matters (or
similar document)pertaining to the use and investment of proceeds of a series of Bonds, executed
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and dclivered by a duly authorired oiTiccr of the District and of the City on thc relatcd Delivcry Uate,
including any and all exhibits and attachinents theretc�.
"Tax-exempt" means, with respect to interest on any obligations of a state or local
government, including the interest on the Bonds, that such intcrest is excludcd from gross income for
federal income tax purposes whether or not such intcrest is includable as an item of tax preference or
otherwise includable directly or indirectly for purposes of calculating tax liabilities, including any
altcrnativc minimum tax, under the Code.
"Term Bonds" ►neans the Series 2008 Bonds maturing on Octobcr 1, 20_ and October 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 tiust company
which may at any time be substitutcd in its place as pi•ovided in Sections 7.2 or 7.3 and any successor
thereto.
"Underwriter" means, collectively, Stinson Securitics LLC and Kinsell, Newco►nb & Dc
Dios, [nc., with respect to the Bonds.
ARTICLE II
GENERAL AUT'HORIZATION 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$[10,720,000] shall bc
issued for the purpose of tinancing the Project and paying Costs of Issuance, togcther with any Parity
Bonds authorized by the legislative body in accordance with Section 10.2 hereof, provided that the
aggregate principal amount of the Bonds and any Parity Bonds shall not exceed the total
indebtedness presently authorized or subsequently authori�ed by the qualificd 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 payablc as to the principal thercof and interest thereon and any premiums
upon the redemption thereof solely from the Net Taxes and the other amounts in the Special Tax
Fund (othcr than amounts in the Administrative Expcn�es Account of the Spccial Tax Fund).
Section 2.2. Type and Nature of Bonds and Parity Bonds. Neither the faith and credit
nor the taxing power of thc City, thc State of California or any political subdivision thcreof othcr
than the District is pledged tc� the payment of the Bonds or any Parity Bonds. Except for the Special
Taxes, no other taxes are pledged to thc payment of thc Bonds or any Pai•ity Bonds. The Bonds and
any Parity Bonds are not general or special obligations of the City nor general obligations of the
District, but arc 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, tree of deductions and withc�ut any
abatement, offset, recoupment, diminution or set-ofl�whatsoevcr. 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
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thc I3onds and any Parity B�nds and prcmiums upon the rcdemption thercc�f; if any, arc not a debt �1'
the City, the State of California or any of its political subdivisions within ihe meaning of any
c�nstitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are nc�t a legal
or eyuilable pledge, charge, lien, or encumbrance upon any of the District's proper-ty, or upon any of
its income, receipts or revenues, except the Net Taxes and other amounts in the Special Tax Funci
(exclusive of the Administrative Expenses Account) which are, under thc tern�s of this Indenture and
the Act, sct asidc f'or the payment of the Bonds, any Parity Bonds and interest thereon and ncither the
membcrs of the legislative body of the DisU•ict or thc City Council of the City nor any persons
executing the Bonds or any Parity Bonds, arc liable personally on the Bonds or any Parity Bonds, by
reason of their issuance.
Notwithstanding anything to ihe contrary contained in this Indenture, the District shall not be
required to advance any money derivcd irom any source of income other than the Net Taxes for the
payrncnt of'thc 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 derivcd froin a source lcgally available for such purpose.
Scction 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Taxes. Pursuant io
the Act and this Indenture, the Bonds and any Parity Bonds shall be cqually payable from the Net
Taxes and othcr amounts in the Special Tax Fund (exclusive of�the Administrative Expenses
Account), without priority for number, date of�the Bonds or Par•ity Bonds, date of'sale, date of
execution, or date of delivcry, and the payment of thc interest on and principal of the Bonds and any
Parity Bonds and any premiums upon the rede►nption thereof, shall be exclusively paid from the Net
Taxes and othcr amounts in thc Special Tax Fund (exclusivc of thc Administrative Expenses
Account), which are hcreby set aside for the payment of�the Bonds and any Parity Bonds. Amounts
in the Special Tax Fund (other than thc 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 oi•any Supplemcntal 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 Suiplus Fund, the Costs of Issuance Fund, or the Administrativc Expenses Account of the Special
Tax Fund shall be construed as a trust fund held for the bencfit of the Owners.
Nothing in this Indenture or any Supplemental Indenture shall preclude: (a) subject to the
limitations containcd hercunder, the redemption prior to maturity of any Bonds or Parity Bonds
subjcct to call and redemption and payment of said Bonds or Parity Bonds fi•om proceeds of
rcfunding bonds issued under the Act as the same now cxists or as hcreaftcr amendcd, 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 fram Nct Taxes.
Section 2.4. Description of Bonds; Interest Rates. The Bonds and any Parity Bonds
shall be issued in fully registcred form in denominations of$5,000 or any integral multiplc thercoi:
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 COMMUMTY FACILITIES
DISTRICT NO. 91-1 (INDIAN RIDGE PUBLIC IMPROVEMENTS) SPECIAL TAX
REFiJNDING BnNDS, SERIES 2008." Thc Series 2008 Bonds shall be dated as of thcir Delivcry
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Date and shall mature and be payablc on October I in thc years and in the aggregate principal
amounts and shall be subject to and shall bear interest at thc ratcs sct forth in thc tablc bclow payable
on October l, 2008 and each Interest Payment Date thereafter:
Maturity Date
(October 1) Pi-incipal Amount Interest Rate
2008 � %
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Intcrest shall be payable on each Bond and Parity Bond from thc datc established in
accordance with Section 2.5 below on each Interest Payment Date thereatter 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 thcrcof in full, in
accordance with the tcrms of this Indenture, such Bonds and Parity Bonds shall then ccasc to bear
interest. Interest due on the Bonds and Parity Bonds shall be calculated on the basis of a 360-day
year compriscd 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 payablc upon presentation and surrender thercof
at the Principal Officc of the T'rustee, or at thc dcsignated ofCcc 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
Payinent Date in which event interest shall be payable from such date of authentication, (ii) the date
of authentication is afrcr a Record Date but prior to the immcdiately succeeding Interest Payment
Date, in which event interest shall bc payable from thc Interest Payment Datc immediately
succeeding thc date of�authentication, or(iii) the date of authentication is prior to the close oi'
business on the tirst Record Date occurring after the issuance of such Bond or Parity Bond, in which
event intcrest shall be payable from thc dated date of such Bond or Parity Bond, as applicable;
provided, howevei•, that if�at the time of authentication of such Bond or Parity Bond, interest is in
default, intcrest on that Bond or Parity Bond shall be payable from thc last lnterest Payment Date to
which thc interest has been paid or made available for payment or, if no interest has been paid or
madc available for paymcnt on that Bond or Parity Bond, intcrest on that Bond or Parity Bond shall
be payable froin its dated date. Interest on any Bond or Parity Bond shall be paid to the person
whose name shall appcar in the Bond Registci•as the Ownei•oi�such Bond or Parity Bond as of the
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closc of busincss on the Recc�rd Datc. Such interest shaU be paid by chcck �f the Trustee mailed by
first class mail, postagc prcpaid, to such Bondowncr at his on c�r address as it appcars on the Bond
Registcr. In addition, upon a rcqucst in writing received by the Trustee on or bctore the applicable
Record Date fi•om an Owner of�1,000,000 or more in principal amount of the Bonds or�f any issuc
of Parity Bonds, payment shall be made on the Interest Payment Date by wire transfer in i►nmediatcly
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 stecl engraved or lithographic plates or may be typewritten. The Bonds and the certificate of
authentication shall be substantially in the for►n attached hercto as Exhibit A, which fonn is hereby
appi•oved and adopted as the form oi'such Bonds and of the certificate of authentication. Each issue
of Parity Bonds and the certiticate of authentication therefor shall be in thc forcn provided in thc
Supplemental Indenture for such issue of Parity Bonds.
Until definitive Bonds or Parity Bonds, as applicable, shall bc prepared, the District may
cause to be executed and delivered in lieu oi'such definitive Bonds or Parity Bonds temporary bonds
in typcd, printed, lithographed or engraved f'orn� 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 authorired by the District. Until exchangcd for
definitive Bonds or Parity Bonds, as applicable, any ternpor•ary bond shall be entitled and subject to
the same benefits and provisions of this Indenturc as definitive Bonds and Parity Bonds. If the
District issues temporary Bonds or Parity Bonds, it shall exccute and furnish definitive Bonds or
Parity Bonds, as applicable, without unnccessary delay and thercupon any temporary Bond or Parity
Bond may be surrendered to the Trustee at its otiicc, without expense to the Owner, in cxchange for
a definitive Bond or Parity Bond of the same issue, maturity, intcrest rate and principal amount in
any authorized denoinination. All te►nporary Bonds or Parity Bonds so surrendered shall be
cancelled by the Trustce and shall not be reissued.
Scction 2.7. Execution and Authentication. The Bonds and Parity Bonds shall be signed
on behalf�of the District by the manual or facsimilc signature of the Mayor of the City and
countersigned by the manual or facsimilc signature of the City Clerk of thc 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 thereo� may bc impressed, imprinted, engraved or otherwise reproduced thereon, and
attested by the signature of the City Clcrk 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 becn authenticated and delivcred
by the Trustec (including new Bonds or Parity Bonds delivered pursuant to thc provisions hec•eof
with reference to the transfer and exchange of Bonds or Parity Bonds or to lost, stolen, destroyed or
inutilated Bonds or Parity Bonds), such Bonds and Parity Bonds shall nevertheless be valid and may
be authenticated and delivered as hcrein provided, and may be issued as if the person who signcd or
sealed such Bonds or Parity Bonds had not ceased to hold such office.
nnly 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 bcen
duly executed by the Trustce.
Section 2.8. Bond Register. The Trustee will keep or cause to be kept, at its office,
sufficicnt books lor the registraiion and transfer of the Bonds and any Parity Bonds which shall upon
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9R7421.4
reasonablc prior noticc bc open to inspection by the District during all rcgular busincss h�urs, 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, registcr or transfer or cause to bc
ti-ansferred on said Bond Rcgister, Bonds and any Parity Bonds as hercin providcd.
The District and the Trustec may treat the Owner of any Bond or Parity Bond whosc namc
appears on the Bond Register as the absolute nwner of that Bond or Parity Bond for any and all
purposes, and the District and the Trustec shall not bc affected by any notice to the contrary. The
District and the Trustee may rely on thc addr•ess oi�the Bondowner as it appears in thc Bond Registcr
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
ter-►ns, be transferred upon the Bond Register by the per•son in whose namc it is registercd, in person
or by his or her duly authorized attorney, upon surrender of�such Bond or Parity Bond for
cancellation at the ofTice of the Trustee, accompanied by delivery of written instrument of transfcr in
a form acceptable to the Trustec and duly cxecuted by the Bondowner or his or her duly authori�cd
attorney.
Bonds or Parity Bonds may be exchanged at the office of the Trustce for a like aggregatc
principal amount of Bonds or Parity Bonds for other authorired 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 rcquire 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 thc Trustce 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 Trustec shall not be requircd to register
transfers ar make exchanges of'(i) Bonds or Parity Bonds f'or a period of fifteen (15) days next
preceding any selection of the Bonds or Parity Bonds to be redcemed; or(ii) any Bonds or Parity
Bonds chosen for redcmption.
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 foi•the Bond or Parity Bond so mutilated, but only upon surrender to the Trustce oi�the
Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so surrendered to the
Trustee shall be cancellcd by thc Trustee pursuant 10 Seclion 11.1 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
thc Trustce shall be given, the District shall exccute and the Trustee shall authenticate and deliver, a
ncw Bond or Parity Bond, as applicable, of like tenor, rnaturity 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 entiticd to the benefits hcreof with all
othcr Bonds and Pai-ity Bonds issued hereunder. The Trustee shall not treat both the oi-iginal Bond or
Parity Bond and any replacement Bond or Parity Bond as being nutstanding for the purpose of
determining the principal amount of Bonds or Parity Bonds which may be executed, aulhenticated
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and dclivcred hereunder o►- f�r tlic purposc of detcrniining any perccntagc of Bonds or Parity Bonds
nutstanding hcreunder, but both the original and replacement Bond or Parity Bond shall bc trcated as
one and the same. Notwithstanding any other provision ot�this Section, in licu of delivcrin� a ncw
Bond or Parity Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the
Trustec may makc payment with respect to such Bonds or Parity Bonds.
Section 2.1 1. Validity of Bonds and Parity Bonds. The validity of the authorizaticm and
issuancc of�the Bonds and any Parity Bonds shall not be aftected in any way by any defect in any
proceedin�s taken by the District for thc financing of the Project, or by the invalidity, in whole or-in
part, of any contracts made by the District in conncction thci•ewith, and shall not be dcpendent upon
the completion of the financing of�the Project or upon the performance by any Person ot�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 othcr•applicable laws of�thc 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 for►n of a
separate single fully re�;istered Bond(which may be typewritten) for each of the maturities of the
Bonds. Upon initial delivery, the ownership of cach such Bond shall bc registcred in the registration
books kcpt by the Trustee in the name of thc Nominee as nominec of the Depository. Except as
providcd in Scction 2.14 hercot; all of the nutstanding Bonds shall be rcgistercd in the re�istration
books kept by thc Trustce in the name of the Nominee. At lhe election of the District, any Parity
Bonds may also bc issued as book-entry bonds registered in the name of the Nomince as provided
hcrein, in which case the refercnces 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 Nomince, the District and the Trustce 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 thc Bonds.
Without limiting the immediatcly preceding sentencc, the District and the Trustee shall have no
responsibility or obligation with respect to (i) the accuracy of the rccords 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 noticc of redemption, (iii) the
selection by the Depository and its Participants of the beneticial 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 Pcrson, 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 considcr the Person in whosc name each Bond is registered in
the registration books kept by the Trustec as the holder and absolute owner of such Bond for the
purpose of payment of the pr•incipal of, pi•emium, 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 puipose of�
i•ebistering transfcrs with respect to such Bond, and for all other purposes whatsoever. The Trustee
shall pay all pr•incipal of, premium, if any, and interest due on the Bonds only to or upon the order of
the respectivc Owner, as shown in the registration books kept by the Trustee, or their respective
attorneys duly authorized in wc•iting, 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 ihe 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
�bligation �f the Dist►-ict to ►nake payments of principal, pre►nium, if any, and intcrest pursuant to
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this Indenturc. Upon dclivc►•y by the Dcpository to the Tiustce and thc Di�trict of�writtcn noticc tc�
the etfect that the Depository has detennincd to substitute a new nomince in place of the Nomince,
and subject to the provisions herein with respect to Record Datcs, the w�rd Nominee in this
Indenture shall refer to such new nomince 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�f thc Nc�minee for the Deposit�ry's book-cntry
system, an author•ized representative of the Trustec is hereby authorized to execute from ticne to time
and deliver to such Deposit�ry the Representation Lctter. The execution and delivery of thc
Represcntation Lctter shall not in any way limit the provisions of�Section 5.1 or in any other way
imposc 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 madc
by it in the Represcntation Letter. In addition to the execution and delivery oCthe Representation
Letter, thc Authorizcd Represcntatives of the District are hereby authorized to take any other actions,
not inconsistent with this Indenture, to yualify the Bcmds for the Depository's book-entry program.
Section 2.14. Transfers Outside Book-Entry System. In the event (i) thc Depository
detennines 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 qualitied securities depository to replacc
thc Depository then thc Bonds so designated shall no longer be restricted to being registered in the
registration books kept by thc Trustee in the name of the Nominee, but shall be rcgistered in
whatever namc 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 ihe name of ihe Nominee, a!1 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, respectivcly, as provided in the Representation
Letter or as othci-wise 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.
ARTICLE III
CREATION nF 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. 91-1 Special Tax
Fund (the"Special Tax Fund") (in which there shall be established and created an Interest
Account, a Principal Account, a Redemption Account, a Reserve Account, and an
Administrative Expenses Account).
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(2) Thc City of Palm Descrt Community Facilitics District N�. 91-1 Rcbatc Fund
(thc "Rcbate Fund") (in wllich there shall be establishcd a Rebate Account and an Alternativc
Penalty Acc�unt).
(3) The City of Palm Desert Community Facilities District No. 91-1 Costs of
Issuancc Fund (thc"Costs of Issuance Fund") (in which there shall bc established a Costs of�
Issuancc Account).
(4) The City of Palm Desert Community Facilities District No. 91-1 Surplus
Fund (the "Surplus Fund").
The amounts on deposit in the fc�regoing f'unds, accounts and subaccounts shall bc held by thc
Trustee and the Trustee shall invest and disburse the amounts in such f'unds, 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 3.10 hereof.
In connection with the issuance of any Parity Bonds, the Trustee, at the direction of an
Authoriied 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 oCthe Bonds and any Parity Bonds.
(b) A portion of the pr-oceeds of the sale of the Bonds in thc amount of
� (such amount being equal to the principal amount oCthe Series 2008 Bonds,
(plus/less] a net original issue [premium/discount� of� , less an Underwriter's discount of�
$ , less an amount oi�$ wired by the Underwriter at the request of the
District to pay the premiucn for the Insurance Policy) shall be received by the Trustec on behalf of
the District and deposited and transferred as follows:
(1) $ shall be deposited in the Costs of Issuance Fund to pay
the Costs of Issuance of�the Bonds;
(2) � shall be deposited in thc Prior Local Obligations Account
of the Escrow Fund; and
(3) $ shall be deposited in the Reserve Account of the Special
Tax Fund to fund the Reservc Requirement.
The Trustcc may, in its discretion, establish a temporary fund or account in its books and
records to facilitate such transfers.
Scction 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 Authori�ed Representative
designating such Special Taxes as Prepayments and specifying the respective amounts tc� be
deposited in the various funds and accounts hereunder, and the Trustee shall make such deposits as
speciGed in such certificate on the same day as its receipt thereof. Except for any Prepayments to be
deposited pursuant to the forcgoing, thc Trustee shall, on each datc on which the Special Taxes arc
received trom the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for
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the Owners. The Trustec shall iransfer the Special Taxes on deposit in the Spccial Tax Fund on the
dates and in the amounts set forth in the following Sections, in thc following ordcr of�priority, to:
(1) thc Administrative Expenscs Account of the Specia) Tax Fund;
(2) the [nterest Account ol�the Special Tax Fund;
(3) the Principal Account oi'the Special Tax Fund;
(4) the 2edemption 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 [ive (5) Business Days prior to each Interest Payment Date the Trustee shall
transfer to the Interest Account, thc 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 Datc.
(c) At maturity of all of'the Bonds and Parity Bonds and, after all principal and interest
then due on thc Bonds and Parity Bonds then Outstanding has been paid or provided for and any
amounts owed to the Trustee have been paid in Iull, 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 timc 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 rcceipt of
any such certificate, the Trustee shall transfer from thc Special Tax Fund and deposit in thc
Administrativc Expenscs Account of the Special Tax Fund amounts necessary to make timely
payment of any such Administrativc Expenses as set forth in the Certificate of�an Authori�ed
Representative ofthe 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 Priority
Cap until such time as thcre has been deposited (a) to the Interest Account and the Principal Account
an amount, together with any amounis alrcady on deposit therein, that is sufficicnt to pay the interest
and principal on all Bonds and Parity Bonds duc in such Bond Year, (b) to the Rcdemption Account
an amount, togethcr with any ainounts alr•eady on deposit therein, that is sufticient to call and redecm
Term Bonds in accordance with thc Sinking Fund Payment schedules set forth in Section 4.1(b)
hcreof and to redeem Parity Bonds in accordance with any Sinking Fund Payment schedule in the
Supplemcntal Indcnture for such Parity Bonds, and (c) to the Reserve Account an amount, togcther
with any amounts already on deposit therein, that is sufficient to restore the Reserve Account to the
Rcserve Requiremcnt. Notwithstanding the f'orcgoing, amounts in excess of the Administrative
Expcnses Priority Cap may bc transferred to the Administrative Expenscs Account to the cxtent
necessary to collect delinquent Special Taxes. Moneys in the Administrative Expenses Account of
the Special Tax Fund may be invested in any Authorizcd Investmcnts as directed in writinb by an
Authorized Representative of�the District and shall be disbursed as dii•ected in a Certificate of an
Authori�ed Rcpresentative. Thc Trustee shall have no oblibation to transfer any amount fi-orn thc
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Spccial Tax Fund tor deposit in the Ad►ninistrative Expenses Account ot�the Special Tax Fund
except upon its reccipt of a Ceriificate of an Authori�ed Rcpresentative of thc District pursuant to
this section.
Sectio�l 3.4. Interest Account and Principal Account of the Special Tax Fund. The
principal of and interest due on the Boncis and any Parity Bonds until maturity, other than pi•incipal
due upon redemption, shall be paid by the Trustee fi•om the Principal Account and the Intel•est
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 bc made when due and after making
thc transfer required by Section 3.3, if any, at least five (5) Business Days prior to each April 1 and
Octobei• 1, the Trustee shall make the following transfers fi•om the Special Tax Fund first to the
Interest Account and then to the Principal Account; provided, however, that to the cxtent that
deposits have becn made in thc Interest Account or the Principal Account from thc proceeds of the
sale oi�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 thc Interest
Account five (5) Business Days prior to each Intcrest Payment Date shall be equal to thc
installment of interest due on the Bonds and any Parity Bonds on said Interest Paymenl Date
and any installmcnt of interest due on a previous [nterest 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 October 1 of each year, commencing Octobcr 1,
2008, shall equal the principal payment duc on the Bonds and any Parity Bonds maturing on
such October 1 and any principal payment due on a previous October 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 thc same become due at maturity.
Section 3.5. Redemption Account of thc Special Tax Fund.
(a) With respect to cach October 1 on which a Sinking Fund Paymcnt 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 reyuired 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
each October 1 eyual to the Sinking Fund Payment due on any Outstanding Bonds and Parity Bonds
on such October 1; provided, howevcr, that, if amounts in the Special Tax Fund are inadequate to
�nake the Coregoing transfers, then any deficiency shall be made up by an immediatc transfer from the
Reserve Account, if funded, pursuant to Section 3.6 below. Moneys so deposited in thc 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.
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(b) After making thc dep�sits to the Administrative Expenses Account, thc Intcrest
Account and the Principal Account of the Special Tax Fund pursuant io Seciions 3.3 and 3.4 above
and to thc Redcmpti�n Account ior Sinking Fund Payments thcn duc pursuant to subparagraph (a) oC
this Section, and in accordancc 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 transfei- fi•om the Spccial Tax Fund and
deposit in the Redemption Account moncys available fol•thc puipose and sut'ficient to pay the
principal and the prcmiums, if any, payablc on the Bonds or Parity Bonds callcd tor optional
redemption; provided, however, that amounts in the Special Tax Fund (other than thc Administrative
Expenses Account therein) may be applied to optionally rcdeem Bonds and Parity Bonds only ii'
immcdiately following such redemption the amount in the Reserve Account will equal the Reserve
Requirement.
(c) Prcpaymcnts dcposited to thc Redemption Account shall be applied on the
redemption date established pursuant to Section 4.1(c) hereof for the use of such Prepayinents to the
payment oi'the principal of, premiu►n, and intcrest on the Bonds and Parity Bonds to be redecmed
with such Prepayinents.
(d) Moneys set aside in the Redemption Account shall be used solely for the purpose of
redceming Bonds and Parity Bonds and shall be applied on or after the redemption date to the
payrnent of principal of and premium, if any, on thc Bonds or Parity Bonds to be redcemed upon
presentation and surrender of such Bonds or Parity Bonds and in the case of an optional redemption
or an extraordinary rcdemption from Prepayments to pay the intcrest 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 providcd. Purchascs of Outstanding Bonds or Parity Bonds may be made by thc
District at public or private sale as and when and at such prices as the District may in its discretion
detennine 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 redcmption or an extraordinary
redemption, the premium applicable at the next following call datc according to the premium
schedule established pursuant to Section 4.I(a) or 4.1(c) hereof; as applicable, or in the case o1'Parity
Bonds the premium established in any Supplemental Indenture. Any accrued interest payable upon
the purchase of Bonds or Parity Bonds may be paid irom the amount reserved in the Intcrest Account
of the Special T'ax Fund i'or the payment of'interest on the next following Interest Payment Date.
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 Reyuircment. If funded,
the amounts in the Reserve Account shall be applied as follows:
(a) Except as otherwise provided in this Section 3.6, moneys in the Reserve Account
shall be used solcly for the purpose of paying the principal of, including Sinking Fund Payments, and
intcrest on the Bonds and any Parity Bonds when due in thc event that the moneys in the Interest
Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in thc
Rcdemption Account of the Special Tax Fund arc insufficient to make a Sinking Fund Payment whcn
due and for the puipose of making any required transfer to the Rebate Fund pursuant to Section 3.7
hereof upon written dir•ection i'rom the District. [f 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 insufticient to make transfers to the Rebate Fund when rcquired, the Trustec
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shall withdraw from thc Reserve Account for deposit in the Intci•est Account, thc Principal Account
or the Redemption Account of the Special Tax Fund or the Rebate Fund, as applicable, moncys
necessary for such purposes.
(b) Whenevcr moneys arc withdrawn from the Reseivc Account, atter making the
required translers 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 clects to apply to such purpose, the amount needed to restorc the amount of
such Reserve Account to the Rescrve Requirement. Moneys in the Special Tax Fund shall bc
dccined available far transfer to thc Reserve Account only if thc Trustec determincs that such
amounts will not be necdcd to makc the deposits required to be made to thc Administr-ative Expcnses
Account, the Interest Account, the Principal Account or the Redemption Account of�the Special Tax
Fund on or before the next October 1. If�amounts in the Special Tax Fund togethcr with any other
amounts transferred to rcplenish the Reserve Account are inadequatc to restore the Reservc Account
to the Reserve Requiremcnt, then the District shall include the amount necessary fully to restore the
Reserve Account to the Reservc Rcquirement in the next annual Special Tax levy to the extent oi�the
maximu►n permitted Special Tax rates.
(c) In connection with a redemption of Bonds pursuant to Section 4.1(a) or(c) or Pai•ity
Bonds in accordance with any Supplemental Indenture, or a partial defcasance of Bonds or Parity
Bonds in accordance with Section 10.1 hercof, amounts in the Reserve Account may be applied to
such redemption or partial defcasance 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 Certiticate 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
Scction 10.1(c) to partially defease Bonds, and the Trustee shall inake such transter on the applicablc
redernption or defeasance date, subject to the limitation in the preceding sentence.
(d) To the extent that the Rescrve Account is at the Rescrve Requircment as of the tirst
day of the tinal Bond Year for the Bonds in accordance herewith or, if applicable, with any
Supplemental Indenture for an issue of Parity Bonds, amounts in the Rcserve Account may be
applied to pay the principal of and intei•est duc on the Bonds and Parity Bonds, as applicable, in the
final Bond Ycar for such issue.
(e) Moneys in the Reserve Account in excess of ihe Reserve Requirement not transfened
in accordance with the preceding provisions of this section shall be withdrawn from the Rescrve
Account on the Business Day before each April 1 and October 1, and such moneys shall be
transterred and deposited into the Interest Account of thc Special Tax Fund; provided, however, to
the cxtent that, as of a date ninety(90) days prior to the next occurring Interest Payment Date, the
amount on deposit in the Rcserve Account is cqual to or gi•cater than the aggregate remaining
principal paymcnts to be paid on thc Bonds and any Parity Bonds, any and all amounts in the Reserve
Account may be applied to ef�fect a redemption of all Outstanding Bonds pursuant to Section 4.1(a)
and any Outstanding Parity Bonds in accordance with any Supplemental Indenture. The District
shall set forth in a Cci-tificate of an Authorized Representative the amount in the Reserve Account to
be transferred to the Redemption Account on a redempticm date or to be transierred pursuant to
Section 10.1(c) to defease Bonds, and the Trustee shall make such transter on the applicable
rcdemption or defcasance datc.
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Secti�n 3.7. Rebatc Fund.
(a) The Trustee shall establish and mai►itain a fund separate fi•om any other fund
established and maintained hereundcr designated as the Rebate Fund and shall establish a separate
Rebate Accc�unt and Alternative Penalty Account therein. All money at any time deposited in the
Rebate Account or the Alternative Penalty Account of�thc Rebate Fund shall be held by the Ttustee
in trust, tor payment to the United States Treasury. A separate subaccount of the Rebate Account
and the Alternative Pcnalty Account shall be established for the Bonds and each issuc of Parity
Bonds the interest on which is excluded ti•om gross income for �edcral income tax pui-poses. All
amounts on deposit in the Rebate Fund with respect to the Bonds or an issuc 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 thc Bonds and Parity Bonds will not be adversely affected if such requirements
are not satisfied.
(1) Rebate Account. The following reyuirements shall be satisfied with respcct
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 accordancc
with Section 148(�(2) of ihe Codc and Section 1.148-3 oC the Rcbate Regulations (taking
into account any applicable exceptions with respect to the computation oCthe rebatable
arbitrage described in the Tax Certificate for each issue(e.�, the temporary investments
exceptions of Section 148(�(4)(B) and (C) of the Code), and taking into account whether the
election pursuant to Section 148(�(4)(C)(vii) of the Code (the "1'/�% 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 (thc "Rebatable
Arbitrage"). The District shall obtain expert advice as to the amount of the Rebatable
Arbitragc to comply with this Scction.
(ii) Annual Transfcr. Within 55 days of the end of each Bond Ycar for
which Rebatable Arbitrage must be calculated as required by the Tax Certificate for cach
issue, upon the written direction of an Authorized Representative of the District, an amount
shall be deposited to each subaccounl 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 bchalCof the
District in accordance with (i) of this Subscction (a)(1) with respect to the Bonds and each
issue of�Parity Bonds to which this Section 3.7 is applicablc. In the event that immediately
following any transfer required by the previous sentence, or the date on which the District
detennines that no transfer is requircd for such Bond Year, the amount then on deposit to thc
credit of the applicablc subaccount of thc Rebate Account exceeds the amount rcquired to be
on deposit therein, upon written instr•uctions 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 cxcess to the Special Tax Fund.
(iii) PaYnent to the Treasury. The Trustee shall pay, as directcd in writing
by an Authorizcd Representative of the District, to the United States Treasury, out of
amounts in each subaccount of the Rebate Account,
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(X) not later than 60 days after the end of(A) the fifth Bond Year for the
Bonds and cach issuc of Parity Bonds to which this Section 3.7 is applicable, and (B) each
applicable fifth Bond Year thereaftcr, an am�unt cqual to at least 90% of the Rebatable
Arbitrage calculated as of thc end of such Bond Ycar for the Bonds and cach issue of Parity
Bonds, as applicable; and
(Y) not later than 60 days after the paymcnt or redemption c�f all oi�thc
Bonds or an issuc of Parity Bonds, as applicable, an a►nount cyual to 100% oi'the Rebatable
Arbitrage calculated as�f the end of such applicable Bond Year, and any income attributable
to the Rebatable Arbitrage, computed in accordance with Section 148(� �f the Code.
In the event that, prior to the time ot'any payment required to bc ►nade Crom thc
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 rcceived 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 Revenuc Service Center,
Ogden, Utah 84201 on or before the date on which such payment is due, and shall be
accompanied by Internal Revenue Service Foi-m 8038-T, or shall be made in such othei•
►nanner as provided under the Codc.
(2) Alternative Penalty Account.
(i) Six-Month Computation. If the 1'/�% Penalty has been ciccted for the
Bonds or an issue of Parity Bonds, within 85 days of each particular Six-Month Period, thc
District shall determine or cause to be determined whether the 1'/z% 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 detcrminations.
(ii) Six-Month Transfer. Within 85 days of the close of each Six-Month
Period, the Trustee, at the written direction of an Authori•r.ed Representative of the District,
shall deposit an amount in the appropriate subaccounts of the Alternativc Penalty Account
. from any source of funds held by the Trustee pursuant to this Indenture and designated by thc
District in such written directions or provided to it by the District, if and to thc cxtcnt
required, so that the balance in each subaccount of the Alternative Penalty Account equals
the amount of 1%z% Penalty due and payable to the United States Treasury determined as
provided in Subsection (a)(2)(i) above. In the cvent that iin►nediately following any transfer
provided for in the previous scntence, or the date on which thc District detcrmines that no
transfer is required for such Bond Ycar, 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 Subscction(iii) below, the Trustee, at the written direction oCan
Authori�ed Representative of the District, may withdraw thc cxcess from thc applicable
subaccount of the Alternative Penalty Account and credit the exccss 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 o('
amounts in a subaccount of the Alternative Penalty Account, not later than 90 days after the
close of each Six-Month Period the 1'/z% 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
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the C�dc. In thc cvent that. prior to the timc of any paymcnt requircd to bc made li-om a
subaccount of thc Alternative Penalty Account, the amount in such subaccount is n�t
sufficient to make such payment when such payment is due, thc District shall calculate thc
amount of such deiiciency and direct the Trustcc, in wi-iting, to deposit an amount cqual to
such dcficiency into such subaccount of the Alternative Penalty Account from any funds held
by the Trustee pursuant to this lndcnture 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 Intcrnal Revcnue Seivicc, Ogden, Utah 84201
on or before the date on which such payment is duc, and shall be accompanied by Intcrnal
Revenue Scrvice 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 thc
Rebate Fund with respect to the Bonds or an issuc 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 Trustec at the written direction of the District and utilizcd in
any manner by the District.
(c) Survival of Defeasance and Final Pavment. Notwithstanding anything in this Section
or this Indenture to the contrary, the obligation to comply with the requiremcnts of this Section shall
survive the defcasance and final payment of the Bonds and any Parity Bonds with respect to which
an Account has bccn created in the Rebate Fund.
(d) Amendment Without Consent of Owners. This Section 3.7 may bc deleted or
amended in any manner without the consent ot'the Owners, provided that prior to such event there is
delivered to the District an opinion of Bond Counsel to the cffect that such delction 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.
The Trustee shall not be responsible for calculating rebatablc arbitrage or for the adcquacy 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 require►nents.
Section 3.8. Surplus Fund. Aiter making the transfers required by Sections 3.3, 3.4, 3.5,
3.6 and 3.7 hereof, as soon as practicable after each October 1, and in any event prior to each
November I, the Trustee shall transfer all remaining amounts in the Special Tax Fund to thc Surplus
Fund, unless on or prior to such date, it has received a Certificate of an Authori�ed Representative
directing that ccrtain amounts bc rctained in thc Special Tax Fund bccause 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 depositcd 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 Rcdemption 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 moncys in the Special Tax
Fund and the Reserve Account ol�the Special Tax Fund are insul'licient therefor, (ii) to the Reserve
Account in order to replenish the Reserve Account to the Resetve Requirement, (iii) to the
Administrative Expenses Account of the Special Tax Fund to pay Administrativc Expenses to thc
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extcnt that thc amounts c�n dcposit in thc Administrative Expenses Account of the Special Tax Fund
arc insufficient to pay Administrative Expenses, or(iv) i�r-any other lawfu] purp�se ofthe DisU�ict.
The amounts in the Surplus Fund are not pledged to thc 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 Tiustee in a Ccrtificate of an
Authorized Representative and the Trustcc will segrcgate such amount into a separate subaccount
and the ►noneys on deposit in such subaccount of the Surplus Funci shall be invested at the written
direction of the District in Authorized Investments the interest on which is excludable (rom gross
income under Section 103 of thc Code (other than bonds the interest on which is a tax preference
item for purposes of computing the alternative mini►num tax of individuals and corporations under
the Code) or in Authorizcd Investments at a yield not in excess of the yield on the issuc of Bonds or
Parity Bonds to which such amounts are to be applicd, 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�r any Parity Bonds which were issued on a tax-excmpt
basis for federal income tax purposes.
Section 3.9. Costs of Issuance Fund.
The moneys in the Costs of Issuance Fund shall be disbursed by the Trustee pursuant to a
Certificate of an Authori�ed Representative of the District, and any balance therein shall be
transferrcd by the Trustee to thc Special Tax Fund 180 days after the Delivery Date of the Bonds or
Parity Bonds, as applicable.
Section 3.10. Investments. Moneys held in any of the Funds, Accounts, and Subaccounts
under this Indenture shall be invested at the written dircction of the District in accordance with the
limitations set forth below only in Authori�ed Investments which shall be deemed at all times to bc a
part of such Funds, Accounts and Subaccounts. Any loss resulting from such Authorized
Investinents shall be crcdited 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 Collows: (i) investment earnings on all amounts deposited in the Costs of Issuancc Fund,
the Special Tax Fund, the Surplus Fund and the Rebate Fund and each Account and Subaccount
therein (other than the Reservc Account of the Special Tax Fund) shall be depositcd in those
respective Funds, Accounis, and Subaccounts, and (ii) investrnent earninbs 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 Authori�ed Invcstments subject to the
following restrictions:
(a) Moneys in the Costs of Issuance Fund shall be invested in Authorized Investments
which will by their tenns mature, or in the case of'an Investment Agreement are available wi�hout
pcnalty, as close as practicable to the date the District estimates the moneys represented by the
particular investment will be needed for withdrawal from the Costs of Issuance Fund.
(b) Moneys in the Interest Account, thc 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 datcs so as to ensw•c thc paymcnt ol'principal �l; prcmium, ifany, and intcrest on the Bonds and
any Parity Ronds as the same bec<�me due.
(c) Moncys in the Rcseive Account of the Special Tax Fund may be invested only in
Authori�ed Investments which, takcn together, have a weighted average maturity nc�t in excess of�
five ycars; provided that such amounts may be invested in an Investment Agreement to the later of
the final matuc•ity oi'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 Invcstment of amounts in the Rescrve 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 issuc ol�
Parity Bonds, as applicablc.
(d) Moneys in the Rebate Fund shall be invested only in Authorized lnvestments 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 Authori�ed 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 thcreof.
The Trustee shall sell, or present for redemption, any Authorized Investment whenever-it
may be necessary to do so in order to provide moncys 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 Rcserve Account shall be
valued at the market value thereol�at Icast semiannually on or bef'ore cach [nterest Payment Date. In
making any valuations hereunder, the Trustec ►nay utilize such computerized sccurities pricing
services as may be available to it, including, without li►nitation, those available through its regular
accounting system, and conclusively i•cly thereon. Notwithstanding anything herein to the contrary,
the Trustee shall not be responsible for any loss f'rom investments, sales or transfcrs undertaken in
accordance with thc provisions of this Indenturc.
The Trustee or an aftiliate may act as principal or agent in the making or disposing of any
investment and shall be entiticd to its customary fee for such invcstment. The Trustee may scll at the
best market price obtainable, or present for redemption, any Authorized Investment so purchased
whenever it shall be necessary to provide moneys to mcet any required payment, transfer, withdrawal
or disbursement from the Cund or account to which such Authorized Investment is credited, and,
subjcct to the provisions of Scction 7.4, the Trustee shall not be liable or responsible for any loss
resulting from such investment. For investmcnt purposes, the Trustee may comminglc thc f'unds and
accounts established hcreunder, but shall account for each separately.
The District acknowledges that, to the extent regulations of the Comptroller of the Currency
or other applicable regulatory cntity grant the District the right to reccive brokerage confiimations oi'
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 Trustec hereunder.
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ARTICLE I V
REDEMPTI(�N OF f30NDS AND PARITY BONDS
Section 4.1. Redemption of Bonds.
(a) Optional Redemption.
The Bonds maturing on or bcfore October 1, 20 are not subject to call and redemption
prior to ►naturity. The Bonds maturing on or afrcr October 1, 20 shall be subject to call and
redemption prior to maturity and ►nay bc redeemcd, at the option of the District, Crom any source of
(unds on any Intei•est Payment Date in whole, or in part, from such maturities as are selccted by thc
District and by lot within a maturity, at thc following redemption prices expresscd as a percentage of
the principal amount to be redeemed, together with accrued intcrest to the date of'redemption:
Redemption Dates Redcmption Prices
Octobcr 1, 20_and April 1, 20_ %
Octobcr I, 20_ and April I, 20_ _
October I, 20_ and Interest Paymcnt
Dates thereatter
In thc event the District clects 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 redeeined. The notice to thc Trustee shall be given at
least forty-five (45) but no more than ninety(90) days prior to the redemption date, or by such latcr
date as is acccptable to the Trustee, in its sole discretion.
(b) Mandatory Sinkin�l Fund Redemption.
(i) The Term Bonds maturing on October 1, 20_ and October 1, 20_
shall be callcd before maturity and redcemed, from the Sinking Fund Payments that have been
deposited into the Redemption Account, on October 1, 20_ and October 1, 20 , respectively, and
on each October 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 ther•eof, plus accrued interest to the redemption date, without premium, as follows:
BONDS MATURING OCT(�BER 1, 20
Redemption Date
(October 1) Principal Amount
$
(maturity)
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BONDS MATIIRING OCTnBER l, 20
Redemption Date
(nctober 1) Principal Amount
�
(maturity)
(ii) Purchase of Term Bonds in Licu of Redemption. If during the Fiscal Year
immediately preceding one of the redemption dates specified above the District purchases Tenn
Bonds, at least forty-five (45) days prior to the redemption date the District shall notify the Trustee as
to thc principal amount purchascd and thc 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 Paymcnt for thc applicablc maturity of the Term Bonds so purchased. All Term Bonds
purchased pursuant to this subsection shall be cancelled pursuant to Section 1 1.1 hereof.
In the event of a partial optional rcdcmption or extraordinary redemption of the Tern�
Bonds, each of thc rcmaining Sinking Fund Payments for such?erm Bonds, as described above, will
bc reduced, as nearly as practicable, on a pro rata basis, in intcgral multiples of$5,000.
(c) Extraordinary Rcdcmption.
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata
basis among maturities, on any [nterest 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
October 1, 20_ and April 1, 20_ _%
October 1, 20_ and April 1, 2U_ _
October 1, 20_ and April 1, 20_ _
October 1, 20 and Interest Paytncnt
Dates 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 lcast forty-fivc (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 Supple►nental
Indcnture.
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 r•edeemed, the portion of any Bond or Parity Bond
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of a denomination of morc than �5,000 to bc redcemcd 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, thc
Trustee shall treat such f3onds or Parity Bonds, as applicablc, as representing that number of Bonds
or Parity Bonds of$5,000 denominations which is obtaincd by dividing thc 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 Supplcmental Indenture for such Parity
Bonds. The Trustee shall promptly notify the District in writing of�the Bonds or Parity Bonds, �r
portions thcreof; selected for redemption.
Section 4.3. Notice of Redemption. When Bonds or Parity Bonds are duc for redcmption
under Section 4.1 above or under anothcr i•edemption provision set forth in a Supplemental Indenturc
relating to any Parity Bonds, the Trustee shall give notice, in the namc of the District, of thc
redemption of such Bonds or Parity Bonds; provided, however, that a notice ot�a redemption to bc
made from other than from Sinking Fund Payments shall be conditioned on there being on deposit on
the redcmption date sufficient moncy to pay thc redemption price of the Bonds or Parity Bonds to be
redcemed. Such notice of redcmption 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, cxcept
that wherc 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, ihe bond numbers of such issue need not
be specified; (b) state the datc fixed for redemption and surrender of the Bonds or Parity Bonds to bc
redccmed; (c) statc the redemption pricc; (d) state the place or places whcre the Bonds or Parity
Bonds are to bc 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; (t) statc 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) statc any other descriptive infornlation needed to identify accurately
the Bonds or Parity Bonds being redeemed as shall be specified by thc 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 i-edemption, the principal thereof, together with any
premium, and interest accrued to the redcmption datc, and that from and after such date, interest
thcreon shall cease to accrue and be payable. At lcast thirty(30) days but no more than forty-five
(45) days prior to the redecnption date, thc Trustee shall mail a copy of such notice,by first class
mail, postage prepaid, to the respective Owners thcreof'at their addresses appearing on the Bond
Register, and to the original purchaser of the Bonds or Parity Bonds, as applicable. Thc actual
receipt by the Owner of�any Bond or Parity Bond or the original purchaser of�any Bond or Parity
Bond of noticc of such redemption shall not be a condition precedent to redemption, and neither the
failure to receive nor any defect in such noticc shall affect the validity of the proceedings for the
redemption of�such Bonds or Parity Bonds, or the cessation of interest on thc redemption datc. A
certificate by the Trustee that notice of such redemption has been given as herein providcd shall be
conclusive as against all parties and thc Owner shall not bc entitled to show that he or she failcd to
receivc 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 f'ailurc to givc all or any portion of such further
notice shall in any manner defeat thc effectiveness of a call for redemption if notice thereof is given
as above prescribed.
Each furthcr notice of rcdcmption shall be scnt not laler than thc date that notice or
redemption is mailed to the Bondowners pur•suant to the first paragraph of this Section by registered
or certiticd mail or overnight delivery service to the Depository and to any other registered securities
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depositories then in thc business of holding substantial amounts �f obligations of typcs comrrising
the Bondti and Parity Bonds as dctcrmined by Trustce and ro one or more national inforniation
services that the Trustee deterniines are then in the business �f disseminating notice �f redernpticm of
obligations such as thc E3onds and Parity Bonds:
Upon the payment of�thc redemption price of any Bonds and Par•ity Bonds being redecmed,
each check or other transfcr of funds issued for such purpose shall to the extent practicablc bear the
CUSIP number identifying, by issue and maturity, the Bonds and Parity Bonds being redcemed with
the proceeds of such check or other iransi'er.
Section 4.4. Partial Redemption of Bonds or Parity Bonds. Upon surrendcr of any
Bond or Parity Bond to be i-edeemed in part only, the District shall execute and the T�ustee shall
authenticate and deliver to the Bondowner, at the expense of'thc District, a new Bond or Bonds or a
new Parity Bond or Parity Bonds of authoriied denoininations eyual in aggregate principal amount to
thc unredecmed portion of the Bonds surrendcred, with thc samc interest rate and the samc maturity
or, in the case of surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to thc
Corcgoing 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 madc availablc for that purpose and being available thcref'or 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, bccome due and payable at the redemption pricc
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 thc Parity Bonds, or portions thereof
so designated for redemption shall be decmed to be no longer Outstanding and such Bonds or
Parity Bonds, or portions thercof, shall cease to bcar further interest; and
(d) as oi�the date fixed f��r redeinption 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 thc redemption pricc and intcrest 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
hercunder to the Bonds and any Parity Bonds abainst all claims and demands of all persons.
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Section 5.2. Covenants. So long as any�f the Bonds or Parity Bonds issued hcreunder
are Outstanding and unpaid, the District makes the foll�wing covenants with the f3ondo�vners under
thc provisions of the Act and this Indenture (t� bc performcd by the District or its proper�fficci•s,
agents or employees), which covenants ar-c necessaiy and desirable to secure the Bonds and Parity
Bonds and tend to make thcm more marketablc; prc�vided, howevcr, that said covenants do not
r•equire the District to cxpend any funds or moncys other than the Special Taxes and other amounts
deposited to the Special Tax Fund:
(a) Punctual Pavment; A�ainst Encumbrances. The District covenants ihat it will receive
all Spccial Taxes in trust for the Owners and will instruct thc 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
Spccial Taxes shall be disbursed, allocatcd and applied solely to the uses and purposes set forth
herein, and shall be accounted for scparately and apart from all other money, funds, accounts or othec-
resources of the District.
The District covenanis that it will duly and punctually pay or cause to be paid the
pr•incipal of and interest on every Bond and Parity B�nd issued hereunder, togcther with the
prcmium, if any, thereon on the date, at the place and in thc manner set forth in the Bonds and the
Parity Bonds and in accor•dance with this Indenturc to the extent that Net Taxes and other amounts
pledged hereunder arc available therefor, and that the payments into the Funds and Accounts crcated
hereundcr will bc inade, all in strict conformity with the tcrms 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 Supplemcntal lndentures and of the Bonds and any Parity
Bonds issued hereunder.
The District will not mortgage or otherwise encumber, pledge or place any chargc
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 indebtedncss
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. The legislative body of the District represents it has levied thc
Special Tax for Fiscal Year 2006-07 pursuant to the Rate and Method, and so long as any Bonds o►•
Parity Bonds issued under this Indcnture are Outstanding, but subject to the Rate and Method, the
lcgislative body of the District covenants it will continue to levy the Special Tax in an amount eyual
to the Special Tax Require►nent (as detined in the Rate and Method), which includes, but is not
limited to, amounts sufficient, togcther with othcr 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 duc, (2) the Administrative Expenses, and (3) any amounts required to rcplenish the Rescrve
Account of the Special Tax Fund to the Rcserve Requirement. Thc 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 Actions. The District covenants for the benetit of the
Owners of the Bonds and any Parity Bonds that it (i) will commence foreclosure actions against
parcels with at lcast four(4) installments of delinyuent Special Taxes which total in the aggregate at
35
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Icast �6,000 by the October 1 following the close of each Fiscal Year in which such Spccial Taxes
were due; and (ii) will commence foreclosurc actions against all parcels with delinquent Special
��axes by the nctober 1 following the close of each Fiscal Year in which it receives Special Taxes in
an amount which is Icss than 95% of the total Specia( Tax levied and the amount on deposit in the
Reserve Account is at less than the Rescrve Requirement, and (iii) will diligently pursue such
toreclosure actions until the delinyuent Special Taxes are paid, and in no event shall such foreclosurc
actions excecd thc time periods specif ied in Section 53356.1 of the Act.
The District covenants ihat it will deposit the net proceeds of�any foreclosure in the
Special Tax Fund and will apply such proceeds remaining aCter the payinent of Administrative
Expenses to make current payments of�principal and interest on thc Bonds and any Parity Bonds, to
bring the amount on deposit in the Reservc Account up to the Reservc 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 abovc;provided, however, thc 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 penaltics paid in excess of the amount advanced by the District shall be deposited in thc
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 dcposits
to the Special Tax Fund. Such books of records and accounts shall at all times during business hours
be subject to the inspection of thc Trustee or of thc Owners of not less than 10% of the principal
amount of the Bonds or the Owners of not less than l0% of�any issue of Parity Bonds then
nutstandinb or their representatives authorized in writing.
(c) Federal Tax Covenants. Notwithstanding any other provision of this [ndenture,
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-cxempt basis for federal income tax purposes will not be adversely
affected for ['ederal income tax purposes, the District covenants to comply with all applicable
requirements of the Code necessary to preserve such cxclusion from gross income and specifically
covenants, without limiting the gencrality of�the foregoing, as follows:
(1) The District shall not take any action, or fail to take any action, if any such
action or failure to take action would adversely affect the Tax-excmpt status of intcrest on the
Bonds under Section 103(a) of the Code or cause interest on the Bonds to be an item of tax
preference for purposes of the federal alternative ininimum tax imposed on individuals and
corporations under Section 55 of thc Code.
(2) In furtherance of the forcgoing tax covenant, the District shall comply with
the provisions of the Tax Certircate, which is incorporated herein as if fully set forth herein.
These covenants shall survive payment in full or defeasance of thc Bonds.
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(t) Reduction of Maximum Special "raxes. The District hereby finds and dctennines
that, historically, delinyucncics in the payment of spe�ial taxes authorired pursuant to the Act in
community facilitics disU•icts in Southern Calif�rnia have trom time to time becn at levcis reyuiring
the levy of special taxes ac the maximum authorized rates in ordcr to makc timely payment of
principal �f and interest on the outstanding indebtedness of such cotnmunity facilities districts. For
this reason, the District hereby determines that a reduction in the maximum Special Tax rates
authorized to bc levied on parcels in the Disti•ict bclow the levels pr•ovided in this Section 5.2(�
would interfere with the tiinely retirement of the Bonds and Parity Bonds. The District determincs it
to be necessary in order to preserve the security for the Bonds and Parity Bonds to covcnant, and, to
the maximum extent that the law pennits it to do so, the District hcreby does covenant, that it shall
not initiate proccedings to reduce the maximum Special Tax ratcs ior the District, unless, in
connection therewith, (i) the District reccives a certiticate from one or more Independent Financial
Consultants which, when taken together, ccrtify that, on the basis of the parcels of land and
improvemenis existing in the District as of the July 1 preceding the rcduction, the maximum amount
of the Special Tax which may be levied on then existing Developed Property in cach Bond Year for
any Bonds and Parity Bonds Outstanding will equal at least the sum of the estimated Administrative
Expenses and 1 l 0% of ihe gross debt service in cach Bond Year on all Bonds and Parity Bonds to
remain Outstanding after the reduction is approved, (ii) thc 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) thc District is not dclinquent in the paycnent oI�the principal of or interest on ihe
Bonds or any Parity Bonds. For purposes of estimating Administrativc Expenses for thc foregoinb
calculation, the Independent Financial Consultants shall compute the Administrative Expenses for
the current Fiscal Ycar and cscalate that amount by two percent (2%) in each subseyucnt Fiscal Year.
(g) Covenants to Defend. The District covenants that, in the event that any initiativc is
adopted by the qualificd electors in the District which purports to reduce the maximum Special Tax
below the levels specified in Section 5.2(� above or to limit the powcr of the District to levy the
Special Taxes for the purposes set forth in Section 5.2(b) above, it will commencc and pursue legal
action in order to preserve its ability to comply with such covenants.
(h) Limitation on Ri�ht 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 paymcnt 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
wili not result in ihe District having insul�ticient Special Tax revenues to pay the principal of and
interest on the Bonds and Parity Bonds when due.
(i} Continuin�Disclosure. The District covenants to comply with 1he terms of the
Continuing Disclosure Agreement and with the terms of any agreement executed by thc 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 assuranccs as may be reasonably necessary or proper to carry out
the intention or to facilitatc the perfonnance of this Resolution and for the better assuring and
confirming unto the nwners of�the Bonds and any Parity Bonds of the rights and benefits providcd in
this Resolution.
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ART'ICI_E VI
AMENDMENTS '1�0 INDENTURE
Scction 6.1. Supplemcntal Indentures or Orders Not Requiring Bondowner Consent.
The District may frc�m time to time, and at any limc, with the written conscnt of the Insurer(as long
as the Insurance Policy is in full force and eflect) but without notice to or consent of any�f the
Bondowners, adopt Supplemental Indentures for any o(�the tollowing purposes:
(a) to cure any ambiguity, to con•ect or supplcment any provisions herein which may be
inconsistent with any other provision herein, or to rnake any other provision with respect to matter•s
oi-questions arising under this Indenture or in any additional resolution or ordcr, provided that such
action is not matcrially adverse to the interests of'the Bondowners;
(b) to add to the covenants and agrecments of and thc limitations and the restrictions
upon the District contained in this Indenture, other covenants, agreements, limitations and restrictions
to be observed by thc 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 issucd, subject to and in accordance with the
provisions ofthis Indenture;
(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 inay be permitted by said act or similar federal statute, and which
shall not materially adversely affect the interests of thc Owners of the Bonds or any Parity Bonds
then Outstanding;
(e) to modify, altcr 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 cach 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 intcrest due in each con-esponding future Bond Year with respcct to
the Bonds and Parity Bonds Outstandin�as of the date of such amendment;or
(n to modify, alter, amend or supplement this Indenture in any other respect which is not
materially adverse to the Bondowners.
Scction 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent.
Exclusivc of the Supplemental Indentures described in Section 6.1 and with the written consent of
the Insurer(as long as the Insurance Policy is in full force and cfT'ect), the Owners of not less than a
►najority in aggregate principal amount of�the Bonds and Parity Bonds Outstandin�;shall have the
right to consent to and approve the adoption by the District of�such Supplemental Indentures as shall
be deemcd neccssary or desirable by the District for the purpose of waiving, ►nodifying, altering,
amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this
Indenture; provided, however, that nothing hcrein shall pennit, or be construed as permitting, (a) an
cxtension 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 oi; or redemption premium on, any Bond or Parity
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Bond or the ratc of interest thereon, (c) a prcference or priority of�any Bond or Pai-ity Bond over any
other Bond or Parity Bond, or(d) a rcduction in thc aggregate principal amount of the Bonds and
Parity Bonds the Owners of which are required to cc�nsent to such Supplementa) Indenture, without
thc conscnt of�thc Owncrs of�all Bonds and Parity Bonds thcn Outstanding.
If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to
the terms oCthis Section shall require the consent of'the Bondownei-s, the District shal! so notify the
Trustee and shall delivcr to the Trustee a copy of the proposed Supplemental Indenture. The Trustce
shall, at the expcnse of the District, cause notice of'the proposed Supplemental Indentui•e to be
mailed, by first class mail, postagc prepaid, to all Bondownei-s at their addresses as thcy appear in the
Bond Register. Such notice shall brielly set forth thc nature oi�the proposed Supplemental Indenturc
and shall state that a copy thereof is on file at thc of'fice of the Trustee for inspection by all
Bondowners. The failure ol�any Bondowners to rcceive such noticc 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 insttuments purporting tc� be executed by the Owners oi�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 [ndenture dcscribed in such
notice, and shall specifically consent to and approve the adoption thereof by the District substantially
in the form of the copy refen•ed to in such notice as on file with the Trustee, such proposed
Supplemental Indcnture, when duly adopted by the District, shall thereafter become a part of the
proceedings for the issuance of thc Bonds and any Parity Bonds. In determinin� whether the Owners
of a majority of the aggregate principal amount of the Bonds and Parity Bonds have consented to the
adoption of any Supplemental [ndenture, 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 detennination.
Upon the adoption of any Supplcmental Indenture and the receipt of consent to any such
Supplemental Indenture from the Owners of not less than a majority in aggregatc 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 bc deemed to be, modified and amended
in accordance therewith, and the respective rights, duties and obligations under this Indenturc of the
District and all Owners of Outstanding Bonds and Parity Bonds shall thereafter be detennined,
exerciscd and enforccd hereunder, subject in all respects to such modifications and amendments.
Section 6.3. Notation of Bonds or Parity Bonds; Dclivery 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 fonn 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 Trustec or at such additional offices as the Trustec cnay select and
designate for that purpose, a suitable notation as t� such action shall be made on such Bonds or Parity
Bonds. If the Disirict shall so detennine, 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 deinand of the Owner of any Outstanding Bond or Parity Bond at such effective date
such new Bonds or Parity Bonds shall be exchangcd at the otlice of the Trustee�r at such additional
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offices as the Trustee inay select and designate fc�r that pur�osc, without cost to each nwner c►f
Outstanding Bonds�r Parity Bonds, upon su►-render of such Outstandin� Bonds or Parity Bonds.
ARTICLE VIl
TRUSTEE
Scction 7.1. Trustee. Wells Fac•go Bank, National Association, shall be the Trustcc 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 rcyuirements of
Section 7.2 below for the purpose of rcceiving all money which the District is reyuircd to deposit
with the Trustee hcreunder and to allocate, use and apply thc same as provided in this Indenture.
The Trustee is hereby authorized to and shall mail by lirst class mail, postage prepaid, or wire
transfer in accordance with Section 2.5 above, intcrest payments to the Bondowners, to select Bonds
and Parity Bonds i'or redcmption, 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
samc are duly prescnted 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 Indcnture, and to
provide for the authcntication of�Bonds and Parity Bonds, and shall perform all othcr 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 cancclled by it.
The Trustee is hereby authorized to redeem thc Bonds and Parity Bonds when duly prescnted
for payment at maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds and
Parity Bonds upon paymcnt thereof in accordancc with the provisions of Section 1 I.1 hereof:
The District shall from time to time, subject to any agreement bctween the District and thc
Trustee then in force, pay to the Trustcc compensation for iis services, reimburse thc Trustee for all
its advances and expenditures, including, but not limited to, advances to and fees and expenses of
independent accountants or counsel employcd by it in the exercise and performance of'its powers and
duties hereunder, and indemnify and save the Trustce, its officers, directors, cmployees and agents,
harmless against costs, claims, expenscs and liabilities, including, without limitation, Cees and
expenses of its attorneys, not arisinb from its own negligence or willful misconduct which it may
incur in the cxcrcise and performance of its powers and dutics hereunder. The foregoing obligation
of the District to indemnify the Trustec shall survivc the removal or resignation of the Trustee or the
discharge oi�the Bonds.
Section 7.2. Removal of Trustee. The District may at any time at its sole discretion
remove thc Trustee initially appointed, and any successor thereto, by delivering to the Trustee a
written notice of its decision to remove thc Trustee and may appoint a successor or successors
thereto; provided that any such successor shall be a bank or trust company having a coinbined capital
(exclusivc of borrowed capital) and surplus of at least �,100,000,000, and subject to supervision or
cxamination 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 appointcd as a successor
publishes a report of condition at least annually, pursuant to law or to the rcquirements of�any
supervising or examining authority above referred to, then for the purposes of�this scction the
combined capital and surplus of such bank �r trust company shall be deemed to be its combined
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capital and surplus as set forth in its inost recent repc�ri of condition so published. Any rcmoval �f
the Trustee and appointment ofa successor Trustee shall become effective only upon acceptance o1'
appointment by the successor Trustee and notice beieig sent by thc successor Trustee to the
B�ndowncrs of the successor Trustce's idcntity and address.
Section 7.3. Resignation of Trustee. The Trustee may at any time resign by givinb
wr•itten notice to the District and by giving to thc Owners notice ol�such resignation, which noticc
shall be mailed to the Owners at their addresses appearing in the registi•ation books in the officc ol'
the Trustee. Upon receiving such noiice of resignation, thc District shall promptly appoint a
successor Trustee satisfying the critei•ia in Section 7.2 abovc by an instrument in writing. Any
resignation or removal of the Trustee and appointment of a successor Trustee shall become eCfective
only upon acccptancc of appointment by thc succcssor Trustcc.
Section 7.4. Liability of Trustec. The recitais of fact and all promiscs, 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
[ndenture, 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 certiticate of authentication assigncd to or imposed upon the Trustee. The
Trustcc shall be under no responsibility or duty with respect to thc 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.
The Trustee shall be responsible for the performance of the duties of the Trustee expressly set
forth in this Indcnture, and no implied duties or obligations shall be read into this Indenture against
the T'rustee.
The Trustce 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 matcrial prepared or distributed with respect to the Bonds.
Before taking any action under Article VIII hereof the Trustec may rcquire indemnity
satisfactory to the Trustec be Curnished from any expcnses and to protcct it against any liability it
may incun c�s�eundcr.
The Trustee shall not be liable for any action taken or not takcn by it in accordance with thc
direction of the (�wners of at least twenty-live percent (25%) (or other percentage provided for
hcrein) in aggregate principal amount of�0utstanding Bonds relating to the cxercisc of any right,
power or re►nedy available to the Trustee.
The permissive right of�the Trustee to do things enumerated in this Indenture shall not be
const►ued as a duty.
The Trustee may becomc the owner or pledgee of Bonds with thc same rights it would have
if it wcrc not Trustcc.
The Trustee shall be protected in acting upon any notice, resolution, request, consent, order,
certificate, rcport, Bond, Parity Bond, facsimile transmission, electronic mail or other paper or
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document belicved by it to bc genuine and to have been signed or prescnted by the proper party or
parties. The"i'rustec may consult with counscl, who may be c�unsel to the District, with rcgard t�
legal questions, and the opinion of such counsel shall be full and complete authori�ation and
protection in respect of any acti�n takcn or suficred hereunder in good faith and in accoi•dance
therewith.
The Trustee shall not be bound to recognize any person as the Owncr oC a Bond or Parity
Bond unless and until such Bond or Parity Bonci is submitted for inspection, if required, and his title
thereto satisfactorily establishcd, if disputed.
Whenever in the administration of its dutics under this indenturc 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 evidcnce in respect thereof be herein specifically prescribed)
may, in the absence of bad faith on the part ot'the Trustee,bc deemed to be conclusively proved and
established by a written certificate of the District, and such certificate shall be full wairant to the
Trustee for any action taken or suffered under the provisions of this Indenturc upon thc faith thereot;
but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may
require such additicmal 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 depositcd with it hereundcr, or as to thc 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
otherwise incur any financial liability in thc performance of�any of�its duties hereunder, or in the
exercise of its rights or powers.
The Trustee shall not bc deemed to have knowledge of any default or cvent of default until an
of'ficer at the Trustee's corporate trust office responsible for the administration of its duties hereundcr
shall have actual knowledge thereof or the Trustce shall have receivcd 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 thc Trustee
�nay sell or transfer all or substantially all of its corposate 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
notwithstandinb.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
NOTWITHSTANDING ANYTHING TO THE CnNTRARY HEREIN, SO LONG AS THE
INSURANCE POLICY REMAINS IN EFFECT AND THE INSURER HAS NOT DEFAULTED
WITH RESPECT TO ITS PAYMENT OBLIGATIONS UNDER THE INSURANCE POLICY, ALL
PROVISIONS OF TI-�1S ARTICLE VI11 SHALL BE SUBJECT TO, AND QUALIFIED BY, THE
PROVISIONS SET FORTH IN ARTICLE IX, INCLUDING, WITHOUT LIMITATION, THE
INSURER'S RIGHT TO CONSENT TO ACCELERAT[ON OF THE BONDS, AND THE
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INSURER'S RIGHT TO CONSENT TO OR DiRECT CERTAIN D1STRiCT, TRUSTEE OR
BONDnWNER ACTIONS.
Section 8.1. Events of Default. Any one o►•more of the Collowing events shall constitute
an "event ol�default":
(a) default in the due and punctual paymcnt of the principal of or redemption
premium, if any, on any Bond or Parity Bond when and as thc same shall become duc and
payable, whether at inaturity as thercin expressed, by declaration or otherwise;
(b) delault in the due and punctual paymcnt 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), dcfault shall be tnade by the District in the
obscrvance of any of thc agreements, conditions or covcnants 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 Trustec agrees to give notice to the Owners as soon as practicable upon thc occurrencc of
an Evcnt of Default under(a) or(b) above and within thirty(30) days of the Trustce's knowledge of
an cvent of default under(c) above.
Section 8.2. Remedies of Owners. Upon the occurrence of an Eveni of Defaull, the
Trustee may pursue any available remedy at law or in equity to enforce the payment of the principal
c�f, 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 suil 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
thcir 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
thc rights of the Owners; or
(c) By a suit in equity to require the District and its mccnbers, 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 twcnty-five percent (25%) in aggregate principal arnount of Outstanding Bonds
and Parity Bonds and if indemnified to its satisfaction, the Trustec shall be obligated to exercise such
one or more of the ri�hts and powers confcrred by this Article 8, as thc Trustee, being advised by
counscl, shall deem most expedient in the interests oC thc Owners of the Bonds and Parity Bonds.
No rcmedy herein conferred upon or reserved to the Trustec or to thc Owners is intended to
bc exclusive of any othcr remedy. Every such remedy shall be cumulative and shall bc in addition to
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every other remedy given hereunder or now or hercafter existin�, at law or in equity c�r by statute or
c�therwise, and may be exercised witl�out exhausting and without regard tc� any other remedy
conferrcd by tl�e Act or any other law.
Section 8.3. Application of Revenues and Othcr Funds Aftcr Default. All a►nounts
receivcd by thc Trustec 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 bc applied by the Trustee in
the following order upon presentation of the several Bonds and Parity Bonds:
First, to the payment of the fecs, costs and cxpenses ol�thc Trustee in declaring such
Evcnt of Dcfault and in carrying out the provisions of this Article 8, including reasonable
compensation to its agents, attorneys and counscl, and to the payment of all other outstanding
fees and expenses of the Trustee; and
Sccond, to the payment of the whole amount of interest on and principal of the Bonds
and Pai•ity Bonds then due and unpaid, with intcrest on overdue installmcnts of principal and
interest to the extent permitted by law at the net effective rate ot'interest then bornc by the
Outstanding Bonds and Parity Bonds; provided, however, that in the event such amounts
shall bc insufficicnt to pay in full the full atnount of such interest and principal, thcn such
amounts shall be applied in the following order of priority:
(a) (irst to the payment of all installments of intcrest on the Bonds and Parity
Bcmds then due and unpaid on a pro rata basis based on the total amount thcn 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.
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 procecdings or
otherwise, pursuant to its duties hercunder, whcther upon its own discretion or upon the reyuest of�
the Owners of twenty-five percent (25%) in aggrebate principal amount of the Bonds and Parity
Bonds then Outstanding, it shall have full power, in the exercise of its discrction for thc best interests
of the Owners of the Bonds and Parity Bonds, with respect to the continuance, discontinuance,
withdrawal, compromise, scttlement or other disposal of such action; provided, however, that the
Trustee shall not, unless there no longer continues an Event of Dcfault, discontinue, withdraw,
compromise or scttle, or otherwise dispose of any litigation pending at law or in equity, if at the timc
there has been filcd with it a written rcquest signed by the Owners oi�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 benetit and protection of all
Owners ot�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 attorncy in f'act �f
44
�,s�azi a
the respective Owners of the Bonds and Parity Bonds tor the ��uiposes of bringin� any such suit,
action or procecding and to do and perfoi•m any and all acts and things for and on behalf�f�thc
respective Owners oi'the Bonds and Parity Bonds as a class or classes, as may be necessary�r
advisable in the opinion ol�thc Trustec as such attc�rncy-in-fact.
Section 8.5. Appointment of Receivers. Upon the c�ccu�z-ence of an Event oC Default
hereunder, and upon the liling oi�a suit or other coin►ncncement of judicial proccedings to enforce thc
rights of the Trustee and of�the Owners of the Bonds and Parity Bonds under this Indenture, thc
Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Net
Taxes and othcr amounts pledgcd hereunder, pending such proceedings, with such powers as the
court making such appointment(s) shall confer.
Scction 8.6. Non-Waiver. Nothing in this Arlicic 8 or in any other provision of this
Indenturc,or in thc 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 thc respective Owners of the Bonds and Parity Bonds at the respcctive dates of'maturity, as
hcrein pi•ovided, out of the Net Taxes and other moneys herein plcdged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any()wners 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 dclay or omission of the Trustee or any Owner of any of the
Bonds or Parity Bonds to exercisc 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
thcrein; and every power and remedy confcrred 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 Trustec or the Owners, as the casc may be.
Scction 8.7. Limitations on Rights and Rcmedies of Owners. No Owner of any Bond
or Parity Bond issued hcreunder shall have the right to institute any suit, action or proceeding at law
or in eyuity, for any remedy under or upon this Indcnture, unless(a) such Owner shall havc
previously given to the Trustee written notice of the occui-rence of an Event of'Default; (b) the
Owners of a majority in aggrcgate principal amount of all thc Bonds and Parity Bonds then
Outstanding shall have made writtcn request upon the Trustee to exercisc the powers hereinbefore
granted or to institute such action, suit or procecding in its own name; (c) said Owners shall have
tendered to the Truslee indcinnity reasonably acccplable 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 reyuest for a period of�sixty(60) days after such wr•itten request shall
have been received by, and said tender of indemnity shall have becn made to, the Trustec.
Such notification, i•equest, tcnder of indemnity and refusal or omission are hereby declared,
in every case, to be conditions pi•ecedent to the exercise by any Owner of Bonds and Parity Bonds of
any remedy hereunder; it being understood and intendcd that no one or more Owners of Bonds and
Parity Bonds shall have any r•ight in any manner whatever by his or their action to enforce any right
undcr this Indenture, except in the manner herein provided, and that all proceedings at law or in
equity to enfoi•ce any provision of this Indenture shall be instituted, had and maintained in the
manner herein provided and for the equal benefit ol�all Owners of thc Outstanding Bonds and Parity
Bonds.
45
9s�a2t a
The i-ight of any Owner of any Bond and Parity Bond to receive payment of�the principal ot�
and interest and prcmium (if�any) on such Bond and Parity Bond as hcrcin provided or to institute
suit tor the enforcement oi�any such payment, shall not be impaired or affected without the written
consent oCsuch Ownec•, notwithstanding the foregoing pr�visi�ns ol'this Section or any other
provision of�this Indenture.
Section 8.8. Termination of Proceedings. In case the Trustee shall have proceeded to
cnforce any right under this [ndenture by the appointment of a receiver or otherwise, and such
proceedings shall have bcen discontinued or abandoned for any reason, or shall have bcen
detcrmined adversely, then and in every such case, thc District, the Trustee and the Owners shall bc
restored to their Corrr►er positions and rights hereunder, respectively, with regard to the property
subject to this Indenture, and all rights, remedies and powers of the Trustec shall continue as if no
such proceedings had been taken.
ARTICLE IX
BONDINSURANCE
�to comeJ
ARTICLE X
DEFEASANCE AND PARITY BONDS
Section 10.1. 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 covcnants, 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 becc�me void and be
discharged and satisfied. In thc 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 desirahle to evidence such discharge and satisfaction, and the Truslee shall pay over or
deliver to the District's general fund all money or securities hcld by it pursuant to this Indenture
which are not required for the paymcnt of the principal of; premium, if any, and interest due on such
Bonds and Parity Bonds.
Any Outstanding Bond or Parity Bond shall be decmed to have been paid within the mcaning
expressed in the first paragraph of this Section if such Bond or Parity Bond is paid in any one or
morc 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 Trustec, in trust, at or bcfore maturity, money which,
together with the amounts then on deposit in the Special Tax Fund (exclusive �f the
Administrative Expenses Account) and available for such purpose, is fully sufficient to pay
46
987421�3
thc principal of, prcmium, ifany, and interest on such Bond or Parity Bond, as and whcn thc
samc shall bcc�me duc and payablc; c►r
(c) by depositing with the Trustec or another escrow bank appointcd by the
Disti-ict, in trust, Federal Sccurities, in which the District may lawfully invest its moncy, in
such amount as will bc sufficient, together with the interest t� accrue thereon and moneys
then on deposit in the Special Tax Fund (exclusive of�the Administrative Expcnses Account)
and available tor such purpose, together with the interest tc� accrue thereon, to pay and
discharge the principal of, premium, if any, and interest on such Bond or•Parity Bond, as and
when thc same shall become due and payable.
Ifpaid as provided above, then, at the election of the District, and notwithstanding that any
Outstanding Bonds and Parity Bonds shall not havc been surrendered for payment, all obligations of
the District under this Indentuce and any Supplcmenta4 (ndenture with respect to such Bond or Parity
Bond shall cease and tenninate, 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 Scction 5.2(e) or any covcnants in a
Supplcmental Indenturc relating to compliance with the Code. Notice of such election shall be filed
with the Trustee not lcss than ten (]0) days pi•ior to the proposed defeasancc date, or such shorter
period of time as may bc acceptable to the Trustec. In connection with a defeasance under(b) or(c)
above, there shall be provided to thc District a verification report from an independent nationally
recognized certified public accountant stating its opinion as to the sufficicncy of the moneys or
securities deposited with the Trustee or thc cscrow 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 Scction, as and when the same shall bccome due and payable, and an opinion of
Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that
thc Bonds or Parity Bonds being defeased have been Icgally defeascd in accordance with this
Indenture and any applicable Supplcmcntal Indenturc.
Upon a defeasance, thc Trustee, upon request of the District, shall rclease the rights of the
Owners of such Bonds and Parity Bonds which have been de(eased under this Indenture and any
Supplemental Indenture and cxecute 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 Trustec shall pay over or deliver to the District any
funds held by the Trustee at tt�e tisne af a deteasance,which are no1 required for 1he purpose of
paying and discharging the principal of'or interest on the Bonds and Parity Bonds when due. The
Trustee shall, at the written dircction of the District, mail, first class, postagc prepaid, a noticc to the
Bondowners whose Bonds or Parity Bonds havc been defeased, in thc form directed by the District,
stating that the defeasance has occurred.
47
yR 732 I.4
Scction 10.2. Conditions for the Issuancc of Parity Bonds and Other Additional
lndcbtedness. Thc District may at any timc after the issuance and dclivery of thc Bonds hercunder
issuc Parity Bonds payable fmm thc Net Taxes and other am�unts deposited in thc 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 hercunder or undei-any Supplemental Indenture; providcd, howcver, Parity
Bonds ►nay only be issued for the purpose of refunding all or a por-tion of the Bonds or any Parity
Bonds then ()utstanding. Parity Bonds issued are subject to the following specilic conditions, which
are hereby made conditions precedent to the issuance c�f any such Parity Bonds:
(a) The District shall be in compliancc with all covcnants set forth in this Indentui-e and
any Supplc►nental Indenture then in effcct and a certificate of the District to that effect shall have
been filcd with thc T�ustee; provided, however, that Parity Bonds may be issued notwithstanding that
the District is noi 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 thc
Act and all applicablc laws, and thc issuance of such Parity Bonds shall have been provided f'or by a
Supplemental Indenture duly adopted by the District which shall specify the following:
(1) the purpose for which such Parity Bonds are to bc issued and the fund or
funds into which the proceeds thereof are to be deposited, including a provision requiring the
proceeds of such Parity Bonds to be applied solcly f'or the purpose of refunding any
Outstanding Bonds or Parity Bonds, including payment of all costs and the funding of all
rescrves incidcntal to or connccted with such refunding;
(2) thc authorized principal amount of such Parity Bonds;
(3) the date and the maturity date or dates of such Parity Bonds; providcd that
(i) each maturity date shall fall on an October 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 bc established to provide for the
retircment of all such Parity Bonds on or before their respective maturity dates;
(4) the description of the Parity Bonds, the placc of payment thereof and the
procedure for execution and authentication;
(5) thc denominations and mcthod of numbcring of such Parity Bonds;
(6) thc amount and due date of each ►nandatory Sinking Fund Payment, if any,
for such Parity Bonds;
(7) the amount, if any, to be deposited fi�om the proceeds of such Parity Bonds in
thc Reserve Account of the Special Tax Fund to increase the amount therein to the Reserve
Requirement;
(8) the form of such Parity Bonds; and
48
��R�azi.a
(9) such other provisions as are necessary �r appropriate and not inconsistent
with this [ndenture.
(c) 7�he District shall have received the tollowing documents or money or securitics, all
of such documcnts dated or cer-tified, as the casc may be, as ot�the date ol�delivery ofsuch Parity
Bonds by the Trustee (unless the Trustee shall accept any of�such documents bcaring a prior date):
(1) a certificd copy of the Supplemental Indenture authorizing the issuance of
such Parity Bonds;
(2) a written request of the District as to the delivcry of such Parity Bonds;
(3) an opinion c�f 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 [ndentures relating to such Parity Bonds, and this Indenture and all such
Supplemental Indcntures have been duly and lawlully adopted by the District, are in full
forcc and efiect and arc valid and binding upon the District and enforceable in accordancc
with their teims (except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar laws relating to thc enforcement of�ci•editors' rights); (b) this
Indenture crcatcs the valid pledge which it purports to create of the Nct Taxes and other
amounts as provided in this lndenture, 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, cnforceablc in accordance with their terms (except
as cnforcement may bc limited by bankruptcy, insolvency, reorganization and other similar
laws relatin�to the enforcement of'creditors' ribhts) and the terms of this Indenture and all
Supplemental Indentures thereto and entitled to the benefits of this Indenturc and all such
Supplemental Indentures, and such Parity Bonds have been duly and validly authorized and
issued in accordance with thc Act (or other applicable laws) and this Indenture and all such
Supplcmental Indentures; and a further opinion of Bond Counsel to thc effect that, assuming
compliance by the District with certain tax covenants, thc issuance of the Parity Bonds will
not adversely affect the exclusion from gross income for federal income tax purposes of
interest on thc Bonds and any Parity Bonds theretof'ore issued on a tax-exempt basis, or the
exemption from State of California personal income taxation of intcrest on any Outstanding
Bonds and Parity Bcmds theretofore issued;
(4) a certificate of the District containing such statements as may be reasonably
necessa►y to show compliance with the rcquirements of'this Indcnture;
(5) 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 issuancc of the Parity Bonds proposcd to be issucd is less than thc Annual Debt
Scrvice on thc Bonds and Parity Bonds Outstanding prior to the issuance of such Parity
Bonds; and
(6) 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.
49
9R 742 I.4
ARTICLE XI
MISCEI.LANEOUS
Section 1 1.1. Cancellation of Bonds and Parity Bonds. All Bonds and Parity Bonds
surrcndered to the Trustee tor payment upon maturity or for redemption shall be upon payment
therefor, and any Bond or Parity Bond purchaseci hy the District as authori�ed hercin and delivcred 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 1 1.2. Execution of Documents and Proof of Ownership. Any request, direction,
consent, revocation of consent, or other instrument in writing required or pennitted by this Indenture
to be signed or executed by Bondowners may be in any numbcr of concurrent instruments of�similar
tenor may be signed or executed by such ()wners in per•son or by their attorneys appointed by an
instrument in writing for that purpose, or by the bank, trust company or othcr depository for such
Bonds. Proof of the execution of any such instrument, or of any instrument appointing any such
attorney, and ofthe owncrship of Bonds or Parity Bonds shall be sufficient for the purposes of this
Indenture (except as otherwise herein provided), if made in the following cnanner:
(a) The fact and date of the execution by any Owner or his or her attorney of any such
instrument and oI�any instrument appointing any such attorncy, ►nay be proved by a signature
guarantee of any bank or trust cornpany located within the Unitcd States of America. Where any
such instiument is executed by an ofticer 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 sufticient proof of his authority.
(b) As to any Bond or Parity Bond, the person in whose natne the same shall bc
registered in thc Bond Register shall bc deemed and regarded as the absolutc 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 ordcr 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 extcnt of the sum or sums to
be paid. Neither the District nor the Trustee shall be affectcd by any notice to the contrary.
Nothing contained in this Indenture shall bc construcd as limiting the Trustee or thc District
to such proof; it being intcnded that the Trustee or the District may accept any other evidence of thc
mattcrs herein stated which the Trustee or the District may deem sufficicnt. Any request or consent
of thc nwner of�any Bond or Parity Bond shall bind every future Owner of the same Bond or Parity
Bond in respect of anything done or suf'fcred to be done by the Trustec or the District in pursuance of
such request or-consent.
Section 11.3. Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and dischargc of any of the
Outstanding Bonds and Parity Bonds which remain unclaimcd for two (2) years afrer the date when
such Outstanding Bonds or Parity Bonds have become due and payablc, if such moncy was held by
thc Trustee at such date, or Ior 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 duc and payable,
shall be rcpaid by the Trustec to the District, as its absolute pr�perty and free from trust, and the
50
987J2I 4
Trustee shall thereupon be relea�ed and discharged with respect theret<� and the Owners shall look
only to thc District for the paymcnt of such Outstanding Bonds�r Parity Bonds; provided, however,
that, betore being reyuired to makc any such payment to thc District, thc Trustee, at the expense of'
the District, shall cause to be ►nailed by tirst-class mail, postage prepaid, to the registered Owners oi'
such Outstanding Bonds or Parity Bonds at their addresses as they appear on thc rcgistration books of
the Trustee a notice that said money remains unclaimed and that, after a date named in said notice,
which datc shall not be less than thirty(30) days after the date of the mailing of such notice, the
balance ol�such money then unclaimed will be returned to the District.
Section 1 1.4. Provisions Constitute Contract. The provisions of this Indenture shall
constitute a coniract between the District and the Bondowncrs, and the provisions hcrcof shall bc
construed in accordance with thc laws of thc Statc of Calif'ornia.
In case any suit, action or proceeding to enforce any right or exercise any remedy shall be
brought or taken and, shc�uld said suit, action or proceeding be abandoned, or be determined
adversely to thc Bondowncrs or thc Trustee, thcn thc District, the Trustee and the Bondowners shall
be restorcd to their former positions, rights and remedies as iI�such suit, action or proceeding had not
been brought or taken.
After the issuancc and delivery of the Bonds this lndenture shall be irrepealable, but shall be
subjcct to modifications to the extent and in thc manner provided in this Indenture, but to no greater
extent and in no other manner.
Section 1 1.5. Future Contracts. Nothing herein contained shall be deemed to restrict or
prohibit the District from making contracts or creating bondcd or other indebtedness payable froin a
pledge of the Net Taxes which is subordinate to the pledge hereunder, or which is payable fro►n the
general fund of thc District or from taxes or any source other than the Net Taxes and other amounts
pledged hcrcunder.
Section 1 1.6. 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 thc rights and benefits providcd in
this Indenturc.
Section 1 1.7. Severability. If any covenant, agreement or provision, or any portion
thercof; 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 Indenturc and the application
of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances,
shall be decmcd severable and shall not be affected thcreby, and this Indenture, the Bonds and any
Parity Bonds issued pursuant hereto shall remain valid and the Bondowners shall rctain all valid
rights and bcnefits accorded to them under the laws of�the State of California.
Section 1 1.8. Notiees. Any notices required to be given to the District with respect to the
Bonds o►•this Indenture shall be ►nailed, first class, postage prepaid, or personally delivered to the
Finance Director-Treasurer of the City of Palm Desert, 73-510 Fred Waring Drive, Palm Descrt,
California 92260, and all notices to the Trustec in its capacity as Trustee shall be mailed, first class,
postage pr-epaid, or personally delivered to the Trustee, Wells Fargo Bank, National Association, 707
Wilshire Blvd., l7`h Floor, Los Angeles, California 90071, Attention: Robert Schneider.
51
9R742I.4
(Remainder of Pagc lntentionally Lcft Blank)
52
9�742 I.4
IN WITNESS WHEREOF, CITY OF PALM DESERT COMMUNITY FACILITIES
DISTRICT NO. 91-1 (INDIAN R[DGE PUBLIC IMPROVEMENTS) has caused this I3ond
lndenturc to be signed by the Mayor of the City of Palm Descrt, acting as the Icgislative hody of the
District and attested thereto by the City Clerk of the City of Palm Desert, and Wells Farg� Bank,
National Association, in token of its acceptance of the trust created hcreunder, has caused this Bond
Indenture to be signed in its corporate namc by its of7iccr identified below, all as of�thc day and year
first above written.
C1TY OF PALM DESERT COMMUNITY
FACILITIES DISTRICTNO. 91-1 (INDIAN R[DGE
PUBLIC IMPROVEMENTS)
By:
Mayor of the City of Pal►n Desert, California
ATTEST:
City Clerk of the City of Palm Desert,
California
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustec
By:
Its: Authorized Officer
53
��x�a21 a
EXHIBIT A
FORM OF SPECIAL TAX REFUNDING BOND, SERIES 2008
Unless this Rond is presented by an authorized representative of The Uepository Trust Company, a New
York corporation("DTC"), to thc nistrict or thc Trustcc for registration of transfcr, cxchange, or
payment, ai�d any I3ond issued is registered in the riarne of Cede& Co. or in such other name as is
requested by an authorized representative of ll'I�C (and any payment is made to Cede& Co. or to such
other entity as is rec�uested by an authorizcd representative of�DTC), ANY 7�RANSI�ER, PLLDGL, OK
UTHFR USL H�:RLOF FOR VALU�:OK O'rHLRWIS� BY ()R TO nNY P�:RSON IS WRONGI-�UL
inasmuch as the registcred 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. 91-1
(INDIAN RIDGE PUBLIC IMPROVEMENTS)
SPECIAL TAX REFUNDING BOND, SERIES 2008
INTEREST RATE MATURITY DATE DATED DATE CUSIP
% October 1, January [15], 2008
REGISTERED OWNER: CEDE 8r. CO.
PRINCIPAL AMOUNT: DOLLARS
CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 91-1 (INDIAN
RIDGE PUBLIC IMPROVEMENTS) (the"District") which was formed by the City of Palm Desert
(the "City") and is situated in the County of Riverside, State of Calif'ornia, FnR VALUE
RECEIVED, hereby promises to pay, solely from certain amounts held under the Indcnturc (as
hereinafrer 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 sct
forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as
hereinafter detined) next preceding the date of�authentication hereof, unless (i) the date oi�
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 payablc from
the Interest Payment Date i►nmediately succccding the date of�authentication, or(iii) thc date of
A-1
authentication is prior to thc closc of�business on the tirst Record Datc in whicll event interest shall
be payable ii•om the Dated Date set lorth abovc. Nc�twithstanding the foregoing, if at thc timc of
authcntication ot�this Bond intcrest is in default, interest on this Bond shall be payable from the lasl
Intcrest Payment Date to which the interest has been paid or made available for payment or, if�no
interest has been paid or madc availablc for payment, intcc-cst on this Bond shall bc payable from the
Dated Date set forth above. Interest will be paid semiannually on April 1 and October I (each, an
"Interest Paymcnt Date"), commencing October 1, 2008, at the Interest Rate set forth above, until the
Principal Amount hereof is paid or made available Cor paymcnt.
Thc principal ol�and premium, il�any, on this Bond ai•e payable to thc Rcgistcrcd Owner
her-cof in lawiul money of the Unitcd States of America upon presentation and surrender of this Bond
at the Principal Office oi�the Trustee (as such term is dcfined 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 ►nail, postage prepaid, or in ccrtain circumstances described in the
Indenture by wire transfer to an account within the Unitcd States of America, to the Rcgistered
nwner hereof as of thc closc ofbusiness 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
appcars on the registration books maintaincd by the Trustee.
This Bond is one of a duly authori�ed issue of"City of Palm Desert Community Facilities
District No. 91-1 (Indian Ridge Public Improvements) Special Tax Refunding Bonds, Series 2008"
(the "Bonds") issucd in the aggregate principal amount of$[10,720,000] pursuant to the Mello-Roos
Community Facilities Act of 1982, as amended, being Scctions 53311, et.sc�y., of the California
Governmcnt Code (the "Act") for the purpose of financing cerlain public facilitics, funding a reserve
account, and paying certain costs related to the issuance of the Bonds. The issuance of the Bonds
and the tenns and conditions thereof are provided for by a resolution adopted by the City Council of
thc City acting in its capacity as the legislative body of thc District (the"Lcgislative Body") on
[Deccmber 13, 2007] and a Bond lndenturc dated as oCJanuary 1, 2008, by and betwccn thc District
and the Trustec executed in connection therewith (the"Indenture"), and this reference incc�rporates
the Indcnture herein, and by acceptance hereof the Registcred Owner of this Bond assents to said
terms and conditions. Thc Indenture is executed under and this Bond is issued under, and both are to
be construed in accordance with, the laws of the State ofCalitornia.
Pursuant to thc 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 cc�llected within the District (thc"Special Taxes") and ceriain othcr amounts pledged to
the repayment of the Bonds as set forth in thc 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 othec•amounts deposited to the Special Tax Fund (other
than the Administr•ative Expenses Account therein) established under the Indenture, except to the
cxtent that other provision f�r payment has been madc by the Legislative Body, as may be permittcd
by law. The District has covenanted f'or the benefit of the owners of the Bonds that under certain
circumstanccs described in the Indenturc it will conunence and diligcntly pursue to completion
foreclosure actions in the event of delinquencies of Special Tax installments levied f'or payment of
principal and interest on thc Bonds.
Thc Bonds maturing on or before October 1, 20_ are not subject to call and redcmption
prior to maturity. The Bonds maturing on or after October 1, 20 shall be subject to call and
redemption prior to maturity and may be redeemed, at the option of the District, from any source of
funds on any Intcrest Payment Date in whole, or in part, from such matui•ities as are selected by the
n-2
District and by lot within a maturity, at thc following rcdemption prices expresscd as a percentage oC
the; principal amount tc� be redeemed, together with accrued intci-est to the date of redempti�n:
Redemption Dates Redemption Prices
October 1, 20_ and April 1, 20 %
October 1, 20_and April 1, 20_
()ctc�ber 1, 20 and Interest Payment
Dates thereafter
Thc Bonds maturing on October I, 20_ and Octobcr 1, 20_(the "Term Bonds") shall bc
called before maturity and redeemed, from Sinking Fund Payments deposited into thc Rcdcmption
Account, on October I, 20 and October 1, 20 , respectively, and on each October 1 thereafter prior
to maturity, in accordance with the schedule of Sinking Fund Payments set forth in the Bond
Indcnture at a redemption price equal to the principal amount thereof, plus accrued interest to the
rcde►nption date, without prcmium.
Thc Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis
a►nong maturitics, on any [nterest Payment Date, and shall be redeemed by the Trustec, from
Prepayinents ot�Special Taxes dcpositcd to the Rede►nption Account, plus amounts transterred trom
the Reservc Account in connection with such transfers, at the following rcdcmption prices expressed
as a percentage of the principal amount to be redeemed, together with accrued intcrest to thc
redemption date:
Redemption Dates Redemption Prices
October 1, 20_ and April 1, 20_ %
October 1, 20_ and April 1, 20_
Octobcr 1, 20_ and April 1, 20_ _
October 1, 20 and Intcrest Payinent
Dates thereatter
Notice of redemption with respect to the Bonds to be redccmed 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 Grst class mail, postage prepaid, to the addresses set forth in the registration
books. Neither a failurc of the Registered Owner hercof to receivc such notice nor any defect therein
will afCect the validity of the proceedings for redemption. All Bonds or ponions thereof so called for
redemption will cease to accrue interest on the specified redemption date, provided that funds for thc
redemption are on deposit with the Trustec on the redemption date. Thereaftcr, the registered owners
of such Bonds shall have no rights except to receive payment of the redemption price up�n the
surrendcr of the Bonds.
This Bond shall be registcrcd in thc name of the Rcgistered Ownen c�reoi; as to both
principal and interest, and the District and the Trustee may treat the Registered Owner hereof as the
absolute owner i'or 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 authori�ed denominations of the same issue and maturity, all as more fully set forth in the
Indenture. This Bond is transferable by the Rebistered Owner hereof, in person or by his attorney
duly authorized in writing, at the Principal Office of thc Trustee, but only in the manner, subject to
A-3
the limitations and upon payment of the char�;es nrc�vided in thc Indenturc, upon surrender and
cancellation of this Bond. Upero such transfer, a ncw rcgistered Bond of authorized denomination or
denominatic�ns for the saine aggregate principal amount of�the same issue and matui-ity will be issuecl
tc� thc U•ansferec in cxchange therefor.
The Trustee shall not be required to registcr transfers or make exchangcs of(i) any Bonds lor
a period of tifteen (15) days next prcccding any selection of the Bonds to be redeemed, or(ii) any
Bonds chosen for redemption.
Thc rights and obligations of the District and of the registered owners of the Bonds may be
amended at any ticne, and in certain cases without notice to or thc consent of the registcrcd owncrs, to
the cxtcnt and upon the tenns providcd in thc Indcnture.
THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OF PALM
DESERT nR OF THE DISTRICT FOR WHICH THE CITY OF PALM DESERT OR THE
DISTRICT [S 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 nBLIGATIONS nF THE DISTRICT PAYABLE FROM
THE PORTION OF THE SPECIAL TAXES AND nTHER 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 RESTRICT[ON.
This Bond shall not become valid or obligatory for any purpose until the certiticate of
authcntication and registration hereon endorsed shall have been dated and signed by the Trustcc.
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, havc happened and have becn performed in duc time, fonn 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
IN WITNESS WHEREOF, City of Palm Dcsert Community Facilitics Uistrict No. 91-I
(lndian Ridge Public lmpmvements) has caused this Bond to be dated as of.lanuary �15�, 2008, to be
signed on bchall�ol'the District by thc Mayoi•of�the City by his manual signature and attestcd by thc
manual signaturc �f the City Clerk of the C'ity.
CITY OF PALM DESERT CnMMUNITY
FACILITIES DISTRICT NO. 91-I
(INDIAN RIDGE PUBLIC
IMPROVEMENTS)
Mayor of thc City ot'Palm Desert, California
ATTEST:
City Clcrk of
the City of Palm Dcscrt, California
STATEMENT OF INSURANCE
[to come]
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A-5
[FnRM OF TRUSTEE'S CERTIFICATE
nF AUTHENTICATION AND REGISTRATION]
This is one of the Bcmds described in thc within-mcntioned Indentw•e which has been
registered on the Bond registration books.
Dated: WELLS FARGO BANK, NATIONAL
ASSOCIAT[ON, as Trustee
By:
Its: Authoriied Signatory
[FORM OF ASSIGNMENT]
For value received the undersigned hereby scll(s), assign(s) and transfer(s) unto
(Name, Address, and Tax Identification or Social Security Numbcr of Assignee)
the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s)
attorney,
to transfcr the samc on the Registration Books of the Trustee with full power of substitution in the
premiscs.
Dated:
Signature Guaranteed:
Notc: Signature must be guarantccd 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 Transter Agent Medallion written on the facc of the within Bond in
Program (STAMP) or other similar program. evety particular without alteration or
enlargement or any change whatsoever.
A-6
ESCROW AGREEMENT
by and among
PALM DESERT FINANCING AUTHOR[TY
and
CITY OF PALM DESERT
and
CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 91-1
(INDIAN RIDGE PUBLIC IMPROVEMENTS)
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Escrow Agent
Dated as of January 1, 2008
Relating to thc Rcfunding of�the
Palm Desert Financing Authority
1997 Rcvcnuc Bonds
(Assessment District Nos. 92-1 [Ticrravista] and 94-1 [Bighorn] and
Community Facilities District No. 91-1 [Indian Ridge])
scheduled to mature on October 1, 2008 and thereafter through October 1, 2020
9R7440.3
TABLE OF CONTENI'S
Page
Sectionl. Dcfinitions............................................................................................................... 2
Scction 2. Appointment of Escrow Agent ............................................................................... 3
Scction3. Escrow Fund ........................................................................................................... 3
Scction 4. Dcposits to Escrow Fund ........................................................................................ 3
Section 5. Investment of Escrow Fund.................................................................................... 4
Section 6. Reinvcstmcnt; Payment of Refunding Requirements............................................. 4
Section7. Verification............................................................................................................. 5
Section 8. Compliance with Agreement, Prior Fiscal Agent Agreement, and Prior Indenture 5
Scction9. Tax Covenants ........................................................................................................ 5
Section10. Notices .................................................................................................................... 6
Section 11. Defeasance of Prior Local Obligations and Prior Bonds........................................ 6
Section12. Nature of Lien......................................................................................................... 6
Section13. Amendments........................................................................................................... 6
Section 14. Cocnpensation of Escrow Agent ............................................................................. 7
Section 15. Resi�mation or Removal of Escrow Agent; Appointment of�Successor................. 7
Section 16. Limitation of Powers and Duties ............................................................................ 8
Scction17. Indcmnification....................................................................................................... 8
Section 18. Limitation of Liability............................................................................................. 9
Section 19. Termination........................................................................................................... 10
Section20. Governing Law ..................................................................................................... 10
Scction21. Severability........................................................................................................... 10
Section 22. Counterparts.......................................................................................................... 10
9R7440.3 -i-
SCHEDULE A REFUNDING REQUIREMENTS
SCHEDULE B ESCROW SECURITIES
EXHIBIT A FORM OF DEFEASANCE NOTICE
9R7440.3 -ii-
ESCROW ACREEMENT
This Escrow Agreement (this "Agr�ement") is made and entered into as of
January 1, 2008, by and among the Palm Desert Financing Authority, a joint powers authority
duly organized and existing pursuant to the laws of thc State of�California (the "Authority"), the
City of Palm Desert, a municipal corporation (the "City"), the City of Palm Desert Community
Facilities District No. 91-I (Indian Ridge Public Improvements), a community facilities district
established under the Mello-Roos Community Facilities Act of 1982 ("District"), and Wells
Fargo Bank, National Association, a national banking association duly organi�ed ai�d cxisting
under thc laws of the United States of America, as Escrc�w Agent (together with ac�y successors
and assigns, the "Escrow Agcnt").
RECITALS
A. Thc Authority has prcviously issued its 1997 Revenue Bonds (Asscssmcnt
District Nos. 92-1 [Tierravista] and 94-1 [Bighorn] and Community Facilitics District No. 91-1
[Indian Ridge]) (the "1997 Bonds"), pursuant to thc Indenture of Trust, dated as of November 1,
1997 (the "Prior Indcnture"), by and between the Authority and First Trust of California,
National Association, as succeeded by Wells Fargo Bank, National Association, as trustee (the
"Prior Bonds Trustec").
B. Pursuant to the Prior Indenture, the 1997 Bonds maturing on October 1,
2008 and thereafter through October 1, 2020 (the "Prior Bonds") are subject to mandatory
redemption on any interest paymcnt datc from moneys receivcd by the Authority as the
redemption prices for such of the District's Limited Obligation Refunding Bonds (Property
Secured Only — No Issuer Liability), Series 1997 (the "Prior Local Obligations") as may be
redeemed pursuant to the Fiscal Agent Agreement, dated as of November 1, 1997 (the "Prior
Fiscal Agent Agreement"), by and bctwecn the City and the Prior Bonds T'rustee, relating to the
Prior Local Obligations. The Prior Local Obligations, and therefore, the Prior Bonds, are subject
to redemption on any interest payment date on or after Octobcr 1, 2002.
C. The 1997 Bonds are secured by revenues consisting of amounts payable to
the Authority by the City on the Prior Local Obligations.
D. The District and the Authority have determined to redeem the Prior Bonds
pursuant to the Prior Indenture and effect a refunding thereof, and in connection therewith, to
redeem the Prior Local Obligations pursuant to the Prior Fiscal Agent Agreement.
E. The City Council of the City, as thc legislative body of the District, has
determined to cause the District to issue its Special Tax Refunding Bonds, Series 2008 (the
"Series 2008 Bonds"), pursuant to the Bond Indenture, dated as of even date herewith (the "2008
Indenture"), by and between the Authority and Wells Fargo Bank, National Association, as
trustcc (together with any successors and assigns, the"2008 Trustee").
F. Pursuant to the 2008 Indenture, a portion of the proceeds derived from the
Series 2008 Bonds will be deposited in escrow with the Escrow Agent and applied to the
purchase of noncallable direct obligations of, or noncallable obligations guaranteed by, the
United States of America.
987440.3 -1-
G. In accordance with the Prior Fiscal Agcnt Agreement, if the City, on
behalf of the District, will pay or cause to be paid, or will have made provisions to pay, or there
will have bcen set asidc in trust funds to pay, to thc holders of� any portion of thc Pric►r Local
Obligations, the principal and interest and premium, if any, to become due thereon, then with
respect to such portion of the Prior Local Obligations the pledge and lien of the Prior Fiscal
Agent Agreement will thereupon cease, terminate and become void and be discharged and
satisficd.
H. In accordance with the Prior Indenture, if the Authority will pay or cause
to be paid, or will have madc provisions to pay, or there will have been sct aside in trust funds to
pay, to thc holders of any portion of the 1997 Bonds, the principal and interest and premium, if
any, to becoine due thereon, then with respect to such portion of the 1997 Bonds the pledge and
licn of the Prior lndenture will thereupon cease, terminate and become void and be discharged
and satisfied.
I. In order to provide for the proper and timely application of the moneys
deposited in said escrow to the payment of the Prior Local Obligations and the Prior Bonds, it is
ncccssary to entcr into this Agreement.
NOW, THEREFORE, in considcration of the forcgoing and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
Section 1. Definitions. Unless the context clearly requires otherwise,
capitalized tenns used in this Agreement shall have the meanings ascribed to them in the
introductory paragraph and the Recitals hereof. In addition, as used herein, the following tenns
shall have the following meanings:
"Code" means the Internal Revenuc Code of 1986, as amended.
"Escrow Fund" means the Escrow Fund established and held by the Escrow
Agent pursuant to Section 3.
"Escrow Securities" ineans the Investment Securities set forth in Schedule B
hereto.
"Investment Securities" means noncallable direct obligations of the United States
of America, or bonds or other obligations which are noncallable and for which the full faith and
credit of the United States of America are pledged for the payment of principal and interest, to
maturc or be withdrawable, as the case may be, not later than the time whcn needcd for the
payment or redemption of the Prior Local Obligations and the Prior Bonds in order to discharge
the respective pledges and liens securing the Prior Local Obligations and the Prior Bonds.
"Prior Local Obligations Account" means the account within the Escrow Fund
cstablished and held by thc Escrow A�ent pursuant to Scction 3.
"Refunding Requirements" means an amount suf'ficient to pay all installments of
principal and interest of�thc Prior Local Obligations and of the Prior Bonds, respectively, on their
respective earliest available optional redemption date, as set forth in Schedule A attached hereto.
9R7440.3 -2-
Scction 2. /1ppc�intment of� Escrow A,gent. The Authority and thc Uistrict
hercby appc�int Wclls Fargo Bacik, National Association, as Escrow Agent u�ldcr this Agrccmcnt
f��r the benetit of the holders of the Prior Local Obligations and the Prior Bonds. The Escrow
Agent hercby accepts thc duties and obligations of Escrow Agent under this Agreement and
agrees that the irrevocable instructions to the Escrow Agent herein provided are in a form
satisfactory to it. The applicable and necessary provisions of the Prior Fiscal Agent Agreement,
including particularly redemption provisions set forth in Article II thereof, are incorporated
herein by reference. The applicable and necessary provisions of the Prior Indenture, including
particularly redeinption provisions set forth in Article II thereof, are incorporated herein by
reference. Reference herein to, or citation herein ot; any provisions of the Prior Fiscal Agent
Agreement or the Prior Indenture shall bc deemed to incorporate the same as a part hereof in the
same manner and with the same cffect as if thc same were fully set forth hcrein.
Section 3. Escrow Fund. There is hereby created and established with the
Escrow Agent a special and irrevocable trust fund designated the "Escrow Fund" (the "Escrow
Fund") to be held by the Escrow Agent separate and apart from all other funds of the District, the
Authority or the Escrow Agent and used only for the purposes and in the manner provided in this
Agreemcnt. In the Escrow Fund, thcre shall be cstablished and created an account designated the
"Prior Local Obligations Account."
Section 4. Deposits to Escrow Fund.
(a) Upon the issuance of the Series 2008 Bonds, the Authority, the City, and the
District shall cause to be deposited with the Escrow Agent in the Prior Local Obligations
Account of the Escrow Fund, the following: (i) $[9,374,633.60], representing a portion of the
sale proceeds of the Series 2008 Bonds; (ii) money transferred by the District froin the Special
Tax Fund (as defined in the Prior Fiscal Agent Agreement) in the amount of $[891.31]
(representing moneys deposited in the Special Tax Fund that would have been used to pay debt
service on the Prior Local Obligations on the next Interest Paycnent Date but for the refunding
described herein); (iii) money transferred by the District from the Reserve Fund (as defined in
the Prior Fiscal Agcnt Agreement) in the amount of$[1,896,492.67]; (iv) money transferred by
the District from the Redemption Fund (as defined in the prior Fiscal Agent Agreement) in the
amount of $[1,379.74]; and (v) money transferred by thc City and the Authority from the
Improvement Fund (as defined in the Prior Indenture) in the arnouclt of$[5,020,741.68]. Moneys
on deposit in the Prior Local Obligations Account of the Escrow Fund shall be held in
irrevocable trust by the Escrow Agent and applied solely as providcd in this Agreemcnt.
(b) Upon thc issuance of the Series 2008 Bonds, the Authority shall cause to be
deposited with the Escrow Agent in the Escrow Fund, the following: (i) money transferred by the
Authority from the Revcnue Fund (as dcfined in thc Prior Indenture) in thc ainount of$[142.61]
(representing moneys deposited in the Rcvenue Fund that would have becn used to pay debt
service on the Prior Bonds on the ncxt Interest Payment Date but for the refunding described
herein); and (ii) money transfcrred by thc Authority from the Surplus Account within the
Revenue Fund (as defined in the Prior Indenture) in the amount of$[313,21 1.97J. Moneys on
deposit in the Escrow Fund shall be held in irrevocable trust by the Escrow Agent and applied
solcly as provided in this Agreemcnt.
987440.3 -3-
Scction 5. Investmcnt of Escrow Fund.
(a) The Escrow Agent, upon receipt of the moncys described in Section 4(a), shall
immediately invest al( ($J 6,294,139.00) of such mo►leys lil the Escrow Securities and shall
deposit such Escrow Securities in the Prior Local Obligations Account of the Escrow Fund.
(b) The Escrow Agent shall, upon receipt of the moneys described in Section 4(b),
deposit the all ($[313,354.58]) of�such moneys in the Escrow Fund to be held uninvested.
Tlle Escrow Agent is hereby authori�ed and cmpowered to deposit uninvested mo�lies held
hereunder from time to time in demand depc�sit accounts, without payinent for interest thereon as
provided hcreunder, established at commcrcial banks that are corporate affiliatcs of the Escrow
Agent.
Notwithstanding the foregoing or any other provision of this Agreement to the
contrary, at the written request of the District and upon compliance with the conditions
hercinafter set forth, the Escrow Agent shall have thc power to sell, transfer, request thc
redemption of or otherwisc dispose of so�ne or all of the Escrow Securities in the Escrow Fund
and to substitute Investment Securities. The foregoing may be effected only if: (a) the
substitution of Investment Securities for the substituted Escrow Securities occurs simultaneously;
(b) the amounts of and datcs on which the anticipatcd transfcrs from the Escrow Fund (and the
Prior Local Obligations Account therein) to the Prior Bonds Trustee for the payment of the
principal of; or interest on, the Prior Local Obligations and the Prior Bonds will not be
dimin�shed or postponed thereby, as shown in the certification (described below) of� an
independent certified public accountant; (c) the Escrow Agent shall receive the unqualified
opinion of counsel to the effect that the District has the right and power to effect such disposition
and substitution; and (d) the Escrow Agent shall receive from an independent certified public
accountant a certification that, immcdiately after such transaction, the principal of and interest on
the Invcstment Securities in the Escrow Fund will, together with other moneys available for such
purpose, be sufficient to pay the Refunding Requirements. Any cash received from the
disposition and substitution of Escrow Securities pursuant to this Section to the extent that, as
shown in such certification, such cash will not be required, in accordance with the Prior Fiscal
Agcnt Agreement, the Prior Indenture, and this Agreement, at any time for thc payment when
due as providcd in Sectior� 6, shall be transferred to the District.
Section 6. Reinvestment; Payinent of Refundin� Requirecnents. As thc
principal of the Escrow Securities shall mature and be paid, and the investment income and
earnings thereon are paid, the Escrow Agent shall reinvest such moneys in Investment Securities
in accordancc with the written instructions of the District.
(a) On the redemption date of�the Prior Local Obligations as set forth Schedule A (i.e.,
April l, 2008), the Escrow Agent shall transfer an amount sufficient to pay the Refunding
Reyuirements of the Prior Local Obligations from the Prior Local Obligations Account of the
Escrow Fund to the Prior Bonds Trustee. Such amounts transferred from the Prior Local
Obligations Account of the Escrow Fund shall be applied by the Prior Bonds Trustee to the
paymcnt of the Refunding Requirements of the Prior Local Obligations for the bencfit of the
holder of the Prior Local Obligations (i.e., the Authority). The Authority hcreby agrees that
9R744U.3 -4-
upon such transfer pursuant to the foregoing sentence, the Authority shall have been deemed to
direct, pursuant to this Section 6 and the Prior Fiscal Agent Agreement, the Prior Bonds Trustee
to apply such amounts, together �vith such other amc�unts transferred from the Escrow Fund, to
thc paymcnt of tlie Refunding Rcquirements of tile Prior Bonds for thc equal and ratablc bcnefit
of the holders of the Prior Bonds.
(b) After effcctinb thc transfer pursuant to the foregoing paragraph (a), o�l the
rcdemption date of the Prior Bonds as set forth Schedule A (i.e., April 1, 2008), the Escrow
Agent shall transfer such amounts remaining in the Escrow Fund to the Prior Bonds Trustee,
wl�ich, together with the amounts transferred pursuant to paragraph (a), shall be sufticient to pay
thc Refunding Rcquiremcnts of thc Prior Bonds. Such amounts shall be applicd by thc Prior
Bonds Trustee to the payment of thc Refunding Requiremcnts of the Prior Bonds for the equal
and ratable benefit of the holders of the Prior Bonds.
Section 7. Verification. The District has caused schedules to be prepared
relating to the sufficiency of the anticipated receipts from the Escrow Securitics to pay the
Refunding Requirements. The District shall furnish the Escrow Agent with the report of Grani
Thornton LLP, verifying the mathematical accuracy of the computations contained in such
schedules.
Section 8. Compliance with A�reement, Prior Fiscal A�ent A�reement, and
Prior Indenture. The Authority, the City, and the District hereby direct, and the Escrow Agent,
in its capacities as escrow agent hereunder and as the Prior Bonds Trustee, hereby agrees that the
Escrow Agent will take all the actions required to be taken by it hereunder, including the timely
transfer of tnoneys for the payment of principal and interest with respect to the Prior Obligations
and the Prior Bonds, in order to effectuate this Agreement. The liability of the Escrow Agent for
the payment of ihe Refunding Requirements, pursuant to this Section and, in its capacity as Prior
Bonds Trustee, the Prior Fiscal Agent A�neement and thc Prior Indenture, shall be limited to the
application, in accordance with this Agreement, of moneys and the Escrow Securities in the
Escrow Fund and the Prior Local Obligations Account therein (including interest earnings
thereon, if any) available for the purposes of and in accordance with this Agreeinent.
Section 9. Tax Covenants. Notwithstanding any other provision of this
Abreement, the District, the City, and the Authority hereby covenaiit that cio part of the proceeds
of thc Series 2008 Bonds or of the moncys or funds held by thc Escrow Agent hcreunder shall be
used, and that the District, the City, and the Authority shall not direct the Escrow Agent to use,
any of such moneys or funds at any time, directly or indirectly, in a manner that would cause any
of the Series 2008 Bonds to be an "arbitrage bond" under Section 148 of the Codc and the
regulations of the Treasury Department thereunder proposed or in effect at the time of such use
and applicable to obligations issued on the date of issuance of the Series 2008 Bonds. None of
the Authority, the District, the City, nor the Escrow Agent shall, except as sct forth in this
Agreement, sell, transfer or otherwise dispose of the Escrow Securities; provided that the Escrow
Agent may effectuate the transfer of such Escrow Securities to a successor escrow agent in
accordance with ihe provisions of Section 15 relating to the transfer of rights and property to
successor escrow agents.
987440.3 -5-
Scction 10. Notices. The Authority hereby instructs the Escrow Agcnt, in its
capacity as the Prior Bonds Trustee, to mail to the registered owners of the Prior Qonds, as soon
as practicahle upon receipt of the deposit of moncys in the Cscrow Fund pursuant to Section 4, a
notice substantially in the forrn sec fortl� in Exl�ibit A attached herero. The Auttiority also hereby
instructs the Escrow Agent, in its capacity as the Prior Bonds Trustee, to send redemption
notices, at least 30 days but no more than 60 days bcforc the redemption date set forth in
Schedulc A, to the rcgistcrcd owncrs of the Prior Bonds, the Sccurities Depositorics and to onc
or more Inforcnation Services (as defined in the Prior Indenture) in the fonn and manner
prescribed by Section 2.02(d) of the Prior lndenture.
Section 11. Defeasance of Prior Local Obligations and Prior Bonds. The
District, the City, and the Authority represent and agree that, concurrently with the initial deposit
of the Escrow Securitics pursuant to Section 5, (i) the Prior Local Obli�ations scheduled to
cnature on or after October 1, 2QQ8 will be deemcd paid and wi�� no longer be deernec� to be
outstanding within the mcaning and with the effect expressed in the Prior Fiscal Agent
Agrccment, and (ii) thc Prior Bonds will no longer be deemed to be outstanding and unpaid
within the tneaning and with the effect expressed in the Prior Indenture.
Section 12. Nature of Lien. The trust hereby crcated shall be irrevocablc and
thc holders of thc Prior Bonds shall have an express lien on all of the moneys and Escrow
Securities in the Escrow Fund (and the Prior Local Obligations Account therein), including the
interest earnings thercon, until paid out, used and applied in accordance with this Agreement.
Section 13. Amendments. This Agreement is made pursuant to and in
furthcrance of the Prior Fiscal Agcnt Agrccmcnt and the Prior Indenture and for the benetit of
the District, thc City, the Authority and the holders from time to time of the Prior Bonds and it
shall not bc repealed, revoked, altered, amended or supplemented without the written consent of
all such holders and the written consent of the Escrow Agent, the Authority, the City, and the
District; provided, however, that the District, the Authority, the City, and the Escrow Agent may,
without the consent of, or notice to, such holders, enter into such agreement supplemental to this
Agreement as shall not materially adversely affect the rights of such holders and as shall not be
inconsistent with the tenns and provisions of this Agreemcnt, for any one or morc of thc
following purposes:
(a) To cure any ambiguity or fonnal defect or omission in this Agreement;
(b) To grant to, or confer upon, the Escrow Agent for the benefit of the
holders of the Prior Bonds, any additional rights, reinedies, powers or authority that inay
lawfully be granted to, or conferred upon, such holders or the Escrow Agent;
(c) To transfer to thc Escrow Agent and make subject to this Agreemcnt
additional funds, securities or properties; and
(d) To make any othcr changc dctcrmined by the Authority, thc City, and the
District to be not materially advcrse to the holders of thc Prior Bonds.
The Escrow Agent shall be entitled to rcly exclusively upon an opinion of counsel
with respect to compliance with this Scction, including the extent, if any, to which any change,
9R7440.3 -6-
modification �r addition affccts thc rights of the holders of the Pri�r Bonds, or that any
instrument executed hercunder complies with the conditions and provisions of this Scction.
Section 14. Compensation of Escrow Age�lt. In cc�nsideration of the services
rendered by the Escrow Agent under this Agreement, the District agrees to and shall pay to the
Escrow Agent its proper fees and expenses in accordance with the agreement therefor reached by
the Escrow Agent and the District, including all reasonable expenses, charges, counsel fees and
othcr disbursements incurred by it or by its attorneys, a�ents and employees in and about the
performance of their powers and duties hereunder, from any moneys of the District lawfully
available therefor and the Escrow Agent shall have no lien whatsoevcr upon any of the moncys
or Escrow Securities in the Escrow Fund for the payment of such proper fees and expenses.
Section l5. Resi�nation or Removal of Escrow Agent; Appointment of
Successor. The Escrow Agent at the time acting hereunder may at any time resign and be
discharged from the trusts hereby created by giving written notice to the District, the City, the
Authority, and the Prior Bonds Trustee (if different from the Escrow Agent) specifying the date
when such resignation will take effect, but no such resignation shall take ef�fect unless a
successor Escrow Agent shall have been appointed by the holders of the Prior Bonds or by the
District as hcreinafter provided and such successor Escrow Agent shall have accepted such
appointment, in which event such resignation shall take effect immediately upon the appointment
and acceptance of a successor Escrow Agent. The Escrow Agent may be removed at any time by
an instrument or concurrent instruments in writing, delivered to the Escrow Agent and to the
District, the City, and thc Authority and signed by the registered holders of a majority in
principal amount of the Prior Bonds. The Escrow Agent may also be removed at any time by the
District with not less than 30 days' written notice to the Escrow Agent, the Authority, the City,
the Prior Bonds Trustcc (if different froin the Escrow Agent) and thc registered holders of thc
Prior Bonds.
In the cvcnt thc Escrow Agent hereunder shall resign or be removed, or be
dissolved, or shall be in the course of dissolution or liquidation, or otherwise become incapable
of acting hereunder, or in case the Escrow Agent shall be taken under the control of any public
officer or officers, or of a receiver appointed by a court, a successor Escrow Agent may be
appointed by the holders of a majority in principal amount of the Prior Bonds, by an instrument
or concurrcnt instruments in writing, signcd by such holdcrs, or by their attorneys in fact, duly
authorired in writing; provided, nevertheless, that in any such event, the District shall appoint a
temporary Escrow Agent to fill such vacancy until a successor Escrow Agent shall be appointed
by thc holders of a majority in principal amount of the Prior Bonds, and any such tcmporary
Escrow Agcnt so appointed by thc District shall immediately and without further act be
superseded by the Escrow Agent so appointed by such holders. The District shall give written
notice of any such appointment made by it to the Authority, the City, and the Prior Bonds
Trustee.
In the event that no appointment of a successor Escrow Agent or a temporary
successor Escrow Agent shall have been made by such holders or the District pursuant to the
foregoing provisions of this Section within 60 days after written notice of the removal or
resignation of the Escrow Agent has been given to the District, the holder of any of the Prior
Bonds or any retiring Escrow Agent may apply to any court of competent jurisdiction for the
987440.3 -7-
appointmcnt of a successor Escrow Agent, and such court may tliereupoil, aher such notice, if
any, as it shall dc�m proper, appoint a successor Cscrow Agcnt.
No successor Escrow Agent shall be appointed unlcss such successor Escrow
Agcnt shall be a corporation with trust powers organized under the banking laws of thc Unitcd
States or any state, and shall have at the time of appointment capital and surplus of not lcss than
$]00,000,000.
Every successor Escrow Agent appointed hereunder shall execute, acknowledgc
and deliver to its predecessor and to the District, an instrument in writing accepting such
appointment hereunder and thereupon such successor Escrow Agent without any further act,
deed or conveyance, shall become fully vested with all the rights, immunities, powers, trusts,
duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the written
request of such successor Escrow Agent or the District execute and deliver an instrument
transferring to such successor Escr�w Agent all the estates, properties, rights, powers and trusts
of such predecessor hereunder; and every predecessor Escrow Agent shall deliver all securities
and moneys held by it to its succcssor. Should any transfer, assignment or instrument in writing
frocn the District be required by any successor Escrow Agent for more fully and certainly vesting
in such successor Escrow Agent the estates, rights, powers and duties hereby vested or intended
to be vested in the predecessor Escrow Agent, any such transfer, assignment and instrument in
writing shall, on requcst, bc cxccutcd, acknowledged and delivered by the District.
Any entity into which the Escrow Agent, or any successor to it in the trusts
created by this A��reetnent, may be merged or convertcd or with which it or any successor to it
inay be consolidated, or any entity resulting from any inerger, conversion, consolidation or tax-
free reorganization to which the Escrow Agent or any successor to it shall be a party, shall, if it
meets the qualifications set forth in the fifth paragraph of this Section, and if it is otherwise
satisfactory to the District, be the successor Escrow Agent under this Agreement without the
exccution or filing of any paper or any othcr act on the part of any of thc parties hcrcto, anything
herein to the contrary notwithstanding.
Section 16. Limitation of Powers and Duties. The Escrow Agent shall have no
power or duty to invest any funds held under this Agreement except as provided in Sections 5
and 6. The Escrow Agent shall have no power or duty to transfer or otherwise dispose of thc
moneys held hereunder except as provided in this Agrccmcnt.
Section 17. Indemnification. To the extent pennitted by law, the District
hereby assumes liability for, and hereby agrees (whether or not any of the transactions
contemplated hereby are consuintnated) to indetnnify, protect, save and keep harmless the
Escrow Agent and its respective successors, assigns, agents, employees and servants, from and
against any and all liabilities, obligations, losses, damages, penaltics, claims, actions, suits, costs,
expenses and disbursements (including reasonable legal fees and disbursements) of whatsoever
kind and nature which may be imposed on, incurred by, or asserted against, the Escrow Agent at
any time (whcthcr or not also indemnified against the samc by the District or any other person
under any other agreement or itistrument, but without double indemnity) in any way relating to
or arising out of the execution, delivery and performance of this Abrecment, the establishment
hereunder of the Escrow Fund, the acceptance of the funds and securities deposited therein, the
987440.3 -8-
purchase of any sccuritics to bc purchascd pursuant thereto, thc retcntion of such securities or the
proceeds thereof and any pa}nnent, transfer or other application of moncys or securitics by the
Escrow Agent in accordancc with the provisions c�f this Agreemcnt; provided, h�wever, that the
District shall not be requircd to indemnify thc Escrow Agent agairist tt�e Escrow Agcnt's own
negligence or willful misconduct or the negligence or willful misconduct of the Escrow Agent's
employees. In no event shall the Authority, the District or the Escrow Agent be liable to any
person by reason of tlle transactions contemplated hereby other than as set forth in this Section.
The indemnities contained in this Section shall survive the termination of� this Agreement and
removal or resignation of the Escrow Agent.
Section 18. Limitation of Liabilitv. The Escrow Agent and its respective
successors, assigns, a�ents and servants shall not be held to any personal liability whatsoever, in
tort, contract, or otherwise, in connection with the execution and delivery of this Agreement, the
establishment of� the Escrow Fund, the acceptance of the mc�neys or any securities depc�sited
therein, the purchase of the securities to be purchased pursuant hereto, the retention of such
securities or the proceeds thereof; the sufficiency of�the securities or any uninvested moneys hcld
hereunder to accomplish the payment and rede�nption of the Prior Bonds, or any payment,
transfer or other application of moneys or securities by the Escrow Agent in accordance with the
provisions of this A��reement or by reason of any non-negligent act, non-negligent omission or
non-negligent error of the Escrow Agent inade in good faith in the conduct of its duties. The
recitals of fact contained in the Recitals of this Agreement shall be taken as the statements of the
District or the Authority, and the Escrow Agent assumes no responsibility for the correctness
thereof. The Escrow Agent makes no representation as to the sufficiency of the securities to be
purchased pursuant hereto and any uninvested moneys to accomplish the pay►nent and
redernption of the Prior Bonds pursuant to the Prior Indenture or to the validity of this
Agreement as to thc District or the Authority and, exccpt as otherwise provided herein, the
Escrow Agent shall incur no liability in respect thereof. The Escrow Agent shall not be liable in
connection with the performance of its duties under this Agreement except for its own
negligence, willful misconduct or default, and the duties and obligations of the Escrow Agent
shall be determined by the express provisions of this Agreement. The Escrow Agent may
consult with counsel, who may or may not be counsel to the District, and in reliance upon the
written opinion or advice of such counsel shall have full authorization and protection in respect
of any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever
the Escrow Agent shall deem it necessary or desirable that a matter be proved or established
prior to taking, suffering, or omitting any action under this Agreement, such matter (except the
matters set forth herein as specifically requiring a certificate of a nationally recognized finn of�
independent certified public accountants or an opinion of nationally reco�nized bond counsel)
may bc deemed to be conclusively establishcd by a written certitication of the District or the
Authority, as applicable. Whenever the Escrow Agent shall deem it necessary or desirable that a
matter specifically requiring a ceriificate of a nationally recognized firm of independent certitied
public accountants or an opinion of nationally recognized bond counsel be proved or established
prior to taking, suffering, or omitting any such action, such matter may be established only by
such a certificate or such an opinion. No provision of this Agreement shall require the Escrow
Agent to expend or risk its own funds or otherwise incur any fiiiancial liability in the
performance or exercise of any of its dutics in accordance with this Agreement, or in the exercise
of its rights or powers.
�x�aao.3 -y-
Scction 19. Termination. This A�neement shall terminatc whcn mc�neys I�ave
been transferred pursuant to Section G tc� the Prior Bonds Trustee sufficient to pay all Prior Local
Obligations and all Prior Bonds. Upon such tennination, all moneys remaining in the Escrow
Fund after payment of any amc>unts duc tiic Escrow Agent hereunder shall he releascd to tlle
Special Tax Fund held under the 2008 Indcnture.
Section 20. Governin ��, Law. This Agreement shall be governed by the law of
thc Statc of California.
Section 21. Severabilitv. If any one or more of the covenants or agreements
provided in this Agrecment on the part of thc District, the Authority, the City, or the Escrow
Agent to bc performed should be detennined by a court of competent jurisdiction to be contrary
to law, such covenant or agreement shall be deemed and construed to be severable from the
remaining covenants and a�neements herein contained and shall in no way affect the validity of
thc remaining provisions of this Agreement.
All thc covenants, promises and agreements in this Agreement contained by or on
bchalf of thc District, thc Authority, the City, or the Escrow Agent shall bind and inure to thc
benefit of their respective successors and assigns, whether so expressed or not.
Section 22. Counterparts. This A�-eeinent may be executed in scveral
counterparts, all or any of which shall be regarded for all purposes as one original and shall
constitute and be but one and the same instrument.
�Rc�mainder o/�Page /ntentionally Left BlankJ
9 R 7440.3 -10-
(F.sc•rn►�•�1��-eem�nt)
IN WITNESS WHEREOF, the parties hereto havc cach caused this Agrecment to
be executed by their duly authori�ed officers and appointed or elected officials as of the date first
written above.
PALM DESERT FINANCING AUTHORITY
By:
Chief Administrative Officer
CITY OF PALM DESERT
By:
Mayor
CITY OF PALM DESERT COMMUNITY FACILITIES
DISTRICT NO. 91-1 (INDIAN RIDGE PUBLIC
IMPROVEMENTS)
By:
Mayor of the City of Palm Desert, California
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Escrow Agcnt
By:
Authorized Otficer
9 R 7440.3 -1 1-
SCHEDULE A
REFUNDING REQUIREMENTS
"Prior Local Obli�ations"
City of Palm Desert Community Facilities District No. 91-1 (Indian Ridge Public Improvements)
Limited Obligation Refunding Bonds, Series 1997
Redemption Redemption Escrow
Date Principal Intcrest Premium Reyuirement
April 1, 2008 $15,924,000.00 $498,689.25 $0.00 �,16,422,689.25
* Consists of the follo�ving Prior Local Obligations to bc optionally redeemcd on April l,2008:
Maturitv
Date Interest Redemption
(October 1) Principal Ratc Price
200R $ 998.000 S.R25°/, 100%
2009 1,057.000 5.925 100
2010 1,120.000 6.025 100
2011 l,18E,,000 6.050 100
2012 1,261.000 6.325 100
2013 1,337,000 6.325 100
2014 1,426.000 6.325 100
2(1l5 1,S14.000 6.325 100
2016 1,613,000 6.425 100
2017 1,711,000 6.425 100
201 R 844,000 6.425 100
2019 901,000 6.425 100
2020 956,OOU 6.425 100
"Prior Bonds"
Palm Desert Financing Authority 1997 Revenue Bonds (Assessment District Nos. 92-1 and 94-1
and Community Facilities District No. 91-1)
Redemption Redemption Escrow
Date Principal Interest Premium Requirement
April l, 2008 $16,260,000.00 $474,285.63 �0.00 $16,734,285.63
* Consists of the following Prior Bonds to bc optionally redcemed on April 1, 200R:
Maturity
Uate Interest Redemption
(October 1) Principal Rate Yrice
2008 $1,060,000 5.400% ]00%
2009 1,115,000 5.500 100
2010 1,1 R0,000 5.600 100
2011 1,245,000 S.fi25 100
2015 5,705,000 5.900 100
2020 5,955,000 6.U00 100
9R7440.3 Schedulc A-1
SCHEDULE B
ESCROW SECURITIES
Type of Maturity Date Par
Securit�� Amount Rate
SLG-Cert April 1, 20U8 $16,294,139.00 3.75%
987440.3 Schedule B-1
EXHIBIT A
[FORM OF DEFEASANCE: NOT[CE]
PALM DESERT FINANCING AUTHORITY
Noticc to thc Holdcrs of
Palm Desert Financing Authority
1997 Revenue Bonds
(Asscssmcnt District Nos. 92-1 [Tierravista] and 94-1 [Bighorn] and Community Facilities
District No. 91-1 [Indian Ridge])
scheduled to mature on October 1, 2008 and thereafter through October 1, 2020
CUSIP No.
NOTICE IS HEREBY GIVEN on behalf of the Palm Desert Financing Authority
(the "Authority"), that pursuant to Section 9.03 of the Indenture of Trust, dated as of Novc�nber
1, 1997 (t1�e "Indenture"), pertaining to the abovc-captioried Bonds with the maturity dates of
October l, 2008 and thereafter through October l, 2020, the lien of such Indenture has bcen
discharged through the irrevocable deposit in escrow of cash and Federal Securities.
DATED this_ day of , 2008
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Escrow Agent
9R7440.3 Exhibit A
L&J DRAFT#2
1 1/28/07
$
CITY OF PALM DESERT COMMUNITY FACILI"I'IES
DISTRIC7' NO.91-1 ([NDIAN RIDGE PUBLIC IMYROVEMENTS)
SYECIAL TAX REFUNDING BONDS
SERIES 2008
BOND PURCHASE CONTRACT
Decembcr , 2007
City of Palm Desert Community Facilities
District No. 91-1 (Indian Ridgc Public Improvemcnts)
73-510 Fred Waring Drive
Palm Desen, California 92260
Ladies and(ientlemen:
Stinson Securities, LLC, on bchalf of itself and as the rcprescntativc (the"Re�rese��tative") of
Kinsell, Newcomb & De Dios, Inc. (together, with the Representative,the"Underw�•iters")offers to enter
into the following Bond Purchase Contract (the"Purchuse C'nntracP') with the City of Palm Desert
Community Facilities District No. 91-1 (Indian Ridge Public Improvements) (the"Dist�•ict"), which, upon
acceptance of this offer by the District and approval by the City of Palm Desert(the "Citv") will be
binding upon the District and the Unde�writer. This oi�fer is made subject to acceptance ot�this Purcl�ase
Contract by the City on or before 1 1:59 p.m. California time on the date hereof,and, if not so accepted,
will be subject to withdrawal by the Underwriters upon written notice delivered to the District at any time
prior to such acccptance.
Capitalized terms used in this Purchase Contract and not otherwise defined herein shall ha��e thc
meanings given to such terms as set forth in the Indenture (defincd below).
Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis ot�the
representations set forth in this Purchase Contract,the Underwriters agree to purchase from the District,
and the District agrecs to sell to the Undeiwriters, all (but not less than all)of the � _aggregate
principal amount of the City of Palm Desert Community Facilities District No. 91-1 (Indian Ridge Public
Improvemcnts) Special Tax Refunding Bonds, Series 2008 (the"Bonds"). Thc Bonds shall be dated their
date of delivery and shall have the �naturitics and bear interest at the rates per annum and have the yields
all as sct forth on Schedule I attached hereto. The purchase price for the Bonds shall be S
(�vhich incl��des an Under`vriters' discount in the amount of� , less a net original issue discount
in the amount of S_�, and such purchase pricc represents %ot the principal amount of
the Bonds.
Section 2. [)escription of the Bonds. The Bonds are issued pursuant to the provisions of the
Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Pan l, Division 2, Title 5,
of the Government Code of the State of California(the"AcP')and shall be as described in and shall be
secured under and issued pursuant to a Bond ]ndenture, dated as of January 1, 2008 (the"/ndenture") by
and between the Uistrict and Wells Fargo Bank, National Association, as trustee(the"T!'1LSIPP��). The
Bonds shall be payable and subject to redemption as provided in thc Indcnture and described in the
OfGcial Statement. The Bunds are secured by a special tax (the "Sj�ec•ic�! Tu.r") levied and collected on
the Taxablc Parccls located within the District and amounts held in certain lunds and accounts established
by the lndenture, subject only to the provisions of the Indenture permitting the application thereof for the
z;a-u�nz�r,�c.z
purposes and on the tenns and conditions sct forth thercin. The Bonds are legal,valid and limited
obligations of�the District which are payable solely from and secured by a pledge of the Special Tax, net
of Administrative l;xpenses in an amount not to exceed the Administrative Expenses in an amount not to
exceed the Administrative Expenses Priority Cap (as defined in the Indenture).
The 13onds are bcing issued in order to: (i) refund and defcase all of the outstanding S
principal amount of Palm Desert Financing Authority 1997 Revenue Bonds (Assessment Districts No. 92-
1 [Tierravista) and 94-1 [Bighorn] and Community Facilities District No. 91-1 [Indian Ridge]) (the"Priur
Bonc%s") pursuant to the terms and conditions of an Escrow A�reement,dated as of January 1, 2008 (the
"Esc��o�t�AgreemenP'), by and among the Palm Desert Financing Authority(the"Authority"), the City, the
District and Wells I�argo Bank, National Association, as escrow agent(the"Escrotiv Agent'), (ii) fund a
reserve account as securiry for the Bonds; and (iii)pay certain costs associated with the issuance of the
Bonds.
The payment of principal of and interest on thc Bonds when due will be guaranteed under a
tinancial guaranry insurance policy (the"Finuncia!Gua�•ant}�Polic}'")to be issued by (the
"Insurer")simultaneously with the deli��ery of the Bonds.
Section 3. Authorit oy f Representative. Any authority, right,discretion or other power conferred
upon the Underwriters by this Purchase Contract may be exercised jointly by the Underwriters or by the
Representative on behalf of the Underwriters, and the District shall be entitled to rely upon any requcst,
notice or statement if the same shall have been given or made by the Representative.
Section 4. Public OCferin�. It shall be a condition to the obligation of the Underwriters to
purchase, accept delivery of, and pay for the Bonds that the entire � principal amount ot�the
Bonds authorized by the Indenture bc delivered by the Uistrict to thc Underwriters on the datc of Closing,
defined below. The Underwriters agrcc to make a bnna frde public offering of all ofthe Bonds, at not in
excess of the initial public offering yields or prices set forth on Schedule 1 attached hereto, however, the
Bonds may be offered and sold to certain dealers(including dealers depositing the Bonds into investment
trusts)at prices lower than such initial public offering prices or yields. The Underwriters reserve the right
to make concessions to dealers and to change such initial public oftering prices or yields as the
Undenvriters reasonably deem necessary in connection with the marketing of the Bonds. Tl�e
Underwritcrs also reserve the right tc>: (i) ovcr-allot or effect transactions that stabilize or maintain the
market price of the Bonds at a level above that which might otherwise prevail in the open market and
(ii)discontinue such stabilizing, if'commenced, at any time. rollowing the initial public offering of the
Bonds, the oftering prices may be changed from time to time by thc Undcrwritcrs.
Section 5. Delivery of the Official Statement and Other pocuments. The District has delivered
to the Underwriters a Preliminary Official State►nent dated December_, 2007, including the cover pagc
and appendices thereto, in printed fonn and in electronic forrn in all material respects consistent with such
printed forn� relatcd to the Bonds (the"Prelimina�}'O%Jiciul Stutement")as it may bc amcnded, and will
deliver to the Underwriters as promptly as possible, but in no event later than the seventh f3usiness Day
atter the City has accepted this Purchase Contract, such number of copies of the final Official Statement
dated the date hereof relating to the Bonds, as it may be amended and supplcmented from time to time
pursuant tu Section 6(t1 (the"nf�iciu!Stutemenf'), as the Underwriters may reasonably request in order
for the Underwriters to comply with the rules of the Municipal Securities Rulemaking Board (the
"ti1.SXB")and paragraph (b)(4) of 17.CFR.240 15c2-12 ("Rule ISc2-I2"). Prior to the date hereof, the
District delivered to the Undcrwriters a cec-tificate pursuant to Securities and Exchange Commission Rule
I Sc2-12(b)(1), relating to the Preliminary Official Statemcnt, in substantially the fo�m attached hereto as
Lxhibit A.
z�a-o�uz����-z
2
The [)istrict hereby authorizes the use of the Official Statcment by the Underwriters in connection
with thc public offerin�and the sale of the Bonds. The Underwritcrs hereby agree that they will not send
any confirmation requesting payment for the purchase of any Bonds unless the confirmation is
accompanied by or preceded by the delivery of a copy of the Official Statement. The Underwriters agree
that from the time the Official Statement becomes available until the earlier of: (i) 90 days from the"enil
o/thc>c�nde�•tivritin�period,"as defined in Section 6(h) of this Purchase Contract,or(ii)the time when the
Official Statement is available to any person from a nationally recognized municipal securities
information repository, but in no case less than 25 days following thc"end of the underwriting period"(as
detined bclow), each Underwriter shall send, no later than the next business day following a request for a
copy thereof, by first class mail or other eyually prompt means, to any Potential Customer, as detined in
the Rule,on request, a single copy of the Official Statement. The Representative agrees to: (1)provide
the District with final pricing information on the Bonds, (2)promptly file a copy of the Ofticial
Statement, including any supplements prepared by the District with a nationally recognized municipal
securitics intormation repository, (3) promptly notify the District of the end of the underwriting period(as
such tenn is defined in Rule 15c2-12), and (4) take any and all other actions necessary ro comply with
applicable Securities and Exchange Commission rules and MSRB rules governing the offering, sale and
delivery of the Bonds to ultimatc purchasers.
Section 6. Representations and Warranties of the I�istrict. The District represents and warrants
to the Underwriters that:
(a) The District is a cortununity facilities district duly organized and existing under the Act
and the laws of tlie State of California(the"State")and has all necessary power and authority to enter into
and perfonn its duties under the District Agreements (defined bclow) and, when duly authorized,
executed and delivered by the other parties thereto, the District Agreements will each constitute a legal,
valid and binding obligation of'the District enforceable in accordance with its respective terms, except as
enforceability may be limited by bankruptcy, insolvency,moratoriinn or other laws affecting the
enforcement of creditors' rights generally;
(b) The(:ity(;ouncil as the legislative body of the District has,by a resolution adopted by a
majority of the members of the City Council at a meeting duly called, noticed and conducted,at which a
quorum was present and acting throughout, on December_, 2007 (the"Di.sn•ict Resoltrtron"), taken all
ofticial action necessary to be taken by it for(i)the execution,delivery and due performance of the
Indenture, Escrow Agreement, the Tax Certificate of the District dated the Closing Date as hereinafter
detined(the"Tnx CertiJicate")and the Continuing Disclosurc Agrcement, dated the Closing Date(thc
"Continuing Uisclos��r•e AgreemenP'), by and among the District, the Trustce and MuniPinancial,as
Dissemination Agent, (collcctivcly, the"District Agreements") and this Purchase Contract; (ii) the
distribution ot�the Preliminary OfGcial Statement and the execution and deliver of the Official Statement;
(iii)thc issuance, sale and delivery of the Bonds; and (iv) and for the taking of any and all such action as
may be required on the part oi the Uistrict to carry out,give eftect to and consummate the transactions
contemplated hereby;
(c) This Purchase Contract constitutes, and upon their issuance and delivery,the Bonds,and
the District Agreements will constitute, legal, valid and binding oblibations of the District enforceable in
accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency,
moratorium or creditors' rights benerally; and to the best knowledge of the District, the execution and
delivery of the District Agrecments, the Bonds and this Purchase Contract, and compliance with the
provisions of each thereof will not in any material respect conflict wilh or constitute a►naterial breaclti of
or a material default under any applicable law or administrative regulation of the State of California or the
United States, or any applicable judgment, decree, agreement or other instrument ro which the District is a
party or is otherwisc subjcct;
z3a-o�u��r��,�-z
3
(d) At the ti►ne of the District's acceptance hereof and at all times subsequent thereto up to
and including the time of the Closing, the information and statements in Preliminary Official Statement
and the Of�ficiai Stateinent did not and wi11 not contain any untrue statemenl of a inaterial fact or omit to
state a material fact necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleadinb;
(e) As of ti�e date i�ereof and except as otherwise disclosed in the Official Statement, there is
no action, suit, proceeding or investigation, notice of which has been served on the District, before or by
any court,public board or body pending against the District or to the best knowledge of the District
threatened against the District, wherein an unfavorable decision, ruling or finding would: (i)affect the
creation, organization, existence or powers of the District, or the titles of its members or officers, (ii)
enjoin or restrain the issuance, sale and delivery of the Bonds, the levy and collection of the Special Tax
or the utie of any other monies or properties pledged or to be pledged under the Indenture for the paymcnt
of thc Bonds, (iii) in any way yuestion or affect any of the rights,�owers,duties or obligations of the
District with respect to the monies pledged or to be pledged to pay the principal of,premium, if any,or
intcrest on the Bonds, (iv) in any way question or affect any authority for the issuance of the Bonds,or the
validity or enforceability of the Bonds or the District A�reements, or(v) in any way question or affect the
Purchase Coniract,the Sonds,the transactions contemplated by the Purcl�ase Contract,the Official
Statement, or any other abreement or instrument to which the District is a pai'ty relating to the issuance of
the Bonds;
(� If,between the date hercof and the datc which is 25 days after the"end oJthe
auTdentiriting perind"(as defined in Section 6(h)), any event occurs, or facts or conditions become known
of which the Uistrict or the City has knowledge and which in the reasonable opinion of Richards, Watson
&Gershon, A Professional Corporation, Los Angcles, California("Bond CounseT'), Lofton&Jcnnings,
San Francisco, California("Disclosur•e CucrnseP'), or Best, 13est& Krieger, LLP, Indian Wells,
California, as City Attorney (the "Cit}�Attorney"), would cause the infonnation contained in the Ot�f icial
Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit
to state a material fact necessary to make such information therein, in the light of the circumstances under
which it was presented, not misleading in any material respect, the District will notify the Representative,
and, if in the opinion of the Represcntative, such event requires the preparation and publication of a
supplement or amcndment to the Official Statement, the District will forthwith prepare and furnish to thc
Underwriters(at the expense of the District}a ceasonah4e number of cop'ses of an amendment of or
supplement to the Official Statement(in form and substance satisfactory to the Underwriters) which will
amend or supplement the Official Statement so that it will not contain an untrue statement of a material
tact or omit to state a material fact necessary in order to make the statements therein, in the light of thc
circumstances existing at the time the Osfi�iaf Statement is defivered to prospective purchasers, not
misleading in any material respect. If such notification shall occur subsequent to the Closing, the District
shall forthwith provide to the Underwriters such certificates as the Underwriters may reasonably deem
necessary to evidence the truth and accuracy of such supplement or amendment to the Official Statement.
For the purposes of this subsection,betwcen the date hereof and the date which is 25 days after the "end
of the underwriting period" for the Bonds, the District will furnish such information with respect to itself
as the Underwriters may from time to time reasonably request;
(g) If the inCormation contained in the Ofticial Statement is amended or supplecnented
pursuant to Section 6(fl, at the time of such supplement or amendment thereto and (unless subsequently
again supplemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and
including the date which is 25 days after the"end of the�undertit�riting pe�•iod,"as defined in Section 6(hl
for the Bonds, the pot-tion of the Official Statement so supplemented or amended(including any iinancial
and statistical data contained thercin),excluding statements and infonnation under the caption
"UNULRNRIT[NG,"in APPL•NnIX D—"DTC AND THE• BOOK-ENTKY ONLY SYS"fEM"and information as to
prlce and is�terest rate on t4�e cover of the Officia4 Statement,will not contain any untrue statement of a
Z3a-u�Uz9�pc '
4
material fact or omit to state a material fact necessary to make such information therein, in the light ot�thc
circumstances under which it was made, not misleading in any material respect;
(h) As used herein and for thc purposes of the foregoing, the term "end of underwriting
period" for the Bonds shall ►nean the earlier of(i) the Closing Date unless the District shall have been
notified in writing to the contrary by the Representative on or prior to the Closing Date or(ii) the date on
which the"end of the underwriting period" for the Bonds has occurred under Rule 15c2-12,provided,
however, that the District may treat as the"end of the underwriting period" for the Bonds the date
specified as such in a notice from the Representative stating the date which is the "end of the underwriting
period;"
(i) Any certiticate signed by any official of the Uistrict authorized to do so shall be deemed a
representation and warranty by the District to the Underwriters as to the statements made thercin;
(j) The District shall apply the proceeds of the Bonds, including the investment earninbs
thereon, in accordance with the Indenture and the L.scrow Abreement, and as described in the Official
Statement;
(k) The District is not in default in any materia) respect, and no such default has occurred and
is occurring on any bond,note or other obligation for borrowed money or any agreement under which any
such obligation is or was ouistanding; and
(I) The District will undertake, pursuant to the Continuing Disclosure Agrcement to provide
ccrtain annual tinancial information and notices of the occurrence of certain events, if material. A
description of this undertakinb is set fonh in the Preliminary Ofticial Statement and will also be set forth
in the final Official Statement.
Section 7. Representations and Warranties oi�the City. T}ie City represents and warrants to thc
Undcrwriters that:
(a) The City is a charter city and municipal corporation duly organized and existing under
the laws of the State of California (the"State")and has all necessary power and authority to enter into and
perform its duties under the City Agreements(detined below)and, when duly authorized, executed and
delivered by the other parties thereto, the City Agreements will each constitute a Iegal, valid and binding
obligation of tl�e City enforceable in accordance with its respective ter►ns, except as enforceability may be
limited by bankruptcy, insolvency, moratorium or other laws affecting the enforecment of creditors' rights
�cnera44y;
(b) The City Council of thc City has,by a resolution adopted by a majority of the membcrs
of the City Council at a meeting duly called, noticed and conducted, at which a quorum was present and
acting throughout,on December , 2007 (the "City Resoh�tion"), taken all official action necessary to be
taken by it for(i) the execution, delivery and due performance of the, Escrow Agreement, the Tax
Certificate of the City dated the Closing Date as hereinaRer defined (the"Tu.r Certifcnte")and the
Continuing Disclosure Agreement of the City, dated the Closing Date(the "Continuing Disclosure
Agrcement") (collectively, the "Citi�A�reements") and this Purchase Contract; (ii) the distribution of the
Preliminary Ofticial Statement and the exccution and deliver of the official Statement; (iii)the issuance,
sale and delivery of the Bonds; and(iv)and for the takin�of any and all such action as may be required
on the pan of the City to carry out, give effect to and consummate the transactions contemplated hereby;
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(c) This Purchase Contract constitutes, and upon their issuance and delivery, the City
Agreements will constitute, Iegal, valid and binding obligations of the City enforceable in accordance
with their terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or
creditors' rights benerally; and to the best knowledge of�the City, the execution and delivery of the City
Agreements and this Purchase Contract, and compliance with the provisions of each thereof will not in
any inaterial respect conflict with or constitute a material breach of or a material detault under any
applicable law or administrative regulation of the State of California or the United States,or any
applicable judgment, decree, agreement or other instrument to which the City is a party or is otherwise
subjert;
(d) At the time of the City's acceptance hereof and at all times subsequent thereto up to and
including the time of the Closing, the information and statements in Preliminary Official Statement and
the Official Statement did not and will not contain any untrue state►nent of a material fact or omit to state
a material fact necessary to make the statements therein, in the light of the circucnstances under which
thcy were made, not misleading;
(c) As of the date hereof anJ except as otherwise disclosed in the Ofticial Statement,there is
no action, suit,proceeding or investigation, notice of which has been served on the District, before or by
any coui-t, public board or body pending against the City or to the best knowledge of the City threatened
against the City, �vherein an unfavorable decision, ruling or finding would: (i)aftect the creation,
organization, existence or powers of the City,or the titles of its members or ofticers,(ii)enjoin or restrain
the issuance, sale and delivery of the Bonds, the levy and collection of the Special Tax or the use of any
other monies or propertics plcdged or to be pledged under the lndenture for the payment of the Bonds,
(iii) in any way question or aftect any of the rights,powers,duiies or obligations of the City with respect
to the monies pledged or to be pledged to pay the principal of,premium, if any, or intcrest on the f3onds,
(iv) in any way question or affect any authority for the issuance of the Bonds,or the validity or
entorccability of the Bonds,the Purchase Contract or the City Agreements, or(v) in any way question or
affect the 1'urchase Contract, the Bonds, the City Agreements, the transactions contemplated by the
Purchase Contract, the Official Statement, or any other agreement or instrument to which the City is a
party relating to the issuance of the Bonds;
(t) If, between thc date hereof and the date which is 25 days after the"end of the
z�nclenti�riting pei�iocP'(as defined in Section 7(h)),any event occurs, or facts or conditions become known
of which the City has knowledge and which in the reasonable opinion of Bond Counsel, Disclosure
Counsel or the City Attorney, would cause the information contained in the Official Statement,as then
supplemented or amended, to contain an untrue statement of a material fact or to omit to statc a matcrial
fact necessary to make such infonnation therein, in the light of the circumstances under which it was
presented, not misleading in any material respect, the City will notify thc Underwriters,and, if in thc
opinion of the Undenvriters, such event requires the preparation and publication of a supplement or
amendment to the Official Statement, the City will fonhwith prepare and furnish to the Underwriters (at
the expense of the City) a reasonable number of copies of an amendment of or supplement to the Of(icial
Statement (in form and substance satisfactory to the Unde�writers) which will amend or supplement the
Ofticial Statement so that it will not contain an untrue statement of a material fact or omit to state a
material fact necessary in ordcr to make the statements therein, in the light of the circumstances existing
at the time the Ofticial Statement is delivered to prospective purchasers, not misleading in any material
respect. If such notification shall occur subsequent to the Closing, the City shall forthwith provide to the
Underwriters such ceniticates as the Underwriters may reasonably deem necessary to e��idence the truth
and accuracy of such supplement or amendment to the Official Statement. For the purposes of this
subsection, between the date hereof and the date which is 25 days after the"end of the underwritin�
period" for the Bonds, the City will furnish such infom�ation with respect to itself as the Underwriters
may from time to time reasonably request;
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(g) If the information contained in the Official Statement in AP�L��DrX B—"G�NGRAL
INFORMATION CONC�.RNING THC- CITY OF PnLM DESGRT" is amended or supplemented pursuant to Sertion
7�f , at the time of such supplement or amendment thcreto and(unless subsequently again supplemented
or amendcd pursuant to such subparagraph)at all times subsequent thereto up to and including the date
which is 25 days after the"end of the under-writing period,"as defined in Section 6(h) for the Bonds, the
portion of ihe Official Statement so supplemented or amended(including any tinancial and statistical data
contained therein), excluding statements and information under the caption "UNDLRWRITING,"in
APPENDIX D—"DTC AND THE BOOK-ENTRY ONLY SYSTGM"and infonnation as to price and interest rate
on the cover of the Ofticial 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 such information therein, in the
light of the circumstances under which it was made, not misleading in any material respect;
(h) As used hcrein and for the purposes of thc foregoing, the tcrm"end of undertirriting
pe�•ioc/" for the Bonds shall mean the earlier of(i)the Closing Date unless the City shall havc been
notified in writinb to thc contrary by the Representative on or prior to the Closing Datc or(ii)tl�e date on
which the"end of the underwriting period" for the Bonds has occurred under Rule I Sc2-12,provided,
however,tliat the Ciry may treat as the"end of the underwriting period" for the Bonds the date specitied
as such in a notice from the Representative stating the date which is the`'end of the underwriting period;"
(i) Any certiticate signed by any ofticial of the City authorized to do so shall be deemed a
represcntation and wan�anty by the City to the Underwriters as to thc statcments made therein;
(j) The City shall apply the proceeds of the Bonds, including the investment earnings
thereon, in accordance with the Indenture and the Escrow Agreement,and as described in the Official
Statement; and
(k) The City is not in dcfault in any material respect and no such default has occurred and is
occurring, on any bond, note or other obligation for borrowed ►noney or any agreement under which any
such obligation is or was outstanding.
Section 8. The Closin�. At 8:00 A.M., California time, on January 15, 2008,or on such earlier
or later datc as may be a�reed upon by the Representative and the District (the"Closing Dute"), the
Underwriters will accept delivery of the Bonds through the tacilities of The Depository Trust Company in
Ncw York, New York("DTC"') by the initial deposit with the Trustee(in care of DTC}through the Fast
Automated Securities Transfer System procedures and will deliver or cause to be delivered at the offices
of Bond Counsel in Los Angelcs, California, or such other place as shall have been mutually agreed upon
by the parties,the other documents described herein and the Underwriters shall pay the purchase price of
thr Bonds as set forth in Section 1 of this Purchase Contract in immediately available funds to the order
of tl�e Trustee, less the premium for the Insurance Policy in the amount of S , which tl�e
Representative will wire directly to thc Insurer.
The Bonds shall be issued in fully registered form. It is anticipated that CUSIP identitication
numbers will be insertcd on the Bonds, but neither the failure to provide such numbers nor any error with
respect thereto shall constitute a cause for failure or refusal by the Underwriters to accept delivery of the
t3onds in accordance with the terms of this Purchase Contract.
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Section 9. Termination bv the Underwritcrs.
Tl�e Representative shall have the right to terminate the obligations of the Under�vriters under this
Purchase Contract to purchase, to aceept delivery of and to pay for the Bonds by notifying the City of its
elcction to do so it; after the execution hereof and prior to Closing: The Underwriters shall have the right
to terminate their obligations tmder this Purchase Contract to purchase, to accept delivery of and to pay
for the Bonds by notifying the County of its election to do so if, after the execution hereof and prior to
Closing Date: (1) lcgislation (including any amendments thereto), resolution, rule or regulation (including
any amendments thereto) shall be introduced in, considered by or be enacted by any governmental body,
department or political subdivision of the State, or a decision by any court of competent jurisdiction
within the State shall be rendercd which, in the reasonable opinion of the Underwriters would make it
impracticable or inadvisable to proceed with the offer, sale or delivery of the Bonds on the terms and in
the manner contemplated in the Official Statement; (2)the outbreak or declaration of war, institution of a
police action,engagement in military hostilities by the United States,or any escalation of any existing
conflict or hostilities in which the United States is involved, or the occurrences of any other national or
international emergency or calamity or crisis or any chanbe in tinancial markets resulting from or any
escalation of the foreboing, which, in the reasonable opinion of the Underwriters�vould make it
i►npracticable or inadvisable to proceed with the offer, sale or delivery of the 13onds on the tenns and in
the manner conte►nplated in the Official Statement; (3)the declaration of a general banking moratorium
by federal,New York or California authorities, or the general suspension or material limitation of trading
on the New York Stock Exchange, the Nasdaq National ?vlarket, in any over-the-counter market or any
national securities exchange which materially adversely affects the market price of the Bonds; (4)the
imposition by the New York Stock Gxchange or other national securities exchan�e, or any governmental
authority,of any material restrictions not now in force with respect to the Bonds or obligations of the
general character of the Bonds or securities generally, or the material increase of any such restrictions
now in f'orce, including those relating to the extension of credit by,or the charge to the net capital
require►nents of,the Under�vriters which, in the reasonable opinion of the Undenvriters would make it
impracticable or inadvisable to proceed with the offer, sale or delivery of the Bonds on the tenns and in
the manner contemplated in the Official Statement; (5) legislation enacted(or resolution passed) by or
introduced or pending legislation amended in the Congress or recommended for passage by the President
of the Unit�d States,or an order,decree or injunction issued by any court of competent jurisdiction,or an
order, rulinb, regulation (17na1, temporary or proposed) issued or made by or on behalf of the Sccurities
and Cxchange Commission,or any other governmental agency having jurisdiction of the subjcct matter,
ro the effect that securities of the general character of the Bonds, or the Bonds, including any or all
underlying arrangements, are not exempt trom registration under the Securities Act of 1933,as amended,
or that the Indenturc is not exempt from qualification under the Trust Indenture Act of 1939,as amended,
or ti�at the execution, oifering or safe of obligations of the general character of the F3onds, including any
or all underlying arrangements, as contemplated hereby or by the Official Statemcnt,otherwise is or
would be in violation of the federaf securities laws as amended and then in effect; (6) action is taken by or
on bchalf of the State or the State Franchise Tax Board, with the purpose or effect, directly or indirectly,
ot�imposing State personal income taxation upon such interest as would be received by the Owners of the
Bonds; (7) thc withdrawal or downgradinb or any notice of an intcnded or potential downgrading ot�any
raUng of�the obligations ot�the County(including the rating to be issued with respect to the 13onds)by a
"nationally recognized statistical rating organization," as such term is detined for purposes oC
Rule 436(g)(2) under the Securities Act of 1933 as amended which, in the reasonable opinion of the
Underwriters would make it impracticable or inadvisable to proceed with the offer, sale or delivery of the
Bonds on the terms and in the manner contemplated in the Official Statement; (8)any event occurring, or
information becoming known which, in the reasonable judgment of the Underwriters,make untrue in any
material respect any statement or information contained in the Official Statement, or has the effect that
the Official Statement contains any untrue statement ot�a material fact or omits to state a material fact to
be stated therein ur necessary in order to make the statements thcrein, in the light of the circumstances
iinder�vhich they were made, not misleading; (9) any change or development involving a prospective
���-o�uze��,�-z
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change in the condition of the County, financial or otherwise, or in the operations of the County from
those set lorth in the Official Statement that makes the Bonds, in the reasonable judgment of the
Underwriters, iinpracticable or inadvisable to offer, sell or deliver the �3�nds on the terms and in the
manner conte►nplated by the Official Statement; (10)a material disruption in securities settlement or
commercial banking,payment or clearance services in the United States shall have occu�red and be
continuing; or(11)the purchase of and payment for the Bonds by the Underwriters, or the resale of the
Bonds by the Underwriters, on the terms and conditions herein providcd shall be prohibited by any
applicable law, governmental authority, board, agency or commission; (12)a general suspension of
trading, minimum or maximum prices for trading shall have bcen Gxed and be in force or maximum
ranges or prices for securities shall have been required and be in force on the New York Stock Exchange
or other national stock exchange whether by virtue of a determination by the New York Stock Exchanbe
or by order of the Securities and Gxchange Commission or any other governmental agency having
jurisdiction; or(13)any action, suit, proceeding, inquiry, litigaiion or investigation, at law or eyuity,
before or by any court or public body, shall be instituted,pending or threatened that requires the
preparation of a supplement or amendment to the Ofticial Statement.
Section 10. Closin�Conditions. The Underwriters have entered into ihis Purchase Contract in
reliance tipon the representations, warranties and agreements of the District contained herein and to be
contained in the documents and instniments to be delivered at Closing, and upon the perfonnance by the
District of its respective obligations hereunder, both as of the date hereof and as of the Closing Date.
Accordingly, the obligations of the Underwriters under this Purchase Contract to purchase, to accept
delivery of and to pay for the Bonds shall be subject to the performance by the District of its obligations
to bc performed hereunder and under such documents and instruments at or prior to Closing, and shall
�ilso be subject to the following conditions:
(a) The representations and wan�anties of the District and the City contained herein shall be
true,complete and con-ect on the datc hereof and on and as of the Closing Date, as if made on the Closing
Datc;
(b) As of the Closing Date: (i)each of the District Agreements and the City Agreements shall
be in full force and effect,and shall not have been amended,moditied or supplemented,except as cnay
have been agrced to by the City and the Underwriter,and(ii)the City shall perform or ha��e performed all
of its obligations reyuired under or specified in the District Agreements to be perfonned by the City at or
prior to the Closing Date;
(c) As of the Closing Date, all necessary official action of the District relating to the Bonds
and the I�istrict Agreements shall have been taken by the District, all necessary official action of the City
relating ro the Bonds and the City Agree►nents shall ha��e been taken by tl�e City,and each of the District
A�rccmcnts and thc City Agreements shall be in full force and effect and shall not havc becn amended,
modified or supplemented in any material respect;
(d) At or prior to Closing, the Underwriters shall have received each of the following
documcnts:
(i) Certified copies of the District Resolution and the City Resolution, and executed
copies of each of the llistrict Agreements and the City Agreements.
(ii) The Preliminary Official Statement and the Official Statement,with the Official
Statement executed on bel�alf of the District by a duly authorized ofticer of the District;
(iii) The Continuing Disclosure Agreement, executed on behalf�of the Dislrict by a
duly authorized officer of the City;
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9
(iv) An approving opinion of Bond Counsel, dated the Closing Date, substantially in
the fonn attached as Appendix D to the Official Statement, and a reliance Ictter with respect
thereto addresscd to the Underwriters and the Insurer.
(v) A supplemental opinion of Bond Counsel,addressed to the Underwriters and the
Insurer, to the effect that: (i) the Bonds are not subject to the registration requirements of the
Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the
Trust Indenture Act of 1939, as amendcd; and(ii)the statements contained in the Official
Statement, under the captions"THf�: SI�:RI1:S 2008 BOhDS,"and"SECURI'I'Y AND SOURCES OF
P�YMEhT FOR Tilf•,SLR]L•S 2008 BONUS" are accurate in all material respects insofar as such
statements summarize certain provisions of the lndenture and the Bonds, and thc statements
contained in the Official Statement under the caption"Tnx MArrLRs," insofar as such statements
summarize the legal opinion and certain provisions of federal and State law, are accurate in all
material respects.
(vi) An opinion of Bond Counsel, dated the Closing Date, and addresscd to
the Authority, the District and the Underwriters, in the form and substance satisfactory to
the District and the Underwriters, to thc effect that the Prior Bonds have becn defcascd.
(vii} A certiticate of the DisU�ict, dated the Closing Date, from a duly authurized
ofticial of the llistrict to the effect that:
(A) The representations and warranties of the District contained in Section 6
hereof are true and correct in all material respects on and as of the Closing Date as if
made on the Closing Date;
(B) To the best knowledge of such official, no event afCecting the District has
occurred since the date of the Official Statement which should be disclosed in the Official
Statement in order to make the statemenis therein not misleading.
(C) No litigation,notice of which has been served on the District, is pending
or to the best knowledge of such official threatened against the District: (1) to restrain or
enjoin the issuance, sale or delivery of the Bonds, or the validity of the District
Agreements or the Special Tax, (2) in any way contesting or affecting the validity of the
I'urchase Contract, the Bonds, or the District Agreements, or(3) in any way contesting
the existen�c of the llistrict.
(viii) a certificate of the City signed by an authorized officer of the City dated the
Closing Date to the effcct that:
(A) the representations and warranties of the City contained in Scction 7
hereof are true and correct in all material respects on and as of the Closing Uate as if
made on the Closing Date; and
(13) the information relating to the City in APP�Nutx B—"GrN�:Rn�
INFORMA"fION CONCE•RNING l'HE CITY OF PALM DLSERT" to the Of ticial State►nent, as ot�
its date and as of the date of the Closing, is true and correct in all material respects.
(ix) An opinion of the City Attorney,dated the Closing Date and addresscd to the
City, the Underwriters and the Insurer in substantially the form of l:xhibit B.
�34-07029',pr•2
��
(x) The opinion of Lotton&Jennings, Disclos�rre Counsel, dated the Closing Date
and addressed to the District and the Underwriters, to the effect that, based upon the information
made available to them in the course of their participation in the preparation of the Official
Statement and without passing on and without assuming any responsibility for the accuracy,
completeness and fairness of the statements in the Official Statement,and having made no
independent invcstigation or verification thereof, no facts have come to their attention that lead
them to believe that, as of the Closing Date, the Official State►nent (except for any financial or
statistical data or forecasts, numbers, charis, estimates,projections, assumptions or expressions of
opinion,as to which no opinion or view need be expressed)contains any untrue statement of a
material fact or omits to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading and that the Bonds are
exempt from registration under the Securities Act and the Indenture is exempt from qualification
pursuant to the Trust Indenture Act of 1939, as amended,and that the Continuing Disclosure
Agrcement provides a suitable basis for the Underwritcrs, in connection with the Offering(as
detined in the Securities and Exchange Commission Rule 15c2-12)of the Bonds, to make a
reasonable determination as required by section (b)(5)of said Rule.
(xi) The opinion ofcounsel to Wells Fargo. Bank National Association, as the
Trustee,thc L.scrow Agent and the Dissemination Agent (the "l3ank"), dated the Closing Date,
addressed to the District and the Underwriters, to the effect that:
(A) the Bank is a national banking association duly organized and validly
existing and in good standing under the laws of the United States of America and has ful l
power and authority to execute and deliver d�e Indenture,the Escrow Agreement and the
Continuing Disclosure Agreement and to perfonn its respective obligations thereunder;
(�3) the Indenture, the Escrow Agreement and the Continuing Uisclosure
Agreement have each been duly authorired,executed and delivered by the Bank, in its
respective capacities described under each such agreement, and each constitutes a valid
and binding obligation of the Bank enforceable against the Bank in accordance with is
respective ternls, except insofar as the validity, binding nature and enforceability of the
obligations of the Bank under such agreements may be limited by the effect of(I)
insolvency, reorganization, ai-rangement, moratoriu►n, fraudulent transfer and other
similar laws,(2) the discretion of any court of competent jurisdiction in awarding
equitable re►nedies, including, without limitation,specific performance or injunctive
relicf, and(3)tl�e effect of general principles of equity embodied in California statutes
and common law;
(C) the authorization,exccution and delivery of the Indenture, the �scrow
Agreement and the Continuing Disclosure Agreement by the Bank,and compliance with
the respective provisions thereof, will not contravene the Articles of Association or
13ylaws of the Bank or any law, ruling or regulation governing the banking and tnist
powers of thc Bank;
(D) there is no litigation pending against the Trustee to restrain thc Trustee's
panicipation in, or in any way contesting the powers of the Trustee with respect to the
transactions contemplated by the lndenture, the Escrow Agreement or the Continuing
Disclosure Agreement; and
(E) no authorization, approval, consent, or other order of any governmental
agency or regulatory authority having jurisdiction over the Bank that has not bcen
z�a-o�ozy�.���-z
II
obtained is required for thc authorization, execution and delivery by the Bank of the
Indenture, the F,scrow Agreement or the Continuing Disclosure Agreement.
(xii) A certiticate of the 13ank, dated the Closing Date,to the effect that:
(A) The Bank is a trust company existing under the laws of the United States
of A►nerica, and has full power and is qualified to accept and comply with the tenns of
thc Indenture, the Escrow Agrcemcnt or the Continuing Disclosure Agreement, and to
perform its respective obligations stated therein;
(B) The Bank has accepted the duties and obligations imposed on it by the
Indenture,the Lscrow Agrecmcnt or the Continuing Disclosure Agreement;
(C) No consent,approval, authorization or other action by any governmental
or regulatory authority having jurisdiction over the Bank that has not becn obtained is or
will be required for tl�e consummation by the Bank of the transactions contemplated by
the (ndenture and the Escrow Agreement to be undertakcn by the Bank, in its respective
capacities under such agreements;
(D) Compliance with the terms of the Indenture, the Escrow Agreement and
the Continuing Disclosure Abreement will not conflict with, or result in a violation or
breach of, or constitute a default under, any loan agreement, indenture, bond, note,
resolution or any othcr agreemcnt or instrumcnt to which the Bank is a party or by which
it is bound, or, to thc best knowledge of the Bank,after reasonable investigation, any law,
rule, regulation, order or decree of any court or governmental agency or body having
jurisdiction over the Bank or any of its activities or properties (except that no
representation, warranty or agreement is made by the Bank with respcct to any Federal or
state sccurities or Blue Sky laws or regulations); and
(1:) To the best knowledge of the Bank, there is no action, suit, procceding,
inquiry or invcstigation, at law or in equity, before or by any court or governmental
agency,public board or body served on or threatened against or affecting the existence of
the Bank, or in any way contesting or affectinb the validity or enforceability uf the
13onds, the Indenture, the Escrow Agreement and the Continuing Uisclosure A�reement
or contesting the powers of'the Bank or its authority ro entcr into and perfonn its
obligations under the Indenture, the Escrow Agreement, the Continuing Disclosurc
Agreernent or the Bonds, wherein an unfavorable decision, ruling or fnding would
adversely affect the validity of the Indenture, the �scrow Abreement, the Continuing
Disclosure Agrcement or the Bonds.
(xiii) The Insurance Policy insuring the payment of the principal of and interest on the
Bonds issued by the Insurer.
(xiv) The opinion of Counsel ro the Insurer addressed to the City and the Undenvriter,
dated the Closing Uate, to the effect that the Insurance Policy is a legal, valid and binding
obligation of tiie Insurer enforceable in accordance with its tenns.
(xv) A Certiticate orthe Insurer, dated the Closing Uate, to the effect that the
statements in the Preliminary Official Statement and the Official Starement under the caption
"FfNnNCIAL GUnRnNTY INSUR�INCL•"and contained in AYP[?NDIX G-"SPGCIMEN FINANCI�L
G�ARANf'1'INSURnNCE PUUCY"accurately reflects and fairly represents the information
purported to be sho�vn therein.
z 3�s-o�oz����,�-z
12
(xvi) Evidence from Standard& Poor's,a division of the McGraw Hill Companies,
Inc. that it has assigned an insured rating to the Bonds of"AAA" [and evidence from Fitch
Ratings that it has assigned an insured rating to the Bonds of"AAA."]
(xvii) A certiticate of Grant Thornton LLP(the"Ve�•ifcueion Agent"), independent
certified public accountants, dated the Closing Date, to the effect that it has veriGed the
cnathematical accuracy relating ro: (i)computation of forecasted receipts of principal and interest
on the l:scrow Securities and the forecasted payments of principal and interest to redeem the Prior
Bonds, and(ii) computation of'the yields on the Bonds and the Escrow Sccurities to be deposited
in the Rcfunding Fund;
(xviii) A Tax Certificate,executed on behalf of the District by a duly authorized ofticer
of the City.
(xix) Evidcnce of required filings with the California Debt and Invcstment Advisory
Commission.
(xx) A copy of the executed Blanket Letter of Representations by and between the
District and The Depository Trust Company, New York, New York, relating to the book-entry
system for thc Bonds;
(xxi) Such additional Iegal opinions, certificates, instruments and documents as the
Underwriters may reasonably request to evidence the truth and accuracy,as of the date hereof and
as of the Closing Date, of the representations and warranties of the District contained herein and
of�the statements and information contained in the Official Statement and the due performance or
satisfaction by the District on or prior to the Closing Date of all agreements then to be performed
and all conditions then to be satisfied by the District.
All of the opinions, letters, certificates, instru►nents and other documents mentioned above or
elsewhere in this Yurchase Contract shall be deemed to be in compliance with the provisions hercof if, but
only if, they are in form and substance satisfactory to the Underwriters. Receipt of; and payment for, the
F3onds shall constitute evidence of the satisfactory nature of such as to the Underwriters. The
perfonnance of any and all obligations of the District hereunder and the perfonnance of any and all
conditions contained herein for the benefit of the Undeilvriters may be waived by the Representative in its
solc discretion.
If the District shall be unable to satisfy the conditions to the obligations of the Underwriters to
rurchase, accept delivery of and pay for the Bonds contained in this Purchase Contract,or if the
obli�ations of the Underwriters to purchase, accept dclivery of and pay for the Bonds shall be terminated
for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate, and non�of
thc Underwriters nor the District shall be undcr further obligation hereunder, except that the respcctive
obligations of the District and the Under�vriters set forth in Section 10 hereof shall continue in full force
and cCf'ect.
Section l 1. F.xnenses. (a) The Underwriters shall be under no obligation to pay and the Uistrict
shall pay the following expenses incident to the performance of the obligations of the District hereunder:
(i) the fecs and disbursements of Bond Counsel and Disclosure Counsel; (ii) the cost of printing and
delivering the Bonds, the Preliminary Oflicial Statement and the Official Statement (and any amendment
or supplcment prepared pursuant to Section 6 of this Purchase Contract); (iii) the fecs and disbursements
uf I�el Itio Advisors, LLC, as Financial Advisor to the District, the Verification Agent, �IuniFinancial, as
Special Tax Consultant, thc 13ank, accountants, advisers and of any other experts or consultants retained
�3a-o�uz9�.pc-2
13
by the llistrict; and (iv) any other expenses and costs of the District incident to the performance of their
respective obligations in connection with the authorization, issuance and sale of the Bonds, including out-
of-pocket expenses and regulatory expenses, and any other expenses agrced to by the parties.
(b) The Underwriters shall pay all expenses incurred by them in connection �vith the public
offering and distribution of the Bonds including,but not limited to: (i) all advertisin�;expenses in
connection with the offering of the Bonds; and(ii)all out-of-pocket disbursements and expenses incurred
by ihe Underwriters in connection with the offering and distribution of the Bonds (including travel and
other expenses, fees of the California Debt and Investment Advisory Commission, CUSIP Service Bureau
fees, costs and fees to prepare any blue sky memoranda and any other fees and expenses), except as
�rovided in(a) above or as otherwise agreed to by the Underwriters and ihe District.
Section 12. Notices. Any notice or other communication to be given to the District under this
Purchase Contract may be given by delivering the same in writing at the address for the District set forth
above, and any notice or other com►nunication to be given to the Underwriters under this Purchase
Contract may bc given by delivering the same in writing to the Representative: Stinson Sccurities, LLC,
55 I�rancisco Street,Penthouse A, San Francisco,California 94133; Attention: Lonnie Odom, C�;O.
Section 13. Parties in Interest; Force and �,ffect. This Purchase Contract is made solely Cor the
benefit of the llistrict and the Underwriters (including thcir successors and assigns), and no other person
shall acyuire or have any right hereunder or by virtue hereof. All of the representations, warranties and
abreements of the District contained in this Purchase Contract shall remain operative and in full force and
ef�iect rcgardless ot`. (a) any investigations made by or on bchalf of the Underwriters; or (b) dclivery of
and payment for the Bonds pursuant to this Purchase Contract . The agreements contained in this Section
I 3 and in Section 1 1 shall survive any tennination of this Purchase Contract.
Section l4. Unenforceable Provisions. In the event that any provision of this I'urchase Contract
shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or rcnder unenforceable any other provision of this Purchase Contract.
Scction 15. Counter�ans. This Purchasc Contract may be executed in any number of
counterparts, all of w�hich taken together shall constitute one agreement, and any of the parties hereto may
execute the Purchase Contract by signing any such co�mterpart.
Section 16. Governin� Law; Venue. This Purchase Contract shall be governed and interpreted
cxclusively by and construed in accordance with the laws of the State applicable to contracts made and to
be performed in the State. Any and all disputes or legal actions or proceedinbs arising out of this
Purchase Contract or any document related hereto shall be filed and►naintained in a court of cotnpetent
jurisdiction for matters arising in Riverside County, California. By execution of and delivery of this
Purchase Contract,the parties hereto accept and consent to the aforesaid jurisdiction.
Section 17. Headin�s. The headings of the sections of this Purchase Contract are inserted for
convenience only and shall not be deemed to be a part hereof.
Section 1�. l:ntire Agreement. The parties agree that the terms and conditions of this Purchase
Contract supersede those of all previous agreements between the parties, and that this Purchase Contract
contains the cntire agreement between the parties hercto. In the event of a dispute between the parties
under this Purchase Contract , the losing party in such dispute shall pay all reasonable costs and expenses
incurred by the prevailing party in connection therewith, including but not limited to attorneys' fees.
z3a-n�oz���,-z
14
Section 19. Ef�fectiveness. This Purchase Contract shall become effective upon the execution of
the acceptance hereof by authorized officers of'the District, and shall be valid and enforceable as of�the
time of such acceptance.
Very truly yours,
STINSON SCCURITIES. LLC
KINS�LL, NEWCOMB & DE DIOS, INC.
By: STINSON SECURITIES, LLC,as Representativc
By:
Lonnie Odom
Chief Executive Officer
Acccpted:
CITY O1� PALM DESERT COMMUNITY
PAC1LITlES DISTRICT NO. 91-1 (INDIAN
R1UGE PUBLIC IMPROVEMENTS)
By:
Authorized Officcr
Approved:
CITY OF PALM DGS�RT
By:
Authorized Officer
��a-n�n�v���_,
�5
SCHLDULEI
�
CITY OF PALM DESERT COMMUNITY FACILITIES
DISTRICT NO. 91-1 (INDIAN RIDGE PUBLIC IVIPROVEMF.NTS)
SPECIAL TAX REFUNDING BONDS
SERIES 2008
MATURITIES, AMOUNTS, RATES, YIELDS AND PRICES
Maturity Principal Intcrest
{October 1) Amount Rate Yield Price
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
234-07029�pc-2
EXHIBIT A
S
CITY OF PALM DESERT COMi�1UNITY FACILI'fIES
DISTRICT NO. 91-1 (INDIAN RIDGE PUBLIC IMPROVEMENTS)
SPECIAL TAX REFUNDING BOVDS
SF,RIES 2008
CER'I'IFICATE OF THE DISTRICT
RN:GARDING PRELIMINARY OFFICIAL STATEMF.N"1'
The undersigned hereby states and certitics:
1. That she is the duly qualified and acting City ?vlanager of the City of'Palm Desert(the
"City")as the legislative body of the City of Palm Uesen Community I�acilities District No. 91-1 (Indian
Ridge Public Improvements) (the "District")and, as such, is familiar with the facts herein certitied and is
authorized and qualitied to ceRify the same;
2. That there has been delivered to Stinson Securities, LLC and Kinsell, Newcomb & Uc
Dios, Inc., as the underwriters of the captioned Bonds(the"Underwriters"), a Preliminary Ofticial
Statement relative to the captioned Bonds, dated December , 2007 (including the cover page and all
appendices thereto, in printed form and in electronic form in all material respects consistent with such
printed form, the"Preliminary Official Statement"),which the City,on behalf of the District deems Final
as of its date for purposes of Rule 15c2-12 promulgated under the Securities Excl�ange Act of 1934,as
amended("Rule ]Sc2-12"), except for information permitted to be omitted therefrom by Rule 15c2-12;
and
3. The Uistrict hereby approves thc use and distribution by the Underwriters of the
Prelirninary Ufficial Statement.
Datcd: Deccmber , 2007
CITY OF PALM DESERT COMMUNITY
PACILITIES DISTRICT NO. 91-1 (INDIAN
RIDGE PU�3LIC IMPROVLMLNTS)
By:
�:arlos L. Ortcga
City Manager
234-07112y�pc-2
A-1
EXHIBI"C B
FOR111 OF OPINION OF DISTRICT COUNSEL
[Closing Date]
City of Palm Descrt Community Facilitics
l�istrict No. 91-I (Indian Ridge Public
Improvcments)
Palm Descrt,Califomia
Stinson Securities, LLC
San Francisco, Calisornia
Kinsell, Newcomb& De Uios, Inc.
Solana Bcach,California
[Insurer]
Ncw York, New York
Re: City of Palm Desen Community Facilities Districi No. 91-1 (Indian Ridge Public
Improvements) Special Tax Retunding Bonds, Series 2008
(District C'nunsel Opinion)
Ladies and Gentlemen:
I am the City Attorney of the City of Palm Desert (the "City"). In such capacity, in connection
with the issuance of the above-referenced bonds (the "Bonds") by the City of Palm Desen Community
Facilities District No. 91-1 (Indian Ridge Public Iinprovements) (the "District"), 1 have examined the
original, cenified copies, or copies otherwise identitied to my satitifaction as being true copies of such
resolutions, docu►nents, eertiticates, and records as I have deemed relevant and necessary as the basis
for the opinions set forth herein relying on such examination and pertinent law and subject to ihe
qualifications hereinafter set forth. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Bond 1'urchase Contract, dated December , 2007 (the "Purchase
Contract"), by and among Stinson Securities, LLC, and Kinsell, Newcomb & De Dius, Inc.(the
"Underwriters"), and the City, as the s thc legislative body of the District.
F3ased upon the foregoing, I am of the opinion that:
1. The City is a municipal corporation duly organized and validity existing under the
Constitution and laws of the State of California, with full legal right, power, and authority to form the
llistrict;
2. Rcsolution No. 07- has been duly approved at a meeting of the City Council on
Uecember , 2007, acting as the legislative body ot�the District, which �vas called and he4d pucs�iane
to law and �vith all public notice required by law and at which a yuorum was present and acting
throu�hout, and Resolution No. 07-_ has not been amended since its date of adoption and is now in
full forcc and e(�tect;
z3�-u�oz����-z
13-1
3. Othcr than as disclosed in the Official Statemcnt, no action, suit, procceding, inquiry or
investigation, at law or in eyuity, before or by any court, regulatory agency, public board or body to
which the City or the Disirict is a part and has been served with a summons or other notice thereof, is
pending or, to ►ny knowledge, threatened, in any way affecting the existence of tl�e District, the existence
of the City of the titles of its officers to their respective offices, or secking to restrain or to enjoin the
issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the
Indcnture and the Escrow Agreement, the collection of application of the Spccial Taxes 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, the Escrow Agreement, this Purchase Contract, the 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 thc district
with respect to the Bonds, the Indenture, the Escrow Agreement, this Purchase Contract, the Continuing
Disclosure Agreement, of any action on the part of the City or the District contemplated by any ot�such
documents,or in any way seeking to enjoin or restrain the City from approving the development oi�any of
the property within District, or which challenges the exclusion of the interest paid on the 13onds from
federal income tax purposes and the cxemption of interest paid on the E3onds from State of Calif'ornia
personal income taxation.
4. 7he statements in the Of�ficial 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 oC 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 oC the circumstances under which they were made, not
misleading.
Sincercly,
_'34-07029',pc-2
�-2
L�J l)raft r�4 - I I/l 5/07
PREL1�11NARl'Oh'FICIAL STATF.�IEN'I'DAl'N:U UE('E�1BN:R 14,2007
NF:\�'ItiSUE-I300K-EVTRI'ON1.1' RATInGS: S&P �H'itch�
Insurcd:
Ar N�r up�niun o/72ichen�d�. {�'ut�un ct�(;c��:�hon. A Prufe��.��uunl C'u���orrrtiun. L�,.�.dn�c�lee. ('cih/u�•nic�. Runri Cum�.ce(. hu.�erl on exLclin,L(a�, und
«.�s�un��i,t cump/irrnre nrth rc�rruin cnrenurr�.s seI/nrlh b� Ihc�ducirmtml.c per�nrnbiK fu!he Se��e.ti lllll�Bonrlc culd�c�yture�mr�Ns u/lhe°/�rrr��nu/Rer�•iiuc•
('urlc�u//9�Yf. us mnr�rdr�!(rhe� ..('�,rle�..).n.c dr.cc r�he�d hevrrn. inrr�c�c�oi�Ihe Srric�?IIII,Y Bon�l.c(s nul inc(ti�le�tl in Kruss htcumr oJ thi�n�rne�:c Ihe�rru//ur
/edrru( i�u��nir tu.r pu�7wsc:� fn dte- opiruort of Bu+ul Cuiuu'c�L intrres! tm Ihe Srrirs 111II,4 Bone(ti' i.c nut (rruled us nn i(rm u�(n.�'prrJere��tcr (ur (he�
piu/ttuec oJ lhc�/edivr�(n(Ie�r�nNve mhr�mmn la.r bnpus�tl un intliridunLc ruul caE�a»�ions hiicve.c!on!he Se�ic�s 11111,'i Bwids mu}'he s��/,/��ct tn ccviain
/��d��rnl lnxeec tmposi�A on ca/�uruttun.c. includtnt!he cu�y�o�'nle nherniNire mr�r�mrun �n.r un u ponron oJ�har rn�erc�.c1. /�t Ihr/tu lher upiniun u/Bnnr(
C�otrn.�'el. inte�rc�s�un!he Bundc rs ex�inp�/rom per.eonnl i��c��me la.a�s�mpu.serl hr Ihe S�alr oJ(�nlr/orniu .k�e .T.�a�L1 i i iek.ti'."
$10,720,000*
CI'1�1'OF PALM DI�:S�RT
COMMLNITI'FACILITIES UISTRICT NO.91-1
(INDIAN RIDGE PUBI.IC IMPROVEMF:NTS)
SPF.CIAI.TAX R�:FUNDING BONDS
SERIES 2008
Dated: Date of Issuance Due: October I,as sho��n on the inside co�•cr hereof
The Ciry of Palm Desert('ommunity Facilities District No. 91-I (Indian Ridge Pubhc Impro�ements)(the"District") is issuing 510,720,000*
principal amount of City of Palm Desert Community Facilities District No. 91-I (Indian Ridge Public Impro�ements) Special Tax Refunding Bonds,
Srrics 200R(the"Senes 2008 Bonds")ro:(i)refund and defease all of the outstanding$IG,260,000 principal amount of Palm Uescrt Flnancing Authority
1997 Rc�•cnue Bonds(Assessmcnt Districts No.92-1 [Ilerra�ista�and 94-1 [BighornJ and Communiry Facilities District No.91-I 9�Indian RidgeJ)(the
"Pnor[3onds"), (ii) fund a reserve account as secunty for the Series 2008 Bonds; and (iii)pay certain costs associated wrth the issuance of the Senes
200R Bonds. The Serics 200R Bonds�vill be issued by District pursuant to the temis of a Bond Indenture,dated as of January I,200R(the"indenture").
by and beaveen thc Uistnct and Wells Pargo Bank,National Associauon,as trusree(the"frustee").
The Series 2008 Bonds are special obligadons of the Uistnct payable solely from and secured by Vet Taxes and certain moneys held in thc
Special Tax Pund rstablished under the Indenture (and designated accounts therein, but ercluding the Administrati�•e Expenses Account) as further
described herein. "Net Taxes"are derived from annual installments of sprcial taxes(the"Special Taxes") le�ied and collected on the taxable property
�vithin the Distnct. The Special Taxes are levied according to the rate and method of apportionment of Special Taxes as described herein. The Special
Taxes arc securcd by a lien on certain real property within Ihe Dislrict and does not constitutc a personal indebtedness of the respective propeny o��ners.
Ser"SP('l'RIT}'FOR'I Ilh.ShKII l?Q(1R BC11DS-S�CC12I TBXCi'and ANt�i�t�ix A-"R:�i r nxn Mernuu��r ANi�c�ki ux:nu v i or Srrci:�i Tnxrs."
fhe Senes 2(IOR Bonds��ill be issued as fully registered instrumrnts without coupons,in the denomination of 55,000 or any integral multiple
thereof, in book-entry fomi, initiall}• registered in ihe name of Cede& Co., as nominre c�f The Depository Trust Compan��, Ne�e l'ork, Ne�� York
("UTC"). Purchasers�iill not recri�e physical certrficates rrpresenting their interest in the Senes 2(I(1�Bonds. For so long as the Srries 20U2i Bonds are
registered in the name of Cede&Co.,the"I rustec will make all payments of principal and interest on the Series 20118 Bonds to DTC, �vhich, in tum. is
obligated to remit such principal and interest to DT('Participants(defined herein)for subsryucnt disbursement to the I3eneficial Owners(defined herein)
of the Series?OOR I3onds. Sec APrrnoiz F "D1 C n�� nm Bcx�K-Fn rttv Oni v Svsre�t." Interrst on the Scnes 200R Bonds�vill be payablc on Apnl I
and October I of each year(each an"Inrerest Payment Date"),commencing Octobrr I,200R,by check or draft,mailed on the Interest Paymeni Date to
each O���ner of the Series 2008 Bonds as of thr Record Uatr preceding such Interest Payment Date. Ser"I Hr $i ttits 2(lOR 13��nns-Descnption of the
Scncs 2U08 13onds."
'I'he Scrics 2008 Bonds are subject to optional redemption and extraordinar� redemption from prepayment of the Special Taxes as
described hercin. Sec"Ti�e Se►t�ts 2008 Bonus-Redemption Provisions:'
Payment of Ihr principal of and interest on the Series 200R Bonds when due will be insured by a financial guaranty insurance policy to be
issued by simultaneously�vith the deli�•rry ofthr Senes 200R Bonds. See"Fin,�vc iai Gu:�R,��Tv Inst�R:anc r."
[Insurcr Logo�
TI1E SF.kIF:S 2U()H BONDS ARE LIMITED OI3LIGATIONS OF THI: [)ISTRI('T PAYABLE SOL.ELY FROM THE PROCEEDS OF
SPF.CIAI. TAXES (INCLUDING ANY PREPAl'MENTS THEREOF AND PROCE�DS COLLECTED FROM THE SALE OF PROPERTI'
PI:RSUANT"�C1 FORFC'LUSURE PROVISIONS AS SET FORT11 1N TfIE 1NU�NTURE FOR DELINQL'tNC'Y li� PAY'M�.N"l OF I H�. SYECIAL
TAXES), 1'ET OF THE COSI IO IIIE CfI'1' Of PAI.M Df:Sk�:RT (THE "CITY") nF ADMINISTRATING THE DISTRICT, AND CERTAIN
FUNDS ESIABLISHED PURSUA�IT TO THE INDEtiTURF. AtiD HELU BY THE TRUSIGG, AS MORE FLLLI' UESCRIBED IIEREIN.
NEITHGR 1 H� FAITH AND CREDIT NOR TI1L GGNERAL TAXING POWF.R UF TIIE CI'I Y, I H�: COUN"I Y OF� RIVF:RSIDE (l Hl-:
"COUVTY"),THE S I A"I I:Of CALIFORNIA(THE"STATE"),UR A1�Y POLITICAI.SUDDIVISION THF.RFOF,01 HI:R l'HAN I HE DISTRIC 1,
IS PLEDGEU I'O THF.PAY�IGNT OF TfIE SBRIES 20UR QONUS. I HE SERIES 2OOti I30NDS DO NOT CONSTITUTE AN INDEE3TEDNC•SS OP
I HE ('ITY', THh: COUNTY, THE STATE OR ANY POI.I�I ICAL SI�BDIVISION "I HER[nF, WITHIN THE �tEANING OF ANY
('O\'STITUTIONAL OR STATUTORY DC•QT LIMITATlON OR RESTRIC'l ION.
MATURII Y SCHEDI;L[
(Scc insidc cover)
The Se�te�?OOX Bo�tds iue nJJerer!i+hrn. ac n�td r���:cued ttnd aca�ple�tl h}�Ihe Undenrri[ers. suhjec�lo�he nppro��a!ns tn le�qnlin•l�r/liclia�rl.�.
{f'ursun h Gershnn.A/'�v/essionn!Ca��a-nt'r�n, Lo.s AnQele.c. CuliJo�nia, eund('ounseL Ce�rain legn!mntte�s�,Nl be pn.csecf on jo�•�he ni.cn ict nnd rhe
('ut• b�� Be.ct Be.ct cYr /�7•ieKer LLP. lntfiari {f'e!l.c. CuliJorniu. ('i�ti• A��urnet• und Jo� �he Ui.ctrrcl ht' /.oj�un c� JenninKs. Strn Fraiicisco. C'nli�aniri.
Disclu.ci�re(i��uise�l. /�i.c nniic�pared�hn��he Se�•ies?llll8 Baitl.s tirr!!he a��ur(uh(e Jnr de(ir���J•on a�n%u�U./unuru}•I5. 2fIfIK
STINSON SECURITIES,LLC KINSELL,NE��'COMB B DE DIOS,INC.
Datrd: ,2007.
'" Prehminary,subject ro changc.
$10,720,OU0*
C1TY OF PALA1 1)F,SERT
COMI11UN1"1'Y FACILITI}�:S DISTRIC'1' NO. 91-1
(INDIAN RIDGE PUBLIC IMPROVEMEN"1'S)
SPECIAL TAX REFUNDING BOI�DS
SERIES 2008
�IATURITY SCIIEDULE
I3ase CUSIP No.: �
Maturity Date Principal Interest
�Uctober 1) Amount Rate 1'rice Yield CUS1P'
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
+ Copynght 200K. American Bankers Association. CUSIP data herein is provided by Standard and Poor's, CUSIP Senicc
k3ureau,a division of The McGraw-Hill Companies,Inc. This data is not intendrd to cr�ate a database and does not scn e in
any way as a substrture for the C'USIP Service. CI;SIP numbers are pro�ided for convenience of reference only. Neithrr the
Ciry nor the Undcnvriters takc any responsibility for the accuracy or s��n CUSIP numbers. l'he C'USIP number for a
specific maturity is subject to being changed after the issuance of the Senes 2(1(18 Bonds as a result of�anous subsequent
a�tions including,but not lirnited lo,a rcfunding in whole or in part of such maturity.
* Preliminary,subject ro change.
a7u'_�)pus-4
CI7'Y OF YALA'I DESH;It'1'
COMMUNITY FACILITIES UISTRIC7' NO. 91-1
(INDIAV RIUGE YI;RI.IC IMPROVEMEnTS)
and
C17'Y OF PALM DESF,RT
DISTRICI' I.EGISLAI'IVE BOUY AVD CI1'Y COUNCII,
Richard S. Kelly,M���•vr
Jean M. Benson,h�u}•ur Pra 7��m
Jim l�erguson, C��i�nrilntc�nther�
Cindy Fincrty, Cor�rtc•ilmc mher
Robert A. Spiegel, Crn�ncilmc�mhc�r
CITY S"1'AFF
Carlos L. Ortcga, Chic�/Adminisu•utii�c OJrcc��'/E.t�c�ctuii�c�Director/Cih�Mnnugc�r
Paul S. Gibson, Ti•c n.curc�r/Ti•eusu�•er/Financc Dirc�ctor
Rachelle D. Klassen,Se�cv�etury/Sec�•etc�n�/Cit3'Cl��•k
David L. Yrigoyen. Dirc�ctvr o/�Re�cterelopme�ndHot�sing
Arla K. Scott,Scnior Financiu/Ancrltst
Veronica Tapia, Redc�vc�lnpment Accountunt
David J. Erwin, Ci[}•Atta•ner
SPI�;CIAL 5ERVICES
Richards, Watson& Gershon, Lofton&Jennings
A Profcssional Cocporation San Francisco,California
Los Angeles, Califomia Disclosi�rc�Cai�n.cc�!
Bonrl Counsel
Wells Fargo Bank,National Association Del Rio Advisors, LLC
Los An�;elcs,California Modesto, California
Ti�u.�tec� Finuncin!Ach�isor
Grant Thornton LLP MuniFinancial
Minneapolis, Minnesota Temecula,Califomia
VcriTcntion Agen� Spccinl "!'a.i� Con.sultnnt
n7o'_'9,�n,s�
1
GENF,RAL INFORA1A'fI0'.V ABOI-'1"CIIIS UH'H'ICIAL S7'A'tE11H;N'1'
Use of'Of'ficiulStutc�mcnt. '1'he infonnation sct forth hcrcin has bccn furnishcd by thc Pinancing
�luthority and thc City and includes information which has been obtained from other sources which are
believcd to be rcliable. The infoctnation and expressions of opinion contained herein are subject to
change without notice and neither the delive�y of this Official Statement nor any sale madc hereunder
shall undcr any circumstances create any implication that there has bcen no change in the affairs of thc
Di�trict and the City since thr date hereof.
F_stimates pnd Forecasls. Any statement made in this Official Statement involving any forecast or
matter of cstimates or opinion, whcther or not cxpressly so stated, is intended solely as such and not as a
representation of fact. Certain statements included or incorporated by refercnce in this Official Statement
constitute "forward-looking statcments" within the meaning of the Unitcd States Private Securities
Litigation Reform Act of 1995, Scction 21 E of the Unitcd States Securities �xchanbe Act of 1934, as
amendcd, and Section 27A of the United States Securitics Act of 1933, as amcnded (the "Securities Act").
Such statements are generally idcntifiable by the tenninology used, such as "plan," "expect," "estimate,"
"budget"or other similar words.
The achievemrnt of certain results or other expectations contained in such forward-looking
statement5 involves known and unknown risks, uncertaintics and other factors which may cauae actual
results, performance or achievements describcd to be materially different from any f�uturc results,
perfonnance or achievements expressed or implied by cuch fonvard-lookinb statemcnts. The District and
the City does not plan to issue any updatcc or rcvisions to those forward-looking statements if or when
their expectations,or events,conditions or circumstanccs on which such statements arc based occur.
Limit of OfJ'ering. No dealer, broker, salesperson or othcr person has been authorized to give any
iniorniation or to make any representations in connection with the offer or salc of the Scries 2008 Bonds by
the District, the City or thc Underwriters, other than those contained in this Official Statement, and, if given
or made, such other infonnation or representations must not be relicd upon as having been authorized by the
Uistrict or the City. "Chis Official Statement docs not constitute an offer to sell or the solicitation of an offer
to buy, nor shall therc be any sale of thc Series 200R Bonds by any person in any jurisdiction in which it is
unlawful for such person to makc such an otfer,solicitation or sale.
Involvement of Underwriters. The Underwriters have provided the following sentence for
inclusion in this Official Statement:
T�he Undcrwriters have rcviewed thc information in this Official Statement in
accordance with, and as part of, its responsibilities to investors under the federal
securities laws as applicd ro the tacts and circumstances of this transaction, but the
Underwriters does not guaranty the accuracy or completcness of such information.
In connection with the oflering of the Series 2008 Bonds, thc Underwriters may overallot or
ef�fect transactions that stabilizc or maintain thc market pricc of the Series 200R Bonds at a level above
that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be
discontinued at any time. 'I�he Underwriters may ofter and sell the Series 2008 Bonds to certain dealers
and others at prices lower than the public offering prices set forth on the inside cover page hereof and caid
public offering prices may bc changcd from time to timc by the Undcrwriters.
"The Series 2QOR Bonds have not been registered under the Securities Act of 1933, as amended, in
reliance upon an exemption from thc registration rcquirements contained in such Act. The Series 2008
I�onds have not been registcred or qualified under thc sccurities laws of any state.
u7o3'��.Pos-a
11
"1'ABI.F,UF COI�'1'I�:N7'S
Not Gcncral Ubligation of thc('ity...........2S
INTR()DUC'"1'ION .............................................1 Levy of thc Spccial Taxes.........................2S
General; Authority for Is�uance..................1 Not a I'ersonal Obligation.........................26
I'urpose........................................................2 Cc�llection of the Spccial Taxes.................26
"1'hc City.......................................................2 Bankruptcy................................................26
The District..................................................2 Parity"l�axe�and Special A�sessments......2$
Security and Sources of Yaytnent for Exempt f'ropertics.....................................28
the Series 2008 13onds...........................2 Land Values..............................................29
Risks to I3ondowners...................................3 Natural Disasters.......................................29
Continuing Disclosurc.................................3 Ila�ardous Substancec...............................30
Additional liifoimation................................3 Disclosure� to l�uture Purchasers..............30
PI.AN OF REFUNUING...................................4 Limitation on Remedies; No
Refunding of Prior 13onds............................4 Accelcration........................................31
Estimated Sourcc�and Uses of I�unds.........5 Loss of'l�ax l�:xcmption.............................31
Debt Service Schedule.................................fi Risk of Tax Audit......................................32
Secondary Market.....................................32
THL: SIiRII:S 200R BONDS..............................R Yroposition 21 R and the Initiative
I)cscription of the SerieS 2008 Bond�.........R Power..................................................32
Redemption Provision,................................8
Redemption Procedures...............................9 CONS'I'I'I'UTIONAL AND Sl'A"I'UTORY
I.IMITATIONS ON TAXI:S,
SIiCURITY AND SUURCIiS OF REVENUES ANI�
PAYMENI' 1�'OR THE SERI�S APPROPRIATIONS ..........................33
2008 BONDS......................................10 Article XIII A of the Califomia
Gcncral ......................................................10 Con�titution........................................33
Special Tax Authorization.........................10 Article XIII B of the California
Special 'I'ax is not a Personal Constitution........................................33
Oblibation...........................................12 Proposition 21 R.........................................34
Special Tax Fo►mula .................................12 I�uture Initiatives.......................................35
Rrserve Account........................................14
Deposit of Special Tax; Flow of CF,RTAIN I.I:GA[. MATTERS......................36
�unds...................................................15 TAX MATTERS .............................................36
Covcnant for Foreclosurc..........................16
Limited Obligation....................................1 R NO MATF.RIAI. I.ITIGATION......................37
Issuance of Parity Bonds...........................18
RA"I'[NGS........................................................3R
FINANCInL C;UARANTY INSURANCE.....19
�INANCIAL AUVISOR.................................38
T�IE I�IS"l'RIC"f............................................... 19
General; Location......................................19 VERIFICATION OF MATHLMA"I'ICAL
Status of Uevelopment..............................19 COMPUTAT[ONS.............................3R
Land Use Classifications...........................20 UNDI:RWRITING..........................................39
Valuc of the llistrict..................................20
Secured 1'roperty Tax Levies, CONTINUING DISCLOSURE.......................39
Collections and Delinquencies............22
Direct and Ovcrla �n Debt.....................23 MISCELLt�NEOUS........................................40
PP g
I30NI)OWNrRS' RISKS................................25
n�o�e,��,.-a
iii
1�9AYS AND TABI,H:S
C'ity and Ui�trict Map....................................................................................................................................v
"I�ablc 1 - 1997 Rcvcnue Bonds..............................................................................................................4
�I'able 2 - Dcbt Service Schcdule...........................................................................................................6
'1'ablc 3 - Projectcd Dcbt Servicc...........................................................................................................7
Table 4 - Maximum Tax Ratc,by Land Use C'ategory....................................................................... 13
Table 5 - Maxi►nu►n Special Tax by Land U�e Catcgory.................................................................... 14
"I'able 6 - Property Cla,�itication By Land Use Categories.................................................................20
Table 7 - AsSessed Value-to-Special 7�ax Lien C'atcgories .................................................................21
Table 8 - 1'roperty()wner's By nssesscd Valuation and Prorated Lien..............................................22
��able 9 - Ilistorical Special Tax Dclinquency.....................................................................................23
Table 10 - Dircct and Overlapping Debt Report ...................................................................................24
API'ENDICES
t\PP�NDIX A - RATE ANI) METIiOI)OF APPOR'I�IONMENT UF SPECIAI.TAXES................A-1
APPENDIX B - GF.Ni:RAL INFORMATION CONCERNING "I�HE CITY OF Pt\LM DFSERT....I3-1
nPPENDIX C - SUMMnRY OI'PRINCII'AL LEGt\L DOCUMrNTS ...........................................C-1
APP�NDIX D - FORM O}�OPINION OF BOND COLJNSEL...........................................................D-1
APPF,NDIX E - FORM OF CON"I'INUING UISCI.OSURE AGRLLMENT..................................... r-1
AYPT:NDIX F - D1'C AND TIIE BOOK-EN"fRY ONLY SYSTEM ..................................................I�-1
APPENDIX G - SPECIMGN I�INANCIAI.GUt\RANTY INSURANCE POLICY............................G-1
u�uzy.Nos-a
Iv
CI7'ti'AI�D DIS'1'RIC'I'I�'IAY
o�u�y�.�,�-a
��
OFFICIAL S'fA7�H:�1H:N7'
$10,720,000*
CI'CY OF PALVI DF:SF,RT
COM;�IUI�ITY FACl1.ITIES DISTRIC'1' NO. 91-1
(INDIAI� RIDGF, PUBLIC IAIPROVEMF.nTS)
SYECIAI.TAX REFUNUING BONDS
SERIES 2008
1 VTRODt1CTION
This introduction conlclin.c onl1�u hric�/summcriy ��/'certuin u/thc� tcrms orthc Scric�.c ZO(JR Bunc/s
hc�ing c�rrc�,'cd, nnd«f tll rerie�ir shottld he�m�rcte n/thc�e�nlirc� O/%iciul Stutem�nt inch�c/ing t{re cui�c>r pugc�,
the tuhle� uTconte�nt.s und thc appc�nclicc�.c for u more comp/c�tc�descriptrnn o/�the terinc o/thc� Sc�ries 1U08
Boncls. A!! slcrtemc�nt.c cont�ined in tltis introductiun ctre quuliJicrl in lheir entiret}� h,ti� rc./��rencc to Ihc�
cntirc�OJJiciul Stutement. Rc�rerence�.c to. und sununnries oJ prorisiun.c u/: unr oth�r clucum�nts �•c-/�rred tu
here�in rlo not p�upo�•t[o hc�canple�te und.circh rc/i>rc�nees urc�yea�liTc�r/in their c nti�•c ti�hr rc�r��r��nc�to thc�
co�n/�letc>prori.ciun�ursuch d��cerment.s.
General; Authority for Issuance
'I'he purpose of this Official Statement, including the cover page, the inside cover page and thc
appendiccs is to furnish information in connection with the sale and dclivcry by thc City of Palm I)cscrt
Community Facilities District No. 91-1 (Indian Ridge Public Improvements) (the "District") of
$10,720,000* principal amount of City of Palm Desert Community Facilities District No. 91-1 (Indian
Ridge Public Improvements) Special Tax Refunding Bonds, Series 2008(the"Scrics 2008 Bonds").
The Serie� 200R Bonds are issued pursuant to the provision� of the Mello-Roos Community
Facilities Act of 19R2, a� amended, being Chapter 2.5, Part l, Division 2, Title 5, of the Government
Code of the State of California (the "Act") and pursuant to a Bond Indenture, dated as of January 1, 2008
(the "Indenture"), by and between the District and Wells Fargo Bank, National Association (the
""Crustee").
The Act was enacted by the California Legislature to provide an alternate method of financing
certain public capital facilities and services, especially in developing areas of the State of California (the
"State"). Subject to approval by a two-thirds vote of a district's qualified electors and compliance with the
provisions of the Act, a legislative body of a local agency may act as the legislative body of a community
facilities district, cause such community facilities district to issue bonds and may ievy and collect a special
tax within such district to repay such indebtedness.
The Series 200R Bonds will be �ecured solely by a pledge of annual special taxes (the "Special
Taxes") levicd by thc City (including any prepayment thercof and proceeds from toreclo�ure sales
pursuant to thc Indenturc) net of Administrative �:xpensca in an amount not to exceed the Admini�trative
1-:xpenses Priority Cap(each as defined herein)on Taxable Parcels (defined herein) within the District, the
Reserve Account established under the Indenture and moncys in ceriain other funds and accounts
establishcd under the Inden[ure. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008
BONDS." Thc Special "I�axes are included on thc rcgular property tax bill sent to the rccord owncrs of
properties within the District. The District has covenanted for the benefit of the owners of the Serics
200R Bonds, under certain circumstances described herein, to commence foreclosure actions against
property with delinqucnt Special Taxes and to diligently pursue such actions to completion. See
"SFCURIT�'AND SOURCES OF PAl'ME\T FOR THE SER(ES 2008 BONDS Special Tax Authorization"and"—
Covenant for Porcc losure."
'Preliminary,subject to change.
(17U'_y�pos-�3
P�n•pose
The Series 20UR l3onds are bcing issucd to provide tLnds to: (i) to refund and defease all ol�thr
outstanding $16,260,000 principal amount of Nalm I�esert Financinb Authority 1997 Rcvcnue Bonds
(nssessmcnt Districts No. 92-1 [Tierravista] and 94-1 [Bighorn] and Community Facilitics I)istrict No.
91-1 �Indian Ridge]) (the "Prior Iionds"); (ii) fund a resei•ve account as security for the Series 200R
i3onds; and (iii) pay certain costs associated with the issuance of the Series 200R Bonds. See "PLAN OF
KFFUNDING"and"I;S I 1�1ATED SUURCES AND USES OP FI;NDS."
"l�hc Citv
1�he City of Palm Descrt (the "City") is located in the Coachella Valley and is approximately mid-
way bctween the cities of Indio and Palm Sprinbs, 1 17 miles east of I.os Angeles, 118 miles northeast of
San Dicgo and 51$ miles southeast of San Prancisco. According to the State Department of Finance, the
City population as of January l, 2007 wa� approximately 49,539. Thc Series 2008 Bondc are not an
obligation of the City. Por certain information regarding the City, see nPPENDIx B—"GENERAI.
INFORMATIO\CONCtR\ING l HE CITY OI�PALM UESERT."
7'he District
The District was created in 1992, comprises approximately 641 gross acres and ic located in the
northern section of the City. The development within the District iti known as the"Indian Ridbe Country
Club" and fcatures two 18-hole golf courses, a sports club with health spa and tennis facilities, a golf
clubhousc and a sports clubhouse. The Fiscal Year 2007-08 Assessed Value of thc �l�axable Property in
the District is $72R,R3R,545. The Fiscal Year 2007-08 assessed value of Taxable Property-to-outstandinb
Special "I'ax lien (in the amount of $15,979,000) as of January 1, 2008 is 45.61:1; and the Fiscal Year
2007-OR acse�scd value of Taxable Property-to-outstanding total direct and overlappinb tax and
as�cssment debt within the Uistrict (in thc amount of$21,K80,513)as of January 1, 200R is 33.31:1.
There are 1,092 parcels within the District, of which all are developed and 1,063 parcels
(representing approximately 97.3%) are subjcct to the Special Taxes. '1'he predominant land use within
the District is single-family detached housing. See"THG DISTRICT."
Security and Sources of Payment for the Series 2008 Bonds
Payments of interest on and principal of the Series 2008 Bonds are to be made solely tcom the
proceeds of the Special Taxes authorized to be levied annually by the City Council, acting as the
]egislative body of the District on all Taxable Property in the District undcr and pursuant to the Act and
the elrction held in the District on March 12, 1992 (the"Special 'l�ax"). See"SECUKITY AND SOURCES OF
PAYME!�T 1��OR THF SERIES 200R BnNDS �I�he Special Taxcs."
'I'HF. SERIES 200R BONDS ARF. I.IM[TED OBLIGA"I'IUNS OF "1'H� DISTRICT PAYnBLL
SOL�:LY FROM '1'HE PROCGEDS OF SPF,CIAL "I'AXGS (INCLUDING ANY PREPt�YMENTS
TIIERLnI� AND PROCEL:US COI.LF.CTF.D FROM THL SAI.E OF I'ROPF,RTY PURSUAN�' "f0
FORECI.OSUR� PKOVISIONS AS SET POR"1'H IN THE IND�:NTURE FOR UELINQUENCY IN
PAYMF..NT OF T(IE SPF.CIAL TAXLS), NET OF T[IE COS"1' TO TI(E C11Y OF ADMINISTRATING
THr UISTRICT, AND CERTnIN FUNDS ESTABLISHED PURSUANT TO THE INULN"I�URE AND
H�LD BY TH�. TRUSTF.E, AS MORE FULLY DESCRIBED HEREIN. NE[TEiER TEiF. FAiTH ANn
CREDIT NOR TIfE GF.NERAL '1'AXING POWER OF THL CITY, THL COUNTY OF RIVF.RSIDE
(�'HL-' "COUN'I'Y"), TfiE STATE, OR ANY POLITICAL SUBDIVIS[ON THLREOF, OTHER T}1AN
THG DISTRICT, IS PLEUGF.I) TO THE PAYMEN'I' Ol� THE SERIhS 2008 BONDS. '1'H�; S�RII:S
200R BONDS DO NOT CONSTITU'I'1: AN INDEBTEDNLSS OF THE C17�Y, 'I�Fi�: COUNTY, THE
u7u�v,p�,s-�
2
STATF. OR ANY I'OL111CnL SUBUIVISION 7�IIEREOF, WI'I'HIN 'I'lIE MEANING OT' ANY
CnNS'1'I"1'Ul�[ONAI.OR STATUTORY DF.BT I,IMITi1TION OR RrSTRICTION.
Reserve Account. n Reserve Account for the Series 200R 13onds is established under the
Indenturc which is required to be maintained in the amount of the Rescrvc Requirement (defined herein).
Upon the issuance and delivery of the Series 2008 Bonds, procecds of the Series 2008 Bonds in the
amount of$ will be deposited into the Reserve Account, which amount is equal to the Reserve
Requiremcnt. Sce "SECURITY AN� SOURCES OE 1'nY'MI-:N"1' fUR TIIL SERIFS 2008 [30��[)S—Rcscrvc
Account."
Financiul Guaranty Insurance. Yayment of principal and interect on the Serics 2008 Bonds will
be insurcd in accordance with the terms of a financial guaranty insurancc policy (the "Financial Guaranty
Policy") to be issued simultaneously with the dclivery of the Series 200R Bonds by (thc
"Insurer"). See "FINA�CIAL GI:ARANTti' INSI!RAN('L" and APPENDIX G-"SPGCIMEN FINAI�CIAL
GI;ARAN l l' INSURANCE POLICY."
Risks to Bondowncrs
Ccrtain events could at�iect the ability of the City to pay debt service on the Series 2008 Bonds
when due and an inve5tmcnt in thc Series 2008 Bonds involve� ri5k5 that should be considered in addition
ro other matters described herein in evaluating the investment quality of the Series 2008 Bonds. See
"B()NDnWNFRS' FtISKS" for a discussion of certain factors that should be considered, in addition to other
matters set forth herein, in cvaluating an investment in the Series 2008 Bonds
Continuing Disclosure
The District has covenanted for the benefit of Bondowners and 13cneficial Uwners to provide certain
financial and operating data relating to the District not later than six months after the end of each Fiscal
Year,commencing with the Fiscal Year ending June 30, 2008 (the"Annual Report"),and to provide notices
of the occurrcnce of cenain enumerated events, if material. The Annual Report will be filed with each
Nationally Recognized Municipal Securities Repository and with any then existing State Repository
(collectivcly, the"Repositories"). The notices of material events will be filed with the Municipal Securities
Rulemaking Board (the "MSRI3") and to the State Repository, if any. 'l�he specific nature of the
information to be containcd in the Annual Report or the notices of material cvents is set lorth in APPENDIX E-
"FORM OF CONTINUING DISCLOSURE AGREE�IENT." �fhcse covenants have been made in order to assist the
Underwriters in complying with S.E.C. Rule 15c2-12(b)(5).
Additional Information
This Oflicial Statement contains brief descriptions of, among other thinbs, the Series 2008 Bonds,
the security for the Series 200R Bonds, the District, and the Indcnture and certain othcr documents. Such
descriptions do not purport to be comprehencive or definitive. All references herein to the Indenture are
yualified in their entirety by reference to such documents, copies of which are available for inspection at
the office of Trustee in Los An�;cles,California.
u�o�y��,os-a
3
NI.AN OH� RH;F[JI�DII�(:
Refunding of Prior Bonds
A portion of thc procecds from thc sale of the Series 200R I3onds will be used by the District
together with othcr available moneys, to establish an irrevocable escrow (the "Escrow Fund") to rcdccm
all of thc I'alm Desert Financing Authority 1997 Revcnuc I3onds (nssessmcnt Districts No. 92-1
�'1'ierravistaJ and 94-1 �Bighorn� and Community Facilities District No. 91-1 �Indian Ridge]) in the
outstanding principal amount of$16,260,000(the"Prior I3onds")on April l, 200R.
"I�hc Prior Bonds were issued by the Palm Desert l�iiiancing /\uthoriry (thr "Authority") in
connection with two asscssment districts and the District to purchase separate series of refunding bonds
and to rcdeem certain outctanding bonds. The bonds associatcd with the two assessment districts werc
previously redeemed lcaving only the Prior Bonds Outstanding, all of which are related solely ro the
Uistrict. The proceeds of thc Yrior Bonds were used to rcfinance bonds issued in 1992 and 1995, the
proceeds of which tinanccd the construction of various off-site public improvemcnts within the District,
includinb street and water facilities, and to pay tees required by public agencies for sewer, water, schools,
parks, traffic mitigation and other related fecs, charges and expenses all of which have been completed.
See"THF UIS I RICT."
The Prior Bonds consist of thc following:
"fable 1
$16,260,000
Palm Desert H inancing Authoritv
1997 Revenue Bonds
(Assessment Districts No. 92-1 [Tierravista� and 94-1 [Bighorn�
and Community Facilities District No.91-1 �Indian Ridge�)
Dated Datc: December 11, 1997
Paymcnt or
Maturity Date Interest Redemption Date Redemption
(October 1) Amount Rate CUSIP�'� A ril 1 Price
200R $1,060,000 5.400 69661 NAYO 2008 100%
2009 1,115,000 5.500 69661 NAZ7 2008 100
2010 1,I R0,000 5.600 69661 NBA 1 2008 100
2011 1,245,000 S.h25 69661NBB9 200R 100
2015 5,705,000 5.900 69661 NBFO 2008 100
2020 5,955,000 6.000 69661 NBL7 2008 100
+ Copynght 200R, Amencan Bankers Association. CUSIP data herein is pro�ided by Standard and Poor's, CUSIP Sen�ice
Bureau,a division of The McGra��-Hill Companies, Inc. This data is not intended to create a database and does not serve in
any ���ay as a substitute for the C'USIP Senice. CL;SIP numbers are pro��ided for reference only. None of the Distnct,the
c�ey, en� Flnancing Authority, the Unden�riters or the Finandal Ad�isor take any responsibility for the accuracy of such
numbers.
Upon the sale of the Series 200R Bonds, the City will apply a portion of the proceeds therefrom,
together with certain other available moneys, to establish thc Escrow Fund pursuant ro the Escrow
Agreement, datcd January 1, 200R (the "Escrow Agreemcnt") by and among the District, the Financing
nuthority and Wells Fargo Bank, National Association, as escrow agent (the "Escrow Agent"). Amounts
deposited in the Escrow Fund will be invesred in noncallable direct obligations of the United States, or
obligations, thc principal and interest on which are fully and unconditionally guaranteed as to timely pay►nent
by the United States of America, which �vhen received will be sufficient to pay the principal ot; interest on
o�0���.4,�»-�s
4
and redcmption premium of,the I'rior 13onds. (irant Thornton I.I.P, indcpcndcnt ccrtificd public accountants,
as th� Verification ngent, w�ill deliver a repoi-t on the verification of the mathematical accuracy of ccrtain
computations based upon certain infonnation and asscrtions providcd to them by the Undeiwriter relatin� to
the adcyuacy of the maturinb principal of and interest on the obligations to pay all of the principal ot; interest
on and redemption premium on the Yrior Bonds to their respective redemption dates. Sec"VERIFICATION OF
MA"fl i[�tAT1C'AL COMPUTATIONS.��
'l�he Fiscal Year 2007-08 asscsscd value of land and improvements of Taxable Property �vithin the
District is $72$,838,545. See also"The District-Dircct and Ovcrlapping Debt-Table 10."
F.stimated Sources and l;ses of Funds
The estimatcd sources and uses of funds, excludinb accrued interest on the Series 200R Bonds, is
sumrnarizcd as follows:
Sources of Funds
Par Amount of�Bonds............................................. $10,720.000*
Transier of Prior Bonds I�und,...............................
Lc�.c.s: Net Original Issue Discount..........................
TOTAI.SOUR('C•5................................................
l'ses of Funds
[)cposit to thc Fscrow Fund��'................................
Deposit to Resen�c: Account...................................
Deposit to Costs of Issuancc I�und'Z'......................
Undcrwriters' Discount..........................................
TnTALUSLS......................................................
' � See"-Refunding of Prior Qonds."
�'' Includes thr fees and rrpenses of Bond C'ounsel and Disclosure Counsel, fees and expenses of thr Trustee, the Financial
Ad�isor and the Venfication Agent, printing costs, raung agency fers, thr Financial Guaranq� Insurance Policy premiurn,
and other costs related to the issuance of the Sencs 200R Bonds.
' Preliminary,subject to change.
'" Preliminary,sub�ect ro change.
0'o?y,pn<-.3
5
Debt Servicc Schedule
Scmi-annual debt servicc for the Series 2008 I3onds is sct forth bclow.
Table 2
Debt Service Schedule
Bond Year Ending Fiscal Year
(October 1) Princiaal* Interest 'I'otal Total
October 1,200Y F
April 1,2009
October 1,2009
April 1, 2010
October 1,2010
April 1,201 1
October 1,2011
April 1,2012
October l,2012
April ], 2013
Octobcr 1, 2013
April 1,2014
Ocrobcr 1,2014
April l,2015
October 1,2015
April l,2016
October 1,2016
April 1, 2017
October 1,2017
April 1,2018
October 1,201 R
April 1,2019
October I,2019
April 1,2020
October 1,2020
T�TAL S 10,720,000*
*PreGminary,sub�cct ro change.
11711_'9`�riiti•�3
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Projected Debt Service Covera�;e
Tablc 3 shows projcctcd annual scheduled debt scrvicc on thc Scries 200H Bonds, without regard
to any optional redemption and the net estimated annual coverage. Scc"—Debt Service Schedule" for the
schcduled semiannual debt service on the Series 200R Bonds.
"rablc 3
Citv of Palm Descrt
Community Facilities District No. 91-1
(Indian Ridge Public Improvements)
Projected Debt Service Coverage
Gross Series Net Srries
Le.ss 200R Bonds Gross /.ess Kesene 200$ Bonds
[3ond Maximum AdnunistraU�c Net Maximum Debl Annual Fund and Debt '�let Annual
Yrar SpecialTax��� Expenses''' SoecialTax�'� Service"�� Co�era¢e�`�� F.amings� Senice"'� Co�•eraYe„�
2OQR $3.365,-370.U0 S(3U.01A).00) $3.3ti,.�7u0U 51.94u.'_8�3.�34 1.7� 1 S(30,49�.�1� 51.909,79?.00 IJ5:1
211(1�) 3,365,�3711.U0 �3o.nOn.0p1 3,33s,a�ono I,IRR.525.00 �';cl:l 1�2.8�O.OU1 1.1�1i,b�3;uU 2vl l
2010 1,3�5.470.OQ (3U.OU000) 3.335;370.011 I.IR�),II�SUO 2.ifl:l (42,KKUU1)) 1.146.14�.U0 '_.91 1
?(11� 1,36S.47p U11 �30.00D UU) 3,33t,q711.1)O I.I`t7,$�S.11(1 2.81:1 1�2,KRQ00) 1.14�3,6�1�.011 '_.91:1
2U12 3.;A>,.t7ppp 130.00Oi�i�) 3,;;5,�37n.On I,IR7,7?S.uO �.itl:l (�32.KSO.OU) 1.14�3,84i.1�p '.41:1
2U13 1,36�.47UU0 (30.00OOU) 3.33i,�170.UU I.IR7.475.1111 '_}SI:I (-1'_.BRO.UII) 1.1�1�1,iyi011 '_91'I
2014 3.;hi,.170.00 (3U,UUUUO) 3,33?.47uuu I.IKU,�3751)p '.Q0:1 142.xS0n(i� I,I�1nj95.p0 '_.��I:I
2015 3.36>,47U.(�0 (30,UOO U0) 1,33>.47u oo I.I$9.875 0(1 ?2tU l (�32.RR0.00) I,I�tG,9�)S UU 2 91:I
21)�(� 1,36?.47000 (j0,00000) 3.115,47000 1.141.2511.(10 �.80:1 (�32,i�$000) �.I-3K.370.00 '_40:1
?0l7 3,36�.470.00 {30c1000i1) 3,33i,�70.00 1.183.�50.00 ?.82J 1>3;,KKf)00) naK.57a0U � IdJ
2018 3,36�.470 00 �30.00O.oO) 3.335.�37U.uu �ux.'_uu uu Ih.a?:I (�u�s,�uu oo� viA
2019 3,1ni,470A0 (30 nun U0) 3.33S,47U U0 210,ROU.00 15.8?:I ('-IO,ROO.Op� ��A
?02�I1 3.16>.47p.00 13(I OOO OUl 3.33?.�70.OU ?�1H!J00.00 16.0�3:1 (2�)2i.00p.Up) NiA
Tc�ini �a3,�51.1I0oi� 513����,ou000l 5�3,36I.iloAu Si3�ni.no9.aa" 5(I.S35.41'aal SII.�2r,,lm.nn•
(11 Represents the Max�mum Tax pursuant to the Rate and Method of Apportionment of Special Taxcs. Sec Ai�i�evoix A-
..R:�i i::�ni��iri nuo oF APPc�rcrumnte�r oF SNeci.a�T.azes...
(2) Represcnts amounts paid to the City for ongoing administration and staff nme related ro Distnct operations.
(3) Maximum Special Tar Icss Annual City Adnunistration Expenses.
(4) Represents gross Debt Service on the Senes 2UUR Bonds(prior to Reserve Fund eamings and c:orpus credits).
(5) Represents Nct Maximum Special Tax divided by the Gross Srries 2008 Bonds Debt Srn ice.
(6) Assumes an interest earnings rate at 4.00°b and application of the Resen�e Fund balance and interest earnings in final years
as offsets to the payment of Debt Service.
(7) Represents net Debt Sen ice on the Senes 20QR Bonds(aRer application of Resen e Fund and eamings).
(8) Represents Net Maximum Special Tax divided by net Series 20118 Bonds dcbt scn ice.
• Prclirninary,subject to changc.
Sourccs: Dcl Rio Ad�isc�rs,LLC.
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THE SERIF,S 2008 BONDS
1)escription of the Series 2008 Bonds
The Scrics 200R Bonds will be issued only in fully registered t�irm, without coupons, in thc
denomination of $5,000 or any integral multiple thereof�. 7�he Series 2008 Bonds shall mature on thc
dates and in the principal amounts and bcar interest at thc rates as set forth on the inside cover page of this
Ofticial Statement.
The Series 200R l3onds will be dated the date of issuance and delivery, issued in fully rcgistcrcd
form, without coupons, and, when issued will be registered in the name of Cede & Co., as nomince for
"I�he Depository "1'nist Company, New York, New York ("DTC"), as registered owncr of all Series 2008
Bonds. Ownership interests in thc Serics 2008 Bonds may be purchascd in book-entry fonn only.
Purchasers ���ill not receivc certificates representin� thcir interests in the Serics 2008 Bonds purchased.
Payments of principal of�and interest on the Series 200R I3onds, will be paid by the 1�rustee to DTC,
which is obligated in tum to remit such principal and interest to its DTC Participants for subsequent
disbursement to thc beneficial owners of the Serics 2008 13onds. See APPF.NDIx F—"DTC AND THE BOOK-
F,N�I KY' ONLI' Sl'STEM." Ownership may be changed only upon thc registration books maintained by the
Trustcc as provided in the Indenture.
Interest on the Series 200R Bonds will be payable on April 1 and October 1 of each year,
comtnencinb October 1, 2008 (each an "Interest Payment Date"). Each Series 2008 Bond will bear
interest t�om the Interest Payment Date next preccding the date of authentication thereof unless (i) such
date of authentication is an Interest Payment Date, in which event it will bcar intere�t from such date of
authentication; (ii) it iti authenticated durinb the period fi�om the day after a Record Datc for an Interest
Payment Date to and includinb such Interest Payment Date, in which event it will bear interest f�om such
Interest Payment Datc, or (iii) it is authenticated on or priar to the Record Datc for the first Interest
Payment Date, in which event it will bear interest from the datc of issuance;proricled, ho�rei•er, that if, at
the time of authentication of a Series 200R Bond, interest is in default thereon, such Series 200R Bond
shall bear interest from thc last Interest Payment Datc to which interest has been paid or made available
for paymcnt thereon.
Redemption Provisions
Optionu! Redemption. The Series 200$ Bonds maturing on or beforc October 1, 20_ are nut
subject to call and redcmption prior to maturity.
The Series 2008 Bonds maturinb on or after October 1, 20 are subject to call and redemption
prior to maturity and tnay be redeemed, at the option of the District, from any source of funds on any
Intcrest Payment llatc in whole, or in part, from such maturities as are selected by thc District and by lot
within a maturiry, at thc following redemption prices expresscd as a percentagc of the principal amount to
bc redeemed, togcther with accrued interest to the date of redemption:
Redemption Dates Redemption Prices
October 1, 20 and April 1, 20_ _%
October 1, 20_and April 1, 20_ �
October 1, 20_and Interest Paymcnt Dates thereafter _
n�n�e��,us-a
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F.xlruordinury Redemptrun frum Prc/�u,y�ment i�`the Spccru/ Tuxes. 'I he Series 200H Bonds are
subjcct to cxtraordinary redemption as a wholc, or in pai-t on a pru rutu basis among maturitics, on any
Interest Payment Date, and shall be redeemed by the Trustee, from 1'repaymcnts dcposited to thc
Redemption Account, plus amounts transierred from the Resen�e Account, at the following redemption
prices, expressed as a percentage of the principal amount to be redeemed, togcthcr with acc�ued interest to
the redemption datr.
Redemption Dates Redcmation Prices
October 1, 20 and April 1, 20 _%
Octobcr 1, 20 and April l, 20 _
October 1, 20_and April l, 20_ _
October l, 20_and Interest Payment Dates thcrcafter _
Redemption Procedures
Selectinn of Bnnds fiir Redemption. If less than all of thc Scries 2008 Bonds Outstanding arc to
be redeemed, thc portion of any Scries 200R Bond of a denomination of more than $5,000 to be redeemed
is required to be in the principal amount of�5,000 or an intcbral multiple thereof. In selecting portions of
such Series 200H Bonds for redemption, the Trustee is required to treat such Scrics 2008 Bonds as
representinb that nutnber of�Series 200R Bonds of$5,000 dcnominations which is obtained by dividing
the principal amc�unt of such Series 200R Bonds to be redee►ned in part by $5,000.
Notice of Redemption. The 'frustee on behalf of the District will send (by first-class mail,
postage prepaid, or such other meanc accepted to such Owncrs or institutions)notice of any redcmption to
�he respective Owners of any Series 200R Bonds dcsibnatcd for rcdcmption at their respective addressca
appearing on the Bond Register, and to the original purchasers of the Series 200R Bonds, at least 30 but
not more than 45 days prior to the redemption date;p�-u��idecl, ho�reti�er, that ncither failure to receive any
such notice so mailed nor any dcfect therein will affect the validity of the proceedings for the redemption
of such Series 2008 Bonds or the cessation of the accrual of interest thereon. Such notice will state the
date of the notice, thc redetnption date, the redemption place and the redemption price and will designate
the CUSII' numbers, the Serie� 2008 13ond numbers (but only if less than all of the Outstanding Scries
2008 Bonds are to be redeemed) and the maturity or maturitics (in the event of redemption of all of the
Series 2008 13onds of such maturity or maturities in whole) of the Scrics 2008 f3onds ro bc rcdcemed,
biving notice also that further interest on such Series 2008 Bonds will not accrue irom and alter the
redemption date.
Partial Reden:ption of Series 2008 Bonds. In thc cvcnt only a portion of any Series 200R Bond
is callcd for redemption, then upon surrender of such Scrics 2008 Bond, the District is rcquircd to cxccutc
and the Trustee is required to authenticate and dclivcr to the Bondowner, at the expense of the District, a
new Series 200R Bond or Series 2008 Bonds, in authorized denominations, equal in agbregate principal
amount to thc unredeemed portion of the Scrics 200R I3ond or Scries 200R Bonds surrendered.
F_ffe�ct of Redemption. From and aftcr the datc fixcd for redemption, if notice of redemption shall
have been duly mailed and funds available for the payment of the principal of and interest (and premium,
if any) on the Series 2008 Bonds so called for redemption shall have been duly provided, such Series
200R Bonds so called shall ceasc to be entitled to any benefit undcr the Indenture other than the right to
receive paymcnt of� the redemption price, and no interest shall accrue thereon from and after the
redcmption date specified in such notice.
07(1'_9,Poa-4
9
SF,C[IW'I'Y AVU SOURCES OF PAY1�1F.N7' FOR THF. SERIES 2008 BONDS
Genc ral
The Serics 2008 Bonds constitute limited obligations of thc Uistrict payment as to both principal and
interest and redemption premium, if any, from the Special Taxes levied by the Ciry on land �vithin thc
Uistrict, including proceeds from the sale of property collected as result of foreclosure of the licn of the
Spccial "1'axes, net of the cost to the City of administering the District, and certain funds and accounts held
under the Indenture.
TIIE SF,RIES 2008 BONDS ARE LIMITED OBLIGATIO:VS OF THE DIS1'RICT
YAYABLE SOLELY FROM TI�E PROCEEDS OF SPECIAL TAXES (INCLUDING ANY
PREPAYMEN"CS TIIEREOF AND PROCEEDS COI,I,EC"fED FROM "I'HE SALE OF'
PROYF.RTY PURSUAN'1' "CO FORECI.OSURE PROVISIONS AS SET FORTH IN THE
INDENTURE FOR DELINQUENCY IN PAYMEI�T OF 7'HE SPECIAL "fAXES), NET OF THE
COST TO THE CITY OF' ADMINISTRATING THE DISTRICT, A'.VD CERTAIN F�NUS
ESTABLISHED PCJRSUA'.�1T TO THE IVDENTURE AND HELD BY THE TRt1STEE, AS
A'IORE FIILLY DESCRIBED HEREIN. NEITHER 1'HE FAITH AND CIi�:DIT NOR TIiE
GENERAI. 'I'AXIVG POWER OF TIIE CITY, TIIE COUN"I'Y, TIIE STATE, OR AI�Y
POLITICAL SUBDIVISIOn THEREOF, O"I'HER THAV TIIE DIS'1'RICT, IS PLEDGED TO
"1'HE PAYMF,nT OF THE SERIES 2008 BONDS. 'I'HE SERIES 2008 BONDS DO VOT
CONSTITUTE AN INUEBI'EDNESS OF "I'HE CI"1'Y, TIiE COUNTY, THE STATE OR ANY
POLITICAL SUBDIVISION THEIi�OF, WITHIN THE MEANING OF ANY
C0�ISTITt1TIONAI. OR STATUTORY DEBT LIMITATION OR RESTRICTION.
Except with respect to the l�et Taxes, neither the credit nor the taxing power of the District or
the City is pledged for the payment of the Series 2008 Bonds, the interest thereon, or redemption
premium, if any, and no owner of the Series 2008 Bonds may compel the exercise of general taxing
power by thc District or the City or for the forfeiture of any of their property. The Series 2008 Bonds
are not a legal or equitable pledge, charge, lien or encumbrance, upon any of the property, within the
District, or upon any of its income, receipts or revenues, except the amounts which are, under the
Indenture and the Act, set aside for the payment of the Scries 2008 Bonds and interest thereon, and
redemption premium, if any. Neither the members of the legislative body of the District or the City
Council of the City nor any persons executing the Series 2008 Bonds are liable personally on the Series
2008 Bonds by reason of their issuance.
Although the Special Taxes will constitute a lien on property subject to taxation in the l�istrict, it will
not constitute a per,onal indebtedness of the owners of such properry. "I'here is no assurance that the owners
will be financially able to pay the Special Taxes or that they will pay such tax evcn if financially able to do
so. �I�he risk of nonpayment by pmperty owncrs is morc fully described in"I30NDOWNL•RS'R�Stcs-Collection
of the Special 7�axes."
Special Tax Authorization
Pursuant to the Act, on March 12, 1992 the City Council adopted a resolution establishing the
District and calling a special election to authorize the issuance of�bonds and thc levy of the Special Taxes.
On March 27, 1992, at an election hcld pursuant to the Act, the landowners who werc the qualified
electors of the District authorized (by more than the requisite two-thirds vote) the issuance of bonded
indcbtedness in an amount not to exceed $35,000,000 and approved the rate and method of apportionment
of thc Special Taxcs to pay the principal of, and intere�t on, and redemption pre►nium, if any, thc
authorized bondcd indebtedness. The District i��ucd thc Prior Ronds pursuant to this authorization.
Pursuant to Government Code Scction 533fi2.7, the Series 200R Bonds do not reduce the principal
n�o�y��,�,-.�
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amount ol� 13onds that may bc issued pursuant to thc authorization. The Spccial Taxes arc levied
according to thc and method of apportionmcnt of�Special "1'axcs (the "Special "l'ax Fornwla") �et forth in
Appendix A. 'l�he City Council, as the legislative body of the Di,trict, is requircd ro establish tax rates,
and levy and apportion the Spccial 'Caxes against property within the District on an annual basis.
Covenunt to Levy. Pursuant to the Indenture, so lonb as any Bc�nds are outstanding, the District is
required annually ro levy the Special Taxes, subjcct to the maximum tax rates approved by the landowner
voters, against all 'Caxable Property in the District and to make provision for the collection of thc Special
Taxes in amounts that, together with other moneys available to the District, will be sufficient to pay the
principal of and interest on the Bonds when due, to pay the annual expenses of administcrinb the District,
to cure delinquencies in the payment of debt service on the Bonds that have occurred or are expected ro
occur in the current tiscal year, and to replenish the Reservc Account to an amount equal ro the Reserve
Requircment.
In the opinion of Bond Coumel, the Special "t'axes is excepted from the tax ratc limitation of
California Constitution Article XII[A pursuant to Scction 4 thereof as a "special tax" authorized by two-
thirds vote of�the qualiGed electors as set forth in the Act. Consequcntly, the District has the power and is
obligated to cause the levy and collection of the Spccial 'l�axes in an amount detennined according ro the
Spccial Tax Fonnula.
Thc Act prohibit, thc C'ity (:ouncil, as thc Icgislative body of the Uistrict, from adopting a
resolution to initiate proccedinbs to reduce the rate of the Special 1'axes or terminatc the levy of the
Special Taxes unless the City Counc;il, as thc legislativc body of the District, determines that thc rcduction
or tcrmination of the Special Taxes"would not interfere with thc timely retirement"of outstanding Bonds
secured by the Special Taxe,.
Munner of Collecrion. The Special Taxes will be collected in the manner and at the same time as
nd ti�crlorem property taxes are collccted by the County and, except as described bclow under the caption
"I)elinquent Payments of Special Tax: Covenant for roreclosure," shall be subject to thc same penalties
and the same procedures, sale and lien priority in the case of delinquency as is provided for ucl i�alorc�m
property taxes. "I'axes are levied by the County for cach fiscal year on taxable real property that is
situated in the County as of the preceding January 1. Por collection purposes,property is classified either
as "securcd" or "unsecurcd" and is listed accordingly on scparate parts of the assessment roll. 'I�he
"secured roll" is that part of the assessment roll containing State-assessed public utilities property and real
property having a tax lien that is ,ufficicnt, in thc opinion of the County Asse,sor, to secure paymcnt of
the taxes. Other property is assessed and collected on thc"unsecured roll."
Property taxes on the secured roll are duc in two installments, on November 1 and February 1 of
each liscal year. If�unpaid, tiuch taxes become delinquent on I�ecember 10 and April 10, respectively,and
a 10"/o penalty attachcs to any delinquent payment. Property on the sccured roll with respect to which
taxes are delinquent beco►ne tax defaulted on June 30 of the fiscal year; such property may thcrcaftcr be
redecmcd by pay►ncnt of a penalty of l.$% per month to the date of redetnption, together with the
defaulted taxc,, the delinquency pcnalty, costs, and a redemption fee. If taxes are unpaid Sor a period of
tivc years or morc, the property is subject to auction sale by the County.
Property taxes on the unsccurcd roll are due as of thc lien date and become delinquent, if unpaid,
on August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured taxes are unpaid at
5:00 p.m. on October 31, aii additional penalty of 1.5'% attaches to them on thc first day of each month
unti] paid. Thc County has four ways of collecting delinquent unsecured property taxes: (1) bringinb a
civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain
facts in ordcr to obtain a licn on certain property of thc taxpayer, (3) filing a certificate of delinquency for
rccord in the County Clerk and County Recorder's ofticc in order to obtain a lien on certain property of
o7u'_U p��x-a
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the taxpaycr; and (4) seizinb and sclling personal proprrty, improvements, or possescory intcrest�
belonging or a�sessed to the a��c�sec.
Special Tax is not a Pcrsonal Obli�ation
Although the Spccial "1'axes constitute a lien on property subjcct to taxation within the District, it
does not constitute a personal indcbtcdncss of thc owners of such property. �I�here is no assurance that the
owners will be financially able to pay the Special "l�axes or that thcy „�ill pay such tax evcn if financially
able to do so. �Che risk of thc property o�vncrs not paying the Special '1'axes is more fully described in
"E30NDOWNERS' R�SKS-('ollection oi�the Special Taxes."
Special Tax Formula
Thc Spccial Tax Fonnula is used to allocate the amount of the Special Taxcs that is needed to be
collected cach Fiscal Year from all non-exetnpt parcels within tl�e Di�trict (thc "Taxable Property"),
based upon the land use class of the property (i.c�. De��eloped Property, Undeveloped Property, Golf
Course Property or Exempt Property), subject to a maximum tax rate (the "Maximum Special Tax") that
may bc lcvied against each land uce class. The Special Tax Fonnula is set forth in full in Appendix A. A
summary of the Spccial "Cax Formula is set forth below.
The City collects the Special Taxes on all 'l�axable Property at a Icvel sufficient to pay the debt
service and related administrative costs for the Series 200R Bonds and any Parity Bonds in accordance
with the Special Tax Formula as follows:
On or prior to August 1 of each Fiscal Ycar, or such other date as may be established by law, the
City Council, as thc Icgislative body of the District, is required to deter►nine the amount of Special Taxec
to be levied and collected in that Fiscal Year in order to (i) saticfy the amount required in any Fiscal Ycar
to pay debt service on all bonds or indebtedness within the District, (ii) pay cost incurred by the City and
the District in the annual levy or collection of Special 7�axcs; (iii) other reasonable costs related the
administration of the District; (iv) any amounts required to replcnish a reserve fund cstablished for the
bonds and (v) thc costs of remarketing, credit enhancement and liquidity fees, including such fees for
instruments that serve as a basis of the reserve fund in lieu of cash (collectivcly, the "Special Tax
Requirements") for such Fiscal Year. The Special Taxe� are levied as follows until the amount necessary
to satisfy the�pecial tax requircmcnt for such Fiscal Ycar has been reachcd.
Step l: 'I'he Special Taxes are levied annually fir,t on Developed Property in
Classcs 1 and 2 at 100% of� the Assigned Special 'Cax Kate, however, if� such amount
exceeds the Spccial Tax Requirement, the levy of Special Taxes on all parccls of
I�evelopcd Property in Classes 1 and 2 are decreascd proportionately until the revenues
produced equal the Spccial Tax Rcquircmcnt.
Step 2: If the revenues produced by levying the Special Taxes pursuant to Step 1
arc Icss than the Special Tax Requirement, the Special 'l�axes are levied proportionately
on all Yarccls of Undeveloped Property up to 100"/0 of the Maximum Special Tax Rate to
produce abbregate revenues equal to the Special Tax Requiremcnt.
Step 3: [f the revenucs produced by levying the Special "1'axes pursuant to
Steps 1 and 2 are less than the Special Tax Requircments, the Special "1'axes are levied
proportionately on all Parccls of Golf Course Property up to 100% of thc Maximum
Special 1'ax Rate to produce aggre�ate rcvenucs equal to the Special "I'ax Requircmcnt.
n�o�9,�x„-a
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Sten 4: If thr rcvenues which may be produced by levying the Spccial 1ax
pw•suant to Steps, 1, 2 and 3 arc less than Uie Special "fax Requirement,the Special"1'axes
arc levied proportionately on all Parccls of Devcloped Property up to 100% of thc
niternate Special Tax Rate to produce revenucs equal to the Special 1�ax Revenues.
Although Golf Coursc Property is not an cxempt land use pursuant to the Special "l�ax Fonnula,
Special 'Caxes have never becn levied against Golf Course Propeny and the District does not expect that
Special'I�axes will be levicd against such property in the futurc.
"Che Maximum Special Tax which may be imposed upon property depending upon thc class and
land use category is shown in"l�able 4.
Table 4
City of Palm Desert
Communit,y Facilities District No.91-1
(Indian Ridge Public Improvements)
Maximum Tax Rates by I.and Use Category
Class Land Usc Assi�ned Spccial Tax Ratc
DEVEI.OPED PROPERTI':
Dctached Single f amily Residential
1 A O��cr 3,600 squarc fcct �3,R50 per Dwclling Unit
1I3 3,100- 3,599 squarc fcct 3,300 per Dwelling Unit
1 C 2,600 - 2,099 square fect 2,750 per Dwelling Unit
1 D 2,100- 2,599 cquare fcct 2,450 per Dwelling Unit
1 E Under 2,099 square feet 1,650 per Dwelling Unit
Attached Residential
2A Over 2,500�quare feet 2,100 per Dwelling Unit
2B 2,100- 2,499 square feet 1,R00 per Dwelling Unit
2C 1,700 - 2,099 square feet 1,500 per Dwelling Unit
2n 1,300 - 1,699 square feet 1,200 per Dwelling Unit
2L Under 1,299 square feet 900 per Dwelling Unit
GnLF COI;RSE PROPFR1�1": 1,500 per Net Taxable Acre
UNDEVI:LOPED PROPI-:R I Y: 13,120 per Net Taxablc Acre
Source: Ri�erside Counry 2(106-(17 Secured Tas Roll for the 1=iscal Year 2006-07 Assessed Values, as compiled by
!vluniFinancial.
Pursuant to Section 53340 of the Act, the Special "Cax Formula exempts propertics that are or are
intended to be publicly owned (i.c. road,, common area,, and property owncd by State, fcderal or other
local governments and approximately 3.1 acres designated as well sites); exccpt that the Special Taxes on
property not otherwise cxempt that is acquired by a public entity shall be required to be permanently
satisfied pursuant to Sections 53317.3 and 53317.5 of the Act. Parcels for which the owner has prepaid
and satisfied the Special Taxes are also exempt from further Special Taxes. See"BONDOW\FRS' RISKS-
�:xempt Properties."
n�n2U�poc--1
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7�able 5 below shows the Maximum Special Tax Kcvenue for Fiscal Year 2007-OR based on thc
Maximum Spccial Tax for cach land use catego�y. Scc also"'I�HE DlS1 KICl—Slatus of De�elopincsit.��
Table 5
City of Palm llescrt
Community Facilities 1)istrict No. 91-1
(Indian Ridgc Public Improvcments)
Maximum Special Tax by Land Use Categor,y
(As of the l�'iscal Year 2007-08 Secured Tax Roll)
Assessed Value Maximum Soecial Tax
Number of
l axable
ParcelslAcres 1ota1 Value Pcrcent��' Amount I'ercent��'
lleveloped Propert,y
Detached Single Family Residential
Over 3,600 square fect 94 $114,836,228 15.16% $361,900 10.75%
3,100 - 3,599 square feet 25R 207,946,251 27.46 851,400 25.30
2,600- 2,099 square feet 294 197,305,697 26.05 808,500 24.02
2,100- 2,599 ,quare feet 195 108.603.855 14.34 477,750 14.20
Under 2,099 square feet 3 1,455,966 0.19 4,950 0.1�
nttached Rcsidential
Over 2,500 square feet 0 0 0.00%, 0 0.00
2,100-2,499 square feet 132 61,422,492 8.11 237,600 7.06
1,700 - 2,099 square feet 77 33,703,615 4.45 115,500 3.43
1,300- 1,699 square feet 10 3,Sh4,441 0.47 12,000 0.36
Under 1,299 square feet 0 0 0.00 0 0.00
Golf Course Property''' 29 _ 28,465,203 3.76 495,870 14.73
�I�O1AL 1,092 $757,303,74R 100.00`% $3,365,470 100.00%
(1) Column figures do not rotal due to rourxiing.
(2) Represents approximately 330.6 acres. Pursuant to the Special Tax Fomiula, Special Taxes ha�e never been lerird against Golf Course
Property and are not expected to be levied against such property in the future.
Sources: Ri�erside Counry 2007-OR Secured Tax Roll for the Assessed values and acreage,as compiled by MuniFinancial.
Reserve Account
"1'he Series 2008 Bonds are secured by a Rcaerve Account in an amount equal to the "Reservc
Requircmcnt," which is held by the Trustcc in trust for the owners of the Series 200R 13onds, solely for
the purpose of paying the principal of(including sinking fund payments) and intere�t on the Series 2008
Bonds. The "Reserve Requirement" is defined in the Indenture as that amount, as of any date of�
calculation, equal to the lesser of: (i) 10'% of the initial principal amount of the Series 2008 Iionds;
(ii) Maximutn Annual Debt Scrvice on the Outstanding Scries 200R Bonds; and (iii)125"/0 of the average
Annual Debt Service on thc Series 200R Bonds. Exccpt as othenvise provided in the Indenture, moneys
in the Reaerve Account �hall be used solely for the purpose of paying the principal of, including Sinking
Fund Payments, and interest on the Scries 2008 Bonds and any parity Bonds when due in the event that
the moneys in the Interest Account and thc Principal Account of the Special Tax Fund arc insufficient
thercfor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking
Pund Payment whcn due and for the pu�pose of making any required transfer to the Rebate Fund pursuant
to the Indenturc upon written dircction from the District. [f amounts on deposit in the Reserve Account
arc lcss than the Reservc Rcquirement, after making the reyuired transfers ro the Adminish�ativc rxpenses
Account, the Interest Account, the Principal Account and the Redc►nption Account of� the Special Tax
u7o_'9.po,-a
14
I�und, the Trustcc is required to hansfer to the Reserve Account from available moneys in the Special Tax
I�und, or 1�rom any other legally available Cunds desi�.nated hy tk�c District, the atinouslt lticcdcd to resiore
the amount on deposit in thc Reser��e nccount to the Rcscil•c Requiremcnt.
If amounts on deposit in the Special "I'ax Fund together with any other amounts transferred to
rcplenish the Rescn'e Account are inadcyuatc to restore the Reserve Account to the Rcscrve Requirement,
then the I)istrict is rcquired to include the amount necessary to fully restore thc Reserve llccount to thc
Resen�e Requirernent in the next annual Special Tax levy to the extent of the maximum prrrnittcd Special
Tax ratcs.
If, on the first day of the final Bond Year the amount on deposit in the Rcscrve Account is equal
to the Reserve Requircment for the Series 2008 Bonds or any Parity l3ond�, the amounts in the Reserve
Account may be applied to pay the principal of and interest due on the Series 200R Bonds and Parity
Bonds, as applicabl�, in the final Bond Year for such issue.
Moneys in thc Kese»�e Account in cxcctis of the Reserve Requirement not transferred in
accordance with the Indenture are required to be withdrawn from thc Reserve nccount on the Business
Day before each April 1 and October 1, and transferred to the Interest Account of the Special Tax Fund;
provided, howcver, to the extent that, as of a date 90 days prior to the next occurring Interest Payment
Date, the amount on deposit in the Reserve Account is equal to or greater than the aggregate remaining
principal paymcnts to be paid on the Bond� and any Parity Bonds, any and all amount� in the Reserve
Account may be applied to effect a redemption of all Outstandin�; Bonds pursuant to the Indenture and
any Outstanding Parity Bonds in accordance with any Supplcmcntal Indenture..
Deposit of SQecial"I�ax; Flow of Funds
Pursuant to the Indcnture, on each datc on which the Special Taxes are rcceived from the District,
the Trustee is required to deposit such Special Taxes in the Special Tax Fund and such amounts are to be
allocated in the followinb order of priority:
First: to the Administrative Expenses Account of the Special Tax Fund - from time to time,
the Trustcc is required to transfer ro the Administrative Expenses Account for the payment of any
administrative costs with respect to the calculation and collection of the Special Taxcs, includinb all
attorneys' fees and other costs related thereto, the fees and expenscs of the Trustee, any fec� and relatcd
costs for credit enhancement for the Series 200R Bonds or any Parity Bonds which are not otherwise paid
as Co,ts of lssuance, any costs rclated to the compliance by the District with state and federal laws
requiring continuinb discfosure of infonnation concerning the Serics 2008 Bonds and the Uistrict, and any
other costs otherwise incurred by the City staff on behalf of the District in order to carry out the pu�poses
of the District as set forth in the Resolution of Formation and any obligation of the District under the
Indenturc (collectivcly, the "Administrative Expenses") as set forth in the Certificate of an Authorized
Represcntative of thc District; prurirlc�d, hotire�rcr, that, except as set forth in thc following sentence, the
rotal amount transferred in a 13ond Year may not excced an amount equal ro $ per Bond
Year, escalating by 2%each Bond Year commencinb July 1, 200R (thc"Administrative: F.xpensc� Priority
C:ap") until such time as there has been deposited to: (i) the Interest Account and thc Principal Account an
amount, rogether with any amounts already on deposit therein, that is sufficicnt to pay the interest and
principal on all Series 200R Bonds and Parity Bonds duc in such Bond Ycar; (ii) the Redemption Account
an amount, together with any amounts already on deposit thercin, that is sufficicnt to �call and redeem
'1�e�7n Bonds in accordance with the Sinking Fund Payment schcdules tiet forth in the Indenture and to]
redeem Parity Bonds in accordance with any Sinking Fund I'ayment schedule in the Supplemental
Indenture for such Parity Bonds; and (iii) to the Reservc Account an amount, together with any amounts
already on deposit therein, that is �ufficient to restore the Resen�e Account to the Resen�e Requirement.
Notwithstanding the t��regoing, amounts in excess oi the Administrative Expenses Priority Cap may be
0 7a?�,.pi,s--3
15
h•ansfen�ed to thc Admini�h�ative Expcnses Account to the extent nccessary to collect delinyucnt Spccial
"T'axes.
Second: the Interest Account of the Special 1�ax Pund, an amount such that the balance in the
Interest Account five Business Days prior to each Interest Payment Uate will be equal to the installment
of interest due on the Serics 2008 Bonds and any Parity Bonds on tiaid Interest Payment Uate and any
installmcnt of interest due on a previous Intcrest Pay►nent Uate which remains unpaid;
7hird: thc Principal Account of the Spccial Tax Fund, the amount nceded to make the balance
in thc Redemption nccount five Ausincss Days prior to each Ocrober 1 cqual to the Sinking Fund
Payment due on any Outstanding I3onds and Parity Bonds on such October 1; provided, however, that, if
amounts in the Spccial Tax Fund are inadequate to tnakc the foregoing transfers, then any deficiency shall
bc made up by an immediate transfer from the Reserve Account, if funded;
Fourth: the Redemption Account of the Special 'l�ax Fund .olely for the purpose of�rcdeeming
BondS and Parity E3onds and �hall be applied on or after the rede►nption date to the payment of principal
of and premium, if any, on the Bonds or Yarity Bonds ro bc redeemed upon presentation and currender of
such Bonds or Parity Bonds and in the case of an optional redemption or an extraordinary redemption
fi�om Prepayments to pay thc interest thereon; provided, however, that in lieu or partially in lieu of such
call and redemption, moncys deposited in the Redemption Account, othcr than Prepayments, may bc uscd
to purchase Outstanding Bonds or Parity Bonds in thc manner providcd in the Indcnture;
Fifth: the Reserve Account of the Special Tax I�'und solely for the purpose of paying thc
principal of, including Sinkinb I�und Payments, and intere5t on the Bond, and any Parity Bondti when due
in the event that the moneys in the Interest Account and thc Principal Account of thc Special Tax Fund
are insufficicnt therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to
make a Sinking Fund Payment when due and for thc purpose of making any required tran�fcr to the
Rebate I�und pursuant to the Indenture;
Sizth: the Rebate Fund, for payment to the United States"I'reasury; and
Seventh: thc Surplus Fund, aft�r making the transfers describcd in paragraphs H'irst through
Sixth, the "I'rustee ia required 10 transfcr all remaining amount, in the Special Tax Fund to the Surplus
I�und, which amounts may be transferred by the 1�rustee at the direction of�an Authorized Representative
of the District to: (i) the Interest Account, the Principal Account or the Redemption Account of the
Special Tax Fund to pay the principal of, including Sinkinb Fund Payments, premium, if any, and interest
on thc Series 200R Bonds and any Parity Bonds when duc in the evcnt that moncys in the Special Tax
Fund and the Rcserve Account of the Special "1'ax I�und are insufficient therefore; (ii) the Reserve
Account in ordcr to replenish the Reserve Account to the Reserve Requirement; (iii) the Administrative
Expenses Account of the Special Tax Fund to pay Administrative Fxpenscs to the extent that the amounts
on depo�it in the Administrative I:xpcnses Account of thc Special Tax Fund arc insufficient to pay
Administrative �xpenscs; or(iv)to thc I�istrict ior any other lawlul purpose.
Covenant for Foreclosure
Generul. Thc Indenture provides that the Special 'I'axes are to be collected in the same manner as
ordinary ucl rulorem property taxes are collected and, except as provided in thc special covcnant for
foreclosure described below and in the Act, are subject to the same penalties and the same procedure, sale,
and lien priority in case of delinquency as is provided for url rnlorc�m property taxes.
Pursuant to Section 53356.1 0l� the Act, if any payment of the Special Taxes for a parcel of
'I'axable Property i� delinquent, the District may order the in.titution of a court action to foreclose the lien
u�n��,�,,,,a
16
on thc Taxablr Property within speciticd timc limits. In such an action, the rcal property subjcct to thc
unpaid amount may be sold at judicial forcclosure salc. The ability of the District to foreclosc the licn of
delinquent unpaid Special �l�axes may be limited in ccrtain instances and may requirc prior consent of the
property owncr if the property is owned by or in reccivership of the Fcderal Dcposit Insurancc
Co�poration(thc"FDIC"). See"Bc)NnOwNERS'RISKS -Bankruptcy."
Such judicial foreclosure action is not mandatory. However, the District covenants in the
Indenture for the benefit of the nwners of the Series 2008 Bonds and any Parity I3onds that it wilL (i)
commence foreclosure actions against parcels with at least four dclinquent installments of Spccial 'l�axes
which total in the aggregate at least $6.000 by the October 1 t�illowing the close of each I�iscal Year in
which such Special Taxes were duc; and (ii) co►nmence foreclosure actions against all parcels with
delinquent Special 1�axes by the October 1 following the close of each Piscal Year in which it receives
Special Taxes in an amount which is less than 95"/0 of thc total Spccial Tax lcvied and the amount on
deposit in the Rese�ve nccount is at less than the Reserve Kcquirement, and (iii) diligently pursue such
foreclosure proccedings until the delinquent Special Taxes are paid, and in no event will such foreclo�ure
actions exceed the time periods specified in Scction 53356.1 of the Act.
The District is required to deposit the net proceeds of any foreclosure in the Spccial 'l�ax Fund and
apply such proceeds re►naining after the payment of Administrative Expenscs to make current paymcnts
of principal and interest on the Scries 200R Bonds and any Parity Bonds, to bring the amount on deposit
in the Rescrve Account up to the Rescrve Reyuirement and to pay any delinqucnt installments of�principal
or interest duc on the Scries 2008 Bonds and any Parity Bonds.
"l�he District may elcct (but is not obligated) to advance the amount of any particular delinquency
(excluding pcnalties and interest) and deposit such amount to the Special Tax Fund. Upon a deposit of
such money in the Special Tax Fund, the District need not initiate a foreclosure action as provided abovc;
proi�idc�t, hoirei�c>��, the District may reimburse itself for such advance when the Special 1'axes on such
property ia paid in the amount of such advance plus interest on such amount at a rate equal to thc yield on
the Outstanding Series 200R Bonds. Interest and penalties paid in cxcess of�thc a►nount advanced by the
District shall bc deposited in the Special Tax Fund.
Subjcct to the Maximum Special Tax Rate, the Special Tax Formula is designed to gcnerate from
all non-exempt property within the District the current year's debt service, Administrative Expenses, and
replenishment of the Recerve Account to the Re�erve Requirement, including an amount eyual to the prior
year's delinyuencies. Ilowever, if foreclosure proceeding arc necessary, and the Reserve Account has
been depleted, there could be a delay in payments to Bondowners pending prosecution of the foreclosure
procccding� and receipt by the City of the proceeds of the foreclosure sale. Sec "BONDOWNf-:RS' RIShS-
Bankruptcy."
Priority of Lien. "I'he Act specifies that the Spccial Taxes will have the same lien priority as
u�t��ul��rc�m property taxes in the case of delinquency but does not further specify the priority relationship,
if any, bctween the Spccial Taxes and other special taxes and ad valorem taxe� on a taxed parcel. The
City (and other jurisdictions) may lcvy additional special taxes to financc other infrastructurc needed for
development in the arra. See "SC•C'I;RITY AND SOURCGS OF PAYMENT FOR TIIE SF'.KIGS 200R BONDS-
Issuance of Additional Bonds," "TIiE DISTKICT General" and "-Direct and Overlapping I)ebt," and
"BONDOWNERS' RISKS-Parity Taxes and Special Assessment�."
If foreclosure proceedinbs were ever instituted, any holder of a mortgage or deed of trust on the
affccted property could, but would not bc required to, advance the amount of the delinquent Special 'l�ax
paymcnt to protect its security interest.
n�u�v��,�„-a
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Suffrciency �f'Foreclosure Sulc Procecds. No assurances can bc given that thc rcal property
subject to a judicial Corcclosure salc will be sold or, if.old, that the pr�ceeds of salc �vill be sufficicnt to
pay any delinquent Special Tax installment. The Act does not require the City to purchasc or othen�isc
acquirc any lot or parcel of�property sold if therr 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 forcclosure action, plus post-judgmcnt interest and authorized costs, unles� thc
conscnt of the owners of 75'% of the outstanding I3onds is obtained.
Limited Obligation
Neither the full faith and credit nor the general taxing power of the Ciry, thc County, the State, or
any political subdivision thereof; other than the District, i, pledged to the payment of thc Series 200R
[3onds. The Series 2008 I�ondc are not beneral obligations of the City but are limited obligations of the
Uistrict payable sole�ly from the proceeds of the Special Taxes (net of the City's costs of administerinb the
District) and other sources described in the Indcnture. �I�he Series 200R Bonds are secured by a pledge of
and lien upon the Special Taxes and from amounts on dcposit in the Interest Account, the Principal
Account, and the Reserve Account. Amounts on deposit in the Costs of Issuance Fund and the Rebate
Account are not pledbed ro the payment of the Scries 2008 Bonds. Moneys held in any of the accounts or
special funds under thc Indenture are required to be invested at the���ritten direction of the District only in
Authorized Invcstments,as defincd in the Indcnture.
Issuancc of Parity Bonds
Under the Indenture, the District may at any time issue one or more series of Bondc payable f�om
the Net Taxes and other amounts deposited in the Special Tax �'und (other than in the Administrative
Expenses Account therein) and sccured by a lien and chargc upon such amounts equal to the lien and
charge securing thc Series 2008 Bond, and any other Parity [3onds, provided, howevcr, that Parity Bonds
may only be issued for the purpose of refunding all or a portion of the Series 2008 Bonds or any Parity
Bonds then Outstanding. The issuance of Parity F3onds are subjcct to the conditions contained in the
Indenture, including the following:
(1) The District is be in compliance with all covenants set forth in the Indenturc, and a
certificate to that effect is filed with the Trustee;
(2) The issuance of such Narity Bonds has been duly authorized pursuant to the Act and all
applicable laws, and the is�uance of such Parity Bonds has been provided for by a
Supplemental Indenture, in the fot7n and satisfying the requirements specified in thc
Indenture,duly adopted by the District;
(3) The District has received the following documents or money or securities, all of such
documents dated or cenificd, as the casc may be, as of the date of delivery ol�such Parity
Bonds by the 'l�rustee (unless the Trustcc shall accept any of such documents bearin�, a
prior date):
(i) a certificd copy of thc supplemental indenturc authori�ing the issuance of the
Parity I�onds;
(ii) a written request of the Uistrict instructing the delivery thc f'arity Bonds;
(iii) an opinion of Bond Counsel and/or general counsel to the District in the foren and
content specified in the Indenture;
u�u�y��us-a
1R
(iv) ccrtificatcs of thc District, thc lndcpendent Financial Consultant, in the casc of a
refunding, and thc Special 1�ax ndtninisu•ator, as applicable, in the forn� and a�
describcd in the Indcnture.
See al`o APPLNDIX C-"Sl!MMAR�'OF PRINCIPAI.I.FGAL DOCUMh:\'TS- "
FII�ANCIAL GUARAVIY INSURANCE
�lt� %!loi+•ing rn�ormcition hrr.s hc�crn %t�rnishc�d hJ� 11tc� In.tiw•er for tr.cc� in lhis OJ�c•icr! Stc�tc�mc�nt.
Re%rcnce is mctrle to �1PPE,�'DIx G��r u .�pecimc�n o(thc�/inunciul gucn-unn� inst�rnnee pulic►� to he� i.s.cuc�c/
ht� thc Insurer. The Di.ctricl mukc�.c nn reprc�sent�rtions us to tl�e crccuruc�� or cunrplelC'I1C'SS U� Ij1l.0
inja•mution or u.c tu t/ic� crhscncc o%mutc�riul adi�cr.ce clran�,Je�s in thi.c in%n��m��iort suhseyiu�n� ro th�� cicuc�
!Jc�'�ur .
[TO COMI-:]
TIIE DISTRICT
(:eneral; I.ocation
The District is located in the northern section of the City known at the time of fonnation as the
"Indian Ridge Country Club." The land within the District is divided into 1,092 parccl�, of which 1,063
Taxable Parcels are owned by/1,057J individual parties and is roughly bordered by Country Club Drive
to the north, by Oasis Club Drive and Palm Desert Redevelopment Agency Projcct Area No. 4 to the cast,
Hovley Lane to the south and �l Dorado Drive to the west. Thc District contains a total area of
approximatcly 641 �;ross acres and is located minutes from Interstate Hi�;hway ]0 and State Highway 1 1 1
and is ncar La Quinta, the Bermuda Dunes private air��ort, Rancho Mirage, Indian Wells and the City of
Palm Springs.
The District has no contro] over the amouni of additiona] debt payable frorn taxes or asscssments
on all or a portion of the property within the Di�trict that may be i��ued in the future by other
govemmental entitics or districts, including but not limited to school districts, water districts, or any othcr
district having jurisdiction over all or a portion of the land within the District. Nothing prevents the
owners of land within the District from consenting to the issuance of additional debt by other public
agencies that would be secured by taxes or assessments on a parity with the Special Taxes. To the extent
such indebtedness is payable from asscssments, othcr spccial taxes levied pursuant to thc Act or
uc!i�crlo,•c�m properly taxes, such assessments, speeial taxes and ad rula•em property taxes will have a lien
on the property within the District on a pariry with the lien of the Special Taxes. See "BONDOWNERS'
RISKS-Parity Taxes and Special nssessments."
Status of Uevelopment
The District was fo�mcd in 1992. Ucvelopment within the District was undertaken by Sunrisc
Desert Partners, a Califomia l.imited Partnership (the "Dcvcloper") as a planned communiry containing
approximately 1,137 attached and detached single family homes, two Arnold Pal►ner Championship
designed 18-hole bolf courses, and an approximately 22,000 �yuare foot sportc clubhouse, featuring a full
service restaurant, a health and fitness spa, a 14-court tennis facility, a golf clubhouse and a sports
clubhouse. Two casual dining restaurants and a snack bar are al�o located in the facilities.
u�u�vy,,,<.a
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/�II of the parccls �vithin the I)istrict are currcntly devclopcd, including l,Ofi3 sin�;le family
residences, all of� which are o���ned by individual property owncrs and 29 parcels (representing
approximately 330.6 acres)of Golf Course I'roperty.
Land LJse Classifications
'I'he land within the Uistrict is zoned for residential and commercial/industrial developmcnt. 1'he
property classifications within the District by land usc category is as of the Piscal Year 2007-08 secured
tax roll and is set forth in 1�able 6 below.
"1'able 6
City of Palm Desert
Communit,y F'acilities District No.91-1
(Indian Ridge Public lmprovements)
Property Classification B,y I.and Use Categories
Fiscal Year 2007-08
2007-OR Assessed Value Maximum Svecial Tax
Number of %of Total
Land Use Cate�ory Parcels Parcels Total %of"l�otal Lien"�* Perccnt*
Developcd Recidential 1,063 97.34'% 728,838,545 96.24% $9,140,510 100.00%,
Developed Golf Course' 29 2.66 28,465,203 3.76 1,579,490 0.00
"CoTn� 1,092 ]00.00% $757,303,748 ]00.00% $10,720,000 100.00%
• Prelirninary,subject to change.
i Rcpresents approximatrly 330.G acres. Pursuant ro thc Special Tax Portnula, Special Taxcs ha�e never bccn levied against Golf Course
Property and are not expectrd ro be le�icd against such property in the future.
Sourcrs: Ri�erside County Piscal 1'car 20117-OR Secured l ax Roll for the Assessed Values,as compiled by MuniFinancial.
See �l�able 1 under the caption "SECI.'RITt' AND SOURCF.S Of PAl"MF.NT �OR IHF. SERIES 200R
TiONDs Special 'I'ax Formula" which scts forth the Maximum Tax for each land use category.
Value of the District
"I�he gro5s a��essed value of land and improvements of Taxable Property within the District for
ri5cal Year 2007-08 is $728,838,545. Upon the refunding of the Prior Bonds, a abgregate Special Tax
licn in the amount of$10,720,000* will be recorded against Taxable Parcels within the Di�trict resulting
in an assessed value-to-Special Tax lien ratio equal to 67.99:1* and the assesscd value-to-outstandinb
total direct and overlapping tax and assessmctit debt within thc District (in thc amount of$16,621,513)
will be eyual to 43.R$:1*. See also"-Direct and Ovcrlapping Dcbt."
'" Preliminary,subject to change.
n�n�U�.p�,.-a
20
1�his amount may not be representative of thc actual market ��aluc of the property in the Uistrict,
howcvcr, since Article XIIIA of the California Constitution limits any incrcase in a�sesscd value to no
more than 2% per year unless propei-ty is sold or U•ansfcrred. As a consequencc, assessed values arc
typically less than actual market valucs unless the property has recently changed ownership. This value
docs not account for any reassessmcnts based on changes in owneiship or improvemcnts to property
occun�ing after January 1, 2007. /1 summary of the assessed valuc of Taxablc Propeny-to-special tax lien
categories, including the Series 2008 Bonds, is set f��rth in"1'able 7.
"1'able 7
City of Palm Desert
Community Facilitics Uistrict No. 91-1
(Indian Ridge Public Improvements)
Asscssed Value of Taxable Property-to-Special Tax I.ien Categories
As of the Fiscal Ycar 2007-OS Secured Tax Roll
Value-ro- Assessed Value Spccial Tax Lien*
Special 'I'ax 'I'axable
Licn Cates�ory Propertv t�mount Percent' Amount Percent
10:1 and Greater 1,Ofi1 S72R,770,RR3 6R.12`Y, 510,698,520 99.R0%
5.1:1 to 9.9:1 1 47,R97 5.23 9,152 0.09
3.1:1 to 4.9:1 0 0 0.00 0 0.00
1.1:1 to 2.9:1 1 19,765 1.60 12,328 0.12
Icss than 1:1 0 0 0.00 0 0.00
�I�OTAL 1,063 �728,R3R,545 100.000"/0 $10,720,000* 100.00%
Agbrcgate nssessed Value of Taxable Propcny-to-Special 'l�ax Lien Ratio: 67.99:1*
t ('olumn does not total due ro rounding.
• Prelinunary,subject to change.
Sources: Ri�crside C'ount��2(l(17-08 Secured Ta� Roll for the Assessed Values,as compiled by'vluniFinancial.
071124�.�os-a
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The following'I abic R �ets forth the top ten property o�vners by assrsscd valuation and prorated lien.
Table 8
City of Palm Uesert
Community Facilitics District vo. 91-1
(Indian Ridge Public Improvements)
'1'op Ten Property Owner's BV Assessed Valuation and Prorated I,ien
(As of the Fiscal Year 2007-08 Secured Txx Roll)
Valuc-to-
Parcels Assessed Value Prorated I.ien'�' I.ien
Property Owner Owned Amount Percent�'� Amount Percent�'' Ratio���
Lopcz,Joseph A.and Patricia A. 2 $3,687,467 0.51% $24,656 0.23% 149.56:1
Chiuminatta,Ldward R.and Charlottc M. 2 3,4b1,O51 0.47 26.710 0.25 129.SR:1
Braden,Denver and Loritta M. 2 3.196,816 0.44 26,710 0.25 119.6R:1
Hoffman,Peggy Moorc 2 2,595.119 0.36 21.480 0.20 120.R 1:1
Fusco Prop. 2 2,298,977 0.32 19,052 0.18 120.67:1
Michael,,'�ola 2 1,933,409 0.27 22,601 0.21 85.55:1
945 Miner�Ridge C't. 2 1,727,500 0.24 20,546 0.19 R4.08:1
Schocnlaub,Peter and Lori 2 1,617A68 0.22 19,426 0.1 ft 83.24:1
Eilef�on,Gary L.and fiarbara A. 2 1,478.050 0.20 15,R77 0.15 93.10:1
Cate,Moniyue 2 1,343,004 O.1R 21,480 0.20 62.52:1
Su�r�rra,i_ 20 23.33R,461 3.20 218,539 2.04 lOG.79:1
Othcr Taxable Property 1,04,i 705,SOO,OR4 96.80 10,501,461 97.96 69.89:1
Tc�TAI."f,�xnHt.t:Pkc�i�t:k i v 1.063 $728,838.545 100.00`%i $10.720,000 100.00"/0 70.G4:1
(I) Preliminary,subject to changr.
(2) Column does not total due to rounding.
Source: Riverside Counry 20(X�-07 Secured Tax Roll for the Piscal 1'ear 2UU6-07 Assessed Valurs,as compiled by MuniFinancial.
Secured I'roperty Tax Levies,Collections and Delinquencies
t�istorically, delinquencies for each property tax in�tallment period arc higher immediatcly
following the respectivc installment paymcnt due datc. Late payments received after the respective due
date reduce the outstanding delinquencics for each installment period, to a level of approximately 0%
aiter 1 R months. For thc 2006-07 Fiscal Year, Special "I'axes in the amount of$2,020,198.40 were Ievicd
against 1,063 parcels in the I�istrict. ()f this amount, an aggregate of $17,265.60 for 19 parcels are
currently delinquent (rcpresenting O.RS% of the abgregate amount of Special Tax levied in the District
and 1.89"/0 of the parcels levied).
While the City currently reccives 100"/0 of its tax levies, under thc Tcctcr Plan with the County
the Special Taxes for the I)istrict are not included in the "[�cctcr Plan. Therefore, delinqucncics in the
paymcnt of Special Taxes may have a material adverse effect on the ti►nely payment of principal of and
intcrc�t on thc Series 200R Bonds. Sce "BUNDOWNERS' RISKS-Collcction of Special Taxe�."
n�o�v,�„„-a
22
Sct ti>nh in Tablc 9 is a summary of payment history f�r taxes levicd in thc District for the past
tive riscal Years.
Table 9
Citv of Palm Desert
Communitv Facilities District l�o. 91-1
(Indian Ridge Public Improvements)
Historical Specia!"I'ax Delinyuencyr
Fiscal Year/ nmount %Amount Yarcels Parcels Yarcels
Installment Dollars Levied Delinquent Delinquent Lcvicd Delinguent'�' DelinUuent'��
2003-04 - 1 $1,015,401.17 0.00 0.00 1,047 0 0.00%
2003-04 - 2 1,015,401.17 0.00 0.00 1,047 0 0.00
2Q04-OS- 1 1,013,093.22 0.00 0.00 1,048 0 0.00
2004-OS - 2 1,013,093.22 0.00 0.00 1,04R 0 0.00
2005-06- 1 1,016,566.R6 0.00 0.00 1,063 0 0.00
2005-06 - 2 1,016,566.86 974.20 0.10 1,Ofi3 1 0.09
2006-07 - 1 1,010,099.20 7,304.00 0.72 1,063 8 0.75
2006-07 - 2 1,010,099.20 9,961.60 0.99 1,063 1 1 1.03
2007-08 - 1 1,01 1,223.13 ''' N/A 1,063 ''' N/A
2007-08-2 1,01 1,223.13 '�' N/n 1,063 'Z' N/A
� Amount delinqucnt as of October 31,2007.
''' Property taxes are due in t��o installments and become delinquent on December 10 with respect to the installment due on
No�cmber 1,and on Apnl 1(1 with respect to the installment due on February I.
Suwre Ri�erside Counry 2Ui�f�-07 Secured Tax Roll for the Piscal Year 2006-U7 Assessed Values, as compiled by
�tuniPinancial.
Direct and Overlapping Debt
Contained within the boundaries of the District are numerous overlapping local agencics
providing public scrvices. Many of these local abencies have outstanding debt. The direct and
overlapping debt(the"Debt Report")of the District as of January 1, 2008, is shown in thc following table
which was prepared by California Municipal Statistics, Inc. 1�he Dcbt Report is included for general
information purposes only. "I'he City has not revicwed the Debt Rcport for completeness or accuracy and
makes no rcpresentation in conncction therewith.
The Debt Rcport genrrally includes lon�; tenn obli�ations sold in the public crcdit markets by
public agencies whose boundaries overlap the boundaries of the District in whole or in part. Such long
tenn obligations gcnerally are not payable from revenues of thc I�istrict (except as indicated) nor are they
necessarily obligations sccured by land within the Uistrict. In many cascs long terrn obligations issued by
a public agency are payable only from the general fund or other revenue,of such public abency.
o�o����Pos-a
23
"1'able 10
City of Palm Descrt
Community Facilitics Uistrict No.91-1
(Indian Ridgc Public Improvements
Direct and Overlapping Debt Report
2007-08 Local Secured A.ses.ed Valuation: $762,264,R71
DIRI�CT AND OVI:RLAPPIVG TAX AND ASSESSMENT DEBT: %Apulicable Ucbt 1/1/08
Dcscrt Community College District 1.080% $ 608.81G
Ucscrt Sands[Jnified School Disuict 2.123 5,024,425
Coachclla Valley Counry Water Uistrict, I.U.No. 58 12.420 268,272
City of Palm Desert Community Facilities District No.91-1 100. 15,979,000 ��'
Tn'l'AL DIRECT ANU OVI�:RLnPPItiG 7 AX ANU ASSI:SSMI•:NT DEBT $21.880,51:�
OVERLAPPII�G GENERAL FUND DEBT: %Applicablc�`� I)ebt 1/1/08
Rivenide County General Fund Obligation� 0.438% $3,127,453
Riverside County PenSion Obligations 0.438 1,720,R58
Ri��erside('ounty Board of Education Certificates of Participation 0.438 40,625
Desen Sands Unified School Di,trict Certificates of Participation 4.842 1,445,095
Coachclla Valley Recreation and Park District Certificates of Participation 3.618 90,R12
C'oachella Valley County Water District, I.D.No. 71 Ccrtificates of Participation 3.249 207,611
TO"1'AL GROSS OVFRLAPPING GENERAL FUVD DEB7 �6,632,454
Less: Riverside County self-supporting obligations 81,386
'I'O"1'AL NET OVERLAPPII�'G GE:�ERAL FUND DFBT $6,SS1A6R
<iROSS COMBINED TOTAL UEB'l �28,512,9G7 '''
NET COViBINLD TOTAL DEBT $28,431,581
(1) Excludes Mello-Roos Act bonds to be sold.
(2) Based on asse„ed valuation not adjusted for redevelopment.
(3) Excludcs tax and revenue anticipation notcs,cnterprisc revcnue,mortgage re��enuc and tax allocation bondti and
non-bonded capital lease obligations.
Ratios to 2007-08 Assessed Valuation:
Direct Debt ($15,979,000).................................................................2.10%
I otal Direct and O��erlapping Tax and As�essment Debt....................2.87°/�
Gros�Combined'l otal Dcbt................................................................3.74%
Net Combined Total Debt....................................................................3.73%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/07: $0
Source� Califomia Municipal Statistics, Inc.
o�n�y,i,o,-a
24
so�nown�:ks� wsxs
Th�� /i,/lutiring i.c u discu.s.cion o/ c•c�r�uin ri.ck /i�ctor.ti �hcr� .tihuulr( hr cun.c�i(c�rc�d, in udcliti��n �u
uthc�r mutter.�• .cc�t Jurl{r herc�in. in c�rcrJtrnling thc� im�c�slnrc�n� quuli!}' uJ lhc� Seric�.c ZOOK Bnnd.s. "!'hi.c
cli.ccu.�.�ion c/oc., nut pir�port tu hc� contp�z�hc�n�ii�e ur ctc�/initirc� unc! thc� urdcr in irhich �hc follu�ring
%actur.c ru•c�rrc�sc�nte�l is not inte�ndc�d to re./Ic�ct the �•c�/utirc� impa•lance� n/.such ri.ck.c. The occtrrrc�ncc� o/
onc� a• �nw•e� orthc� c�i�c�nts disc•ic�.��cc/ herein coirlc/ uch�c�r.�c�lr a//i��� tJrc� uhilitr ur tit�il/ingness orp�-upc��-ti•
nxvtc�r.� in �hc�Di.stric•t to pul•their Sj�c�c•iul �a.r tinc��n duc�. S�u�h_/iriltu�c>.s �o perr S�c�riul "1'u.� could re�.ctr!! in
n �•upic!�/c>plc>tiun u/�hc�Kc�.cc�rrc�Acc•oun!crnd/or u dc�%uttlt in pu.vntc�nts orthc�principu!u/, crncl intc�rc�.ct on.
thc� Sc�rie.� 20(IcY Bonds. In «c/dition, thc� occ►�rrc�ncc ofone ur morc� o/ Ihc� c�vc>>iLc r/iscc�.c.cc�d hc�rc>in cuulc/
uclrc>r.tic�lt•u%/�c�et thc�rulue of t/rc J�rope�•IJ•in the�District.
Not General Obligation of the City
The Series 2008 Bonds are not general obligations of the City but are limited oblibations of thc
City payablc solely from procecds of thc Special Taxes (aftcr payment of thc City's co5t of administering
the District), proceeds of the Series 2008 Bonds and certain moneys held in the Special Tax Fund (and
dcsignatcd account� therein, but cxcluding the Administrative F.xpense Account, established under the
Indcnture. Any tax for thc payment of the Series 200R Bonds shall be limited to the Special Taxes to be
collected within the District.
I.evy of the Special"I'axes
The principal sourcc of�payment of debt service on the Series 2008 Bonds is the proceeds of the
annual levy and collection of the Special Taxes. The annual levy of the Special Taxes is subject to the
maximum tax rates authorized. The [evy cannot be made at a higher rate even if the failure ro do so
means that the estimated proceeds of the levy and collection of the Special Taxes, together with other
availablc funds, will not be suf�ficicnt to pay debt service on the Scrie� 200R Bonds. Other funds that
might be available include fund� derived from the payment of delinquent cpecial taxes and funds deri��ed
from thc tax salc of forcclo5urc and sale of parcels on which thc spccial taxes levied are delinqucnt.
Thc levy of thc Spccial Taxes will rarely, if ever, result in a uniform relationship between the
value of the Taxable Property and the amount of the levy of the Special Taxes. Thu�, there will rarely, if
ever, be a uniforcn relationship bet�veen the value of a parcel and the proportionate share of Series 2001
l3ond dcbt 5crvice levied on the parccl, and certainly not a direct relationship.
'I�he Special Taxes levied in any particular tax year on a parcel of Taxable Property i5 based upoti
the maximum rate and application of the Special Tax Fonnula. Application of the Special Tax Formula
will, in turn, br depcndent upon certain development factors with respect to each parcel of Taxable
Property by comparison with similar development factors with respect to the other Taxable Property
within the DistricL Thus, the following are some of thc factors that might cause the levy of the Special
Taxes on any particular parcel of Taxable Property to vary from the Spccial Taxes that might otherwisc
be expected:
• Rrduction in the number of parcels of Taxable Property, for such reasons as acquisition of
Taxable Property by a govemment and failure of the government to pay the Special Taxes based
upon a claim of exemption, thereby resulting in an increased tax burden on the rcmaininb Taxable
I'roperty.
• railure of thc owncrs of'I'axablc Property to pay the Special Taxes and dclays in thc collcction of
or inability to collect the Special 'Taxcs by tax sale or forcclosure and sale of the delinquent
parcels, thereby resulting in an incrcased tax burden on the remaining parccls.
u�n��r 4,�„-.�
25
Not a 1'ersonal()bligation
An owner of Taxable Property is not personally obligatcd to pay the Spccial Taxes. Rathcr, thc
Special Taxes are an obligation only against the Taxable Property. If the value of the Taxable Property is
not sufticient, takinb into account other obligationc also payable thereby to fully secure the Spccial Taxes,
the City has no recourse against the property owner.
Collection of the Special T�axcs
Neither thc City nor the District has any obligation to pay dcbt service on the Scries 2008 Bonds
in the cvcnt Special Tax installments are delinquent, nor is the City or thc I)istrict obligated to advance
funds to pay such debt service.
The Indenture provides that the Special Taxes are to bc collected in the samc manner as ordinary
ad valorcm property taxes arc collected and, except a5 provided in the special covenant for foreclosure
described below and in the Act, is to be subject to the same penaltics and the sa►ne procedure, sale, and
lien priority in case of dclinquency as is provided for ad valorem property taxes. Pursuant to these
procedures, if taxes are unpaid for a period of five ycars or more, the property is subject to sale by the
Counry.
Pursuant to the Act, in the event of any delinquency in the payment of the Special Taxes, the City
Council may ordcr the institution of a superior court action to foreclose the licn therefor in the amount of
the delinquent Special Taxes plus pcnalties, intcrest, and costs (including attorney's fces within specified
time limits. In such an action, the real property subject to the unpaid amount may be sold at judicial
foreclosure sale. Such judicial foreclosure action is not mandatory. However, the District has covenanted
to cause foreclosure actions to be commenced and prosecuted abainst those properties that are delinquent
in the paymcnt of the Special Taxes. l�or a de�cription of the foreclosure covenant, see "SEC'URITY AND
SOURCES O�PAYMFN I hOR THE SERIES 200R BUNDS—Lovenant for Forcclosure."
In the event that sales or foreclosures of property are necessary, there could be a dclay in payment
of the Seriec 2008 E3onds pending such sales or the pro�ecution of foreclosure actions and receipt by the
City of the proceeds of sale if the Reserve Account is depletcd. [n addition, there can be no assurance that
the sale of�delinquent parccls in foreclosure will produce sufficient procceds to cover delinyucncics.
Bankruptcy
GeneruL The payment of the Special Taxes and the abiliry of the City to foreclose the lien of a
delinquent unpaid tax, as discussed in "SLCURITY AND SOURC�:S OF PAYME�'I h'OR THE SGRIGS 2008
130NDS," may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or
by the laws of the Statc of California relating to judicial foreclosurc. In addition, thc prosecution of a
forcclosure action could be delayed due ro crowded local court calendars or delays in the legal process.
'l�hc various legal opinions to be delivered concun•ently with the delivery of the Series 2008 Bonds
(including Bond Counsel's approving Icgal opinion) will be qualified as to the enforccabiliry of the
various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights and by the application of equitable principles and by the exercise of judicial
discretion in appropriate cases.
Although bankruptcy proceedings would not cause the lien of the Special Taxrs to become
extinguished, bankruptcy of a property owner could result in a delay in prosecuting superior court
foreclosure proceedings. The federal bankruptcy laws provide for an automatic stay of foreclosure and
tax �ale proceedings, thereby delaying such proceedings, perhaps for an extended period. Any such
a�nzy�.��„-a
26
delays �vould incrcase thc likclihood of a dclay or detault in payment of the principal ol�and interest �n
the Serics 2008 Bond�and the pos�ibility of delinquent tax installments not bcing paid in full.
'I'o the extent that bankruptcy or similar proceedings were ro involve a larbe property owner, the
chances would increase that the Resen�e Account could be fully dcplctcd during any resulting delay in
receivinb payment of delinquent Special "Caxes. As a result, sufticicnt monies �vould not be available in
the Reserve Account for transfer ro thc Debt Service Account to make up any shortfalls resultinb from
delinquent paytnents of the Special 'l�axes and thereby ro pay principal ot�and interest on the Series 200R
Fionds on a timely basis.
Property Owned by the FDlC: The ability of thc City to foreclose upon the lien relating to
property on which Special Taxes have not been paid may bc limited in certain respects with regard to
properties in which the Federal Deposit Insurance Corporation (the "FDIC") has an interest. Under
federal law, when the FDIC is liquidating assets of an insured depository in its receivership capacity;
property owned by the FDIC in that capacity is subject ro state and local real property taxes that are
assessed according ro the property's value but is not subject to taxes assessed on some other basis, such as
the Special '�axcs. The FDI(' is liable for any such non-ad-valorem taxea that wcre due or delinquent at
the time the FDIC acquircd the property but not any penalties for delinquency. Howevcr, pursuant to its
policy, the FDIC may cicct not to pay such claims where abandonment of its interest in the property is
appropriate, in its busincss judgmcnt.
In addition, no property of the FDIC is subject to levy, attachmcnt, barnishment, foreclosure, or
sale without the FDIC's consent. Furthemiore, pursuant to FDIC policy, while other liens may attach to
property in which the I��DIC has a lien or security interest, the FDIC will not permit a lien or securiry
interest hcld by the FDIC to be eliminated by the foreclosure of other licns without the FDIC's consent.
If the FDIC had a lien on a parcel subject to the Special Taxes, prohibiting the lien of the FDIC to be
eliminated at a judicial foreclosure sale would likely reduce the number (possibly to none) of persons
willing to purchase a parcel at a foreclosure sale. Owners of the Series 2008 Bonds should assume that
the City will be unable to foreclose on parcels of land in the District owned by thc PDIC Such an
outcomc would cause a draw on the Reserve Account and perhaps, ultimately, a default in payment of the
Series 200R Bonds.
Glasnly Marine Industries. On July 30, 1992, the United States Court of Appcals for the Ninth
Circuit issued its opinion in a bankruptcy case entitled In re Glusply Murine Inclu.sa•ies. In that case, the
court held that nd rrilorem property taxes levied by Snohomish County in thc State of Washington after
the date that the property owner filed a petition for bankruptcy were not entiticd to priority over a secured
crediror with a prior licn on the property. Although the court upheld the prioriry of unpaid taxes imposed
before the filing of thc bankruptcy petition, unpaid taxcs imposcd after the filing of the bankruptcy
petition were declared to be"administrative expenses" of�the bankruptcy e�tate, payable after all securrd
creditors. As a result, the secured creditor was ablc to foreclose on the property and retain all the
proceeds of the sale except the amount of the pre-petition taxes. (Because it lies within the court's
discrction, no assurancc can be �;ivcn that a court would declare the Spccial Taxes to be an
"administrative expcnse.")
nccording ro the court's ruling in Glasplt�, as administrative expenses, post-petition taxes would
be paid, assuming that the debtor has sufficient assets ro do so. In certain circumstances,payment of such
admini�trative expensea may be allowed to be defcrred. Once the property is transferred out of the
bankruptcy estate (through foreclosure or otherwisc), it would at that time become subjcct to current
taxcs.
Congress amended the Bankruptcy Code in 1994 to allow local governments to perfect their liens
for ucl rulorc�m property taxcs cven after the filing of a bankruptcy petition, effectively overtuming
o�o����os-a
27
G/u.cpl��, but only as it applies to «cl rcrlur��m property taxes. The Special Taxes, however, are not crcl
rulurc�m taxcs. F.xcept to thc cxtent reversed by the amendcd Rankruptcy Code, C�Irr.cp!}' remains
controlling precedcnt on bankruptcy cow-ts in the State. No other casc law exists with respect to how a
bankruptcy court would treat thc lien for Special Taxes levied aftcr the filing of a petition in bankruptcy.
[f a court applied the logic of Glu.cpl}�, a bankruptcy petition filing would prevent the licn for Special
Taxes levied in subsequent fiscal years from attaching so long as thc property was a part of the e�tate in
bankruptcy. If the Gla.cpl}�precedent were applied ro the Ievy of the Special "l'axes, the amount of Special
Taxes received from parcels whose owners declarc bankruptcy could be reduccd.
Pariry'I'axes and Special Assessments
The Special Taxe� and any penaltics thcrcon will constitute a lien against the lots and parccis of
land on which they will be annually impoacd until thcy are paid. Such lien is on a parity with all special
taxes and special assessments lcvied by other agencies and is co-equal to and independent of the ]ien for
general property taxes regardlc,� of when they are imposed upon the �ame property. The Special 'I�axes
have priority over all existing and futurc private licns imposed on the property. The City, however, has
no control over the ability of other entities and districts to issue indebtedness secured by special taxes or
assessmcnts payable from all or a portion of the property within the District. In the event any additional
improvements or fees are financed pursuant to the establishmcnt of an assessment district or another
district fonned pursuant to the Act, any taxes or assessment levied to finance such improvements will
havc a lien on a parity with the lien of the Special Taxes.
[n addition ro the Special Taxes, the property within the District is subject to other parity taxes
and asscssments. For information concerning existing direct and overlapping public indebtedness within
the District, cee "SECURIT'�' AND SOURCES OF PAYMENT FOR l HP. SERIBS 200R I30NDS—Uirect and
Overlapping Debt" herein. The existence of general property taxes, other special taxes, and assessments
may reduce the value-to-debt ratio of the affected parcels and increascs the possibility that forcclosure
proceeds will not be adequate to pay delinquent Special "I�axes or the principal of and interest on thc
Scries 2008 Bonds when due.
The City has covcnanted that it will not issue additional I3onds on a parity with the Series 200R
Bonds, unless certain conditions are meL See "SEC'URITY A1�D SOURCBS OF PAYMFNT POR THE SERIES
200R BO'.DS—Issuance of Additional Bonds."
Exempt Yroperties
Certain properties are exempt from thc Special Taxes in accordance with the approved formula.
In addition, the Act provides that properties or entities of the state, federal or local government arc
exempt tro►n the Special "I'axes; provided, however, that property within the Uistrict acquired by a public
cntity through a nebotiated transaction, or by gift or devise, that ia not otherwise exempt from the Special
Taxes, will continue to be �ubjcct to the Special Taxes. It ia po,siblc that property acquired by a public
cntity following a tax sale or forcclosure based upon failure to pay taxes could become exe►npt from the
Special Taxcs. In addition, the Act provides that if property subject to the Special Taxes is acquired by a
public entity through eminent domain proceedings, the obli�ation to pay the Special Taxes with respect to
that property, for outstanding Bonds only, is to be treated as if it were a spccial assessmenL The
constitutionality and operation of these provisions of the Act have not been tested. See "SEC'�R�I'v nrvD
SOURCLS()F PAYME\T FOR THF SERIES 200R BO\DS Special Tax Authorization."
[n particular, insofar as the Act require, payment of the Special Taxes by a federal entity
acquiring property within the District, it may bc unconstitutional. If for any reason property within the
District becocnes exempt from taxation by reason of ownership by a nontaxable entity such as the fedcral
�overnmcnt or another public agency subject to the limitation of the maximum rates, the Special Taxes
(170]4-.p��t-�3
zx
will b� reallocated to th� rcmainin�; Taxablr Properties within the l�i�trict. "l�his would result in the
owners of such property paying a greater amount of�the Special Taxes and could have an adverse i►npact
upon the timely paymcnt of thc Special "l�axes. Morcover, it� a sub�tantial ponion of land �vithin thc
Di�trict becomcs excmpt from the Special Taxes because of public ownership, or otherwise, thc
maximum rate that could bc levied upon the remaining acrcage might not be sufficicnt to pay principal of
and interest on the Serie� 2008 Bonds when due and a default would occur with respcct to the payment of
such principal and interest.
"1'he Act further provides that no othrr properties or entities arc exempt from the Special "faxes
unlcss the propertics or entitics are expressly exempted in a resolution of�consideration to le��y a new
special tax or to alter the rate and method of apportionmcnt of an existing cpccial tax.
Land Valucs
The valuc of Taxable Property within the District is a critical tactor in dctermining the investmcnt
quality of the Serics 200R Bonds. If a property owner defaults in the payment of the Special Taxes, thc
City's only remedy is to foreclose on the dclinquent property in an attempt to obtain funds with which to
pay thc delinquent Special 1'axes. Land values could be advcrsely aTfected by economic tactors beyond
the City's control, such as relocation of employers out of thc area, stricter land use regulations, the
abscncc of watcr, or destruction of property causcd by, among other eventualities, earthquake, tic>od or
other natural disaster, or by environmental pollution or contamination.
Natural Disasters
The value of the 'I�axable Property in the District could be adversely af�fccted by a varicty of
natural occurrences, particularly those that cnay affect infrastructure, other public and private
improvements on the 'I�axable Property and the continucd habitability and enjoyment of such
improvements. Such occurrenccs include, without limitation, wildfires, floods, landslides and
earthquakes. One or more of such natural disasters could occur and could result in damage to
i►nprovements of varyin�; seriousness. "1'he damage ►nay 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 usc, or becauce other considerations prcclude such repair or
replacement.
Wi/dfires. 1�he City is located in area where wildfires are a common occurrence. While there
have not bcen any wildfires in the City, the occurrence of any natural disaster or physical calamity could
reault in damage within the District. The occurrence of any such events couid adversely impaet the value
of real property in the District, the collection of Special Taxes, the economy of the City, and, accordin�;ly,
the ability of the District to make paymcnts on the Serie, 2(lOR Bond�when due.
Floodin�. Plood zones are identified by the Fedcral Emerbency Management Agency
("F�MA"). FEMA designates land locatcd in a low- to modcrate-risk flood zone(i.c�. not in a floodplain)
as being within a Non-Special Flood Hazard Area (a "NSI'HA"). I��.MA defincs an NSrHA as an arca
that is in a low- to modcrate-risk flood zone (i.e. not in a tloodplain) and has less than a 1% chance of
(looding each year. The City is located within a NSFHA and severe, concentrated rainfall could result in
localized flooding and river overflows. The City has adopted a Uraina�cway, Floodway, and
Watercow�se Ordinance that regulates development in flood prone areas by preventing construction in
such areas. Development is permitted in these areas oncc floodtlow hazards are eliminated. Areas in thc
City that have received flood control icnprovements are those subject to potentially destructive floods.
Significant capital investmcnts have bccn made in the community where these threats occur. The City
can make no represcntation that future maps will not be revised to include the City within an area deemed
subject to floodinb. Thc occurrence of flooding in thc District could result in a reduction in Special Taxes
n�n��r.�,�,.--�
29
and such a reduction could havc an advene effect on the ability ol�the Di�trict to make paymcnts on thc
Series 200R 1-3onds when duc.
Seismic Fuctors. Generally, seismic activity occurs on a regular basis in the State. Periodically,
the magnitude of a single seismic c��ent can cause significant ground shaking and potential damage to
property located at or ncar thc centcr of such seismic activity. The occurrence of severe seismic activity
in the City could result in damage to roads, infrastructure and other property within the District. The
occun�ence of such a severe seismic could have a negative i►npact on assessed valucs of taxablc ��alues of
property in the District and could result in a reduction in Special 'I�axes. Such a reduction could have an
adverse effect on the ability on the ability of the District to make payments on the Series 200R Bonds
when due.
Hazardous Substances
One of the most serious risks in tenns of the potential reduction in the value of a parcel of
'l�axable Propeny is a claim with regard to a ha�ardous substance. In gcncral, the owners and operators of
a parcel may bc rcquired by law to remedy condition5 of the parcel relating to relea�e� or threatened
rcleases of hazardous substances. The federal Comprehensive Environmental Response, Compensation
and I.iability Act of 19$0, sometimes referred to as "CERCLA"or the"Supertund Act," is the most well-
known and widely applicable of these laws, but State laws with regard to hazardous substances are also
stringcnt and similar. Under many of these laws, the owner or operator is obligated to remedy a
hazardous substance condition of property whcthcr or not the owner or operator has anything to do with
creating or handlin�; the hazardous substance. The effect, therefore, should any of the Taxable Property
bc affccted by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of
remedying ttie condition, because the purchaser, upon becoming owner, will become obligated to remedy
thc condition just as is thc ticllcr.
The assessed values oC property in the District do not take into account the possible reduction in
markctability and value of any of thc"I'axable Property by reason of the possible liability of the owncr or
operator for the remedy of a hazardous substance condition of thc parcel. It is possible that such
liabilitics cun�ently exist and that the Di�trict and City have not been notified of such liabilities.
Furthcr, it is possible that liabilities may arise in the futurc with respect to any of thc Taxablc
I'roperty resulting from the existence, currently, on the parcel of a sub,tance presently classified as
hazardous but that has not bccn released or the releasc of which is not presently threatened, or may arise
in the futurc resultin�; from the existencc, currently on the parcel of a substance not presently classified as
hazardous but that may in thc future be so classificd. Purthcr, such liabilities may arise not simply from
the existcncc of a hazardous substance but from the method of handling it. All of these possibilities could
significantly affcct the value of a parcel of'l�axable Yroperty within thc DisU�ict.
Uisclosures to Future Purchasers
The willingncs, or ability ot�an o�vner of a parcel oC"l�axable Property to pay the Spccial Taxes
even if the value ic sufficient may be affected by whether or not the owner was given due noticc of the
authori•r.ation of� the Special Taxes at the time the owner purchased the parcel, was informed of the
amount of the Special Taxes on the parcel should the Special Taxes be levied at the maximum tax rate
and the risk of such a levy and, at the time of such a levy, has the ability to pay it as well as pay other
expcnscs and obligations. "I�hc District has caused a notice of the Special "l�axes to be recorded in thc
Office of the Recorder for the County against each parcel of Taxable Property. While title companics
normally refer to such notices in title reports, there can be no guarantee that such reference will be made
or, if made, that a prospective purchaser or lender will consider such Special "fax obligation in thc
purchase of a property within the llistrict or lending of money thereon.
070�9.pos-4
30
I,imitation on Remedies; vo Acccleration
Remcdies available to l3ondholders may be limited by a variety of lactors and may be inadequate
to assure the timely payment of principal of and intcrest on thr Series 2008 Bonds, or to preserve the tax-
cxcmpt status of thc Bonds. Bond C'ounsel has limited its opinion as to the enforceability of thr Bonds
and the Indenture to the extent that enforceability may be limitcd by bankruptcy, insolvency, or similar
laws affecting gencrally the enforcement of crcditors' rights. Additionally, the Scries 200R 13onds are not
subject to acceleration in the cvent of the brcach of any covenant or dury under the Indenturc. Lack of
rcmedies may entail risks of dclay, limitation, or modification of E3ondowncr rights. Judicial rcmedies,
such as foreclosure and enforcement of covenants, are subjcct to exercise of judicial discretion. A
California court may not strictly apply certain remedies or enforce certain covenants if it concludes that
application or enforcement would be unrcasonable under the circumstances and it may dclay the
application of such rcmedies and enforcement.
Loss of Tax Exemption
In order to maintain the exclusion from gross incomc for federal income tax purposes of the
intcrest on thc Bonds, the District has covcnanted in the Indcnture to comply with the applicable
requiremcnts of thc Internal Revenue Code of 19R6, as amcnded. The interest on thc Series 2008 Bonds
could become includable in gross income for purposes of federal income taxation retroactive to the date
of issuancc of such Scrics 2008 Bonds as a result of acts or omissions of thc Uistrict in violation of this or
other covenants in the Indenture applicable to the Series 200Q Bonds. 'I�hc Series 2008 Bonds are not
tiubject to rcdemption or any increa�e in intcrest rates should an evcnt of taxability occur and will remain
outstanding until maturity or prior redemption in accordance with thc provisions contained in thc
Indenturc. See"TAX MATTERS.'�
Legislation affecting the tax cxcmption of interest on the Series 2008 Bonds may be considered
by the United States Congress and the State lcbislature. Federal and State court proceedings and the
outcomc of such proceedings could also affect the tax excmption of interest on the Series 200R l3onds.
No assurance can be given that legislation enacted or proposcd, or action, by a court, after the date of
issuance of the Series 2008 Bond� will not havc an adverse effect on the tax cxemption of interest on thc
Series 200R Bonds or the market value of the Series 2008 l3onds.
As one example, on November 5, 2007, the United States Supreme Court heard arguments in
Kc�ntuc�-�� Dc�nrtme�nt o/ Rc>i�en��e t�. U�ri�is, an appeal from a Kentucky state court that ruled that the
United States Constitution prohibited the state from providing a tax exemption for interest on bonds
issued by the statc and its political subdivisions but taxing interest on obligations issued by other states
and their political subdivi�ions. If the Unitcd States Supreme Court afGrrns the Kentucky appellate court
decision,such ruling could overturn other state income tax laws similar to that in Kentucky. In that event,
each affected state could cnact legislation to either extend its tax excmption to bonds issued by other
states and their political subdivisions, or tax the intcrest on its home-state bonds in thc same manner as it
taxes the interest on out-of-state bondc. It is uncertain whether any such new laws, if enacted,would have
retroactive effect.
"fhe introduction or enactment ol�any such future legislation, or clarification of the Code or court
decisions may also affect thc market price for, or marketability of, the Series 200R Bonds. Prospective
purchasers of the Series 200R I�onds should consult their own tax advisers regarding any pending or
proposed federal or state tax legislation, regulations or litigation as to which Bond Counsel expresses no
opinion.
1170_'9�pos--3
31
Risk of Tax Audit
In December 1999, as a part of a larger reorganization o}� thc Inter►ial Revenuc Service (thc
"IKS"), the IRS com►nenccd operation of its "Cax Exempt and Goveinment Gntities Division (thc "TE/(iE
Di��ision"), as the succcssor to its Cmployee Plans and F.xempt Organizations division. Thc ncw "I�E/GF.
Division ha� a subdivision that is �pecifically dcvotcd to tax-exempt bond compliance. Public statemcnts
by IRS officials indicate that the number of tax-cxcmpt bond examinations (which would include thc
issuancr of securitics such as the Series 2008 Bonds) is cxpected to increase significantly undcr the new
7�E/(iE Division. 'I�here is no assurance that if an IRS examination of the Serics 200R Bonds was
undertaken that it would not adversely affect the market valuc of the Scrie� 2008 13onds. See ""Cnx
Mn�rrtRs."
Neither the District nor the City has been contacted by thc IRS regardinb the examination of any
of its bond transactions.
Secondary Market
"1'here can bc no guarantee that there will bc a sccondary market for thc Series 2008 [;onds or, if a
secondary market exists, that the Series 200R Bonds can be sold for any particular price. Occasionally,
due to bcneral market conditions or becau�e of adverse history or economic prospccts connected with a
particular issue, secondary marketing practices are suspended or terminated. Additionally, prices of
issucs for which a market is being made will depend upon then prcvailing circumstanccs. Such prices
could be substantially different from the original purchase price.
Proposition 218 and the Initiativc Power
On Nove►nbcr 5, 1996, the voters of the State approved 1'roposition 218, a constitutional initiative
entitled thc "Right to Vote on Taxes Act" ("Proposition 218"). Proposition 218 adds Articles XIIIC and
XIIID to thc California Constitution and contains a number of interrelated provisions affecting the ability
of local governments to levy and collect both existing and future taxes, assessmcnts, fees and charges.
Proposition 218 becamc effective for most purposes on November 6, 1996.
Anicle XIII C of Proposition 21 R removes all limitations in State law on the initiative power to
rcduce or repcal "any local tax, assessment, fee or charge." Thc initiative powcr is, however, limited by
the United States Constitution's prohibition abainst State or local laws "impairing the obligation of
contracts." The Serics 200R Bonds represcnt a contract between the District and the Bondowners secured
by the Special �I'axe�. While not free fro►n doubt, it is likely that, once the Series 2008 Bonds are issued,
the Special Taxes would not be subject to repeal or reduction by initiativc, at least to thc extent the taxes
arc necessary ro enable the District to make timely paymcnt on principal and interest on the Series 2008
Bonds, but not necessarily to the lull extent of the maximum tax. 1'he intc►pretation and application of
these provisions of Proposition 218 and the federal Constitution's Contracts Clause will ultimately be
detern�ined by the courtc, and it is not possible at this time ro predict with certainty thc outcome of such
detertnination or the timcliness of�any remedy affordcd by the courts. See also "CUNSTITUTIONAL AND
STATIJTORY LIMI7nTIONS ON TAXE:S, RF.VF.NU�S AND APPROI'RIA�IONS Propo�ition 218."
a�ma,Pos--�
32
CONS1'[T[?TIOnAL AND S"1'AT[JTORY L1M17�ATIONS OV TAXES, REVENUES ANU
APPItOPRIA"CIOI�S
Articic XIII A of the California Constitution
On June 6, 197R, Califomia voters approved an amendment (commonly known as both
I'roposition 13 and thc Jarvis-Gann Initiative) to the California Constitution. 7�his amendment, which
added /\rticic XIII A to the C:alifo�7iia Constitution, among other thing� aflects the valuation of real
property for the purposc of taxation in that it defincs the full cash propci-ty value to mean "the county
assessor's valuation of real property as sho�vn on the 1975-71, tax bill under "full cash value," or
thercafter, the appraised value of rcal property newly constructed, or when a change in ownership has
occurred after thc 1975 assessment." The full cash value may be adjusted annually to rcflect inflation at a
ratc not to exceed 2"/o per year, or a reduction in the consumcr price index or comparable local data at a
rate not to exceed 2% per year, or reduced in the event of declining properiy value caused by damage,
destruction or other factors includinb a grncral economic downturn. The amendment further limits thr
amount of any ud rerlure�m tax on rcal property to one percent of the full cash value except that additional
taxcs may be levied to pay debt service on indebtedness approved by the voters prior to July l, 197R, and
bonded indebtedness for the acquisition or improvement of real property approved on or after July I,
1978 by two-thirds of the votes cast by the voters votinb on the proposition.
Legislation enacted by the California Legislature to implement Article X[II A providcs that all
taxable property i5 5hown at full assessed value as described above. In confonnity with thic procedurc, all
taxable property valuc included in this Official Statement(except as noted) is shown at 100% of assessed
value and all general tax ratcs rcflect the $1 per $100 of taxable value. Tax ratcs for voter approved
bonded indebtcdness and pension liability arc al�o applied to l00"/0 of asses�ed value.
Sincc its adoption, Articic Xlll A has been amended a number of times. These amendments have
crcated a number of exceptions to the requirement that property bc assessed when purchased, newly
constructed or a change in owncrship has occurred. These exceptions include certain transfers of rcal
property between fa►nily members, certain purchases of replacement dwcllings for persons ovcr age 55
and by property owners whose oribinal property has been destroyed in a declared disaster and certain
improvements to accommodate disabled persons and for seismic upgrades to property. Thrsr
amcndments have resulted in marginal rcductions in the property tax revenues of the City
Both the California State Supreme Court and the United Statcs Supreme Court have upheld the
validity of Article XIII A.
Article XIII B of the California Constitution
On November fi, 1979, California votcrs approved Proposition 4, the Gann Initiativc, which
added Article XIII B to the California Constitution. In June 1990, Article XIII B was amended by the
voters throubh their approval of Proposition 11 1. Article Xll[ Fi of the California Constituticm limits the
annual appropriations of the State and any ciry, county, school district, authority or other political
subdivi,ion of the State to the lcvel of appropriations for the prior tiscal year, as adjusted annually for
changes in the cost of livinb, population and services rendered by the �;overnmental entity. The "base
year" for c�tabliching such appropriation limit i� fi�cal year 197$-79. Increases in appropriations by a
governmental entity are also permitted (1) if financial responsibility for providing services is transferred
to the governmental entity, or (2) for cmerbencies so long as the appropriations limits for the three years
following the emcrgency are rcduced to prevent any aggregate increase above thc Constitutional limit.
Decreases are required where responsibility for providing services is transferred fmm the government
entity.
u�u?�T,p,,,-.3
33
nppropriations subject to nrticic XII[ B include �;enerally any authorization ro expend durin� thc
fiscal year thc procced� of taxcs ]e�icd by the State or other entity of local govcrnment, cxclusi��e oi�
certain State subventions, refunds of taxes, bcncfit payments from retirement, unemployment insurance
and disability imw�ancc funds. Appropriations subject to limitation pursuant to Article XIII B do not
include debt service on indebtedness cxisting or legally authorized as of January l, 1979, on bondcd
indebtedness thereafter approved according to law by a votc of the clecrors of the issuing cntity votinb in
an cicction for such putposc, such as the Series 200R Bonds, appropriations required to comply with
mandates ot� courts or thc Pederal government, appropriations for qualified outlay projects, and
appropriations by thc State of rcvcnucs derived from any incrcase in gasoline taxes and motor vehicle
weight fees above January 1, 1990 levels. "Proceeds of taxcs" include, but arc not limited to, all tax
revcnucs and the proceeds to any entity of government from (1)rcgulatory liccnses, user charbes, and
user fees to the extent such proceeds exceed thc cost of providing the service or regulation, (2) the
investment of tax revenues and(3)certain State subventions received by local governments. As amended
by Proposition 11 l, the appropriations limit is tested over consecutive two-year periods. Any excess of
the aggregate "proceeds of taxes" recei��ed by the City over such two-year period above the combined
appropriations limits for those two years is to be returned to taxpaycrs by reductions in tax rates or fcc
schedules over the subsequent two years.
As amended in June 1990, the appropriations limit for the Ciry in each year is based on the limit
for the prior year, adjusted annually for changes in the costs of living and changes in population, and
adjusted, where applicable, for transfer of financial responsibility of providing scrvices to or from another
unit of govcrnmcnt. 1�he chanbc in the cost of living is, at thc City's option, cither (1) thc percentage
chanbe in California per capita personal income, or(2)the percentage change in the local assessment roll
for the jurisdiction due to the addition of nonresidential new construction. 'I�he measurement of chanbc in
population is a blended average of statewide overall population growth, and change in attendance at local
school and community college("K-14") districts.
Article X[I[ B pennits any govemment cntity to change the appropriations limit by vote of�the
electorate in conformity with statutory and Constitutional voting requirements, but any such voter-
approved chanbc can only be effective for a maximum of four years.
Proposition 218
nn November 5, 1996, the voters of the State approved Proposition 21 R, known as the "Right to
Vote on Taxes Act." Proposition 218 added nrticles XI11 C and XIII D to the California Constitution,
which contain a nu►nber of�provisions affecting the ability of cities and countics to Ievy and collcct both
existin�;and futurc taxcs, assessmcnts, tcrs and charges.
Article Xlll C requires that all new local taxes be submitted to the elecrorate before they become
cffective. Taxes for general governmental purposcs of the City require a majority vote and taxes fa�
specific purposes, evcn if dcpotiitcd in the City's general fund, reyuire a two-thirds vote. The voter
approval requircments of Proposition 218 rcduce the flexibility of the City Council ro raisc rcvcnucs for
the general fund, and no assurance can be given that the City will be able to impose, extend or increase
such taxes in the future to meet increased expenditurc rcyuircmcnts. In addition, Article XIII D contains
new provisions rclating to how local a�cncic. may levy and maintain "a,sessments" for municipal
services and programs. "Asscssment" is defined to mean any levy or charge upon real property for a
special benefit conferred upon the real property. This definition applies to landscape and ►naintenance
a�sessments for opcn space areas, street medians, street lights and parks.
Article XIII U also contains several provi�ions affecting "fees" and "charges," deCned for
purposes of Article XIII D to mean "any levy other than an uc/ r�lar�m tax, a spccial tax, or an
assessment, imposed by a local gove�nment upon a parcel or upon a person as an incident of property
o�n�a.E,�,�-a
34
owncrship, including a uscr tcc or charbc for a property rclated servicc." All new and cxistin� property
rclated fees and charge. must confonn to rcyuirement� prohibiting, among othrr things, fces and charges
which (i) generate re��enucs cxceeding the funds required ro provide the property rclated service, (ii) arc
used for any puipose other than those for which the fces and charges are imposed, (iii) are for a service
not acwally used by, or immediatcly availablc to, the owner of thc property in question, or(iv) are uscd
for general bovcrnmental serviccs, includinb police, fire or library services, where the service is available
to thc public at large in substantially thc sa►ne manner as it is to property o�vners. l�urther, bet��re any
property related fee or charge may be imposcd or increased, written notice must be given ro the record
owner of each parcel of land affected by such fce or charbe. The City must then hold a hearinb upon the
proposed imposition or incrcase, and if written protcsts against the proposal are presented by a majority of
the owners of the identitied parcels, the Ciry may not impose or increase the fec or charge. Moreover,
except for fees or charges for sewer, watcr and refuse collection services, or fces for electrical and gas
service, which arc not treated as "properiy related" for purposes of Article XIII U, no property rclated fee
or charge may be imposcd or increased without majority approval by the property owncrs subject to the
fee or charge or, at the option of the local agency, two-thirds voter approval by the electorate residing in
the affcctcd area.
In addition to the provisions described above, Article XIII C removed many of the limitations on
the initiative power in matters of reducing or repealing any local tax, assessment, fee or charge. No
assurance can bc�;iven that the voters of thc City will not, in the future, approve an initiative or initiatives
which reduce or repeal local taxes, assessments, fccs or chargcs currently comprising a substantial part of
thc City's general fund. "Assessment,""fee" and "charge" are not defined in Article XIII C, and it is not
clear whethcr thc dctinitions of thcse terms in Articic XIII D (which are generally property rclated as
described above) would be applicd to Article XIII C. If the Articic XIII D definitions are not held to
apply to l�rticle XIII C, the initiative power could potcntially apply to revenue sourccs which currently
constitute a substantial portion of beneral fund revenues. No assurancc can be given that the voters of the
City will not, in the futurc, approve initiatives which repeal, reduce or prohibit the future itnposition or
increase of local taxes, assessments, fees or chargec.
In addition, Proposition 218 addcd several requirements ►naking it gcnerally more difficult for
counties and other local agencies to lcvy and maintain asscssments for municipal services and programs.
Finally, Proposition 218 requires that all new local taxes be submitted to the electorate belorc
thcy become effective. "I'axc� for general bovernment purposes of the City requirc a majority vote and
taxes for specific pu�poscs only requirc a two-thirds vote. The voter approval requirements rcduce the
flexibility of the City Council to deal �vith fiscal problems by rai�ing revenue and no assurance can be
given that the City wi11 be able to raise taxes in the future to meet increased expenditure requirements.
Futurc Initiatives
Article XIII A, Article XIII B and Proposition 21 R were each adoptcd as measures that qualified
for the ballot pursuant to the State's initiativc process. From time to time, other initiative mcasurec could
be adopted, which may place further limitations on the ability of the State, thc City, the District or local
districts to increasc rcvenues or ro increase appropriations which may affcct revenues or thc ability to
expend�uch rcvenue�.
u�uz��.p�s-a
35
tax-exempt obli�ations, and individuals othcnvise cligiblc ti>r the eamcd income tax credit. Thc
applicability and extent of thcse and other tax consequcnces will depend upon the particular tax status or
other tax items of the owncrs of the Series 2008 Bonds. Bond Counsel ���ill express ►�o opinion rebarding
thosc concequenccs.
Any exccss of the stated redemption price at maturity of the Series 2008 I3onds over the initial
ofTering price to the public of the Seric� 200R Bonds set foi-th on the insidc cover of this Official
Statement is `bribinal issue discount." Such original issue discount accruing on a Series 200R Bond is
treated as interest excluded from the gross income ot�the owner thereof for tederal income tax purpc�ses
and cxcmpt from California personal income tax. Original issue discount on any Scries 2008 I3ond
purchased at such initial offering price and pursuant to such initial offerinb will accrue on a semiannual
basis ovcr the tenn of the Series 200R Bond on the basis of a constant yicld method and, within each
semiannual period, will accrue on a ratable daily basi�. The amount of oribinal issuc discount on such a
Series 2008 Bond accruing during each period is added to the adju5ted basis of such Series 2008 Bond to
determine taxable gain upon disposition (including sale, redemption or payment on maturity) of such
Series 2008 Bond. The Code includcs certain provisions relating to the accrual of original issue discount
in thc case of purchascrs of the Series 2008 Bonds who purchase the Serics 200R Bonds other than at the
initial offerinb price and pursuant to thc initial offerinb. Any person considering purchasinb a Series
2008 Bond should consult his or her own tax advisors with respect to thc tax consequenccs of owncrship
of bonds with original iscue discount, including the treatmcnt of purchasers who do not purchase in the
original offering and the original offering price, the allowance of a deduction for any loss on a sale or
other disposition, and the trcatment of accrued original issue discount on such bonds under federal
individual and corporate altcrative minimum taxcs.
If the Series 2008 Bond� wcre offercd and sold to the public at a pricc in excess of�their stated
redemption price (the principal amount) at mawrity, that excess constitutes "premium." For federal
income tax purposes, that premium is amortized over the period to maturity of the Series 2008 Bonds,
based on the yield to maturity of the Scries 2008 Bonds, compoundcd semiannually. No portion of that
premium is dcductible by the owner of a Series 2008 Bond. For pu►po5es of determining the owncr's
bain or loss on the sale, redemption (including mdemption at maturity) or other disposition of a Series
200R Bond, the owner's tax basis in the Series 20U8 Bond is reduced by the amount of premium that
accrues during the period of ownership. As a result, an owncr may realize taxable gain for federal income
tax putposcs from the sale or other disposition of a Series 200R Bond for an amount equal to or less than
thc amount paid by thc owner for that Series 2008 Bond. A purchaser of a Serics 2008 Bond in the initial
public offering at the price for that Series 200R Bond stated on the cover of this Official Statement who
holds that Series 2008 Bond to maturity will realize no gain or loss upon thc retirement of that Series
200R Bond. Owner� of the Series 2008 Bonds should consult their own tax advisers as ro the
deterniination for federal income tax pu�poses of the amount of prentium properly accruable in any period
with respect to the Series 200R Bonds and as to other federal tax conscquences and thc treatment of
premium for purposes of statc and local taxes on,or based on, income.
Purchasers of the Series 2008 Bonds at other than their oribinal issuance at thc respective prices
indicated on the cover of this Oflicial Statement should consult their own tax advisers regarding other tax
considerations such as thc consequences of market discount.
VO MATERIAL LITIGAI'IOn
At the time of delivery of and payment for the Series 2008 Bonds, the Uistrict and the City �aill
each certify that thcrc is no action, suit, proceeding, inyuiry or im�estigation,at law or in cquity, before or
by any court or rcbulatory agency, public board or body pending or threatened against the District or the
City affectinb their cxistence, or the titles of their respective officers, or seeking to restrain or to enjoin
a�ozy,�os-a
37
the issuance, salc or dclivcry of the Scrie� 200R Ronds, the application of the procecds thercot� in
accrn•dancc with thc Indcnture, rn� the collection or Ic�y of thc Special "l axes to pay the principal of and
interest on the Local Obligations,or in any way contesting or afiectinb the validity or enforccability of the
Local Obligations and the Scrie� 200R Bonds, the Financing Abreement, the Bond Purchase Contract
entered into betwecn the Uistrict and the Unden��riters, or any other applicable agrcements or any action
of the J)istrict or the City contemplated by any of said documents, or in any way contecting th�
completeness or accuracy of this Official Statement or any amendment or supplemcnt thercto, or
contesting the powcrs of the Uistrict or the City or their authority with respect ro the Series 2008 Bonds or
any action of the District or the City contcmplatcd by any of said documcnts, nor, to the knowledge of'the
l)i�;trict or the City, is there any basi�therefor.
RATII�GS
Standard & Poor's Ratings Serviccs, A Division of the McGraw IIill Companies ("S&P") [and
Fitch Ratings ("Pitch")] [are expectcd to assign ratings/have assigned a ratings] of"AAn" [and "AAA,"
respectivelyJ to the Series 2008 Bonds baacd upon the understanding that, upon dclivery of the Serics
2008 Bonds, the Financial Guaranty Insurancc Policy will be issued by the Insurer. Sce "FINANCIAL
GUARAI�I1' 1\SURANCE" and APPENDIX G "SPECIME� FINANC'IAL GUARAKTI' IKSURANCE PULICl'."
[Such ratings reflcct only the views of S&P and Fitch and do not constitute a recommendation to buy, seli
or hold the Series 2008 Bonds.] l:xplanation of the sibnificancc of such ratings may be obtained only
from Standard & Poor's Ratings Scrvices, 55 Water Street, New York, Nc�v York 10041; phonc: 212-
20R-1767 and fitch Ratings, One State Strect Plaza, New York, New York 10041; phonc: 212-90R-O500.
Thcre is no assurance that cither such rating will continuc for any given period of time or that thcy will
not be revised downward or withdrawn entirely by the ratinb agency, if in the judbment of such rating
agency circumstances so warrant. Any such dowmvard revision or withdrawal of such rating may ha��c
an adverse cffect on the market price of and/or thc ability ro tradc the Serics 200R Bonds.
FINANCIAL ADVISOR
"rhe Ciry has retained Del Rio Advisors, LLC, Modcsto, Califomia, as financial advisor (the
"Financial ndvisor") in connection with the preparation of this Official Statement and with respect to thc
issuance of the Serics 200R Bonds. The Financial Advisor is not obligated to undertake, and has not
undertaken to make, an independent verification or assume responsibility for the accuracy, complctenes�,
or fairness of the information contained in this Official Statement.
The compensation of the Financial Advisor is contingent upon the issuancc of the Scries 200R
Bcmds.
VERIFICATION OF MATHEMATICAL COMP�1'ATIONS
Upon delivery of the Serics 2008 Bonds, Grant Thornton I.I.P (the "Verification Agcnt"), will
deliver a report stating that it has rcviewed and confirmed the mathematical accuracy of certain
computations relating to the adequacy of the funds and/or securities deposited in the �scrow Funds and
the interest thereon, if any, to pay, when due, the redemption price and interest on the Prior Bonds on the
specified redemption date thereof.
u�uzy,ix,�-a
38
U!VUER��I�RI7'I�G
l�hc Series 200R Bonds are being purchased by Stinson Securities, LI.0 and Kinscfl, Newcomb &
nc Uios, Inc. (the "Unde�writers"). The Underwriters have agreed, subject to ccrtain conditions, ro
purchase such Serics 200R Bonds at the purchase price of $ (representing thc aggregate
principal amount of the Serics 200R Bonds of $ , Iccs an Underwriters' discount of
$ ). 'The Bond Purchase Agrccment, dated , 200K relating to the Scries 200$ Bonds (the
"Purchasc Agreement") providec that the Undei�vriters will purchase all of the Series 2008 Bonds if any
are purchased, the obligation to make such purchase being subject to certain tenns and conditions set
forth in the Purchase nbrcement, the approval of ceriain lcgal matters by counsel and certain other
conditions.
"I'hc Underwritcrs may offer and sell the Serics 200R Bonds to certain dealers and others at prices
lowcr than the oftering prices statcd on thc inside cover page. The offering prices may be changed trom
time to time by the Underwriters.
CONTINUING DISCLOStIRE
The llistrict has covenanted for the benefit of the Owners and I3cneFcial Owners of the Serics
2008 Bonds to provide annually while any Scries 2008 Bonds are outstanding, to each nationally
recognized municipal sccurities information repository and any public or private reposito�y or cntity
dcsignated by the State ofCalifornia as a state repository for purposes of�Rule 15c2-12(b)(5) (the "Rule")
adopted by the Securities and Exchange Commission (each, a "Repository") certain annual financial
information and operating data, including its Comprchensive Auditcd Financial Report by not latcr than
270 days atter the cnd of each Fiscal Year (thc "nnnual Repori") commencing with the report for riscal
Year 2007-OR. The specific naturc of the information to be contained in the Annual Report or the notices
of material cventc is contained in APPENDIX �:—"FORM OF CONTINUING DIS('LOSURE 11GREFMG!�T.'�
Thesc covenants have been made in order to ascist the Undcrwriters in complying with the Rule.
n�u������x„-.s
39
11ISCELI.AVEOt'S
This Official Statement is not to be construcd as a contract or agreement among the District, thc
City and the purchascrs of the Scries 200R Bonds. My statements made in this Ofticial Statement
involving mattcrs of opinion or of estimates, whcther or not so expressly stated, are set forth as such and
not as represcntations of fact, and no representation is made that any of the estimates will be realized.
'l�hc information and expressionc of opinion hercin are subject ro change without notice and neither the
delivery of the Official State►nent nor any sale ►nade hereundcr sl�all, under any circumstances, crcate any
implication that there has bcen no change in the affairs of the District or thc City since the date hercof.
The execution and delivery of the Official Statement by the District has been duly authorized by
the lcgislative body of the District.
CITY OF PAI.M DESER'I'COMMUNII�Y
FACILITIES DISTRIC'f NO. 91-1 (INDIAN RIDGE
PUBLIC IMPROVl:MENTS)
sy:
[Name]
[Title]
o�o�v�p�,s-a
40
AYPENDIX A
METHOD OF APYORTIONMEVT OF SPECIAL'I'AX�;S
o�uz�,,�o,-a
A-1
APPEI�DIX B
GENH;kAI. INFORMA'I'ION CONCERNING TI1E CI"fY OF PAL�I DESER7'
%hc fullux�ing infnrmution cunce�rning tl�c Citt� u% Pulm Ue.cc�i7. the Coin��}• ��/ Kirc�i•sicle und
stu�rot�nding n�•c�a.c i.c inc/t�dc�r/ nn/r ��r thc� ptr�/�os� u/ .strppli•ing gc�ncrcrl inlurmution i•c�grrrcling lhc�
contmi�nitti•.
O��erview
'1'he City of Palm Desert (thc "City"), incorporatcd in November 26, 1973 as a general law city,
becamc a charter city through thc adoption of�Ordinance 858 by the City Council on January R, 1998. The
City is located in thc Coachella Valley and is approximately mid-way between thc cities of Indio and Palm
Sprinbs, 117 miles east of Los Anbeles, 11 R miles northeast of San Diego and 5]5 milcs southeast of San
I�rancisco.
The City occupies an area of approximatcly 26 square miles. Elevation of the City is 243 feet and
the mcan tcmperature is 73.1 degrees. E:xcept in�ummer, the wcather is mild and annual avcrage rainfall is
3.38 inches. According to the Statc Ucpartment of Finance, thc City population as ofJanuary 1, 2007 was
approximately 49,�52, an increase of approximately 16.7% since 2000, attributable in part to tcrritoria]
anncxation.
Governmcnt
The City Council is comprised of five members, elected at large for four-year staggered tenns
every two years. 'l�he general ►nunicipal clection is conducted in November of even-numbered years,
consolidated with the Statewide General Election and councilmembers are swom in and take office at thc
first mecting in December following each election. .
The City Council sclects one of its mcmbers to serve as Mayor for a onc-year term and appoints a
City Manager to conduct thc day to day busincss of the City and the City Clerk. The City Attomey is
appointed by City Council. �l�hc City operates as "Contract City" utilizing, primarily, agrcements with
other governmental entities, private companies and individuals to provide services. Contracted sen�ices
include police and fire protection provided through the County, animal control, health scrvicec, legal
scrvices and landscape maintenance.
"(�hc City Council also sen�es as the governing board of the Financing Authority, the
Redevelopment ngency, the IIousing Authority and the Parkinb Authority and the City Manger serves as
the Chicf Administrative Officer of thc Financing Authority and the Exccutive Director of the
Redevelopmcnt Agency, the ��ousinb Authority and thc Parking nuthority. 'I�he City Attorney and the
City Clerk also serve as the General Counsel and Secretary, respectively, of the Redevelopmcnt Agency
and these Authorities. The currcnt members of the City Council and key administrative per�onncl of the
Ciry are listed in"I�able B-1 and Table B-2,respectively:
ino��,�ro�-a
B-1
"I�ABI.E B-1
CITY OF YAI.M UES}�;RT
Citv Council Members
Name Of�ficc "l cnn Expires Occupation
Richard S. Kclly Mayor November 200R Retired G'l�L l:xccuti��c
Jean M. Benson Mayor Pro Tem November 2010 Kctircd Travel Industry Professional
Jim l��erguson Councilmember Novembcr 2010 Attorncy
Cindy l�inerty Councilmember November 200R 13usinesswoman
Robert A. Spie�;el Councilmember November 200R Rctircd Retail Industry Executivc
TABLI�: B-2
CITY OF'PALM DESERT
Kev Administrativc Personnel
Name Position
Carlos L. Ortcba City Manabcr
Justin McCarthy Assistant City Manager
Paul S. Gibson Treasurer/Financc Director
David L. Yrigoyen Dircctor of Redcvclopment/FIousing
Rachelle [). Klacsen City Clerk
Population
Between 2003 and 2007, the City's population increased by a total of 5,452 or approximately
12.3%. In addition to permanent resident�, the City has approximately 15,000 scasonal residential residents
who live three to six months in the Ciry, primarily during the winter months. Tablc I3-3 illustrates the
population of the City,the County and the State for 2000 and 2003 through 2007.
7'able B-3
CITY OF PALM DESERT AND RIVERSIDE COt1NTY AND STATE OF CAI,IH'ORNIA
POPUI.ATION
Year
(January 1) Citv of Palm llescrt Riverside Countv State of Califomia
2000 41,450 I,557,800 34,207,000
2003 44,300 1,719,000 35,591,000
2004 45,610 1,807,RSR 36,271,091
2005 49,595 1,8R8,31 1 3fi,728,196
2006 49,879 1,966,607 37,195,240
2007' 49,752 2,031,625 37,662,518
+ Preliminary.
Sources: Uni�ec!S�ates Depcurment oJ Cumme�ce. Bw�rcm uj�he Census /w•20llll unr(S�rr��of C'ulifonr�u Dc�pru�nnenl uj
h'innnce,/o��i-em�ininR yen��s.
070'9.�x�s-�3
B-2
I.abor Forcc and Employmcnt
The main sources of rcvcnuc in the City are derived trom touris►n and salcs tax. Historically, the
unemploymcnt ratr in the City has been lower than that for the County and the State.
'l able F3-4 table represents the labor patte�7is in the City, thc(`ounty, the State,and the Unitcd States
from 2002 through 2006.
Tablc 13-4
CITY OF' YALM DI�:SERT,RIVERSIDE COUNTY,
STATE OF CALIFORI�IA���AND UNITEU S"1'ATES
CI�'II,IAN I.ABOR FORCE, EMPLOYMENT, AND i'NEI�IPLOY�IE'.VT
2002 through 2006
Unemploymcnt
Year and Area Labor 1�'orce �mvlovment Unemployment Ratc
2002
City 21,100 20,300 R00 3.6%
County 749,R00 702,300 47,500 6.3
State 17,326,900 16,165,100 1,161,800 6.7
Unitcd States 144,R63,000 136,4R5,000 8,378,000 S.R
2003
City 21,900 21,100 R00 3.6
County 781,600 732,300 49,300 6.3
State 17,414,000 16,223,500 1,190,500 6.8
United States 146,510,000 137,736,000 R,774,000 6.0
2004
City 22,R00 22,100 700 3.3
County R I 2,000 764,900 47,100 5.8
State 17,SS2,300 16,459,900 1,092,400 6.2
United Statca 147,401,000 139,252,000 R,149,000 5.5
2005
City 24,000 23,300 700 2.R
County 849,600 R06,700 42,900 S.l
State 17,695,600 1 fi,746,900 94R,700 5.4
United States 149,321,000 141,730,000 7,591,000 5.1
2006
City 25,100 24,400 700 2.9
County 8R6,400 842,000 44,400 S.0
State 17,901,900 17,029,300 R72,600 4.9
United States 151,42R,000 144,427,000 701,000 4.6
Labor forcr data for thr Ciry,the County and the State reflect the March 2006 annual rr�ision or(benchmark)and Census
2000 population controls at the State le�el. Labor force data produced using older benchmarks are no longer comparable ro
data based on ihe 2006 benchmark.
Sources: ('uf�fr��n�n S�cne Em/�/ot•ment Dc��e/opment D�pariment nru�C/.S nepartrne�n�of Luhur.Bturm�u�Lu(x�� S1rul�tic:c.
070'_'9\puti--1
B-3
1�able 13-5 dcscribrs the largest employcrs in the City.
Table 13-5
CITY OF PAL:VI DF.SER1'f
LARGF,ST EMPLOYF.RS
(As of January 1,2007)
Number of
Companv ProducUService F.mvloveeti
JW Marriott Desert Springs Resort IIospitality 1,300
Securitas Securiry Svc USA Inc. Sccurity Se�vices 700
College of the Desen �ducation 630
Marriott's Desert Spas Villas Hospitality S00
Sunshine Landscape Landscaping Services 500
Desert Valley Industries Business Support Services 400
Man�iott Owncrship Rcsorts Inc. Hospitality 300
Sunrise Colony Co. Golf Course Community 250
Foundation For the Retarded Social Services 236
Time Warner Cable "fciccommunications 220
13ighorn Golf Club Golf Resort 220
Springs At the Fountains Convalescent and Nursinb Carc 200
Macy's West Retail 200
Monterey Palms Health Care Hcalthcare 200
Fountains At the Carlotta Convalescent and Nursing Care 200
Indian Ridge Country Club Golf Course Community 200
Williams Mechanical Inc. Plumbing 200
Palm Valley Country Club Golf Coursc Community 200
Koala Tee Printing Screen Printinb 200
j' Fcdcral and Statr Go�emment not included.
Source: Amcrica's Labor�larket Information System(ALMIS).
Commercial Activity
A tiale� tax is imposed on retail salc or consumption of personal property. Sales tax rcvenues are
determined by the tota] taxable transactions within a jurisdiction and distributed by the State Board of
Equalization to the juri�diction where the sale took placr. Sales taxes collected from merchant, with no
permanent place of bu�ineti� (i.c�., manufacturers, construction contractors, etc.) are accu►nulated to a
Counrywidc or State-widc (out-of-state businesses) pool and distributed to cities and counties in
proportion to thcir collections from all sales taxpayers.
"I'hc valuc and volumc of the,e taxable transactions are dependent on economic conditions and
othcr factors. Such factors included the level of inflation affecting the price of goods and services subjcct
ro the sales tax, thc rate of population growth in the general area, the characteristics of retail
dcvclopincnts, �uch as the relativc sizc of market service areas, the sensitivity of the types of businesses
within the City to changcs in the economy, and competing retail establishments outside the City. A
deterioration of economic conditions and other factors influencing taxable sales benerated in the City,
may reduce thc City's sales tax revenues.
u�o��r,i,o,-a
B-4
l'able I3-6 �ummarizes taxable transactions in the City for calendar years 2001 throubh 2005.
"1'ABL�: B-6
CI1'Y OF YALM UESF.R"I'
Taxable Retail Sales Data
Calendar Years 2001 to 2005'
($in 000's)
2001 2002 2003 2004 2005�`�
RF.TAIL.STORI-:S
Apparel Stores $93,792 597,924 $108,R29 �132,831 $14R,723
General Merchandise 272,856 278,583 307,186 340,277 374,757
Food Stores 52,2R2 51,73R 52,461 47,455 51,404
�:atinb& llrinking Places I55,91 1 148,228 152,SOR 167,315 ]76,486
IIome Furnishings and Appliances 125,130 129,623 135,694 155,921 154,580
Building Matcrials and Farm 64,251 54,111 56,180 68,737 66,579
Implcmcnts
Auto Dealers and Auto Supplies 8,R25 6,904 R,21 1 S,R62 5,841
Scrvicc Stations 22,633 23,930 39,146 45,585 56,681
Other Retail Stores 220,250 228,2R6 243,474 264,129 2R2,2R6
TOTAL RETAIL STnRES 1,015,932 1,019,327 1,103,689 1,228,112 1,317,337
All Other Outlets 195,137 190,OSR 193,041 205,184 212,005
TOTAL ALL()l1TLF'I S S 1,211,069 �1,209,3 R5 $1,296,730 $1,433,296 g 1,529,342
Most recent annual data a�ailablr.
Source: Stute Buurd ojEqunli_ution.
Construction Activity
In calendar year 2006, the City issued construction pennits valued in excess of$257 million. Of
this amount, approximately 42.5% consisted of new single family construction and approximately 14.2%
consisted of new multifamily construction. A five-year history of building permits and valuation appears
in 1�able B-7.
Table B-7
C[TY OF' PALM UESER"f
BUILDING PEItMITS AND VALUATIONS 2002-2006
Residential
Number of Units Nonresidcntial
Valuation Valuation
Year Sin�le Familv Multifamilv ($in 000's)+ ($in 000's)' Total
2002 221 310 $100,486.0 541,413.7 $141,R99.7
2003 237 101 R6,387.6 20,123.0 106,510.6
2004 325 111 103,73R.2 43,112.1 146,R50.3
2005 100 135 78,130.9 92,535.4 170,663.3
2006 285 442 163,104.8 94,310.R 257,415.6
� Includcs value of individual unrts,alrerations and addmons.
Sourcr: Cunctilictrun/ridte�tr}'Resenrcl�6oeud.QuildinY Permit Suivei:c.
n�u�y��,ot-a
B-5
Ycrsonal Incomc
'l�otal personal income is defined by the Bureau of T:conomic Analysis (the"BEA"), an agency of
the U.S. [)cpartmcnt of Commercc as income received from all sources, including income received from
participation in production as well as from governmcnt and business transfer payments. It represents the
sum of compensation of reccived by employees , supplements to wages and salaries, proprietors' income
with inventory valuation adjustment and capital consumption adjustment(the"CCAdj"), rental income of
persons with the C:Cndj, personal income receipts on assets, and personal current transfer receipts, less
contributions for bovernment social insurancc. Per capita income is calculatcd as the personal incomc
divided by the resident population based upon the Census f3ureau's annual midyear population estimates.
The followin�; table summarizes the total personal income and per capita income lor the County,
the State and the United States for the calendar years 2002 through 2006. Although the City is the lOth
largcst city within the Counry, the I3LA does not currently maintain separate incomc data for thc City.
See also" Population."
Tablc A-6
RIVERSIDE COUN"1'Y
STATE OF CAI,IFORNIA AND l,'NITEU S"1'A"1'ES
Pcrsonal Income
Total
Personal Income Per Capita
Year and Area ithousands of dollars) 1'crsonal Income
2006
Counry $ $
State 1,434,909,558 39,358
United Statec 10,966,80R,000 36,629
2005
Counry 52,850,398 27,167
State 1,347,942,750 37,283
United States 10,284,37R,000 34,fiR5
2004
County 49,225,374 26,361
State 1,265,657,107 35,313
United States 9,711,271,000 33,072
2003
County 45,023,257 25,276
State 1,187,040,144 33,469
United States 9,]50,320,000 31,466
2002
County 42,010,066 24,7R9
State 1,147,715,704 32,769
United States 8,R72,871,000 30,795
Source: U.S.Department of C'ornmerce, Bureau of Economic Analysis.
0702y.pos-�3
H-f1
Utilities
Water, sewagc trcatment and ���aste�vatcr disposal are provided by the Coachella Valley Water
District. Southern California Gas Company supplies natural gas to the City and electric power is
provided by thc Southern California Edison Company. 'I'elephone sen�icc is available through Verizon.
Cable television servicc is provided by�l�ime Warner.
Transportation
Inter-City transportation is provided by Greyhound Bus which providcs scrvice from its
connection points in the City ro its lines outside of the City in addition ro thc community owned and
operated Sunline �us System which provides service throughout the entire Coachella Valley. Intra-City
transportation is provided by Tel-a-Ride and local taxi finns. The City's ccntral highways are California
Highway 1 1 1 and 74 which conncct to US Interstate 10 and to California lIighway 63 and 86.
Shipping is providcd by numerous truck carriers which have overnight service to Los Angeles,
San Francisco, San Diego and Phoenix. Rail transportation is provided by the Southern Pacific Railroad
located in Indio, l0 miles east of the City, and by Amtrak, which has two stations located in Coachclla
Vallcy.
A full service airport is located in Palm Springs, 12 milcs northwect of the City, with
approximatcly scven carriers providing service. The ai�port has an R,500 foot runway and general
aviation facilitics. Thcre is also a private airport in Bermuda Dunes,eight miles northeast of the City.
Communitv Services
The City of Palm Decert provide� both policc and fire protection through contracts with the
County of Riverside.
The Riverside County Public Library Systcm provides library services to the City. The City also
operates a 43,000 square foot public library on the Collcge of the Desert campus which is jointly used by
the public and the College of thc Desert.
Education,Culturc and Recrcation
Educution. Public school education is provided by the Desert Sands Unified School Uistrict (the
"School I)istrict"). 'I'he School District provides preschool through grade 12 education ro students living
in the C'ity and the communities of Indian Wells, Indio, La Quinta, Rancho Mirabe and Bermuda Dunes.
The School District operates three elementary schools, one middle school and one comprehensive high
school. During I-�iscal year 2006-07 there were 5,942 students attending classes in schools located within
the City.
Thc Collcge of the Uecert, the Coachclla Valley Community College is located in the City. A
satellite campus of California State Univercity, San Bcrnardino ("CSUSB") is located approximatcly five
miles northeast of City Hall. In November 2006, CSUSB commenced construction of an approximately
23,000 square foot health sciences building containing labs, classrooms and an electronic library. This
facility is expected to be completed in 200R and will complete the initial three-building phase ot� the
CSUSF3 Palm Desert Campus, which includcs the approximately 37,000 square foot three-story Mary
Stuart Rogers Gateway }3uilding which was completcd in 2002 and the approximately 30,000 square foot
three-story Indian Wells Center for Educational Excellencc and the 300-seat perfonning arts Indian Wcll,
Theater both of which were completed in 2005.
o�o��r,P„s-a
B-7
The University ofCalifornia, Riverside has also established a campus in the City. 'fhe UCR Palm
I�cscrt Graduate Center opened as a pennanent satellitc campus in 2005, �vhen construction was
completed cm tlie approximately 21,200 square foot Richard J. Heckmann International Center f��r
lintreprcncurial Management and an approximatcly 23,600 square foot educational facility.
Culturc and Recreation. Culwral facilitics in thc City include the 1,127 scat McCallum Theatcr
for the Performing Arts located in Bob Iiopc Cultural Center, thc 1,200 acre Living Desert Loo and
Gardens, and the Art in Public Placcs (a muscum without walls fcaturing more than 130 works of�art
throughout the City).
Recrcation programs for residents of the City and other neighboring communities are offered
throubh the Coachella Vallcy Recrcation and Park District (the "Park District"). Thc Yark District
provides rccreational activities and programs ranging from tiny tots programs, kids clubs and summer day
camp, to dance, health and fitness and music instruction, to the senior games.
The I�esert Willow Golf Resort, two championship 1R-hole, public golf course, is locatcd on
approximately $40 acres in the northern area of the City. l�his golf course also features a 33,000 square
foot clubhouse with restaurant, dining and banquet tacilities. Thc Ciry also is home to five other public
golf courses and resorts and 20 private or semi-private bolf clubs and resorts.
a�n�9�i,�,..a
B-R
nrrEnn�x c
SUMMARY OF PRINCIPAL LF,GAL UOCU11'IEI�TS
Thc� /i�//oiring i.c n hric�/�.sumntur�• oJ �hc� /n•ori.sinn.c oJ thc� /nrlenttu•c�. Such .stunnuuy i.s no!
intendc>d ro he�rlc�/ini�ii•e�. unc!r-c�Ji�rc�nce i.s mc��/e�o lhc�contple�e ducinn�nt.s/i�r thc�cump/e�te�tc�rms�/u�rc�uf
n�o��,�,o,-.�
C-1
ANPEI�UIX D
H'ORn1 OI��OPII�ION()F BOI�D COUNSEL
o�a��r..p�,ti-a
I)-1
APPEVUIX E
FOItM OF CON"I'Il�U1NG DISCLOStiRF,A(;It�;E1�iF.l�T
The Continuing Disclosure Agreement (the "Uisclosure Abreement") is executed and delivered
by and among the City of Palm Desert Community Pacilitics Di,trict No. 91-1 (Indian Ridge Public
Improvements) (thc "District"), Wclls Farbo Bank, National Association (the "�l�rustee") and
MuniFinancial, Inc. (the "Uisscmination Agent") in connection with the issuance of the $
principal amount of thc City of Palm Desert Community Pacilities vistrict No. 91-1 (Indian Ridge Public
Improvements) Special Tax Refunding I3ondc. Series 2008 (the"Bonds"). The Bonds are beinb executed
and delivered pur,uant to an Bond Indenture dated as of January l, 200R (the "Indenturc"), by and
between thc District and the"I�rustee. The Uistrict covcnants and agrccs ac follows:
SECTION 1. Pumose of this Disclosure Agrcement. This Disclosure Abrccmcnt is being
executed and delivered by the District for the benefit of the I Iolders and Beneficial Owners of the Bonds
and in order to assist thc Participatinb Underwriters in complying with Securities and Exchange
Commission("SEC") Rule 15c2-12(b)(5).
SF.CTION 2. Uefinitions. In addition to the definitions sct forih in the Indcnture, which apply to
any capitalized term used in this Disclosure Agrccment UIlICtiti otherwise defincd in thic Section, thc
following capitalized tenns shall have the follo���ing meanin�;s:
"Annual Report" shall mean any annual report provided by the Dist�ict pursuant to, and as
described in, Sections 3 and 4 of this Disclosurc Agreemcnt.
"Beneficial Owner" shall mean any person which (a) has the power, dircctly or indirectly, to votc
or consent with respect to, or to dispose of ownership of, any Bonds (including persons holdinb Bonds
through nominees, dcpositories or other intermediaries) or (b) is treated as the owner of any Bonds for
federal incomc tax purposes.
"Central {'ost Office" shall mcan the Disclosure USA website maintained by the Municipal
Advisory Council of Texas or any succeti�or thereto, or any othcr organization or mcthod approved by the
staff or members of the Securities and Lxchange Commission aa an intermediary through which issuers
may, in compliance with thc Rule,make filings required by thi�Continuing Disclosure Certificate.
"Dissemination Agent" shall mean MuniFinancial, Inc., acting in its capacity as Dissemination
Agcni hereunder, or any successor Dissemination /lgent designated in writing by the District and �vhich
has filed with the Trustee a written acceptance of such designation.
"Fiscal Year" shall ►nean with respect to the District, the period be�;inning on July 1 of each year
and ending on the next succeeding Junc 30, or any twelve month or 52 week period thereafter ticlected by
thc DiStrict with notice of such scicction of change in fiscal ycar to be provided as�ct forth herein.
"liolders" shall mean cither the registcred owner� of�the Bonds, or, if the 13onds are registered in
the name of 1�he Deposirory Trust Company or another recognized deposirory, any applicable participant
in its depository system.
"Listed Lvcnt"shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
"National Repository" shall mean any Nationally Recognized Municipal Securities [nfonnation
Repository for purposes of the Rule. A list of the current National Repositories approved by the S.F.C.
may be found at the S.E.C. website: http://www.sec.gov/info/municipal/nrmsir.htm.
o�o�e�F,,,,-a
E-1
"1'articipatinb Underwriters" shall Illl'dtl Stinson Secw�ities, LLC and Kinscll, Newcomb & De
Dios, Inc., as the oribinal underwrite�s of the �3onds rcyuired to comply ���ith the Rule in connection with
offerinb of the Bonds.
"Repository"shall mean each National Repository and each Statc Repository, if any.
"Kule" shall mean Rule 15c2-12(b)(5) adoptcd by the Securitics and h:xchange Commission
under the Securities Exchangc Act of 1934, as the same may be amcnded from time to time.
"State"shall mean the State of California.
"State Repository" shall mean any public or privatc repository or entity dcsi�;natcd by the State as
a state repository for the purposc of the Rule and recognized as such by the Securities and Exchangc
Commission. �1s of the date of this Disclosure Agreemcnt, there is no State Rcpository.
SECTION 3. Provision of Annual Reports.
(a) The District shall, not later than six months after the end thc City's l�iscal Year (which
currently is June 30), commencinb with the report for the [2006-07] I�iScal Year, provide to each
Repository an Annual Report which is consistent with the requircmcnts of Section 4 of this Disclosure
Agreement. The Annual Repo��t may bc submitted as a single document or as separate documents
comprising a package, and may includc by reference othcr information as provided in Scction 4 of this
Disclosurc Abrccmcnt; providcd that the audited financial statcmcnts of the District may be submitted
separately from the balance of the Annual Report. The District ,hall provide a written certification �vith
cach Annual Report furnished to the Dissemination Agent and the "I�rustee to thc effect that such Annual
Report constitutes the Annual Report required to be furnished by the District hereundcr. The
DisScmination Agent and the Trustee may conclusively rely upon such certification of the District. If the
District's Fiscal Year changes, it shall give notice of such change in the same manncr as for a Listed
Event under Section 5(c).
(b) If thc Uissemination Agent is other than the District, thcn not later than fifteen (15)
Business DayS prior to said date, the Uistrict shall provide the Annual Report to thc Disscmination Agent.
If the Uissemination Agent is unable to verify that an Annual Rcport has becn provided to the
Rcpositorie� by the date required in subsection (a), the Dissemination Agent shall send a notice to the
Municipal Securities Rulemakinb I3oard and the Statc Repository, if any, in substantially the fonn
attached as F.xhibit A to this Disclosure Agreemcnt.
(c) l�he Disscmination A�;cnt shall:
(i) determine each year prior to the date for providing the Annual Report the name
and address of each Repository;
(ii) file the Annual Report with each Repository by the date reyuired therefor by
Section 3(a) and file any notice of a listed �vent, if requested by the District, as soon as practicable
following receipt from thc District of such notice; and
(iii) if the Dissemination Abent is other than the Uistrict, tile a report with the District
certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the
date it was provided and listin�all the Repositories to which it was provided.
o�o��r,4x„-a
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(d) Notwithstanding any other provision of thi� Continuing Uisclosur� Certificate, thc City
and thc Dissemination A�;cnt reserve thc ri�ht to make any of the aiorcmcntioned filin�s through the
Ccntral Post Of�ficc.
S�C'I�ION 4. Cbntent of Annual Renorts.
(a) The District's Annual Rcport shall contain or incor��orate by reference the following
infonnation for the immediately prcceding Fiscal Year substantially similar to that providcd in the
following tables and charts in thc Official Statcmcnt:
(i) Table 6 I'roperty Classification By I.and Use Categories;
(ii) "Cable 7 Asscssed Value-to Special Tax Lien Categories;
(iii) Table 8 I'roperty Owner� F3y Asses�cd Valuation and Prorated Lien; and
(iv) Table 9 -Historical Spccial Tax Uclinquency.
(b) 'Che outstanding principal amount of Honds for the precedin� Fiscal Year.
Such annual infonnation and operating data de�cribcd above may be included by specitic
refcrence to other documcnts, including official statements of dcbt issues of the District or he Ciry, which
have been submitted to each of the Repositories or the Securities and Exchange Commission; proi�iderl,
that if the documents included by reference is a final ofticial statement, it must be available from the
Municipal Securitics Rulemaking Board; and prorided�w•ther, that the District shall clearly identify each
tiuch other documcnt �o included by refercnce.
SI:C'I ION $. Reportin��of Sit�nificant Events.
(a) Pursuant to the provisions of this Section 5, the District shall givc, or cause to be givcn,
notice of the occun�ence of any of the following events with re�pect ro the Bonds, if matcrial:
(i) principal and interest payment delinqucncies.
(ii) non-paymcnt related defaults.
(iii) modifications to rights of I3ondholders.
(iv) optional,contingent or unscheduled bond calls.
(v) deteasances.
(��i) rating changes.
(vii) adverse tax opinions or e��ents adversely affecting the tax-exempt status of the
Bonds.
(viii) unschedulcd draws on thc Recerve Account reflecting financial difticulties.
(ix) unschedulcd draws on the credit enhancemcnts reflecting financial difficulties.
(x) �ub�titution of�thc credit or liquidity providers or their failure to perionn.
o�n,y�.ix„-�
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(xi) rcicase, substitution or sale of property sccuring repayment ot�the F�onds.
(b) The"l�rustcc shall, promptly upon obtaining actual knowledge of the occui-��ence of any of
the I.isted Cvents contact thc Disclosure Representative, lI1tOI7I1 such person of the event, and request that
the District promptly notify the Disscmination Agent in writin� whether or not to report the event
pursuant to subsrction (� and promptly notify the Trustee in writing �vhether a�not to report the evcnt to
the Owners (unless noticc ro the nwncrs is required by the Indenture). For pur��oses of this [)isclosure
Agreement, "actual knowlcdge" of thc occurrence of such I.isted Tivents shall mean actual knowledge by
the officer at the Trust Office of the Trustee with regular responsibility for the administration of the
Indenture.
(c) Whcncver the District obtains knowledge of the occurrencc of a Listed Event, whether
because of a notice from the Trustec pursuant to Section 5(b) or otherwise, the District shall as soon as
possible deteimine if such event would be material under applicable federal securities laws.
(d) If the District detectnines that knowledge of the occun•cnce of a I_istcd l:vent would be
material undcr applicable federal securities laws, thc District 5ha11 promptly notify the I)issemination
Agent and the Trustee in writinb. Such notice shall instruct the Dissemination Abent to file a notice of
�uch occurrence with the Municipal Securities Rulemaking Board and thc State Repository, if any.
Notwithstanding the foregoing, notice of Listcd Events described in subsections (a)(iv) and (a)(v) need
not be givcn under thi� subsection any earlicr than thc notice (if any) of thc underlying event is given to
Holders of affccted Bonds pursuant to the Indenture.
(e) If in recponse to a request under tiubsection (b), the District deterrnines that the I.isted
l:vent is not material, the District shall co notify the Disscmination Agent and thc Trustee in writing and
instruct the Dissemination A�;ent and thc'Crustee not to report the occurrence.
SECTION 6. 1�ennination of Renorting Obli�ation. The obligations of the District undcr this
llisclosure Agrcement shall terminate upon the lega] 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 District shall givr
notice of such tcr�nination in the samc manner as for a Listcd E��ent under Section 5(c),
Sf:CTION 7. Dissemination AQent. The District rnay, from time to timc, appoint or engagr a
Dissemination Agent to assist it in carryin�; out its obligations under this Disclosure Agreement, and may
discharge any such Dissemination Agent, with or without appointing a succcssor Dissemination Agent.
The Dissemination Agcnt shall not be responsible in any manner for the content of any noticc or report
prepared by thc District pursuant to this Disclosure Agreemcnt.
Thc initial Dissemination Agent shall be the Munil�inancial, Inc.
The Ui�sctnination Agent may resign its duties hercunder at any time upon written notice to the
District.
SECTION R. Amendmcnt. Notwithstanding any other provision of this Disclosurc Agreement,
the parities may amend this Disclosure Agreement (and thc Trustee and the Dissemination Agent shall
agree to any amendmcnt so requested by the District provided that ncither the Trustee nor the
Dissemination ngent shall be obligated to enter into any such amendment that modifies or increases its
duties or obligations hereunder)only if:
(a) the amendment i~ made in connection with a change in circumstances that arises from a
change in lcgal rcquirements, change in law, or changc in identity, nature, or status of the District,or type
of business conducted;
n�my.4,�,.-a
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(b) this Disclosure ngreemcnt, as amended, �vould have compiled ���ith the requirements of
thc Rulc at the time of sale of the Fionds, ai�ter taking into account any amendments or interprctations of
tlic }tule, as well as any chaii�c in circumstances;
(c) the amcndment does not materially impair thc interests of the O�;mcrs, as drtennined by
parties unaffiliated with the Uistrict (such as, but without limitation, the District's bond counscl) or by
Owner's consent purcuant to Section 7.01 of the Indenture; and
(d) the annual financial information containing (if applicablc) the amended operating data or
financial infonnation will explain, in nan�ative fonn, the rcasons for the amcndment and the "impact" (as
that word is used in the letter fi�om the staff of the Securities and Exchangc Commission to the National
Association of Bond I.awyers dated June 23, 1995)of the change in the type of operatinb data or financial
information being provided.
SECTION 9. Additional Information.
(a) The District agrees to provide public infonnation conccrnin�; the Bonds and the District
to any Holder or Beneficial Owner makinb a written request therefor.
(b) Nothinb in this Disclosure Agreemcnt shall be dccmed to prevent the District from
disseminating any othcr information, using the means of dissemination set forth in this Disclosurc
Abrcement or any other ►neans of communication, or including any other information in any Annual
Rcport or notice of occurrence of a Listed T:vent, in addition to that which is required by this Disclosure
Agreement. If the District chooscs to include any information in any Annual Report or notice of
occurrcnce of a Listed Event in addition ro that which is specifically required by this Disclosure
Agreemcnt, the District shall have no obligation under this Disclosure t�greement to update auch
infomiation or include it in any t�uture Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In thc even to a failure of the District to comply with any provision of
thic Disclosure Agreement, the Trustee shall, at the written direction of any Participating Underwriter or
the Owners of a majority in aggregate principal amount of Outstanding Bonds (but only to the extent
funds have been providcd to it or it has been otherwise indemnified to its satisfaction trom any cost,
liability, expense or additional charges of the 1'rustee whatsoevcr, including, without limitation, fees and
expenses of its attomeys), or any Owncr may, take such actions as may be ncccssary and appropriate,
including seeking mandate or specific perfonnance by court order, to cause the District, the"I�rustec or the
Dissemination Agcnt, as the case may be, to comply with its obligations under this Disclosure
Agreement; provided that any such action may be instituted only in the Federal or State Court located in
the County of Los Angeles, State of California and no remedy other than spccific performancc may be
sought or granted. A default under this Disclosure Agreement shall not be deemed an Lvent of Dcfault
under the Indenturc or thc Loan Agrccment, and the sole remedy under this Disclosure Agreement in the
event of a failure of the District, the Tiustcc or the Dissemination Agent to comply with this Disclosure
A�*rccmcnt shall be an action to compel performance.
SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination
Agent shall have only such duties as are specifically set forth in this Disclocure Agreement, and the
District agrees to indemnify and save the Dissemination Agent and thc Trustee, their ofticers, directors,
employees and agents, harmless against any loss, expense and liabilities which it ►nay incur arising out of
or in thc cxcrcise or performance of its powers and duties hereunder, including the costs and expenses
(including attorneys fccs) of defending against any claim of liability, but excluding liabilities due ro the
Dissemination Agent's or Trustee's negligencc or willful misconduct. Thc Dissemination Agent may rely
on and shall be protected in acting or refraining from acting upon any dircction from thc Issucr or an
opinion of nationally recognized bond counscl. The Uisscmination Agent and the Trustee shall be paid
u�u?y�,�,.a
r-s
compensation by the District tin- its sen�ices provided hercunder in accordance with its schedule of fers as
amended from time to time and all expenscs, legal fees and advanccs made or incurred by thc
Disscmination Abent in the perfonnance oi' its duties hcreundcr. The I)issemination Agent and thc
'frustee shall have no duty or oblibation ro review any information provided to them by the Uistrict
hereunder and shall not be deemed to be acting in a tiduciary capacity for the District, the City, the
Owners, or any other pa►-ty. The oblibations of the District undcr this Section shall survivc resignation or
removal of the vissemination Agent and payment ot� the Fionds. No person shall have any right to
commence any action against thc Dissemination Abcnt ceeking any remedy other than ro compel spccific
performance of this Disclosure Agreemcnt. Thc Di�semination A�;ent shall not be liable under any
circumstances for monetary damages to any person ti�r any breach of this Disclosure Agreement.
SECI�ION 12. Beneficiaries. This Disclosure /\grcement shall inure solrly to the benefit of the
District, the Participating Undcrwriters, the Dissemination Agent and Ilolders and Beneficial Owners
from time to tirne of the Bonds, and shall create no right�in any othcr person or cntity.
ST:CTInN 13. Notices. Notices should be sent in writing to the following addressec. 1'he
following infonnation may be conclusively rclied upon until changed in writing.
District: City ot� Palm Desert Community Facilities District No. 91-1
(Indian Ridge Public Improvcments)
73-510 I��rcd Warinb Drive
Pahn Desert, California 9221�0
(760) 346-0611
(760) 346-0574 Fax
'I'rustee: Wclls Fargo Ban[c, National Association
700 South Flowe►•Street, Suite 500
I.o� Angeles,Califomia 90017-4104
(213) 630-6237
(213) 630-6215 Fax
Disscmination t�gency: MuniFinancial, Inc.
2731,R Via lndustrial, Suite 10
Temecula, California 92590
(951) SR7-3500
(951) 587-3510 Fax
n�uz4,p�,s-�
l:-f�
S�:C�I�ION 14. Counte�parts. 1�his Uisclosurc A�recmcnt may bc cxccuted in scveral
counterparts, each of�vhich shall be an original and all of���hich shall constitute but one and the same
instru►nent.
Date: , 2008
CI'1'Y OF PnLM DESrRT COMMUNITY
FACILITll?S U[STRICT NO. 91-1 (INUTAN RInGl:
PUBLIC IMPROVEMENTS)
By:
Authorized Officer
WF.I.LS FARGO Bt�NK, NnTIONAL ASSOCIA"CION,
as Trustee
13y:
Authorized Officer
MLTNIFINANCIAL, INC.,
as Disscmination Agent
By:
Authori�ed Officcr
o�oz��,�o�-�
�:-7
�.XIIIBIT A
NO'I�ICf�.7�0 MUNICIPnL SECURI'I�[I:S RULEMAKING [�OAR[)
OP rA1I.URE TO I'ILI; ANNUAL R�:I'ORT
Name ofObligatcd Party: City of Palm Dcsen Community I�acilitics District No. 91-1 (Indian
Ridge Public Improvements)
Name of Bond Issue: City of�Palm Desert Community Facilities District No. 91-1 (Indian
Ridge Public Improvements) Spccial Tax Refunding Bonds, Series
200R
Uatc of Issuance: , 200R
NOTICE IS HERF.BY GIVEN that thc City of Palm Dcscrt Community Facilities District
No. 91-1 (Indian Ridge Public Improvement�) (the "District") has not provided an nnnual Report with
respect to the abovc-named Bonds as required by Section 5.2 of the Bond Indenture datcd as of January 1,
200R, by and bctween llistrict and thc Trustee. "I�he District anticipates that the Annual Keport will be
filed by
Dated:
WT:I.I.S FARGO BANK, NATIONAL ASSOCIATION,
as"I�rustec, on behalf of the District
By:
Its:
cc: City of�Yalrn Uesert Community i�acilities District No. 91-1 (lndian Ridge Public Improvements)
n�o�e,�„-a
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AI'I'ENDIX F
DTC AVD "I'HE BOOK-F,NTRY ONLY SYS"1'EM
Thc� inJor-mution in �/ti.ti Appc�ncli.r !�concc�rning Thc� Dc�posi�urt Ti•cr.ct Compun}•, Nc i+� ]'ork. Nc�it�
Ya�k ("U1�C") und DTC'.c honk-c�nn�i' s}�.clenr hus bec�n ohtuinect /i�om DTC and tl7e District tcrkc�.� no
rc�spun.cihilit►� f�r thc> com/�lc�tc��tc�ss ur ucccu•ucy� thc�r��o/: 7he Di.ctrict cc�nnot crnd d��c�.c not givc� an}•
us.surunec�s �hu[ DTC, UTC Pcrrtici��c�nts or/nclir�et Pcu�ticipunts tirill di.�•t�•ihtrle� to thc� Bc�neTciu/ Ox•ner.c
(u) pu}�ments o/ inte�re�.ct, principa! or premit�m. i/ un}�, �a�it{� recp�ct to tlic� Sc�rie.c 20Ut� Bond.,•, (h)
cc�rli/icutes rep�•e.��c�nting otirnc�iship inlc°��c�st in or other con/irmuliun or rnrnc�r.��hip in�e�re�.st in thc� Seric�.c
10O8 Bonc/s, or(c•) rc��lc�mption oi•e�the�r no�iccs sent lo DTC or Cede c� Co.. it.c nontince, us !h�re�gi.cterc�d
utirner o/the Sc�ric�.c 2008 Ronds, or thut thc�ti� �t�ill.so dn on u timelr husi.c, or�rh�u/)%'C, DTC Purticipuntc
or DTC Inclirc�ct Pcrr7icipunt.s �a�i!/ uct in �hc� munner c/e�sc•ribe��t in this �Ippc�ndix. The� c�u�i�ent "Rules"
u/�plicuhle� to DTC nrc� un /i1c� irith Ihc� Se�ctu•ities und Exchange� Commis.cion «ncl the ciu•rc�n1
"Procechu•e.c"o/U%�C to bc follo�rc�d in cte�ling ti+�ith DTC Purticipunt.s ure�on/ilc� x�ith DTC.
'l�hc Depository Trust Company("DTC"), New York, NY, will act as securities depository for the
Series 200R Bonds. The Series 200R I3onds will be issued as fully-registcred securities registered in the
name of Ccde & Co. (DTC's partncrship nominee) or such other name as may be requested by an
authorized representative of�DTC. One fully-registered security ccrtificate will bc issued for each maturity
of�the Series 2008 Bond�, each in the aggregate principal amount of cuch maturity, and will be depositcd
with D"I'C.
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 Rcscrve System, a "clearing corporation" within the meaning of thc New York
Unifonn Commercial Codc, and a "clearing agency" registered pursuant to the provisions of Section 17A
of thc Securities Exchange Act of� 1934. DTC holds and provides a,5et �ervicing for over 2.2 million
issues of U.S. and non-U.S. equity is5uec, corporate and municipal debt issues, and money market
instruments from ovcr l00 countries that DTC's participants ("Direct Participants") deposit with DTC.
D"I�C also facilitates the post-trade settlement among Dircct Participants of sales and other securities
transactions in deposited securities, through electronic computerized book-cntry transfers and pledges
bctween Direct Participants' accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants includc both U.S. and non-U.S. securities brokers and dcalers, banks, trust
companies, clearing corporations, and ccrtain other organizations. I�TC is a wholly-owned subsidiary of
"l�hc Depo,itory Trust & Clearing Co►poration("D1�CC"). DTCC, in turn, is owned by a numbcr of Direct
Participants of DTC and Members of thc National Securities Clearing Corporation, Governmcnt
Securities Clearing Corporation, MBS Clearing Corporation, and F.tnerging Markets Clearing
Corporation, (respectively, "NSCC", "GSCC", "MBSCC", and "EMCC", also subsidiaries of DTCC), as
well as by the New York Srock Exchan�;c, Inc., the American Stock Gxchange LLC, and the National
A,sociation of Securities Dcalcrs, Inc. Access to the DTC system is also availablc 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 rclationship with a Direct Participant, either directly or indirectly
("Indircct Yarticipants"). DTC has Standard & Poor's hibhest rating: AAA. '1'he DTC Rules applicable to
its Yarticipants are on tile with the Securitics and Exchanbe Commission. More info�mation about DTC
can be found at www.dtcc.com and www.dtc.org.
Purchases of the Series 2008 13onds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Scries 2008 Bonds on DTC's records. "l�he owncrship
interest of each actual purchascr of� each Bond ("Beneficial Owner") is in turn to be recorded on thc
Direct and Indirect Nariicipants' records. Beneficial Owners will not receive written confirmation from
DTC of thcir purchase. Beneficial Owncrs are, howe��cr, cxpected to receive written confirmations
n�a�yy,�„-a
F-1
pro��iding details of the tran�action, as well as periodic statements of thcir holdingti, frrnn thc I)irect or
Indircct Participant through which the f3eneficial nwner cntered into thc transaction. Transfcrs of
owncrship interests in thc Scries 200R Bonds are to bc accrnnplished by entrics made on the books of
Direct and Indirect I'articipants aeting on bchalf of I3eneficial Owners. Bcncticial (hvners will not
rcecive certiGcatcs rcpresenting their ownership interests in the Series 2008 I3onds, except in the cvent
that use of the book-cntry system for thc Scries 200R Iiond� is discontinued.
To facilitate subsequent transfers, all Series 200R Bonds deposited by I)irect Participants with
nTC are registcrcd in the name of U'I�C's partnership nomincc, Cede 8c Co., or such other name as may
be requestcd by an authorized representative of [)TC. The deposit of thc Series 200R Bonds with DTC
and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in
beneficial owncrship. DTC has no knowledge of the actual I3eneticial Owncrs of the Series 200R Bonds;
D1'C's recordc retlect only the idcntiry of the Direct Participants to whose accounts such 13onds are
creditcd, which may or may not be the Beneficial Ou�ncrs. The Direct al�d Indirect }'articipants wil!
remain responsiblc for keeping account of their holdinbs on behalf of their customers.
Conveyanee of notices and other communications by D1'C to Direct Participants, by nirect
}'articipants to Indirect Participants, and by Direct Participants and Indirect I'articipants to Beneficial
Owners will bc boverned by arranbcmcnts amonb them, subject to any �tatutory or regulatory
requiremcnts as may be in effect from time to time. Beneficial (lwners of�thc Series 2008 Bonds may
wish to take certain steps to augmcnt the trantimission to thcm of noticcs of significant events with respect
to thc Scries 200$ Bonds, such as redemptions, tenders, dcfaults, and proposcd amendments to the
Indenture. For cxample, Beneficial Owners of the Serics 200R Bonds may wish to asccrtain that the
nominec holding the Series 2008 Bonds for their bcnefit has agreed to obtain and transmit notices to
B�neficial Owners, In thc alternative, Beneficial Owners may wish to provide their names and addresses
to the registrar and request that copies of notices be provided directly to ihem.
Redemption notices shall bc sent to DTC. The conveyance of notices and other communications
by DTC ro D"I�C Participants, by DTC Participants to Indirect Participants and by DTC Participants and
Indirect Participants to Beneficial Ownen will bc boverned by arrangements among them, subject to any
statutory or regulatory requiremcnts as may be in cffect from time to time. Any failure of DTC to advise
any DTC Participant, or of any DTC Participant or Indirect Participant to notify a Beneficial Owner, of
any such notice and its content or effect will not affcct the validity of the redemption ot�the Series 200R
F3ond� called for redemption or of any other action premised on such notice. Redemption of portions of
the Serics 200R Bonds by the District will reduce the outstanding principal amount of Bonds held by
D�I�C. In such event, DTC will implement, through its book-entry systcm, a redemption by lot of interests
in the Series 2008 Bonds held fc�r thc account of D7'C }'articipatits in accordance with its own rule, or
other agreemcnts with I�'I�C Participants and then DTC Narticipants and Indirect Participants will
implement a redcmption of thc Series 200R Bonds tor the I3eneficial Owners. Any such selection of
Bonds to bc redecmcd will not be go��emed by thc lndenturc and will not be conductcd by the District or
the Trustee.
Ncither DTC nor Cede& Co. (nor any other DTC norninee) will consent or vote with respect to
the Series 2008 Bonds unless authori�ed by a Uirect Participant in accordance with D"['C's Procedures.
Under its usual proccdures, D"l�C mails an Omnibus Proxy ro the issuer as soon as possible aftcr the
record date. The Omnibus Proxy assigns Cede & Co.'s consentinb or voting rightc to those Direct
Participants to whose accounts the Series 2008 Bonds are credited on the record date (identificd in a
listing attachcd to the Omnibus Proxy).
Paymcnts of principal of, premium, if any, and interest evidenced by the Series 2008 I�onds will
be made to Ccde & Co., or such other nominee a� may be requested by an authorized representative of
DTC. DTC's practice is to crcdit Direct Participants' accounts upon DTC's receipt of funds and
n�n��r,i,�„-a
F-2
correspondinb detail inti�rmation trom the Uistrict or the'1'rustec, on payable date in accordance���ith thcir
respectivc holding` shown on I�TC's rccords. Payments by Participants to Bcncficial Owners will bc
govcrned by standing instructions and customary practice�, as is the case with securities held for the
accounts of customcrs in bearer fonn or rcbistered in"street name,"and will be the responsibility of such
Yarticipant and no1 of DTC (nor its nominec), the �Crustce, or thc District, subject to any statutory or
regulatory requirements as may bc in effect from time to time. Payment of principal of, premium, if any,
and interest cvidcnced by the Series 200R Bonds to Ccde & Co. (or such other nomincc as may be
requested by an authorized representative of DTC) is the respon�ibility of the District or thc Trustee,
disbursement of such payments to Direct Participants will be the responsibiliry of�ll"CC, and disbursement
of such payments to thc Bcneticial Uwners will be the responsibility of I�irect and Indirect Participants.
NLI'I'HI;R 'I'HE DISTRICT NOR "I'HE TRUSI�I:I: WILL HAVE ANY RESPONSIBII.ITY OR
OBLIGA'1'ION TO DTC PARTICIPAN'CS, INDIRECI� PARTICINANTS OR BENEFICIAI. OWNERS
WITH RF.SPECT TO TIIE PAYMF.NTS OR THE PROVIDIN(� OF N01�ICE TO DTC
PAR"I�ICIPANTS, [NDIRECT PARI�ICIPANTS OR BF.NEFICIAI. OWNERS OR 'I'HC SEI,F.CTION
Of� BONDS FOR REDEMPTION.
Neither the District nor thc Trustee can give any assurances that DTC, D'I�C Participants, Indirect
Participants or others will distribute payments of principal of, premium, if any, and interest on the Scries
2008 I3onds paid to DTC or its nanince, as the registercd Owner, or any redemption or other notice, ro
the f3eneticial Owners or that they will do so on a timcly basis or that DTC will serve and act in a manner
describcd in this Of�ficial Statement.
DTC may discontinue providing its serviccs as depository with respect to the Scries 2008 Bonds
at any time by giving reasonable notice to the District or the Trustcc. Under such circumstances, in the
event that a succcssor depository is not obtained, Bond ccrtificates are requircd to be printed and
delivered.
The District may decide to discontinue use of the system of book-entry transfers through D1�C (or
a successor securities depository). In that event, Bond certificates �vill be printed and delivered.
In the evcnt that thc book-entry system is discontinued as described above, the requirements of
the Indrnture will apply. The foregoinb infonnation concerning DTC concerning and DTC's book-entry
system has been provided by D7�C, and neither the District nor the�I�rustee take any responsibility for thc
accuracy thercof.
The District and the Trustec cannot and do not give any assuranccs that U"CC, thc Participants or
others will distribute payments of principal, interest or premium, if any, evidenccd by thc Series 200R
iiond. paid to DTC or its nominee as the registered owncr, or will distributc any redemption notices or
othcr notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in
the manncr described in this Official Statement. Neither the District nor the Trustee are responsible or
liable for the failure of DTC or any Participant to make any payment or give any notice to a Bcncficial
Owner with respect to the Series 2008 Bonds or an error or delay relating thcrcto.
o�o2Q.ix��-a
P-3
APPF,NDIX(:
SPECIMEN FII�ANCIAL GI-ARAN"fY IVSCIRANCF. POL[CY
o�u�y,�,�,s-a
G-1
L&J Draft
11/28/07
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 91-1
(INDIAN RIDGE PUBLIC IMPROVEMENTS) SPEC[AL TAX REPUNDING BONUS
SERIL'-S 200R
CONTINUING DISCLOSURG AGREEMF.NT
Thc Continuing Disclosure Agreement(the"Disclosure Agreement") is executed and delivcrcd
by and among the City of Palm Desert Community Facilities District No. 91-1 (Indian Ridge Public
Improvements) (the"District"), Wells Fargo Bank, National Association (tlie"Trustee")and
MuniFinancial, Inc. (the"Dissetnination Agent") in connection with the issuance of the �
principal amount of the City of Palm Desert Community Facilities District No. 91-1 (Indian Ridge Public
Improvements) Special Tax Refunding Bonds, Series 2008 (the"Bonds"). The Bonds are being executed
and delivered pursuant to an Bond Indenture dated as of January 1, 2008 (the "Indenture"), by and
between the District and the Trustee. The District covenants and agrees as follows:
SECTION I. Purpose of this Disclosure Agreement. This llisclosure Agreement is being
executed and delivered by the District for the benefit of the Holders and Beneficial Owners of the Bonds
and in order to assist the Participating Underwriters in complying with Securities and Gxchange
Commission ("SEC") Rule 15c2-12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forih in the Indenture, 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 mcanings:
"Annual Report"shall mean any annual repori provided by the District pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Agreement.
"F3eneGcial Owner" shall mean any person which (a) lias the power, directly or indirectly, to vote
or consent with respect to, or to dispose of ownership of, any 13onds(including persons holding Bonds
through nominces, depositories or other intennediarics)or(b) is treated as the owner of any Bonds for
fedcral income tax purposes.
"(:entral ['ost Office" shall mean the Disclosure USA wcbsite maintained by the Municipal
Advisory Council of Texas or any successor therew, ur any other organization or method approved by the
stafT or mcmbers of the Sccurities and Exchange Commission as an intermediary through which issuers
may, in compliance with the Rule, make filings required by this Continuing Disclosurc Certificate.
"Uitisemination Agent"shall mean MuniFinancial, Inc., acting in its capacity as Dissemination
Agent hereunder,or any successor Dissemination Agent designated in writing by the Uistrict and which
has filed with the Trustee a written acceptance of such designation.
"Fiscal Year"shall mean with respect to the District, the period beginning on July 1 of each ycar
and ending on the next succeeding June 30, or any twelve month or 52 week period thereafter selected by
the District with notice of such selection of change in fiscal year to be provided as set forth herein.
"Holders" shall mean either the registered owners of the Bonds, or, if the Bonds are registered in
the name of The Depository Trust Company or another recognized depositoiy, any applicable participant
in its depusitory system.
"Listed Lvent"shall mean any of the events listed in Section 5(a)of this Disclosure Agreement.
"National Repository" shall mean any Nationally Recogniicd Municipal Securities ]nform�ition
Repository for purposes of the Rule. A list of the current National Repositories approved by the S.E.C.
may be found at the S.L;.C. website: http://www.sec.gov/info/municipal/nnnsir.htm.
"Participating Undenvriters"shall mean Stinson Securities, LLC and Kinscll, Newcomb& De
Dios, Inc., as 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, if any.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Fxchange Act of 1934, as the same inay be amended from time to time.
"State"shall mean the State of California.
"State Repository"shall mean any public or private repository or cntity designated by the State as
a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange
Comrnission. As of the date of this Disclosure Agreement, there is no State Repository.
SECTION 3. Provision of Annual Reports.
(a) The District shall, not later than six months after the end the City's Fiscal Year(which
currently is June 30), commencing with the report for the 2007-08 Piscal Year, provide to each
Repository an Annual Report which is consistent witl� the requirements of Section 4 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 4 of this
Disclosure Agreement; provided that the audited financial statements of the District may be submitted
separately from the balance of the Annual Report. The District shall provide a written certification with
each Annual Report furnished to the Dissemination Agent and the Trustee to the effect that such Annual
Report constitutes the Annual Report reyuired to bc furnished by the District hereunder. Thc
Dissemination Agcnt and the Trustee may conclusively rely upon such certiGcation of the District. If the
I�istrict's Fiscal Year changes, it shall �ive notice of such change in the same manner as for a Listed
E��ent under Section 5(c).
(b) It�the Dissemination Agent is other than the District, then not later than fiRecn (15)
Husiness Days prior to said date, the District shall provide thc Annual Report to thc llissemination Agcnt.
If the Dissemination Agent is unable to verify that an Annual Report has been provided to the
Repositories by the date reyuired in subsection (a), the Dissemination Agent shall send a notice to the
Municipal Securities Rulemaking Board and the State Repository, if any, in substantially the form
attached as F.xhibit A to this Disclosure Agreement.
(c) The Dissemination Agent shall:
(i) dctcnnine each year prior to the date for providing thc Annual Report the name
and address of each Rcpository;
(ii) tile the Annual Report with each Repository by the datc required thercfor by
Section 3(a)and file any notice of a listed �vent, if requested by the District, as soon as practicable
followinb receipt trom the District of such notice; and
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(iii) if thc Dissemination Agcnt is other than the District, file a report with thc District
certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, statinb the
date it was provided and listing all the Repositories to which it was provided.
(d) Notwithstanding any other provision of this Continuing Disclosure Certiticate, the City
and the Dissemination Agent reserve the right to make any of the aforcmentioned filings through the
Central Post Office.
SECTION 4. Content of Annual Rcports.
(a) The District's Annual Report shall contain or incorporate by reference the following
infonnation for the immediately preceding Fiscal Year substantially similar to that provided in the
following tables and charts in the Official State►nent:
(i) Table 6—Property Classification By Land Usc Categories;
(ii) Table 7—Assessed Value-to Special Tax Lien Categories;
(iii) Table 8 —Property Owners By Assessed Valuation and Prorated Lien; and
(iv) Table 9—Historical Special Tax Uelinquency.
(b) The outstanding principal amount of Bonds for the preceding Piscal Year.
Such annual information and operating data described above may be included by speci(ic
reference to other documents, including official statements of debt issues of the District or he City, which
have been submitted to each of the Repositories or the Securities and Fxchangc Co►n►nission;provicled,
that if the documents included by reference is a final official statement, it must be available trom the
Vlunicipal Securities Rulemaking Board; and provided fiu•ther, that the District shall clearly identify each
such other document so included by reference.
SE(;TION 5. Rcportin�of Si�nificant Lvents.
(a) Pursuant to the provisions of this Section 5, the District shall give, or cause to be given,
notice of the occurrence of any of the following events with respect to the Bonds, if material:
(i) principal and interest payment dclinquencies.
(ii) non-payment related defaults.
(iii) modifications ro rights of Bondholders.
(iv) optional,contingent or unscheduled bond calls.
(v) defeasances.
(vi) rating changes.
(vii) adverse tax opinions or events adversely affecting the tax-exempt status of the
Bonds.
(viii) unscheduled draws on the Reserve Account reflecting financial difticulties.
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(ix) �mscheduled draws on the credit enhancements re(lecting financial difticulties.
(x) substitution of ihe credit or liquidity providers or their failure to perform.
(xi) release, substitution or sale of property securing repayment of the Bonds.
(b) The Trustee shall, promptly upon obtaining actual knowledge of the occurrence of any of
the Listed Events contact the Disclosure Representative, inform such person of the event, and request that
the District promptly notify the Dissemination Agent in writing whether or not to report the event
pursuant to subsection (�and promptly notify the Trustee in writing whether or not to report the event to
the Owners(unless notice to the Owners is required by the Indenture). For purposes ofthis Disclosure
Agreement, "actual knowledge"of the occurrence of'such Listed Events shall mean actual knowledge by
the ofticer at the Trust Oftice of the Trustcc with regular responsibility for thc administration of the
Indenture.
(c) Whenever the District obtains knowledbe of the occurrence of a Listed Event, whether
because of a notice fro►n the Trustee pursuant to Section 5(b)or otherwise, the District shall as soon as
possible determine if such event would be material under applicable federal securities laws.
(d) If the District determines that knowledge of the occurrence of a Listed Cvent would be
material under applicable federal securities laws, the District shall promptly notify the Dissemination
Agent and the Tc�ustee in writing. Such notice shall instruct the Dissemination Agent to tile a notice of
such occurrence with the Municipal Securities Rulemaking Board and the State Repository, if any.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(iv)and(a)(v) need
not be given under this subsection any earlier than the notice (if any)of the underlying event is given to
Holdcrs uf at�fected F3onds pursuant to the Indenture.
(e) If in response to a request under subsection (b), the Uistrict detennines that the Listed
Event is not material,the District shall so notif'y the Dissemination Agent and the Trustee in writing and
instruct the Dissemination Agent and the Trustee not to report the occurrence.
SECTION 6. Termination of Reportin ��,Obli ag t�. The obligations of thc District 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 District shall give
notice of such termination in the same manner as for a Listed Event under Section 5(c).
SECT'1ON 7. I�issemination A�ent. Thc District may, from timc to time, appoint or engage a
Disscmination Agent to assist it in carryin�out its obligations under this Disclosure Agreement, and may
discharge any such Dissemination Agent, with or without appointing a succcssor Dissemination Agent.
The Dissemination Agent shall not be responsible in any manner for the content of any notice ur report
prepared by the Uistrict pursuant to this Disclosure A�reement.
The initial Dissemination Agent shall be the MuniFinancial, Inc.
The Dissemination Agent may resign its duties here�mder at any time upon written notice to thc
[liscricc.
SECTION R. Amendment. Notwithstanding any other provision of this Disclosure Agreement,
thc parities may amend this Uisclosure Agreement (and the Trustee and the Disscmination Agent shall
agree to any amendment so requested by the District provided that neither thc Trustee nor the
Dissemination Agent shall be obligated to enter into any such amendment that modifies or increases its
dutics or obligations hereunder) only if:
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(a) the amendment is made in connection with a change in circumstances that ariscs from a
change in legal requirements, change in law, or change in identity, nature, or status of the District, or type
ot�business conducted;
(b) this Disclosure Agreement, as amended, would have compiled with the requirements of
the Rule at thc time of sale of the Bonds, after taking into account any amendments or interpretations of
the Rule, as well as any change in circumstances;
(c) the amendment does not materially impair the interests of the Owncrs, as determined by
parties unaffiliated with the District (such as, but without limitation, the Uistrict's bond counsel)or by
Owncr's consent pursuant to Section 7.01 of the Indenture; and
(d) the annual financial information containing(if applicable) the amended operating data or
tinancial information will explain, in narrative form, the reasons for the amendmcnt and the"impact" (as
that word is used in the letter from the staff of the Securities and F.xchange Commission to the National
Association of Bond Lawycrs dated June 23, 1995)of the change in the type of operating data or financial
information being provided.
SECTION 9. Additional Information.
(a) The District agrees to provide public information concerning the Bonds and the District
to any Holder or Beneticial Owner making a written request therefor.
(b) Nothing in this Disclosure Agreement shall be deemed to prevent the District from
disscminating any other information, using the means of dissemination set forth in this Disclosure
Agreement or any other mcans 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 Uisclosure
Agreement. If the District chooses to include any information in any Annual Report or notice of
occurrence ofa Listed Event in addition to that which is specifically required by this Uisclosure
Agreement, the Uistrict 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 Listed Lvent.
SECTION 10. Default. In the even to a failure of the District to co►nply with any provision of
this Disclosure Agreement, the Trustee shall, at the written direction of any Participating Underwriter or
the Owners of a ►najority in aggregate principal amount of Outstanding Bonds(but only to the extent
funds have been provided to it or it has been otherwise indemnitied to its satisfaction from any cost,
liability, expense or additional charges of the Trustee whatsoever, including, without limitation, Cees and
expenses of its attorneys),or any Uwner inay, take such actions as may be necessary and appropriate,
including seeking mandate or specific perfonnance by court order, to cause the llistrict, the Trustee or the
Dissemination Agent, as thc case may be,to comply with its obli�ations under this Disclosure
Agreement; provided that any such action may be instituted only in the Federal or State Court located in
the County of Los Angeles, State of California and no remedy other than specific performance may be
sought or granted. A default undcr this Disclosure Agreement shall not be deemed an Event of Default
undcr the Indcnture or the Loan Agreement, and the sofe remedy under this Disclosure Agreement in the
event of a failure of the District, the Trustee or the Dissemination Agent to comply with this Disclosure
Agrecment shall be an action to compel perfonnance.
SECTION 1 1. Uuties, Immunities and Liabilities of Dissemination A�t. The Dissemination
Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the
District agrees to indemnify and save the Uissemination Agent and the Trustee, their officers, directors,
employees and agcnts, harmless against any loss, expensc and liabilities which it may incur arising out of
or in the exercise or performancc of its powers and duties hcreunder, includinb the costs and expenses
(including attorneys fees)of defending against any claim of liability, but excluding liabilitics due to the
[)isseminatiun Agent's or Trustee's negligence or willtul misconduct. The Dissemination A�ent may rely
5
on and shall be protected in acting or refraining from acting upon any direction from the Issuer or an
opinion of nationally recognized bond counsel. Thc Dissemination Agent and thc Tnistee shall be paid
compensation by the District 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 and the
Trustee shall have no duty or obligation to review any information provided to them by the District
hereunder and shall not be deemed to be acting in a fiduciary capacity for the District,the City,the
nwners, or any other party. The obligations of the District under this Section shall survive resignation or
removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to
commence any action against the Dissemination Agent seeking any remedy other than to compel specific
performance of this Disclosure Agreement. Thc Dissemination Agent shall not be liable under any
circumstanees for monetary dama�es to any person for any breach of this Disclosure Agreement.
SECTION l2. Benef►ciaries. This Disclosure Agscement sha11 inure solefy to the bencfit of tlie
Uistrict, the Participating Underwriters, the Dissemination Agent and flolders and Bencficial Owners
trom time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 13. Notices. Notices should be sent in writing to the following addresses. The
ft>Ilowing information ►nay be conclusively relied upon until changed in writing.
District: City of Palm Desert Community Facilities District No. 91-1
(Indian Ridge Public Improvements)
73-510 Fred Waring Drive
Palm Desert, California 92260
(760) 346-0611
(760) 346-0574 Fax
Trustee: Wells Pargo Bank, National Association
700 South l�lower Street, Suite 500
Los Angeles, California 90017-4104
(213) 630-6237
(213) 630-6215 Fax
Dissemination Agency: MuniFinancial, Inc.
27368 Via lnciustrial, Suite 10
Tcmecula, California 92590
(951) 587-3500
(951) 587-3510 Fax
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SECTION 14. 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
instrumcnt.
Datc: , 2008
CITY OF PALM DESERT COMMUNITY
FACILITIES DISTRICT NO. 91-1 (1NDIAN RIDGE
PUBLIC IMPROVEMENTS)
By:
Authorized Officer
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Tcustee
13y:
Authorized Officer
;�iUNIFINANCIAL, INC.,
as Dissemination Agent
�y:
Authorized Officcr
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