HomeMy WebLinkAboutSec 29 AD No. 2004-02 - Bonds Series 2007 CITY OF PALM DESERT
STAFF REPlJRT
REQUEST: CONSIDERATION OF THE AUTHORIZATION OF ISSUANCE OF
LIMITED OBLIGATION IMPROVEMENT BONDS, SERIES 2007,
IN CONNECTION WITH THE CITY OF PALM DESERT SECTION
29 ASSESSMENT DISTRICT (NO. 2004-02) AND APPROVAL OF
RELATED DOCUMENTS AND AGREEMENTS
SUBMITTED BY: DAVE YRIGOYEN, DIRECTOR OF REDEVELOPMENTIHOUSING
DATE: MARCH 8, 2007
CONTENTS: RESOLUTION NO. 07- 12
FORM OF FISCAL AGENT AGREEMENT
FORM OF BOND PURCHASE AGREEMENT
FORM OF PRELIMINARY OFFICIAL STATEMENT
FORM OF CONTINUING DISCLOSURE AGREEMENT (Appendix
to the Preliminary Official Statement)
FORM OF ACQUISITION AGREEMENTS
FORM OF PURCHASE AND SALE AGREEMENTS
APPRAISAL AND ABSORPTION STUDY (Appendix to the
Preliminary Official Statement)
Recommendation:
It is the staff's recommendation that the City Council adopt the following resolution:
• Resolution No. 07-i2 , a resolution of the City Council of the City of
Palm Desert to authorize the issuance and sale of its limited
obligation improvement bonds, Series 2007, in a principal amount
not to exceed $40,000,000 in connection with the City of Palm
Desert Section 29 Assessment District (No. 2004-02) and approving
certain documents and taking certain other actions in connection
therewith.
• Approval of payment to Capital Realty Associates for $40,000 for the
appraisal and absorption study.
Executive Summarv:
Approval of the attached documents in substantially the form presented is required in
order for the City of Palm Desert to issue limited obligation improvement bonds (the
"Bonds") in connection with the City's Section 29 Assessment District (No. 2004-02) to
Staff Report
Consideration of the Authorization of Issuance of Limited Obligation
Improvement Bonds, Series 2007, for Section 29 Assessment District (No. 2004-2)
March 8, 2007
Page 2 of 5
provide financing for public improvements to serve property within the Section 29 area
of the City.
BackAround:
The owners of certain property located within the Section 29 area of the City of Palm
Desert requested the City Council to undertake proceedings pursuant to the Municipal
Improvement Act of 1913 (California Streets and Highways Code Section 10,000, et
seg.) to form an assessment district for the purpose of acquiring, constructing and
installing certain public infrastructure improvements, including street, storm drain, sewer
and water improvements, as is described in the Engineer's Report for the Assessment
District, previously approved by the City Council and on file in the office of the City
Clerk. The City Council formed the Section 29 Assessment District on January 25,
2007, pursuant to the 1913 Act.
The improvements include the acquisition and improvement of a retention basin.
Approval of the attached Purchase and Sale Agreement and Escrow Instructions by and
between the City and Berdan Parcel C LLC and NFT Parcel C LLC is required in order
for the City to finance the acquisition and improvement of the retention basin. The
purchase price for the retention basin and the amount needed to improve the retention
basin is included in the Engineer's Report and will be financed with the proceeds of the
Section 29 Assessment District Bonds. The issuance of the Bonds is a condition to the
City's obligation to purchase the retention basin under the Purchase and Sale
Agreement. The purchase price for the retention basin property is $1,056,401.56 and is
based on an appraisal and negotiation between the owners and the City and includes
certain costs of the transaction.
Funds for the ongoing maintenance of the retention basin will be provided through the
City's Benefit Assessment District No. 1, formed by the City Council on January 25,
2007. The sellers of the retention basin property previously entered into a maintenance
contribution agreement with Desert Wells 237, LLC, which provides for Desert Wells to
pay for a share of the maintenance costs of the retention basin in accordance with the
terms set forth in the agreement. Desert Wells 237 has now executed a letter
agreement whereby Desert Wells agrees that its obligation to pay for a share of the
maintenance costs under the agreement will be superceded and replaced by the
assessment structure. This ensures that there will not be a conflict between the
agreement, which purports to run with the land and bind the retention basin property,
and the assessment structure.
In addition, the sellers previously entered into a maintenance contribution agreement
with Wal-Mart. The Wal-Mart agreement capped the amount of Wal-Mart's annual
G:�rda�Beth Longman\Staft Reports\YngoyeMGty-Section 29-Bond Docs-030807.DOC
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Staff Report
Consideration of the Authorization of Issuance of Limited Obligation
Improvement Bonds, Series 2007, for Section 29 Assessment District (No. 2004-2)
March 8, 2007
Page 3 of 5
maintenance contribution at an amount that is less than the maximum maintenance
assessment. Wal-Mart has now executed an agreement terminating the maintenance
contribution agreement thereby ensuring that there will not be a conflict between the
agreement and the assessment structure.
The proposed improvements also include improvements to be acquired from two
property owners within the Assessment District. The 1913 Act provides for such
acquisitions so long as the improvements to be acquired were constructed as if they
were constructed under the direction and supervision of the City, meaning the owners
must comply with certain requirements in connection with the construction of the
improvements, including public bidding requirements and the payment of prevailing
wages. The attached Acquisition Agreements with respect to the Sares-Regis and
Rilington developments provides for the acquisition of improvements from the
developers in accordance with the terms of the Agreements, which require the
developers to comply with public bidding and prevailing wage requirements, and various
other requirements relating to the construction, inspection and transfer of the
improvements. The Acquisition Agreements provide for the improvements to be
acquired with the proceeds of improvement bonds to be issued in connection with the
Section 29 Assessment District.
Construction of the public improvements will require the City to acquire various rights-of-
way from the property owners within the Assessment District. All but two of the owners
in the Assessment District (MacLeod and Summit Monterey Properties) have
determined to dedicate the required rights-of-way to the City at no cost. These two
property owners have requested the City to purchase their rights-of-way. The attached
Purchase Agreements provide for the purchase of the rights-of-way with the proceeds of
improvement bonds to be issued in connection with the Section 29 Assessment District.
If adopted, Resolution No. 07- 12 will authorize the City to issue limited obligation
improvement bonds pursuant to the Improvement Bond Act of 1915 (California Streets
and Highways Code Section 8,500, et seq.) in connection with the Assessment District
(the "Bonds") in an aggregate principal amount not to exceed $40,000,000 to finance
public improvements to serve properties in the Assessment District, provided the overall
interest rate does not exceed 7.0% per annum and the discount paid to the underwriters
for the bonds, exclusive of original issue discount, does not exceed 1.5% of the principal
amount of the bonds.
As is typical for assessment district improvement bonds, the Bonds are considered
speculative in nature due to the relationship of these bonds to real estate devefopment.
Also, as is typical for assessment district improvement bonds, the Bonds will not be
rated and a municipal bond insurance policy will not be obtained to insure payment of
G:vda�Beth Longman4Staff Reports\Ynpoyen\City-Section 29•Bond Docs-030807.DOC
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Staff Report
Consideration of the Authorization of Issuance of Limited Obligation
Improvement Bonds, Series 2007, for Section 29 Assessment District (No. 2004-2)
March 8, 2007
Page 4 of 5
principal, interest, and redemption premium, if any, on the Bonds. The market for
assessment district improvement bonds is considered smaller than the market for
insured tax allocation bond issues. The investors are expected to be institutional
investors (such as mutual funds) and other investors experienced in the investment of
below-investment grade bonds, and the underwriters (Stinson Securities, LLC, and
Kinsell, Newcomb & De Dios, Inc.) will sell the Bonds in a public offering to such
investors.
In addition to approving the above-described purchase agreements and acquisition
agreements, Resolution No. 07- 12 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) Fiscal Agent Agreement by and between the City and Wells Fargo Bank,
National Association, as fiscal agent (provides for the terms of the Bonds)
(2) Bond Purchase Agreement by and among the City, Stinson Securities, LLC, and
Kinsell, Newcomb & De Dios, Inc., as underwriters for the Bonds (provides for
the sale of the Bonds by the City to the underwriters)
(3) Preliminary Official Statement and final Official Statement for the bonds (offering
documents used by the underwriters to market and sell the bonds to investors)
(4) Continuing Disclosure Agreement (attached as Appendix F to the Preliminary
Official Statement) by and between the City and MuniFinancial, Inc., as
dissemination agent (governs the City's and dissemination agent's provision of
certain financial and other information on a continuing basis to the bond market)
The Bonds will be repaid from unpaid assessments levied on the parcels within the
Assessment District in accordance with the Engineer's Report. In the event
assessments become delinquent under circumstances described in the Fiscal Agent
Agreement, the City Council will covenant in the Fiscal Agent Agreement to commence
and pursue foreclosure actions regarding delinquent installments of the assessments.
The Fiscal Agent Agreement provides for the establishment of a reserve fund funded
with bond proceeds. In addition, proceeds from foreclosure sales, if any, will be applied
to pay debt service on the Bonds. The Bonds are limited obligation Bonds. The City
Council will not obligate itself to advance available funds from the City Treasury to cure
any deficiency which may occur in the Redemption Fund established for the Bonds.
The offering documents disclose the foregoing, together with the many possible risks
relating to repayment of the Bonds (such as changes in the law, real estate
development, natural disasters, etc.).
GUda\Beth Lonpman�.Stafl Reports\YnpoyeMCity-Section 29-Bond Dces-030807.DOC
P6401-1033\954195v1.doc
Staff Report
Consideration of the Authorization of Issuance of Limited Obligation
Improvement Bonds, Series 2007, for Section 29 Assessment District (No. 2004-2)
March 8, 2007
Page 5 of 5
Capital Realty Analysts have prepared a market absorption study, dated February 15,
2007, and an appraisal report, dated February 15, 2007, providing an opinion of the
market value of the fee simple estate in the property comprising the Assessment
District. The appraisal report showed the value came in at $225,gg3,000 which is a
5.65 times value to lien ratio. The City policy is a minimum of 3 to 1 value to lien ratio.
The absorption study stated that this area will likely be among the strongest to come
back from the declining cycle. The main reasons are as follows:
• Proven high-demand Palm Desert location
• Close proximity to demand generator: UC Campus Complex
• Excellent I-10 access and close proximity to employment centers
• Lack of significant available residential land su I
subject and University Park in North Palm Desert pp y �other than the
Staff recommends adoption of Resolution No. 07- 12 and the issuance of the Bonds to
provide financing for public improvements to serve properties in the Section 29
Assessment District.
Submitted by:
Approval:
�r
.. . ,.,-�'�.-
.. ,.
�L--' - .
�
avid Yrigo ti McCarthy
Director of ` evelopmenbHousing ACM edevelopme t
DY:RC: h
Approval:
Carlos L. rteg ity Manager aul S. Gibson, Director of Finance
CITY COUNCIL 1}�TION:
APPRO�E�D �/ DENIED
RECSIV$D OTH[FSR t�do�c-(�,
_/� .No. - _w_____
MEBTTNG DATE -
�,�Es: � r � l
��C7ES:
G:\rda\Beth Longman\Staff Reports\Yrigoyen\City-Section 29-Bond Docs-030807 a��ENT: �•-
P6401-1033\954195v1.doc ��TAI N: �-
��ERIFIED BY: ---
J�3gir�a�. ��. Fi1e ..h C�.#�y Cl�rk's �:��'.;.��
RESOLUTION NO. o�-i2
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM DESERT AUTHORIZING THE ISSUANCE AND SALE BY
THE CITY OF NOT TO EXCEED $40,000,000 AGGREGATE
PRINCIPAL AMOUNT OF CITY OF PALM DESERT SECTION 29
ASSESSMENT DISTRICT (NO. 2004-2), LIMITED OBLIGATION
IMPROVEMENT BONDS, SERIES 2007; APPROVING AS TO
FORM AND AUTHORIZING THE EXECUTION AND DELIVERY
OF CERTAIN DOCUMENTS IN CONNECTION THEREWITH;
AND APPROVING CERTAIN OTHER MATTERS RELATING
THERETO
RECITALS:
WHEREAS, on November 16, 2006, the City Council of the City of Palm Desert
(the "City Council") adopted its Resolution No. 06-151 (the "Resolution of Intention")
declaring its intention to order acquisitions and improvements for proposed City of Palm
Desert Section 29 Assessment District (No. 2004-02) (the "Assessment DistricY')
pursuant to the provisions of the Municipal Improvement Act of 1913 (California Streets
and Highways Code Section 10000, et seg.) (the "1913 Act") and as provided in Article
XIIID of the California Constitution, and to comply with the requirements of Division 4 of
the California Streets and Highways Code by proceeding under Part 7.5 thereof, and by
such Resolution of Intention, the City Council provided that serial bonds, term bonds, or
both, would be issued thereunder pursuant to the provisions of the Improvement Bond
Act of 1915, Division 10 of the Streets and Highways Code, commencing with Section
8500 (the "1915 Act"); and
WHEREAS, on January 25, 2007, after conducting a duly noticed public hearing,
the City Council adopted Resolution No. 07-46, ordering the acquisitions and
improvements and confirming the proposed assessments against parcels within the
Assessment District; and
WHEREAS, following the expiration of the 30-day cash collection period, a list of
the assessments remaining unpaid has been filed with the City;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT
HEREBY FINDS, DETERMINES, RESOLVES, AND ORDERS AS FOLLOWS:
Section 1. The above recitals are all true and correct.
Section 2. The City Council hereby approves and authorizes the issuance and
sale of not to exceed $40,000,000 aggregate principal amount of City of Palm Desert,
Section 29 Assessment District (No. 2004-02), Limited Obligation Improvement Bonds,
Series 2007 (the "Bonds") under and pursuant to the 1915 Act to represent
assessments remaining unpaid at the expiration of the 30-day cash collection period as
set forth in the Fiscal Agent Agreement (described below). The Bonds shall be
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governed by, and shall mature on the dates and pay interest at the rates set forth in the
Fiscal Agent Agreement.
Section 3. The form of Fiscal Agent Agreement relating to the Bonds by and
between the City and the Fiscal Agent appointed in Section 4 hereof, presented at this
meeting and on file in the office of the City Clerk, is hereby approved. Subject to
Section 7 below, each of the Mayor, the Mayor Pro Tempore (in the Mayor's absence),
the City Manager of the City of Palm Desert, and any deputy of such officers (each an
"Authorized Officer"), acting singly, is hereby authorized and directed, for and in the
name and on behalf of the City, to execute and deliver the Fiscal Agent Agreement in
substantially the form on file with the City Clerk and presented at this meeting, with such
additions thereto or changes or insertions therein as the Authorized Officer executing
the same may approve (such approval to be conclusively evidenced by such Authorized
Officer's execution and delivery).
Section 4. Wells Fargo Bank, National Association, is hereby appointed as
Fiscal Agent under the Fiscal Agent Agreement.
Section 5. The Bonds shall be executed by the Treasurer of the City and by the
City Clerk, by manual or facsimile signature, and the corporate seal of the City shall be
impressed or imprinted on the Bonds in a similar manner. The Bonds shall then be
delivered to the Fiscal Agent for authentication and registration.
Section 6. The form of Purchase Contract relating to the Bonds, by and among
the City and Stinson Securities, LLC and Kinsell, Newcomb, De Dios, Inc. (the
"Underwriters"), presented at this meeting and on file in the office of the City Clerk, is
hereby approved. Subject to Section 7, below, each of the Authorized Officers, acting
singly, is hereby authorized and directed, for and in the name and on behalf of the City,
to accept the offer of the Underwriters to purchase the Bonds as reflected in the
Purchase Contract and to execute and deliver the Purchase Contract in substantially
the form on file with the City Clerk and presented at this meeting, with such additions
thereto or changes or insertions therein that hereafter become necessary in the interest
of the City and which are approved by the Authorized Officer executing the same (such
Authorized Officer's approval to be conclusively evidenced by such execution and
delivery).
Section 7. Each of the Authorized Officers, acting singly, is hereby authorized
and directed to act on behalf of the City to establish and determine (i) the aggregate
principal amount of the Bonds, which amount shall not exceed $40,000,000; (ii) the
purchase price of the Bonds and the interest rates thereon, provided that the interest
rate shall not exceed 7.0% per annum (calculated utilizing the true interest cost
method); (iii) the original purchasers' discount with respect to the Bonds, which shall not
exceed 1.50% percent of the principal amount thereof (exclusive of original issue
discount); and (iv) the final maturity of the Bonds, which shall not be on a date that is
later than 35 years from the second day of September next succeeding 12 months from
the dated date of the Bonds. The authorization and powers delegated to the Authorized
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Officers by this Section 7 shall be valid for a period of 90 days from the date of adoption
of this Resolution.
Section 8. The form of Preliminary Official Statement relating to the Bonds,
presented at this meeting and on file with the City Clerk, is hereby approved (the
"Preliminary Official Statement"}. The Underwriters are authorized to distribute the
Preliminary Official Statement to prospective purchasers of the Bonds in substantially
the form hereby approved, together with such additions thereto and changes therein as
are determined necessary by any one of the Authorized Officers to make the
Preliminary Official Statement final as of its date for purposes of Rule 15c2-12
promulgated under the Securities Exchange Act of 1934 of the Securities and Exchange
Commission, including, but not limited to, such additions and changes as are necessary
to make all information set forth therein accurate and not misleading. Each of the
Authorized Officers is hereby authorized to execute a final Official Statement in
substantially the form of the Preliminary Official Statement, together with such changes
as are determined necessary by the Authorized Officer executing the Official Statement
to make such Official Statement complete and accurate as of its date. The Underwriters
are further authorized to distribute the final Official Statement for the Bonds to the
purchasers thereof upon its execution.
Section 9. The form of the Continuing Disclosure Agreement relating to the
Bonds, by and between the City and MuniFinancial, Inc., presented at this meeting and
on file in the office of the City Clerk, is hereby approved. Each of the Authorized
Officers, acting singly, is hereby authorized and directed, for and in the name and on
behalf of the City, to execute and deliver the Continuing Disclosure Agreement in
substantially the form on file with the City Clerk and presented at this meeting, with such
additions thereto or changes or insertions therein as may be approved by the
Authorized Officer executing the same (such approval to be conclusively evidenced by
such Authorized Officer's execution and delivery).
Section 10. The form of Purchase and Sale Agreement and Escrow Instructions
by and between the City and Berdan Parcel C LLC, A California Limited Liability
Company, and NFT Parcel C LLC, A California Limited Liability Company, presented at
this meeting and on file in the office of the City Clerk, is hereby approved. Each of the
Authorized Officers, acting singly, is hereby authorized and directed, for and in the
name and on behalf of the City, to execute and deliver the Purchase and Sale
Agreement and Escrow Instructions in substantially the form on file with the City Clerk
and presented at this meeting, with such additions thereto or changes or insertions
therein as may be approved by the Authorized Officer executing the same (such
approval to be conclusively evidenced by such Authorized Officer's execution and
delivery).
Section 11. The form of Acquisition Agreement by and between the City and
Rilington Dolce (in connection with the Rilington site), presented at this meeting and on
file in the office of the City Clerk, is hereby approved. Each of the Authorized Officers,
acting singly, is hereby authorized and directed, for and in the name and on behalf of
the City, to execute and deliver the Acquisition Agreement in substantially the form on
3
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file with the City Clerk and presented at this meeting, with such additions thereto or
changes or insertions therein as may be approved by the Authorized Officer executing
the same (such approval to be conclusively evidenced by such Authorized Officer's
execution and delivery).
Section 12. The form of Acquisition Agreement by and between the City and
Lomas De Arena (in connection with Sares-Regis site), presented at this meeting and
on file in the office of the City Clerk, is hereby approved. Each of the Authorized
Officers, acting singly, is hereby authorized and directed, for and in the name and on
behalf of the City, to execute and deliver the Acquisition Agreement in substantially the
form on file with the City Clerk and presented at this meeting, with such additions
thereto or changes or insertions therein as may be approved by the Authorized Officer
executing the same (such approval to be conclusively evidenced by such Authorized
Officer's execution and delivery).
Section 13. The form of Purchase Agreement by and between the City and
MacLeod Couch Land Co. LLC and MC Properties LLC (in connection with McLeod
site}, presented at this meeting and on file in the office of the City Clerk, is hereby
approved. Each of the Authorized Officers, acting singly, is hereby authorized and
directed, for and in the name and on behalf of the City, to execute and deliver the
Purchase Agreement in substantially the form on file with the City Clerk and presented
at this meeting, with such additions thereto or changes or insertions therein as may be
approved by the Authorized Officer executing the same (such approval to be
conclusively evidenced by such Authorized Officer's execution and delivery).
Section 14. The form of Purchase Agreement by and between the City and
Summit- Monterey Properties LLC (in connection with Summit Monterey Properties
site), presented at this meeting and on file in the office of the City Clerk, is hereby
approved. Each of the Authorized Officers, acting singly, is hereby authorized and
directed, for and in the name and on behalf of the City, to execute and deliver the
Purchase Agreement in substantially the form on file with the City Clerk and presented
at this meeting, with such additions thereto or changes or insertions therein as may be
approved by the Authorized Officer executing the same (such approval to be
conclusively evidenced by such Authorized Officer's execution and delivery).
Section 15. The officers of the City are hereby authorized and directed, jointly
and severally, to do any and all things, to execute and deliver any and all documents
which they may deem necessary or advisable in order to consummate the issuance,
sale and delivery of the Bonds, or otherwise to effectuate the purposes of this
Resolution, the Official Statement, and the Agreements described herein, and any such
actions previously taken by such officers are hereby ratified and confirmed.
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Section 16. This Resolution shall take effect immediately upon adoption.
PASSED AND ADOPTED this 8th day of March, 2007, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Richard S. Kelly, Mayor
ATTEST:
Rachelle D. Klassen, City Clerk
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FISCAL AGENT AGREEMENT
by and bctween
CITY OF PALM DESERT
and
WELLS FARGO, NATI(JNAL ASSOCIATION as Fiscal Agent
Dated as of March 1, 2007
Relating to
$
City of Palm Desert
Section 29 Assessment District (No. 2004-02)
Limited Obligation Improvement Bonds
Series 2007
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TABLE OF CONTENTS
Pa e s
ARTICLE I AUTHORITY AND DEFINITIONS................................................................ 2
Section l.Ol Authority for this Agreement............................................................................ 2
Section 1.02 Agreement for Benefit of Bondowners............................................................. 2
Section1.03 Definitions......................................................................................................... 2
ARTICLE II THE BONDS .................................................................................................. 10
Section 2.O1 Principal Amount; Designation....................................................................... 10
Section 2.02 Terms of Bonds............................................................................................... 10
Section2.03 Redemption..................................................................................................... 11
Section 2.04 Form of Bonds ................................................................................................ 14
Section 2.05 Execution of Bonds......................................................................................... 14
Section 2.06 Transfer of Bonds ........................................................................................... 14
Section 2.07 Exchange of Bonds ......................................................................................... 15
Section 2.08 Bond Register.................................................................................................. 15
Section 2.09 Temporary Bonds............................................................................................ 15
Section 2.10 Bonds Mutilated, Lost, Destroyed or Stolen................................................... 15
Section 2.11 Limited Obligation.......................................................................................... 16
Section2.12 Refunding........................................................................................................ 16
ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; ASSESSMENT
FUND.............................................................................................................. 18
Section 3.01 Issuance and Delivery of Bonds ..................................................................... 18
Section 3.02 Application of Proceeds of Sale of Bonds...................................................... 18
Section 3.03 Costs of Issuance Fund................................................................................... 19
Section 3.04 Assessment Fund ............................................................................................ 19
ARTICLE IV ASSESSMENT REVENUES; REDEMPTION FUND; RESERVE FUND;
IMPROVEMENT FUND ............................................................................... 21
Section 4.01 Pledge of Assessment Revenues..................................................................... 21
Section 4.02 Redemption Fund............................................................................................ 21
Section4.03 Reserve Fund .................................................................................................. 22
Section 4.04 Improvement Fund.......................................................................................... 24
ARTICLE V OTHER COVENANTS, REPRESENTATIONS AND DECLARATIONS OF
THECITY ...................................................................................................... 25
Section 5.01 Punctual Payment............................................................................................ 25
Section 5.02 Special Obligation........................................................................................... 25
Section 5.03 Extension of Time for Payment...................................................................... 25
Section 5.04 Against Encumbrances.................................................................................... 2S
Section 5.05 Protection of Security and Rights of Owners ................................................. 25
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Section 5.06 Collection of Assessment Revenues............................................................... 25
Section 5.07 Further Assurances.......................................................................................... 25
Section 5.08 Tax Covenants ................................................................................................ 25
Section 5.09 Covenant to Foreclose..................................................................................... 26
Section 5.10 Continuing Disclosure .................................................................................... 27
ARTICLE VI INVESTMENTS; REBATE FLJND; LIABILITlr OF THE CITY................ 27
Section 6.01 Deposit and Investment of Moneys in Funds ................................................. 27
Section 6.02 Rebate Fund; Rebate to United States ............................................................ 28
Section 6.03 Liability of City............................................................................................... 29
Section 6.04 Employment of Agents by the City ................................................................ 24
ARTICLE VII THE FISCAL AGENT ................................................................................... 29
Section 7.01 Appointment of Fiscal Agent.......................................................................... 29
Section 7.02 Liability of Fiscal Agent................................................................................. 30
Section 7.03 Information ..................................................................................................... 32
Section 7.04 Reliance by Fiscal Agent................................................................................ 32
Section 7.05 Compensation; Indemnification...................................................................... 32
Section 7.06 Books and Accounts ....................................................................................... 32
ARTICLE V III MODIFICATION OR AMENDMENT OF THIS AGREEMENT................ 33
Section 8.01 Amendments Permitted................................................................................... 33
Section 8.02 Owners' Meetings........................................................................................... 34
Section 8.03 Procedure for Amendment with Written Consent of Owners......................... 34
Section 8.04 Disqualified Bonds.......................................................................................... 34
Section 8.05 Effect of Supplemental Agreement................................................................. 35
Section 8.06 Endorsement of Replacement of Bonds Issued after Amendments................ 35
Section 8.07 Amendatory Endorsement of Bonds............................................................... 35
Section 8.08 Consent of Fiscal Agent.................................................................................. 35
ARTICLE IX MISCELLANEOUS ....................................................................................... 35
Section 9.01 Benefits of Agreement Limited to Parties ...................................................... 35
Section 9.02 Successors Deemed Included in All References to Predecessor .................... 35
Section 9.03 Discharge of Agreement................................................................................. 36
Section 9.04 Execution of Documents and Proof of Ownership by Owners....................... 36
Section 9.05 Waiver of Personal Liability........................................................................... 37
Section9.06 Notices ............................................................................................................ 37
Section9.07 Severability..................................................................................................... 38
Section 9.08 Unclaimed Moneys......................................................................................... 38
Section 9.09 Applicable Law............................................................................................... 38
Section 9.10 Conflict with 1915 Act.................................................................................... 38
Section 9.11 Conclusive Evidence of Regularity ................................................................ 38
Section 9.12 Payment on Business Day............................................................................... 38
Section 9.13 Counterparts.................................................................................................... 38
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FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT (the "Agreement") is made and entered into as of
Marchl, 2007, by and between the City of Palm Desert, California, a municipal corporation (the
"City"), and Wells Fargo Bank, National Association, a national banking organization organized
and existing under the laws of the United States, as fiscal agent (the "Fiscal Agent").
W ITNES S ETH:
WHEREAS, on November 16, 2006, the City Council of the City (the "City Council")
adopted Resolution No. 06-151 (the "Resolution of Intention"), relating to the formation of"City
of Palm Desert Section 29 Assessment District (No. 2004-02)" (the "Assessment District") in
connection with the proposed acquisition and/or construction of improvements in the Section 29
area of the City (the "Project") under and pursuant to the provisions of the Municipal
Improvement Act of 1913, as set forth in Division 12 (commencing with Section 10120) of the
California Streets and Highways Code; and
WHEREAS, in the Resolution of Intention, the City Council gave notice that serial
bonds, term bonds, or both, would be issued thereunder pursuant to the provisions of the
Improvement Bond Act of 1915, as set forth in Division 10 (commencing with Section 8500) of
the California Streets and Highways Code; and
WHEREAS, after conducting a duly noticed public hearing, the City Council has adopted
Resolution No. 07-4B on January 25, 2007 approving an assessment engineer's report, ordering
acquisitions and improvements relating to the Project and confirming the proposed assessment
against parcels within the Assessment District; and
WHEREAS, notice of the recordation of the assessments and of the time within which
assessments were to be paid in cash was duly provided in the manner provided by law, and the
time so provided for receiving payment of assessments in cash expired, and the official who has
been designated as collection officer for cash payments of such assessments has filed with the
City Clerk a list of all assessments which remained unpaid; and
WHEREAS, on March 8, 2007, the City Council adopted Resolution No. (the
"Resolution of Issuance"), authorizing the City to issue and sell its City of Palm Desert, Section
29 Assessment District (No. 2004-02) Limited Obligation Improvement Bonds, Series 2007 (the
"Bonds"), pursuant to the 1915 Act; and
WHEREAS, the City has determined that all acts and proceedings required by law
necessary to make the Bonds, when executed by the City, authenticated and delivered by the
Fiscal Agent and duly issued, the valid, binding and legal limited obligations of the City, and to
constitute this Fiscal Agent Agreement a valid and binding agreement for the uses and purposes
herein set forth in accordance with its terms, have been done and taken, and the execution and
delivery of this Fiscal Agent Agreement have been in all respects duly authorized;
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NOW, THEREFORE, in consideration of the covenants and provisions herein set forth
and for other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
AUTHORITY AND DEFINITIONS
Section 1.01 AuthoritYfor this A�reement. This Agreement is entered into pursuant to
the provisions of the 1915 Act and the Resolution.
Section 1.02 A�reement for Benefit of Bondowners. The provisions, covenants and
agreements herein set forth to be performed by or on behalf of the City shall be for the equal
benefit, protection and security of the Owners of the Bonds. All of the Bonds, without regard to
the time or times of their issuance or maturity, shall be of equal rank without preference, priority
or distinction of any of the Bonds over any other thereof, except as expressly provided in or
permitted by this Agreement. The Fiscal Agent and its officers and employees may become the
owner of any of the Bonds with the same rights it would have if it were not Fiscal Agent.
Section 1.03 Definitions. Unless the context otherwise requires, the terms defined in
this Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and
of any certificate, opinion or other document herein mentioned, have the meanings herein
specified. All references herein to "Articles," "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Agreement, and the words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Agreement as a whole and
not to any particular Article, Section or subdivision hereof.
"AQreement" means this Agreement, as it may be amended or supplemented from time to
time by any Supplemental Agreement eniered into pursuant to the provisions hereof.
"Annual Debt Service" means, for each Bond Year, the sum of(a) the interest due on the
Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as
scheduled, and (b) the principal amount of the Outstanding Bonds scheduled to be paid in such
Bond Year.
"Assessment District" means the City of Palm Desert Section 29 Assessment District
(No. 2004-02).
"Assessment Fund" means the fund by that name established and maintained by the
Fiscal Agent pursuant to Section 3.04(a).
"Assessment Prepavment Account" means the account by that name in the Assessment
Fund established and maintained by the Fiscal Agent pursuant to Section 3.04(a).
"Assessment Revenues" means the revenues received by the City in each Fiscal Year
from the collection of the annual installments of the unpaid Assessments and proceeds from the
sale of property for delinquent Assessment installments.
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"Assessments" means the unpaid assessments levied on properties within the Assessment
District which secure the payment of Debt Service.
"Authorized Officer" means any officer or employee of the City authorized by the City
Council or by an Authorized Officer to undertake the action referenced in this Agreement as
required to be undertaken by an Authorized Officer.
"Bond Counsel" means the law firm of Richards, Watson & Gershon, A Professional
Corporation, Los Angeles, California, or another firm or attorney of favorable reputation in the
field of municipal bond law.
"Bond Year" means the period beginning on the Closing Date and ending on September
2, 2007 and thereafter the period beginning on each September 3 and ending on the following
September 2.
"Bonds" means the City of Palm Desert, Section 29 Assessment District (IVo. 2004-02)
Limited Obligation Improvement Bonds, Series 2007, at any time Outstanding under this
Agreement.
"Business Dav" means any day of the year, other than (i) a Saturday or Sunday, or (ii) a
day on which banks in New York, New York and Los Angeles, California, and San Francisco,
California are required or authorized to remain closed and on which the New York Stock
Exchange is closed.
"CIiY" means the City of Palm Desert.
"City Council" means the City Council of the City.
"Closing Date" means the date upon which there is an exchange of the Bonds for the
proceeds representing payment of the purchase price of the Bonds by the Original Purchasers.
"Code" means the Internal Revenue Code of 1986 as in effect on the date of original
issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to apply
to obligations issued on the date of original issuance of the Bonds, together with regulations
promulgated, and official public guidance published, under the Code.
"Continuing Disclosure Agreement" means the Continuing Disclosure Agreement
executed by the City and MuniFinancial, Inc., dated as of the Closing Date, as originally
executed and as it may be amended from time to time in accordance with the terms thereof.
"Costs of Issuance" means all expenses incident to the issuance of the Bonds including,
but not limited to, any bond counsel, financial advisors, underwriters, certified public
accountan[s, and rating agency fees, printing and advertising costs, filing and recording fees,
City administrative expenses, and the charges of the Fiscal Agent.
"Countv" means Riverside County, California.
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"Debt Service" means the amount of interest and principal payable on the Bonds
scheduled to be paid during the period of computation, excluding amounts payable during such
period which relate to principal of the Bonds which are scheduled to be retired and paid before
the beginning of such period.
"Depository" means The Depository Trust Company, New York, New York, and its
successors and assigns as securities depository for the Bonds, or any other securities depository
acting as Depository under Article II hereof.
"Federal Securities" means any of the following which at the time of investment are
determined by the City to be legal investments under the laws of the State of California for the
rnoneys proposed to be invested therein:
(i) Cash; and
(ii) Direct general obligations of the United States of America (including
obligations issued or held in book entry form on the books of the Department of the Treasury of
the United States of America), or obligations, the payment of principal of and interest on which
is unconditionally guaranteed by the United States of America.
"Fiscal A�ent" means Wells Fargo Bank, National Association, the Fiscal Agent
appointed by the City, acting as an independent fiscal agent with the duties and powers herein
provided, its successors and assigns, and any other corporation or association which may at any
time be substituted in its place, as provided in Section 7.01 hereof
"Fiscal Year" means the twelve-month period extending from July 1 in a calendar year to
June 30 of the succeeding year, both dates inclusive, or any other twelve-month period selected
by the City as its official fiscal year period.
"Improvement Fund" means the acquisition and improvement fund established and
maintained by the Fiscal Agent pursuant to Section 4.04 hereof.
"lndependent Financial Consultant" means a firm of certified public accountants, a
financial consulting firm, a consulting engineering firm or an engineer which is not an employee
of, or otherwise controlled by, the City.
"Information Services" means Financial Information, Incorporated's "Daily Called Bond
Service," 30 Montgomery Street, lOth Floor, Jersey City, New Jersey 07302, Attention: Editor;
Mergent's "Municipal and Government," 5250 77 Center Drive, Suite 150, Charlotte, NC 28217,
Attention: Called Bonds Department; and Kenny S&P, 55 Water Street, 45th Floor, New York,
New York 10041, Attention: Notification Department; or, in accordance with then-current
guidelines of the Securities and Exchange Commission, such other services providing
information with respect to called bonds, or no such services, as the City may indicate in writing
to the Fiscal Agent.
"Interest Payment Dates" means March 2 and September 2 of each year, commencing
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"lnvestment Earnin�s" means all interest earned and any gains and losses on the
investment of moneys in any fund or account created by this Agreement excluding interest
earned and gains and losses on the investment of moneys in the Rebate Fund.
"Maximum Annual Debt Service" means the amount determined by the City to be the
largest Annual Debt Service for any Bond Year after the calculation is made through the final
maturity date of any Outstanding Bonds.
"Moody's" shall mean Moody's Investors Service, its successors and assigns.
"Nominee" means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to Section 2.18 hereaf.
"Ori�nal Purchasers" means Stinson Securities, LLC and Kinsell, Newcomb, De Dios,
Inc.
"1984 Refunding Act" means the Refunding Act of 1984 for 1915 Improvement Act
Bonds, as set forth in Division 11.5 (commencing with Section 9500) of the California Streets
and Highways Code.
"1915 Act" means the Improvement Bond Act of 1915, as set forth in Division 10
(commencing with Section 8500) of the California Streets and Highways Code.
"1913 Act" means the Municipal Improvement Act of 1913, as set forth in Division 12
(commencing with Section 10000) of the California Streets and Highways Code.
"Officer's Certificate" means a written certificate of the City signed by an Authorized
Officer of the City.
"Outstanding," when used as of any particular time with reference to the Bonds, means
(subject to the provisions of Section 8.04 hereof� all Bonds except:
(i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the
Fiscal Agent for cancellation;
(ii) Bonds called for redemption which, for the reasons specified in Section
2.03(� hereof, are no longer entitled to any benefit under this Agreement other than the right to
receive payment of the redemption price therefor;
(iii) Bonds paid or deemed to have been paid within the meaning of Section
9.03 hereof; and
(iv) Bonds in lieu of or in substitution for which other Bonds shall have been
authorized, executed, issued and delivered by the City and authenticated by the Fiscal Agent
pursuant to this Agreement or any Supplemental Agreement.
"Owner" or "Bondowner" means any person who shall be the registered owner of any
Outstanding Bond.
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"ParticiQants" means those broker-dealers, banks and other financial institutions from
time to time for which the Depository holds Bonds as securities depository.
"Permitted Investments" means any of the following that at the time of investment are
legal investments under the laws of the State of California for the moneys proposed to be
invested therein:
(a) Direct obligations of the United States (including obligations issued or
held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS)
or obligations the principal of and interest on which are unconditionally guaranteed by the
United States.
(b) Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following federal agencies and provided such obligations are backed by
the full faith and credit of the United States (stripped securities are only permitted if they have
been stripped by the agency itsel�:
1. U.S. Export-Import Bank ("Eximbank")
Direct obligations or fully guaranteed certificates of beneficial ownership
2. Farmers Home Administration ("FmHA")
Certificates of beneficial ownership
3. Federal Financing Bank
4. Federal Housing Administration Debentures ("FHA")
5. General Services Administration
Participation certificates
6. Government National Mortgage Association ("GNMA")
GNMA - guaranteed mortgage-backed bonds
GNMA - guaranteed pass-through obligations
(participation certificates) (not acceptable for certain cash-flow sensitive
issues)
7. United States Maritime Administration
Guaranteed Title XI financing
8. United States Department of Housing and Urban Development Project
Notes
Local Authority Bonds
New Communities Debentures
United States government guaranteed debentures
United States Public Housing Notes and Bonds
United States government guaranteed public housing notes and
bonds
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(c) Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following non-full faith and credit United States government agencies
(stripped securities are only permitted if they have been stripped by the agency itself):
1. Federal Home Loan Bank System
Senior debt obligations
2. Federal Home Loan Mortgage Corporation ("FHLMC")
Participation Certificates
Senior debt obligations
3. Federal National Mortgage Association ("FNMA")
Mortgage-backed securities and senior debt obligations
4. Student Loan Marketing Association ("SLMA")
Senior debt obligations
5. Resolution Funding Corporation obligations
6. Farm Credit System
Consolidated system-wide bonds and notes
(d) Money market funds registered under the Federal Investment Company
Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a
rating by S&P of "AAAm-G," "AAA-m" or "AA-m" and if rated by Moody's rated "Aaa,"
"Aal" or "Aa2," including funds for which the Fiscal Agent or any of its affiliates (including any
holding company, subsidiaries, or other affiliates) provides investment advisory or other
management services, provided such funds satisfy the criteria herein contained.
(e) Certificates of deposit secured at all tirnes by collateral described in (a)
and/or (b) above. Such certificates must be issued by commercial banks (including affiliates of
the Fiscal Agent), savings and loan associations or mutual savings banks. The collateral must be
held by a third party and the bondholders must have a perfected first security interest in the
collateral.
(f� Certificates of deposit, savings accounts, deposit accounts or money
market deposits (including those of the Fiscal Agent and its affiliates) which are fully insured by
FDIC, including BTF and SA1F.
(g) Investment agreements, including guaranteed investment contracts,
forward purchase agreements and reserve fund put agreements.
(h) Commercial paper rated, at the time of purchase, "Prime - 1" by Moody's
and "A-1" or better by S&P.
(i) Bonds or notes issued by any state or municipality which are rated by
Moody's and S&P in one of the two highest rating categories assigned by such agencies.
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(j) Federal funds or bankers acceptances with a maximum term of one year of
any bank (including those of the Fiscal Agent and its affiliates} which has an unsecured,
uninsured and unguaranteed obligation rating of "Prime - 1" or "A3" or better by Moody's and
"A-1" or "A" or better by S&P.
(k) Repurchase agreements for 30 days or less must follow the following
criteria. Repurchase agreements which provide for the transfer of securities from a dealer bank
or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash
from a municipal entity to the dealer bank or securities firm with an agreement that the dealer
bank or securities firtn will repay the cash plus a yield to the municipal entity in exchange for the
securities at a specified date, and
1. Repurchase agreements must be between the municipal entity and a dealer
bank or securities firm
A. Primary dealers on the Federal Reserve reporting dealer list which
are rated "A" or better by S&P and Moody's, or
B. Banks rated "A" or above by S&P and Moody's.
2. The written repurchase agreements contract must include the following:
A. Securities which are acceptable for transfer are:
(1) Direct United States governments, or
(2) Federal agencies backed by the full faith and credit of the
United States government (and FNMA & FHLMC)
B. The term of a repurchase agreement may be up to 30 days
C. The collateral must be delivered to the City, the Fiscal Agent (if
the Fiscal Agent is no[ supplying the collateral) or third party
acting as agent for the Fiscal Agent (if the Fiscal Agent is
supplying the collateral) before/simultaneous with payment
(perfection by possession of certificated securities).
D. Valuation of Collateral
(1) The securities must be valued weekly, marked-to-market at
current market price plus accrued interest
(2) The value of collateral must be equal to 104% of the
amount of cash transferred by the municipal entity to the
dealer bank or security firm under the repo plus accrued
interest. If the value of securities held as collateral slips
below 104% of the value of the cash transferred by
municipality, then additional cash and/or acceptable
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securities must be transferred. If, however, the securities
used as collateral are FNMA or FHLMC, then the value of
collateral must equal 105%.
3. A legal opinion must be delivered to the municipal entity to the effect that
the repurchase agreement meets guidelines under state law for legal
investment of public funds.
(1) Any state administered pool investment fund in which the City is
statutorily permitted or required to invest will be deemed a permitted investment, including, but
not limited to the Local Agency Investment Fund in the treasury of the State.
"Principal Office" means the office of the Fiscal Agent in Los Angeles, California, at
which at any particular time corporate trust business shall be administered, or such other office
as the Fiscal Agent shall designate.
"Project" means the acquisitions and improvements described in that certain Engineer's
Report prepared by Willdan and MuniFinancial, as modified from time to time, approved by
Resolution No. _ of the City Council, adopted on January 25, 2007, as may be modified from
time to time in accordance with the 1913 Act.
"Rebate Fund" means the fund by that name established pursuant to Section 6.02.
"Record Date" means the fifteenth (lSth) day of the month next preceding the applicable
Interest Payment Date whether or not such day is a Business Day.
"Redemption Fund" means the fund by that name established pursuant to Section 4.02(a).
"Reg�stration Books" means the records maintained by the Fiscal Agent pursuant to
Section 2.08 hereof for the registration and transfer of ownership of the Bonds.
"Representation Letter" means the Blanket Letter of Representations from the City and
the Fiscal Agent to the Depository as described in Section 2.15 hereof.
"Reserve Fund" means the fund by that name established and maintained by the Fiscal
Agent pursuant to Section 4.03(a).
"Reserve Requirement" means, on any date in any Bond Year, the least of (i) 10 percent
of the proceeds of the sale of the Bonds (within the meaning of the Code), (ii) Maximum Annual
Debt Service; or (iii) 125 percent of average Annual Debt Service on the Bonds, as determined
by the City.
"Resolution of Intention" means Resolution No. 06-151 of the City Council, referred to
in the recitals hereof.
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw Hill
Companies, Inc., and its successors and assigns.
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"Securities Depositories" means The Depository Trust Company, 55 Water Street, SOth
Floor, New York, New York, 10041, Attn: Call Notification Department, Fax (212) 855-7232;
or, in accordance with then current guidelines of the Securities and Exchange Commission, such
other securities depositaries, or no such depositaries, as the City may designate in writing to the
Fiscal Agent.
"State" means the State of California.
"Supplemental Agreement" means a Supplemental Agreement entered into by the City
and the Fiscal Agent for the purpose of modifying or amending this Agreement or the rights and
obligations of the City and the Owners pursuant to Section 8.01 hereof.
"Tax Certificate" means the certificate (or similar instrument) relating to Section 148 of
the Code executed by an authorized officer of the City and delivered upon the delivery of the
Bonds to the Original Purchasers, or any functionally similar replacement certificate.
"Term Bonds" means the Bonds maturing on September 2, 20_.
ARTICLE II
THE BONDS
Section 2.01 Principal Amount; Desi n� ation. The Bonds in the aggregate principal
amount of $ are hereby authorized to be issued by the City for the Assessment
District under and subject to the terms of the Resolution of Intention, the Resolution of Issuance,
this Agreement, the 1915 Act and other applicable laws of the State. The Bonds shall be
designated "City of Palm Desert, Section 29 Assessment District (No. 2004-02), Limited
Obligation Improvement Bonds, Series 2007," and shall be secured by the Assessments.
Section 2.02 Terms of Bonds. (a) The Bonds. The Bonds shall be issued as fully
registered bonds, without coupons, in the denominations of$5,000 or any integral multiple
thereof, except that one Bond may be in an amount equal to any integral multiple of$1.00. The
Bonds shall be lettered and numbered in a customary manner as determined by the Fiscal Agent.
The Bonds shall be dated the Closing Date. "CUSIP" identification numbers shall be imprinted
on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the
Bonds, and any error or omission with respect thereto shall not constitute cause for refusal of any
purchaser to accept delivery of and pay for the Bonds. In addition, failure on the part of the City
of the Fiscal Agent to use such CUSIP numbers in any notice to Owners shall not constitute an
event of default or any violation of the city's contract with such Owners and shall not impair the
effectiveness of any such notice.
(b) Maturities. The Bonds shall mature and become payable on September 2
of each year, as follows:
Maturity Date Principal Interest Maturity Date Principal Interest
�September 2) Amount Rate (September 2) Amount Rate
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(c) Interest. The Bonds shall bear interest at the rates set forth in subsection
(b) above which shall be payable on the Interest Payment Dates in each year. Interest shall be
calculated on the basis of a 360-day year composed of twelve 30-day months. Each Bond shall
bear interest from the Interest Payment Date next preceding the date of authentication thereof
unless (i) it is authenticated after a Record Date and before the close of business on the next
lnterest Payment Date, in which event it shall bear interest from such Interest Payment Date, or
(ii) it is authenticated on or before the Record Date preceding the first Interest Payment Date, in
which event it shall bear interest from the Closing Date; provided, however, that if at the time of
authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the
Interest Payment Date to which interest has previously been paid or made available for payment
thereon or from the Closing Date, if no interest has previously been paid or made available for
payment thereon.
(d) Method of�Payment. Interest on the Bonds is payable by check of the
Fiscal Agent mailed by first class mail, postage prepaid, on each Interest Payment Date, until the
principal amount of a Bond has been paid or made available for payment, to the registered
Owner thereof at such registered Owner's address as it appears on the Registration Books at the
close of business on the Record Date preceding the Interest Payment Date or by wire transfer
made on such Interest Payment Date upon written instructions of any owner of $1,000,000 or
more in aggregate principal amount of Bonds delivered to the Fiscal Agent prior to the
applicable Record Date. The principal of the Bonds and any premium on the Bonds are payable
in lawful money of the United States of America upon surrender of such Bonds at the Principal
Office of the Fiscal Agent. All Bonds paid by the Fiscal Agent pursuant to this subsection shall
be canceled and destroyed by the Fiscal Agent.
Section 2.03 Redemption. (a) Mandatory Redemption. The Bonds shall be redeemed
prior to maturity, in whole or in part, on any Interest Payment Date from surplus monies on
deposit and available for such purpose in the Assessment Prepayment Account of the
Assessment Fund from the sources, to the extent of and in the manner set forth in Section 3.04, at
the following redemption prices, expressed as percentages of the principal amount of the Bonds
to be redeemed, together with accrued interest to the date of redemption:
Redemption Dates Redemption Prices
September 2, through March 2, � 103%
September 2, through March 2, _ 102%
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September 2, through March 2,_ 101%
September 2, and thereafter 100%
(b) Optional Redemptio�z. The Bonds are subject to redemption prior to their
stated maturity dates on any Interest Payment Date, as selected by the City, in integral multiples
of$5,000, at the option of the City from moneys derived by the City from any source other than
identified in Section 2.03(a), at the following redemption prices expressed as percentages of the
principal amount of the Bonds to be redeemed, together with accrued interest to the date of
redemption:
Redemption Dates Redemption Prices
September 2, through March 2, _ 103%
September 2, through March 2, _ 102�10
September 2, through March 2,_ 101%
September 2, and thereafter 100°Io
(c) Mandatory Sinking Fund Redemption. The Term Bonds maturing on
September 2, 20_ are subject to redemption in part by lot from sinking fund payments made by
the City, at a redemption price equal to the principal amount thereof to be redeemed with accrued
intcrest thereon to the redemption date, without premium, in the aggregate respective principal
amounts and on the respective dates as set forth in the following table; provided, however, if
some but not all of the Term Bonds of a maturity have been redeemed pursuant to Section
2.03(a) or 2.03(b), each future sinking fund payment with respect to such Term Bonds will be
reduced on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, so that the
total amount of sinking fund payments with respect to such Term Bonds to be made subsequent
to a Section 2.03(a) mandatory redemption or Section 2.03(b) optional redemption shall be
reduced by an amount equal to the principal amount of the Term Bonds so redeemed, all as shall
be designated pursuant to written notice filed by the City with the Fiscal Agent:
Bonds Maturin� on September 2, 20_ _
Redemption Date Principal Amount
�September 2) to be Redeemed
$
*
* maturity
In lieu of a redemption pursuant to this Section 2.03(c), the Fiscal Agent may apply
amounts in the Redemption Fund to purchase Term Bonds at public or private sale, as and when
and at such prices (including brokerage and other charges, but excluding accrued interest, which
is payable from the Redemption Fund) as may be directed by the City, except that the purchase
price (exclusive of accrued interest) may not exceed the redemption price then applicable to such
Bonds, as set forth in writing by the City; provided, however, that no Term Bonds shall be
purchased by the Fiscal Agent hereunder with a settlement date more than 60 days prior to the
date on which the City would otherwise redeem such Term Bonds pursuant to this Section
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2.03(c). The principal amount of any Term Bonds so purchased by the Fiscal Agent shall be
credited towards and shall reduce the Redemption Fund payment otherwise required to be made
with respect to such Term Bonds on the applicable redemption date.
(d) Notice to Fiscal Agent. An Authorized Officer shall give the Fiscal Agent
written notice of the City's intention to redeem Bonds not less than forty-five (45) days prior to
the applicable redemption date unless a shorter time is acceptable to the Fiscal Agent in its sole
discretion specifying the principal amount and maturities of Bonds to be redeemed.
(e) Redemption Procedure by Fiscal Agent. The Fiscal Agent shall cause
notice of any redemption to be provided by registered or certified mail or by personal service at
least thirty (30) days prior to the date fixed for redemption, to the respective registered Owners
of any Bonds designated for redemption, at their addresses appearing on the Registration Books.
In addition to the foregoing, the Fiscal Agent shall send a notice of redemption at least thirty (30)
days prior to the redemption date, by registered or certified mail, postage prepaid, or by
overnight delivery service to the following: (i) each of the Securities Depositories, and (ii) one or
more of the Information Services.
Such notice shall state the date of such notice, the date of issue of the Bonds, the place or
places of redemption, the redemption date, the redemption price and, if less than all of the then
Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers (if any)
and Bond numbers of the Bonds to be redeemed, or shall state that all Bonds between two stated
Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more
maturities have been called for redemption, shall state as to any Bond called for redemption in
part the portion of the principal of the Bond to be redeemed, shall require that such Bonds be
then surrendered at the Principal Office of the Fiscal Agent for redemption at the said
redemption price, and shall state that further interest on such Bonds will not accrue from and
after the redemption date. The cost of the mailing of any such redemption notice shall be paid by
the City.
Neither failure to receive any redemption notice nor any defect in such redemption notice
so given shall affect the sufficiency of the proceedings for the redemption of such Bonds. Upon
the payment of the redemption price of Bonds being redeemed, each check or other transfer of
funds issued for such purpose shall, to the extent practicable, identify, by issue, maturity and
Bond number, the Bonds being redeemed with the proceeds of such check or other transfer.
In the event of a redemption of Bonds pursuant to Section 2.03(a) hereof, the Fiscal
Agent shall deposit in the Redemption Fund moneys provided by the City in an amount equal to
the redemption price of the Bonds being redeemed on or before the fifteenth (15th) day of the
month preceding the Interest Payment Date upon which such Bonds are to be redeemed.
Whenever provision is made in this Agreement for the redemption of less than all of the
Bonds, the Fiscal Agent shall select the Bonds for redemption in such a way that the ratio of
Outstanding Bonds to issued Bonds shall be approximately the same in each maturity of the
Bonds insofar as possible (i.e., on a pro-rata basis), and shall select Bonds for redemption within
each maturity of the Bonds by lot.
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Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal
Agent shall authenticate and deliver to the Owner, at the expense of the City, a new Bond or
Bonds, of the same maturity, of authorized denominations in aggregate principal amount equal to
the unredeemed portion of the Bond or Bonds. Such partial redemption shall be valid upon
payment of the amount required to be paid to such Owner, and the City and the Fiscal Agent
shall be released and discharged thereupon from all liability to the extent of such payment.
(f� Effect of Reclemption. From and after the date fixed for redemption, if
funds available for the payment of the redemption prices of the Bonds called for redemption
shall have been deposited in the Redemption Fund or the Assessment Prepayment Account, as
applicable, such Bonds or portions thereof shall cease to be entitled to any benefit under this
Agreement other than the right to receive payment of the redemption price, and interest shall
cease to accrue on the Bonds or portions thereof to be redeemed on the redemption date specified
in the notice of redemption.
All Bonds redeemed by the Fiscal Agent shall be canceled and destroyed by the Fiscal
Agent.
Section 2.04 Form of Bonds. The Bonds, the Fiscal Agent's certificate of
authentication and the assignment to appear thereon shall be substantially in the forms,
respectively, set forth in Exhibit A attached hereto and by this reference incorporated herein,
with necessary or appropriate variations, omissions and insertions as permitted or required by
this Agreement.
Section 2.OS Execution of Bonds. The Bonds shall be executed by the manual or
facsimile signatures of the Treasurer and the City Clerk of the City, who are in office on the date
of this Agreement or at any time thereafter. If any officer whose signature appears on any Bond
ceases to be such officer before delivery of the Bond to the Owner, such signature shall
nevertheless be as effective as if the officer had remained in office until the delivery of the Bond
to the Owner. Any Bond may be signed and attested by such persons as at the actual date of the
execution of such Bond shall be the proper officers of the City notwithstanding that on the
nominal date of such Bond any such person shall not have been such officer of the City.
Only such Bonds as shall bear thereon a certificate of authentication in substantially the
tiorm set forth in Exhibit A hereto, manually executed by the Fiscal Agent, shall be valid or
obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of
authentication of the Fiscal Agent shall be conclusive evidence that such Bonds have been duly
authenticated, registered and delivered hereunder, and are en[itled to the benefits of this
Agreement.
Section 2.06 Transfer of Bonds. Any Bond may, in accordance with its terms, be
transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 hereof,
by the person in whose name it is registered, in person or by his or her duly authorized attorney,
upon surrender of such Bond for cancellation, accompanied by delivery of a duly executed
written instrument of transfer in a form acceptable to the Fiscal Agent. The cost for any services
rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall
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be paid by the City. The Fiscal Agent shall collect from the Owner requescing transfer of a Bond
any tax or other governmental charge required to be paid with respect to such transfer.
Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and
the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of like aggregate principal
amount of authorized denominations.
No transfers of Bonds shall be required to be made (a) during the fifteen (15) days
preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (b)
with respect to Bonds which have been selected for redemption.
Section 2.07 Exchange of Bonds. Bonds may be exchanged at the Principal Office of
the Fiscal Agent only for a like aggregate principal amount of Bonds of authorized
denominations and of the same maturity. The cost for any services rendered or any expense
incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City.
The Fiscal Agent shall collect from the Owner requesting exchange of a Bond any tax or other
governmental charge required to be paid with respect to such exchange.
No exchanges of Bonds shall be required to be made (i) during the fifteen (15) days
preceding the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii)
with respect to Bonds which have been selected for redemption.
Section 2.08 Bond Register. The Fiscal Agent shall keep, or cause to be kept, sufficient
books for the registration and transfer of the Bonds which books shall show the series, number,
CUSIP identification number (if any), date of issuance, amount, rate of interest and Owner of
each Bond and shall at all times be open to inspection by the City during regular business hours
upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under
such reasonable regulations as it may prescribe, register or transfer or cause to be registered or
transferred, on said books, the ownership of the Bonds as hereinbefore provided.
Section 2.09 Temporary Bonds. The Bonds may be initially issued in temporary form
exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be
printed, lithographed or typewritten, shall be of such denominations as may be determined by the
City, and may contain such reference to any of the provisions of this Agreement as may be
appropriate. Every temporary Bond shall be executed by the City upon the same conditions and
in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds, it
will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall
be surrendered, for cancellation, in exchange for the definitive Bonds at the Principal Office of
the Fiscal Agent or at such other location as the Fiscal Agent shall designate, and the Fiscal
Agent shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate
principal amount of definitive Bonds of authorized denominations. Until so exchanged, the
temporary Bonds shall be entitled to the same benefits under this Agreement as definitive Bonds
authenticated and delivered hereunder.
Section 2.10 Bonds Mutilated, Lost, Destroved or Stolen. If any Bond shall become
mutilated, the City, at the expense of the Owner of said Bond, shall execute, and the Fiscal Agent
shall authenticate and deliver, a replacement Bond of like tenor and principal amount in
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exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent
of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be
canceled and destroyed by the Fiscal Agent. If any Bond shall be lost, destroyed or stolen,
evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such
evidence be satisfactory to it and indemnity satisfactory to it shall be given, the City, at the
expense of the Owner, shall execute, and the Fiscal Agent shall authenticate and deliver, a
replacement Bond of like tenor and principal amount in lieu of and in substitution for the Bond
so lost, destroyed or stolen. The City or Fiscal Agent may require payment of a sum not
exceeding the actual cost of preparing each replacement Bond delivered under this Section 2.10
and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation,
execution, authentication and delivery thereof. Any Bond delivered under the provisions of this
Section 2.10 in replacement of any Bond alleged to be lost, destroyed or stolen shall constitute an
original additional contractual obligation of the City whether or not the Bond so alleged to be
lost, destroyed or stolen is at any time enforceable by anyone, and shall be equally and
proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to
this Agreement.
Section 2.11 Limited Obli ation. All obligations of the City under this Agreement and
the Bonds and interest thereon shall be limited obligations of the City, payable solely from the
Assessment Revenues. Neither the faith and credit nor the taxing power of the City or the State
of California or any political subdivision thereof is pledged to the payment of the Bonds or the
interest thereon and no Owner of the Bonds may compel the exercise of any taxing power by the
City or force the forfeiture of any of its property. The principal of, and premium (if any) and
interest on the Bonds are not a debt of the City nor a legal or equitable pledge, charge, lien or
encumbrance upon any of its property, or upon any of its income, receipts or revenues.
Section 2.12 RefundinQ. At any time necessary or appropriate, the City may issue
bonds to refund all or any portion of the Bonds as permitted by and in accordance with law
including, but not limited to, the 1984 Refunding Act. This Section shall not apply to or in any
manner limit advancement of the maturity of any of the Bonds as provided in Parts 7, 8, 9,11 or
11.1 of the Improvement Bond Act of 1915, nor shall this Section apply to or in any manner limit
the redemption and payment of any Bond pursuant to subsequent proceedings providing for the
payment of amounts to eliminate previously imposed fixed lien assessments, including the
Assessments.
Section 2.13. No Acceleration. The principal of the Bonds shall not be subject to
acceleration hereunder. Nothing in this Section shall in any way prohibit the redemption of
Bonds under Section 2.03 hereof, or the defeasance of the Bonds and discharge of this
Agreement under Section 9.03 hereof.
Section 2.14. Book Entry Svstem. The Bonds shall be initially delivered in the form of
a separate single fully registered Bond (which may be typewritten) for each of the maturities of
the Bonds. Upon initial delivery, the ownership of each such Bond shall be registered in the
registration books kept by the Fiscal Agent in the name of the Nominee as nominee of the
Depository. Except as provided in Section 2.16 hereof, all of the Outstanding Bonds shall be
registered in the registration books kept by the Fiscal Agent in the name of the Nominee. With
respect to Bonds registered in the registration books kept by the Fiscal Agent in the name of the
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Nominee, the City and the Fiscal Agent shall have no responsibility or obligation to any such
Participant or to any Person on behalf of which such a Participant holds an interest in the Bonds.
Without limiting the immediately preceding sentence, the City and the Fiscal Agent shall have
no responsibility or obligation with respect to (i} the accuracy of the records of the Depository,
the Nominee, or any Participant with respect to any ownership interest in the Bonds, (ii) the
delivery to any Participant or any other Person, other than an Owner as shown in the registration
books kept by the Fiscal Agent, of any notice with respect to the Bonds, including any notice of
redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in
the Bonds to be redeemed in the event the Bonds are redeemed in part, or (iv) the payment to any
Participant or any other Person, other than an Owner as shown in the registration books kept by
the Trustee, of any amount with respect to principal of, premium, if any, or interest due with
respect to the Bonds. The District and the Trustee may treat and consider the Person in whose
name each Bond is registered in the registration books kept by the Fiscal Agent as the holder and
absolule owner of such Bond for the purpose of payment of the principal of, premium, if any,
and interest on such Bond, for the purpose of giving notices of redemption and other matters
with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and
for all other purposes whatsoever. The Fiscal Agent shall pay all principal of, premium, if any,
and interest due on the Bonds only to or upon the order of the respective Owner, as shown in the
registration books kept by the Fiscal Agent, or their respective attorneys duly authorized in
writing, and all such payments shall be valid and effective to satisfy and discharge fully the
City's obligations with respect to payment of the principal, premium, if any, and interest due on
the Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in
the registration books kept by the Fiscal Agent, shall receive a Bond evidencing the obligation of
the City to make payments of principal, premium, if any, and interest pursuant to this
Agreement. Upon delivery by the Depository to the Fiscal Agent and the City of written notice
to the effect that the Depository has determined to substitute a new nominee in place of the
Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee
in this Agreement shall refer to such new nominee of the Depository.
Section 2.15 Representation Letter.In order to qualify the Bonds which the City elects
to register in the name of the Nominee for the Depository's book-entry system, an authorized
representative of the Fiscal Agent is hereby authorized to execute from time to time and deliver
to such Depository the Representation Letter. The execution and delivery of the Representation
Letter in any way impose upon the City or the Fiscal Agent 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 Fiscal Agent. The Fiscal Agent agrees to take all action necessary
to continuously comply with all representations made by it in the Representation Letter. In
addition to the execution and delivery of the Representation Letter, the Authorized Officers are
hereby authorized to take any other actions, not inconsistent with this Agreement, to qualify the
Bonds for the Depository's book-entry program.
Section 2.16 Transfers Outside the Book-Entry Svstem. In the event (i) the
Depository determines not to continue to act as securities depository for the Bonds, or (ii) the
City determines that the Depository shall no longer so act, then the City will discontinue the
book-entry system with the Depository. If the City fails to identify another qualified securities
depository to replace the Depository then the Bonds so designated shall no longer be restricted to
being registered in the registration books kept by the Fiscal Agent in the name of the Nominee,
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but shall be registered in whatever name or names Persons transferring or exchanging Bonds
shall designate, in accordance with the provisions of Section 2.06 hereof.
Section 2.17 Payments to Nominee. Notwithstanding any other provisions of this
Agreement to the contrary, so long as any Bond is registered in the name of the Nominee, all
payments with respect to principal, premium, if any, and interest due with respect to such Bond
and all notices with respect to such Bond shall be made and given, respectively, as provided in
the Representation Letter or as otherwise instructed by the Depository.
Section 2.18 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
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS;
ASSESSMENT FUND
Section 3.01 Issuance and Delivery of Bonds. At any time after the execution and
delivery of this Agreement, the City may issue the Bonds in the aggregate principal amount set
forth in Section 2.01 hereof and deliver the Bonds to the Original Purchasers. The Authorized
Officers of the City are hereby authorized and directed to deliver any and all documents and
instruments necessary to cause the issuance of the Bonds in accordance with the provisions of
the 1915 Act, the Resolution of Intention and this Agreement and to do and cause to be done any
and all acts and things necessary or convenient for delivery of the Bonds to the Original
Purchasers.
Section 3.02 Application of Proceeds of Sale of Bonds. The proceeds of the sale of the
Bonds shall be applied as follows:
(a) $ shall be deposited in the Redemption Fund representing
funded interest on the Bonds, to be used to pay interest on the Bonds on
;
(b) $ shall be deposited in the Costs of Issuance Fund;
(c) $ shall be deposited in the Reserve Fund; and
(d) The remaining proceeds, in the amount of $ , shall be
deposited in the Improvement Fund.
In addition to the foregoing, on the Closing Date, the City shall transfer or cause to be
transferred, to the Fiscal Agent, for deposit by the Fiscal Agent to the Improvement Fund, the
following amounts:
(i) $ representing Assessments collected during the cash collection
period for the Assessment District;
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(ii) $ 865,330.59 representing a contribution by the Palm Desert Unif'ied School
District; and
(iii) $ representing a contribution by the City of Palm Desert.
Section 3.03 Costs of Issuance Fund. (a) Establishment of Costs of Issuance Fund.
There is hereby established, as a separate account to be held by the Fiscal Agent, the "Costs of
Issuance Fund" into which shall be deposited the proceeds of the sale of the Bonds pursuant to
Section 3.02 (a) hereof. Moneys in the Costs of Issuance Fund shall be held in trust by the Fiscal
Agent and shall be disbursed as provided in subsection (b) of this Section for the payment or
reimbursement of Costs of Issuance.
(b) Disbursements. Amounts in the Costs of Issuance Fund shall be disbursed
to pay Costs of Issuance, as set forth in an Officer's Certificate containing respective amounts to
be paid to the designated payees delivered to the Fiscal Agent on the Closing Date concurrently
with the delivery of the Bonds. The Fiscal Agent shall, to the extent of the moneys on deposit in
the Costs of Issuance Fund, pay all Costs of Issuance upon receipt of an invoice from any such
payee which requests payment in an amount which is less than or equal to the amount set forth
with respect to such payee in such Officer's Certificate, or upon receipt of an Officer's Certificate
requesting payment of a Cost of Issuance not listed on the initial Officer's Certificate delivered to
the Fiscal Agent on the Closing Date. The Fiscal Agent is authorized to act on such an Officer's
Certificate without further inquiry, shall not be responsible for the accuracy of [he statements
contained therein, and shall be absolutely protected and incur no liability in relying on such an
Officer's Certificate. The Fiscal Agent shall maintain the Costs of Issuance Fund for a period of
sixty (60) days from the Closing Date and shall then transfer and deposit any moneys remaining
therein, including any Investment Earnings thereon, to the Improvement Fund.
(c) Investment. Moneys in the Costs of Issuance Fund shall be invested and
deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained in the
Costs of Issuance Fund to be used for the purposes of such fund.
Section 3.04 Assessment Fund. (a) Establishment of Assessme�it Furid. There is
hereby established, as a separate account to be held by the Fiscal Agent, the "Assessment Fund"
to the credit of which the Fiscal Agent shall deposit all Assessment Revenues received by the
Fiscal Agent from the City except for the prepayment of assessments. Upon receiving any
Assessment Revenues from the County, the City shall deduct therefrom the amounts included
therein, or a portion thereof, for payment of the City's expenses associated with the collection of
the Assessment Revenues and payment of the annual costs associated with the registration of the
Bonds and the other duties of the Fiscal Agent provided for herein, and transfer the remainder
thereof to the Fiscal Agent for deposit in the Assessment Fund. Moneys in the Assessment Fund
shall be held by the Fiscal Agent for the benefit of the City and the Owners of the Bonds, as
hcreinafter provided, shall be disbursed as provided below and, pending disbursement, shall be
subject to a lien in favor of the Owners of the Bonds. The Fiscal Agent shall establish and
main[ain within the Assessment Fund an "Assessment Prepayment Account."
(b) Disbursements. Not later than the third Business Day preceding each
lnterest Payment Date, the Fiscal Agent shall withdraw from the Assessment Fund and deposit in
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the Redemption Fund the amount which is necessary to pay Debt Service on the Interest
Payment Date.
On September 3 of each year, beginning on September 3, , the amount on deposit in
the Assessment Fund, together with the amount then on deposit in the Redemption Fund, shall
not exceed the greater of (i) one year's earnings on such amounts, or (ii) one-twelfth (1/12th) of
Annual Debt Service for the then current Bond Year. If on September 3 of any year the amount
on deposit in the Assessment Fund, together with the amount then on deposit in the Redemption
Fund, exceeds the maximum amount allowable pursuant to the preceding sentence and if on such
September 3 the City shall have delivered to the Fiscal Agent an Officer's Certificate containing
the information required below in this paragraph, the excess shall be paid by the Fiscal Agent to
the City as directed by such Officer's Certificate. On September 3 of each year, after any such
excess amount has been transferred as hereinabove provided, the amount on deposit in the
Assessment Fund, together with the amount then on deposit in the Redemption Fund, shall not
exceed in the aggregate the greater of (i) one year's earnings thereon, or (ii) one-twelfth (1/12th)
of Annual Debt Service for the then current Bond Year. An Officer's Certificate delivered by
the City to the Fiscal Agent pursuant to this paragraph shall specify the dollar amount of the
excess determined pursuant to the first sentence of this paragraph which the Fiscal Agent is to
pay to the City. Upon receipt of such an Officer's Certificate, the Fiscal Agent is authorized to
act thereon without further inquiry, shall not be responsible for the accuracy of the statements
con[ained therein, and shall be absolutely protected and incur no liability in relying on such
Officer's Certificate.
(c) Investment. Moneys in the Assessment Fund shall be invested and
deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained in the
Assessment Fund to be used for the purposes of such fund.
(d) Prepayment of Assessments. Amounts received from property owners in
the Assessment District as prepayments of the Assessment pursuant to the 1915 Act shall be
deposited by the City Treasurer and held by the Fiscal Agent in the Assessment Prepayment
Account for application pursuant to Section 3.04(e). The City shall identify to the Fiscal Agent
in writing the amount of such prepayment. The Fiscal Agent also shall deposit in the
Assessment Prepayment Account amounts transferred thereto from the Reserve Fund pursuant to
Sections 4.03(d) and 4.03(f�. Amounts in the Assessment Prepayment Account shall be used to
pay the principal of and redemption premium on Bonds to be called for redemption as provided
in the next sentence. Subject to the priority of disbursements set forth in Section 3.04(e),
whenever and to the extent monies are on deposit in the Assessment Prepayment Account are
sufficient to pay on redemption the principal of Bonds in integral $5,000 amounts plus the
redemption premium thereon (if any), the Fiscal Agent shall advance the maturity of and call
Bonds for redemption pursuant to Section 2.03(a). On or after each redemption date, upon
presentation and surrender thereof, the Fiscal Agent shall pay the principal of and redemption
premium on each Bond the maturity of which has been so advanced from monies in the
Assessment Prepayment Account. Interest accrued on each such Bond shall be paid from monies
in the Redemption Fund.
(e) APplication of Prepaid Assessments. Upon receiving a prepayment of an
Assessment, the City Treasurer shall transfer it to the Fiscal Agent for deposit in the Assessment
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Prepayment Account. All prepayments may be commingled in a single subaccount within the
Assessment Prepayment Account. From the Assessment Prepayment Account (but solely from
money representing prepayment on Assessments described in Section 3.04(d)), the Fiscal Agent
shall make disbursements in the following priority as specified by the City as follows:
(i) The administrative fee in the amount specified to the Fiscal Agent
by the City shall be transferred to the City for deposit in the general fund of the City.
(ii) Delinquent principal, interest, and penalties shall be transferred to
the Redemption Fund. If the Reserve Fund has been depleted on account of the delinquencies,
the delinquent amounts and penalties shall be transferred instead to the Reserve Fund.
(iii) The installment of principal due in the Fiscal Year of prepayment
shall be transferred to the Redemption Fund.
(iv) Interest accrued to the next call date shall be transferred to the
Redemption Fund.
(v) The balance in the Assessment Prepayment Account shall be used
to advance the maturity of Bonds to the next call date as provided in Section 2.03(a) hereof. The
amount of Bonds to be retired shall be the maximum for which principal and redemption
premium may be paid in full from the Assessment Prepayment Account. Accrued interest on
Bonds to be retired shall be paid from the Redemption Fund.
ARTICLE IV
ASSESSMENT REVENUES;
REDEMPTION FUND; RESERVE FUND; IMPROVEMENT FUND
Section 4.01 Pled�e of Assessment Revenues. The Bonds shall be secured by a pledge
(which pledge shall be effected in the manner and to the extent herein provided) of all of the
Assessment Revenues and all moneys deposited in the Redemption Fund and the Reserve Fund.
The Assessment Revenues and all moneys deposited into such funds are hereby dedicated in
their entirety to the payment of the principal of the Bonds, and interest and any premium on, the
Bonds as provided herein, until all of the Bonds have been paid and retired or until moneys or
Federal Securities have been set aside irrevocably for that purpose in accordance with Section
9.03 hereof.
Amounts in the Improvement Fund and the Costs of Issuance Fund are not pledged to the
payment of the Bonds. The Project financed with the proceeds of the Bonds is not in any way
pledged to payment of the Bonds. Any proceeds of condemnation or destruction of any portion
of ihe Project are not pledged to the payment of the Bonds and are free and clear of any lien or
obligation imposed hereunder.
Section 4.02 Redemption Fund. (a) Deposits. There is hereby established, as a
separate account to be held by the Fiscal Agent, the "Redemption Fund" to the credit of which
deposits shall be made as required by the provisions of this Agreement. Moneys in the
Redemption Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds,
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shall be disbursed for the payment of the principal of, and interest and any premium on, the
Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of
the Owners of the Bonds.
(b) Disbursements. On each Interest Payment Date, the Fiscal Agent shall
withdraw from the Redemption Fund and pay to the Owners of the Bonds the principal of and
interest and any premium then due and payable on the Bonds on the Interest Payment Date.
If, on any Interest Payment Date, there will be insufficient funds in the Redemption Fund
to make the payments provided for in the first paragraph of this Section 4.02(b), the Fiscal Agent
shall apply the available funds first to the payment of interest on the Bonds, and then to the
payment of principal due on the Bonds.
As provided in the form of the Bonds attached hereto as Exhibit A, the City Council
has determined, pursuant to Section 8769(b) of the California Streets and Highway Code
that the City will not obligate itself to advance available funds from the City Treasury to
cure any de�ciency which may occur in the Redemption Fund.
On September 3 of each year, beginning on September 3, , the amount on deposit in
the Redemption Fund, together with the amount then on deposit in the Assessment Fund, shall
not exceed the greater of (i) one year's earnings on such amounts, or (ii) one-twelfth (1/12th) of
Annual Debt Service for the then current Bond Year. If on September 3 of any year the amount
on deposit in the Redemption Fund, together with the amount then on deposit in the Assessment
Fund, exceeds the maximum amount allowable pursuant to the preceding sentence and if on such
September 3 the City shall have delivered to the Fiscal Agent an Officer's Certificate containing
the information required below in this paragraph, the excess shall be paid by the Fiscal Agent to
the City as directed by such Officer's Certificate. On September 3 of each year, after any such
excess amount has been paid as hereinabove provided, the amount on deposit in the Redemption
Fund, together with the amount then on deposit in the Assessment Fund, shall not exceed the
greater of (i) one year's earnings thereon, or (ii) one-twelfth (1/12th) of Annual Debt Service for
the then current Bond Year. An Officer's Certificate delivered by the City to Fiscal Agent
pursuant to this paragraph shall specify the dollar amount of the excess determined pursuant to
the first sentence of this paragraph which the Fiscal Agent is to pay to the City. Upon receipt of
such an Officer's Certificate, the Fiscal Agent is authorized to act thereon without further
inquiry, shall not be responsible for the accuracy of the statements contained therein, and shall be
absolutely protected and incur no liability in relying on such Officer's Certificate.
Amounts in the Redemption Fund shall also be withdrawn and deposited in the Rebate
Fund as provided in Section 6.02 hereof.
(c} Investment. Moneys in the Redemption Fund shall be invested and
deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained in the
Redemption Fund, except to the extent they are required to be deposited by the Fiscal Agent in
the Rebate Fund in accordance with Section 6.02 hereof.
Section 4.03 Reserve Fund. (a) Establisjiment of Fund; Disbursement. There is
hereby established, as a separate account to be held by the Fiscal Agent, the "Reserve Fund" to
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the credit of which a deposit shall be made as required by Section 3.02(b), which deposit is equal
to the Reserve Requirement as of the Closing Date, and to which deposits shall be made as
provided in Sections 4.03(b) and 3.04(e)(ii). Moneys in the Reserve Fund shall be held by the
Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment of the
principal of and interest and any premium on the Bonds and shall be subject to a lien in favor of
the Owners of the Bonds.
(b) Use of Fund. Except as otherwise provided in this Section, all amounts
deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the
purpose of making transfers to the Redemption Fund in the event of any deficiency at any time in
the Redemption Fund of the amount then required for payment of the principal of, and interest
and any premium on the Bonds or, in accordance with the provisions of Section 4.03(e}, or for
the purpose of redeeming Bonds.
Amounts transferred from the Reserve Fund to the Redemption Fund pursuant to this
subsection shall be restored by the City from the collection of delinquent installments on the
Assessments levied on parcels for which such installments are delinquent, and penalties and
interest thereon, whether by judicial foreclosure proceedings or otherwise, as soon as is
reasonably possible following the receipt by the City of such delinquent installments, penalties
and interest.
(c) Transfer Due to Deficiency in Redemptio�a Fund. Whenever transfer is
made from the Reserve Fund to the Redemption Fund due to a deficiency in the Redemption
Fund, the Fiscal Agent shall report such fact to the City.
(d) Transfers on Payment of Assessment. Whenever an Assessment levied on
a lot or parcel of property within the Assessment District is paid off, the Fiscal Agent shall, upon
receiving an Officer's Certificate regarding such Assessment, transfer from the Reserve Fund to
the Assessment Prepayment Account an amount equal to the reduction in such Assessment
determined pursuant to Section 8881 of the California Streets and Highways Code, which
amount shall be specified in the Officer's Certificate. Upon receipt of such an Officer's
Certificate, the Fiscal Agent is authorized to act thereon without further inquiry, shall not be
responsible for the accuracy of the statements contained therein, and shall be absolutely
protected and incur no liability in relying on such Officer's Certificate.
(e) Tran.rfer of Excess of Reserve Requirement. Whenever, on any September
3, the amount in the Reserve Fund, less Investment Earnings resulting from the investment of the
funds therein which pursuant to Section 6.02 hereof must be rebated to the United States,
exceeds the then applicable Reserve Requirement, the Fiscal Agent shall provide written notice
to the City of the amount of the excess and shall, subject to the requirements of Section 6.02
hereof, transfer an amount equal to the excess from the Reserve Fund to the Redemption Fund to
be used for the payment of Debt Service on the next succeeding Interest Payment Date in
accordance with Section 4.02 hereof.
(� Transfer When Balance Exceeds Outstanding Bonds. Whenever the
balance in the Reserve Fund exceeds the amount required to redeem or pay all of the then
Outstanding Bonds, including interest accrued to the date of payment or redemption and
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premium, if any, due upon redemption, the Fiscal Agent shall, upon receiving written direction
from an Authorized Officer, transfer money from the Reserve Fund to the Assessment
Prepayment Account and the Redemption Fund as provided in the next succeeding sentence to
redeem all of the Outstanding Bonds in accordance with Sections 3.04(d) and 2.03(b) on the next
succeeding Interest Payment Date. To effect such redemption, the Fiscal Agent shall make the
following transfers from the Reserve Fund: (i) an amount equal to the principal and premium on
the Bonds due upon redemption to the Assessment Prepayment Account, and (ii) an amount
equal to the interest thereon accrued to the redemption date to the Redemption Fund. In the
event that the amounts so transferred from the Reserve Fund to the Assessment Prepayment
Account and the Redemption Fund exceeds the amount required to pay and redeem the
Outstanding Bonds, the balance in the Reserve Fund shall be transferred by the Fiscal Agent to
the City to be applied as provided in Section 8885 of the California Streets and Highways Code.
Upon receipt of such an Officer's Certificate, the Fiscal Agent is authorized to act thereon
without further inquiry, shall not be responsible for the accuracy of the statements contained
therein, and shall be absolutely protected and incur no liability in relying on such Officer's
Certificate.
(g) Investment. Moneys in the Reserve Fund shall, except as provided in
subsection (d) above, be invested and deposited in accordance with Section 6.01 hereof.
Section 4.04 Improvement Fund. (a) Establishment of Fund. There is hereby
established, as a separate account to be held by the Fiscal Agent, the "Improvement Fund" to the
credit of which a deposit shall be made as required by Section 3.02(c) hereof.
(b) Use of Fu�id. Moneys in the Improvement Funds shall be held by the
Fiscal Agent for the benefit of the City and shall be disbursed by the Fiscal Agent for the
payment or reimbursement of costs of the Project. The Fiscal Agent shall make the requested
payment upon receipt of a requisition therefor executed by an Authorized Officer of the City, in
the general form and content attached hereto as Exhibit B.
(c) Completion of Project. Upon the filing with the Fiscal Agent of a
certificate by the City Engineer stating that the Project has been completed and that all costs of
the Project have been paid or are not required to be paid from the Improvement Fund, the Fiscal
Agent shall transfer the amount, if any, remaining in the Improvement Fund in accordance with
written instructions from the City Treasurer as directed by the City Council, which directions
shall be pursuant to the Resolution of Intention and to the applicable provisions of the 1913 Act,
and the Improvement Fund shall be closed.
(d) Irivestment. Moneys in the Improvement Fund shall be invested and
deposited in accordance with Section 6.01 hereof. Investment Earnings shall be retained in the
Improvement Fund, except to the extent they are required to be deposited by the Fiscal Agent in
the Rebate Fund in accordance with Section 6.02 hereof.
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ARTICLE V
OTHER COVENANTS, REPRESENTATIONS AND DECLARATIONS OF THE CITY
Section 5.01 Punctual Pavment. The City will punctually pay or cause to be paid the
principal of and interest and any premium on the Bonds when and as due in strict conformity
with the terms of this Agreement and any Supplemental Agreement to the extent that the
Assessment Revenues are available therefor, and it will faithfully observe and perform all of the
conditions, covenants and requirements of this Agreement and all Supplemental Agreements and
of the Bonds.
Section 5.02 �ecial Obli�ation. The Bonds are special obligations of the City and are
payable solely from and secured solely by the Assessment Revenues and the amounts in the
Redemption Fund, the Reserve Fund and the Assessment Fund.
Section 5.03 Extension of Time for Payment. In order to prevent any accumulation of
claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to
the extension of the time for [he payment of any claim for interest on any of the Bonds and shall
not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or
funding said claims for interest or in any other manner. In case any such claim for interest shall
be extended or funded, whether or not with the consent of the City, such claim for interest so
extended or funded shall not be entitled, in case of default hereunder, to the benefits of this
Agreement, except subject to the prior payment in full of the principal of all of the Bonds then
Outstanding and of all claims for interest which shall not have been so extended or funded.
Section 5.04 A�ainst Encumbrances. The City shall not encumber, pledge or place any
charge or lien upon any of the Assessment Revenues or other amounts pledged to the Bonds
superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds,
except as permitted by this Agreement.
Section 5.05 Protection of Security and Ri�hts of Owners. The City will preserve and
protect the security of the Bonds and the rights of the Owners, and will warrant and defend their
rights against all claims and demands of all persons. From and after the delivery of any of the
Bonds by the City, the Bonds shall be incontestable by the City.
Section 5.06 Collection of Assessment Revenues. The City shall comply with all
requirements of the 1915 Act so as to assure the timely collection of Assessment Revenues,
including without limitation, the enforcement of the payment or collection of delinquent
Assessments.
Section 5.07 Further Assurances. The City will adopt, make, execute and deliver any
and all such further ordinances, resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this Agreement,
and for better assuring and confirming unto the Owners of the Bonds the rights and benefits
provided in this Agreement.
Section 5.08 Tax Covenants. The City hereby covenants that:
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(a) It will not take any action or omit to take any action, which action or
omission, if reasonably expected on the date of the initial issuance and delivery of the Bonds,
would have caused any of the Bonds to be "arbitrage bonds" within the meaning of Section
103(b) and Section 148 of the Code;
(b) It will not take any action or omit to take any action, which action or
omission, if reasonably expected on the date of initial issuance and delivery of the Bonds, would
result in loss of exclusion from gross income for purposes of federal income taxation under
Section 103(a) of the Code of interest paid with respect to the Bonds;
(c) It will not take any action or omit to take any action, which action or
omission, if reasonably expected on the date of initial issuance and delivery of the Bonds, would
have caused any of the Bonds to be "private activity bonds" within the meaning of Section 141
of the Code;
(d) It will comply with the Tax Certificate as a source of guidancc for
achieving compliance with the Code; and
(e) In order to maintain the exclusion from gross income for purposes of
federal income taxation of interest paid with respect to the Bonds, it will comply with each
applicable requirement of Section 103 and Sections 141 through 150 of the Code.
The covenants of the City contained in this Section 5.08 shall survive the payment,
redemption or defeasance of Bonds pursuant to Section 9.03 hereof. The Fiscal Agent makes no
warranties, covenants or representations regarding the current or future tax status of interest on
the Bonds.
Section 5.09 Covenant to Foreclose. The City hereby covenants with and for the
benefit of the Owners of the Bonds that it will order, and cause to be commenced, judicial
foreclosure proceedings against properties with delinquent Assessment installments in excess of
$5,000 by the October 1 following the close of the Fiscal Year in which such installments were
due, and will commence judicial foreclosure proceedings against all propeRies with delinquent
Assessment installments by the October 1 following the close of each Fiscal Year in which it
receives Assessment Revenues in an amount which is less than ninety-five percent (95%) of the
total Assessment Revenues which were to be received in the Fiscal Year and diligently pursue to
completion such foreclosure proceedings; provided, however, the City may elect to defer the
commencement of foreclosure proceedings with respect to any property so long as (i) the amount
on deposit in the Reserve Fund is equal to the Reserve Requirement and (ii) the City is current in
thc payment of Debt Service.
Notwithstanding the foregoing, if at any time, the County's Teeter Plan (adopted pursuant
to Sections 4701 through 4717 of the California Revenue and Taxation Code) is in effect and is
made applicable to the Assessment District and the Assessments being levied in connection with
the Bonds, the City may, in its discretion, elect not to commence any judicial foreclosure
proceeding pursuant to this Section 5.09 or defer the commencement of such proceedings until
such time as the City deems appropriate.
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Section 5.10 Continuin�Disclosure. The City hereby covenants and agrees that it will
comply with and carry out all of the provisions of the Continuing Disclosure Agreement.
Notwithstanding any other provision of this Agreement, failure of the City to comply with the
Continuing Disclosure Agreement shall not be considered an event of default under this
Agreement; provided that, as provided in the Continuing Disclosure Agreement, the Fiscal Agent
as the Dissemination Agent, may (and, at the request of any Participating Underwriter (as
defined in the Continuing Disclosure Agreement) or any Owner of the Bonds shall, but only to
the extent indemnified to its satisfaction from any cost, liability or expenses of its attorneys and
additional fees and expenses which it incurs, take such actions as may necessary appropriate,
including seeking mandate or specific performance by court order, to cause the City to comply
with its obligations pursuant to this Section.
ARTICLE VI
INVESTMENTS; REBATE FUND; LIABILITY OF THE CITY
Section 6.01 Deposit and Investment of MoneYs in Funds. Subject in all respects to the
provisions of Section 6.02 hereof, moneys in any fund or account created or established by this
Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted
Investments, as directed pursuant to an Officer's Certificate filed with the Fiscal Agent at least
two (2) Business Days in advance of the making of such investments; provided that moneys in
the Reserve Fund shall be invested in Permitted Investments which shall mature not more than
five years from the date of such investment. In the absence of any such Officer's Certificate, the
Fiscal Agent shall invest any such moneys in Permitted Investments described in paragraph (d}
of the definition of Permitted Investments in Section 1.03 hereof. Except as specifically
provided herein, the Fiscal Agent shall have no obligation to pay additional interest or maximize
investment income on any funds held by it. Neither the City nor the Owners of the Bonds shall
have any claim of any kind against the Fiscal Agent in connection with investments properly
made pursuant to this Section 6.01. Obligations purchased as an investment of moneys in any
fund or account shall be deemed to be part of such fund or account, subject, however, to the
requirements of this Agreement for transfer of Investment Earnings in funds and accounts.
The Fiscal Agent shall be entitled to rely conclusively upon the written instructions of the
City directing investments in Permitted Investments as to the fact that each such investment is
permitted by the laws of the State, and shall not be required to make further investigation with
respect thereto. With respect to any restrictions contained in the definition of Permitted
Investments in Section 1.03 hereof which embody legal conclusions (e.g., the existence, validity
and perfection of security interests in collateral), the Fiscal Agent shall be entitled to rely
conclusively on an opinion of counsel obtained at the City's expense.
The Fiscal Agent may act as principal or agent in the acquisition or disposition of any
invcstment and may engage in or be interested in any financial or other transaction with the City.
The Fiscal Agent shall not incur any liability for losses arising from any investments made
pursuant to this Section 6.01. For purposes of determining the amount on deposit in any fund or
account held hereunder, all Permitted Investments or investments credited to such fund or
account shall be valued at the cost thereof (excluding accrued interest and brokerage
commissions, if any).
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Subject in all respects to the provisions of Section 6.02 hereof, investments in any and all
funds and accounts may be commingled in a single fund for purposes of making, holding and
disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the
credit of particular funds or accounts of amounts received or held by the Fiscal Agent hereunder,
provided that the Fiscal Agent shall at all times account for such investments strictly in
accordance with the funds and accounts to which they are credited and otherwise as provided in
this Agrcement.
The Fiscal Agent shall sell or present for redemption, any investment security whenever
it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or
disbursement from the fund or account to which such investment security is credited, and the
Fiscal Agent shall not be liable or responsible for any loss resulting from the acquisition or
disposition of any such investment security in accordance herewith.
The City acknowledges that to the extent regulations of the Comptroller of the Currency
or any other applicable regulatory agency grant the City the right to receive brokerage
confirmations of security transactions as they occur, the City specifically waives receipt of such
confirmations to the extent permitted by law. The City shall be provided periodic cash
transaction statements which include detail for all investment transactions made by the Fiscal
Agent hereunder.
The Fiscal Agent or any of its affiliates may act as sponsor, advisor or manager in
connection with any investments made by the Fiscal Agent hereunder.
Section 6.02 Rebate Fund; Rebate to United States. There is hereby created, to be held
by the Fiscal Agent, as a separate account distinct from all other funds and accounts held by the
Fiscal Agent under this Agreement, the Rebate Fund. Pursuant to the written direction of the
City, the Fiscal Agent shall deposit into the Rebate Fund moneys transferred by the City to the
Fiscal Agent pursuant to the Tax Certificate. The Rebate Fund shall be held either uninvested or
invested only in Federal Securities at the direction of the City. Moneys on deposit in the Rebate
Fund shall be applied only to payments made to the United States, to the extent such payments
are required by the Tax Certificate. The Fiscal Agent shall, upon written direction of the City,
make such payments to the United States.
The Fiscal Agent's sole responsibilities under this Section 6.02 are to follow the written
instructions of the City pertaining hereto and the Fiscal Agent shall have no independent
responsibility to monitor or enforce compliance by the City with the Tax Certificate. The City
shall be responsible for any fees and expenses incurred by the Fiscal Agent pursuant to this
Section 6.02.
The Fiscal Agent shall, upon written request and direction from the City, transfer to or
upon the order of the City any moneys on deposit in the Rebate Fund in cxcess of the amount, if
any, required to be maintained or held therein in accordance with the Tax Certificate. Upon
receipt of such a written request and direction the Fiscal Agent is authorized to act thereon
without further inquiry, shall not be responsible for the accuracy thereof, and shall be absolutely
protected and incur no liability in relying thereon.
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Section 6.03 Liability of Citv. The City shall not incur any responsibility in respect of
the Bonds or this Agreement other than in connection with the duties or obligations explicitly
herein or in the Bonds assigned to or imposed upon it. The City shall not be liable in connection
with the performance of its duties hereunder, except for its own negligence or willful default.
In the absence of bad faith, the City may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the City and conforming to the requirements of this Agreement. The City shall not
be liable for any error of judgment made in good faith unless it shall be proved that it was
negligent in ascertaining the pertinent facts.
No provision of this Agreement shall require the City to expend or risk its own general
funds or otherwise incur any financial liability (other than with respect to the Assessment
Revenues) in the performance of any of its obligations hereunder, or in the exercise of and of its
rights or powers, if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured to it.
The City may rely and shall be protected in acting or refraining from acting upon any
notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or
document believed by it to be genuine and to have been signed or presented by the proper party
or proper parties. The City may consult with counsel, who may be counsel to the City, with
regard to legal questions, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by it hereunder in good
faith and in accordance therewith.
Section 6.04 Em�loyment of A e�ts by the City. In order to perform its duties and
obligations hereunder, the City may employ such persons or entities as it deems necessary or
advisable. The City shall not be liable for any of the acts or omissions of such persons or entities
employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected
in doing so, upon the opinions, calculations, determinations and directions of such persons or
entities.
ARTICLE VII
THE FISCAL AGENT
Section 7.01 Appointment of Fiscal A�ent. Wells Fargo Bank, National Association, is
hereby appointed Fiscal Agent, registrar and paying agent for the Bonds. The Fiscal Agent
undertakes to perform such duties, and only such duties, as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read into this Agreement against
the Fiscal Agent.
Any financial institution into which the Fiscal Agent may be merged or converted or with
which it may be consolidated or any financial institution resulting from any merger, conversion
or consolidation to which it shall be a party or any financial institution to which the Fiscal Agent
may sell or transfer all or substantially all of its corporate trust business, provided such financial
institution shall be eligible under the following paragraph of this Section 7.01, shall be the
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successor to the Fiscal Agent without the execution or filing of any paper or any further act,
anything herein to the contrary notwithstanding.
The City may remove the Fiscal Agent initially appointed, and any successor thereto, and
the City may appoint a successor or successors thereto, but any such successor shall be a
financial institution having (or in the case of a corporation or trust company included in a bank
holding company system, the related bank holding company shall have) a combined capital
(exclusive of borrowed capital) and surplus of at least $75,000,000, and subject to supervision or
examination by federal or state authority. If such financial institution publishes a report of
condition at least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purposes of this Section 7.01, combined
capital and surplus of such financial institution shall be deemed to be its combined capital and
surplus as set for[h in its most recent repor[of condition so published.
The Fiscal Agent may at any time resign by giving thirty (30) days' written notice to the
City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of
such resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in
writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance
of appointment by the successor Fiscal Agent.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing
provisions of this Section 7.01 within sixty (60) days after the Fiscal Agent shall have given to
the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by
reason of its inability to act, the Fiscal Agent, at the expense of the City, or any Owner may
apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may
thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal
Agent.
Section 7.02 Liability of Fiscal Agent. The recitals of facts, covenants and agreements
herein and in the Bonds contained shall be taken as statements, covenants and agreements of the
City and lhe Fiscal Agent assumes no responsibility for the correctness of the same, nor makes
any representations as ta the validity or sufficiency of this Agreement or of the Bonds, nor shall
the Fiscal Agent incur any responsibility in respect thereof, other than in connection with the
duties or obligations herein or in the Bonds expressly assigned to or imposed upon it. The Fiscal
Agent shall not be liable in connection with the performance of its duties hereunder, except for
its own negligence or willful misconduct. The Fiscal Agent assumes no responsibility or liability
for any information, statement or recital in any offering memorandum or other disclosure
material prepared or distributed with respect to the issuance of the Bonds.
In the absence of willful misconduct, the Fiscal Agent may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein, upon certificates,
written directions or opinions furnished to the Fiscal Agent and conforming to the requirements
of this Agreement. Except as provided above in this paragraph, the Fiscal Agent shall be
protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding,
in accordance with the terms of this Agreement, upon any resolution, order, notice, request,
consent or waiver, certificate, statement, affidavit, facsimile transmission, electronic mail or
other paper or document which it shall reasonably believe to be genuine and to have been
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adopted or signed by the proper person or to have been prepared and furnished pursuant to any
provision of this Agreement, and the Fiscal Agent shall not be under any duty to make any
investigation or inquiry as to any statements contained or matters referred to in any such
instrument.
The Fiscal Agent shall not be liable for any error of judgment made by a responsible
officer of the Fiscal Agent unless it shall be proved that the Fiscal Agent was negligent in
ascertaining the pertinent facts.
No provision of this Agreement shall require the Fiscal Agent to expend or risk its own
funds or otherwise incur any financia] liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers unless an indemnity and security satisfactory to
the Fiscal Agent shall have been provided to the Fiscal Agent.
The Fiscal Agent shall not be responsible for accounting for, or paying to, any party to
this Agreement, including, but not limited to the City and the Owners, any returns on or benefit
from funds held for payment of unredeemed Bonds or outstanding checks and no calculation of
the same shall affect, or result in any offset against, fees due to the Fiscal Agent under this
Agreement.
The Fiscal Agent shall have no responsibility with respect to the payment of Debt Service
by the City or with respect to the observance or performance by the City of the other conditions,
covenants and terms contained herein, or with respect to the investment of any moneys in any
fund or account established, held or maintained by the City pursuant to this Fiscal Agent
Agreement or otherwise.
All indemnification and releases from liability granted herein to the Fiscal Agent shall
extend to the directors, officers and employees of the Fiscal Agent. The Fiscal Agent may
execute any of its trusts or powers or perform its duties through attorneys, agents or receivers.
The Fiscal Agent shall not be considered in breach of or in default in its obligations
hereunder or progress in respect thereto in the event of enforced delay ("unavoidable delay") in
the performance of such obligations due to unforeseeable causes beyond its control and without
its fault or negligence, including, but not limited to, Acts of God or of the public enemy or
terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to
procure or general sabotage or rationing of labor, equipment, facilities, sources or energy,
material or supplies in the open market, litigation or arbitration involving a party or others
relating to zoning or other governmental action or inaction pertaining to the project, malicious
mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors
due to such causes or any similar event and/or occurrences beyond the control of the Fiscal
Agent; provided that, in the event of any such unavoidable delay under this paragraph, the Fiscal
Agent notify the City in writing within five (5) business days after (i) the occurrence of the event
giving rise to the unavoidable delay, (ii) the Fiscal Agent's actual knowledge of the impending
unavoidable delay, or (iii) the Fiscal Agent's knowledge of sufficient facts under which a
reasonable person would conclude the unavoidable delay will occur.
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Section 7.03 Information. The Fiscal Agent shall provide to the City such information
relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the
City shall reasonably request, including, but not limited to, quarterly statements reporting funds
held and transactions by the Fiscal Agent.
Section 7.04 Reliance bv Fiscal A e�nt. The Fiscal Agent may rely and shall be
protected in acting or refraining from acting upon any notice, resolution, request, consent, order,
certificate, written direction, report, warrant, Bond, facsimile transmission, electronic mail or
other paper or document believed by it to be genuine and to have been signed or presented by the
proper party or proper parties. The Fiscal Agent may consult with counsel, who may be counsel
to the City, with regard to legal questions, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or suffered by the Fiscal
Agent hereunder in accordance therewith.
Whenever in the administration of its duties under this Agreement the Fiscal Agent shall
deem it necessary or desirable that a matter be proved or established prior to taking or suffering
any action hereunder, such matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed
to be conclusively proved and established by a certificate of the City, and such certificate shall
be full warranty to the Fiscal Agent for any action taken or suffered under the provisions of this
Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal
Agent may, in lieu thereof, accept other evidence of such matter or may require such additional
evidence as to it may seem reasonable.
Section 7.05 Compensation; Indemnification. The City shall pay to the Fiscal Agent
from time to time reasonable compensation for all services rendered as Fiscal Agent under this
Agreement, and also all reasonable expenses, charges, fees and other disbursements, including
those of its attorneys (including the allocated costs and disbursements of in-house counsel),
agents and employees, incurred in and about the performance of its powers and duties under this
Agreement, and the Fiscal Agent shall have a lien therefor on any funds at any time held by it
under this Agreement. The City further agrees, to the extent permitted by applicable law, to
indemnify and save the Fiscal Agent, its officers, employees, directors and agents, harmless
against any costs, claims, expenses or liabilities, including, without limitation fees and expenses
of its attorneys, which it may incur in the exercise and performance of its powers and duties
hereunder which are not due to its negligence or willful misconduct. The obligation of the City
under this Section 7.05 shall survive resignation or removal of the Fiscal Agent under this
Agreement and payment of the Bonds and discharge of this Agreement.
Section 7.06 Books and Accounts. The Fiscal Agent shall keep, or cause to be kept,
proper books of record and accounts, separate from all other records and accounts of the Fiscal
Agent, in which complete and correct entries shall be made of all transactions made by it with
respect to the expenditure of amounts disbursed from the Redemption Fund, the Assessment
Fund and the Reserve Fund. Such books of record and accounts shall, upon reasonable notice, at
all times during business hours be subject to the inspection of the City and the Owners of not less
than ten percent (10°Io) of the aggregate principal amount of the Bonds then Outstanding, or their
representatives duly authorized in writing.
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ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01 Amendments Permitted. (a) Subject to Section 8.09 below, this
Agreement and the rights and obligations of the City and of the Owners of the Bonds may be
modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote
at a meeting of the Owners, or with the written consent, without a meeting, of the Owners of at
least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive
of Bonds disqualified as provided in Section 8.04 hereof. No such modification or amendment
shall (i) extend the maturity of any Bond or the time for paying interest thereon, or otherwise
alter or impair the obligation of the City to pay the principal of, and the interest and any premium
on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation
of any pledge of or lien upon the Assessment Revenues, or the moneys on deposit in the
Redemption Fund, superior to or on a parity with the pledge and lien created for the benefit of
the Bonds (except as otherwise permitted by the 1915 Act), the laws of the State or this
Agreement), (iii) reduce the percentage of Bonds required for the amendment hereof, (iv) reduce
the principal amount of or redemption premium on any Bond or reduce the interest rate thereon,
or(v) modify the rights or obligations of the Fiscal Agent without its prior consent.
(b) Subject to Section 8.09 below, this Agreement and the rights and
obligations of the City and the Owners may also be modified or amended at any time by a
Supplemental Agreement, without the consent of any Owners, only to the extent permitted by
law and only for any one or more of the following purposes:
(i) to add to the covenants and agreements of the City in this
Agreement contained, other covenants and agreements thereafter to be observed, or to limit or
surrender any right or power herein reserved to or conferred upon the City;
(ii) to make such provisions for the purpose of curing any ambiguity,
or of curing, correcting or supplementing any defective provisions of this Agreement, or in
regard to questions arising under this Agreement, as the City and the Fiscal Agent may deem
necessary or desirable and not inconsistent with this Agreement, and which shall not be
materially adverse to the interests of the Owners of the Bonds; or
(iii) to make such additions, deletions or modifications as may be
necessary or desirable to assure compliance with Section 148 of the Code relating to required
rebate of moneys to the United States or otherwise as may be necessary to assure exclusion from
gross income for federal income tax purposes of interest on the Bonds or to conform with the
Code.
(iv) to modify, amend or supplement this Agreement in such manner as
to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any
similar federal statute hereafter in effect; and
(v) to make other modifications not adversely affecting any
Outstanding Bonds in any material respect.
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Section 8.02 Owners' Meetin�s. The City may at any time call a meeting of the
Owners. In such event the City is authorized to fix the time and place of any such meeting and
to provide for the giving of notice thereof and to fix and adopt rules and regulations for the
conduct of the meeting.
Section 8.03 Procedure for Amendment with Written Consent of Owners. To the extent
that an amendment is permitted by Section 8.01(a) hereof, the City may at any time enter into a
Supplemental Agreement amending the provisions of the Bonds or of this Agreement or any
Supplemental Agreement, to take effect when and as provided in this Section 8.03. A copy of the
Supplemental Agreement, together with a request to Owners for their consent thereto, shall be
mailed by first class mail, postage prepaid, by the City to each Owner of Bonds Outstanding, but
failure to mail copies of the Supplemental Agreement and request shall not affect the validity of
the Supplemental Agreement when assented to as in this Section provided.
Such a Supplemental Agreement shall not become effective unless there shall be filed
with the City the written consents of the Owners of at least sixty percent (60�10) in aggregate
principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in
Section 8.04 hereof� and a notice shall have been mailed as hereinafter in this Section provided.
Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for
which such consent is given, which proof shall be such as is permitted by Section 9.04 hereof.
Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any
subsequent Owner (whether or not such subsequent Owner has notice thereo� unless such
consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing
such revocation with the City prior to the date when the notice hereinafter in this Section
provided for has been mailed.
After the Owners of the required percentage of Bonds shall have filed their consents to
the Supplemental Agreement, the City shall mail a notice to the Owners in the manner
hereinbefore provided in this Section for the mailing of the Supplemental Agreement, stating in
substance that the Supplemental Agreement has been consented to by the Owners of the required
percentage of Bonds and will be effective as provided in this Section (but failure to mail copies
of said notice shall not affect the validity of the Supplemental Agreement or consents thereto).
Proof of the mailing of such notice shall be filed with the City. A record, consisting of the
papers required by this Section 8.03 to be filed with the City, shall be proof of the matters therein
stated until the contrary is proved. The Supplemental Agreement shall become effective upon
the filing with the City of the proof of mailing of such notice, and the Supplemental Agreement
shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in
this Article) upon the City and the Owners of all Bonds then Outstanding at the expiration of
sixty (60) days after such filing, except in the event of a final decree of a court of competent
jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose
commenced within such sixty (60) day period.
Section 8.04 Disqualified Bonds. Bonds owned or held for the account of the City,
excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of
any vote, consent or other action or any calculation of Outstanding Bonds provided for in this
Article VIII, and shall not be entitled to vote upon, consent to, or participate in any action
provided for in this Article VIII.
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Section 8.05 Effect of Supplemental A�reement. From and after the time any
Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall
be deemed to be modified and amended in accordance therewith, and the respective rights, duties
and obligations under this Agreement of the City and all Owners of Bonds Outstanding shall
thereafter be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such Supplemental
Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and
all purposes.
Section 8.06 Endorsement of Replacement of Bonds Issued after Amendments. The
City may determine that Bonds issued and delivered after the effective date of any action taken
as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form
approved by the City, as to such action. In that case, upon demand of the Owner of any Bond
Outstanding at such effective date and upon presentation of his or her Bond for that purpose at
the Principal Office of the Fiscal Agent or at such other office as the Fiscal Agent may select and
designate for that purpose, a suitable notation shall be made on such Bond. The City may
determine that new Bonds, so modified as in the opinion of the City is necessary to conform to
such action, shall be prepared, executed and delivered. In that case, upon demand of the Owner
of any Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of
the Fiscal Agent without cost to any Owner, for like Bonds then Outstanding, upon surrender of
such Bonds.
Section 8.07 Amendatory Endorsement of Bonds. The provisions of this Article shall
not prevent any Owner from accepting any amendment as to the particular Bonds held by the
Owner, provided that due notation thereof is made on such Bonds.
Section 8.08 Consent of Fiscal A�ent. The Fiscal Agent shall not be required to enter
into or consent to any Supplemental Agreement which, in the sole judgment of the Fiscal Agent,
might adversely affect the rights, obligations, powers, privileges, indemnities, and immunities
provided to the Fiscal Agent herein. The Fiscal Agent upon request, shall be provided an
opinion of counsel that any such Supplemental Agreement complies with the provisions of this
Article VIII and the Fiscal Agent may conclusively rely upon such opinion.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Benefits of A�reement Limited to Parties. Nothing in this Agreement,
expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and
the Owners, any right, remedy or claim under or by reason of this Agreement. Any covenants,
stipulations, promises or agreements in this Agreement contained by and on behalf of the City
shall be for the sole and exclusive benefii of the Owners and the Fiscal Agent.
Section 9.02 Successors Deemed Included in All References to Predecessor. Whenever
in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent is named
or refen-ed to, such reference shall be deemed to include the successors or assigns thereof, and all
the covenants and agreements in this Agreement contained by or on behalf of the City or the
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Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof
whether so expressed or not.
Section 9.03 Dischar e�greement. If the City shall pay and discharge the entire
indebtedness on all Bonds in any one or more of the following ways:
(A) by well and truly paying or causing to be paid the principal of and interest and any
premium on all Bonds, as and when the same become due and payable;
(B) by depositing with the Fiscal Agent, in trust, at or before maturity, an amount of
money which, together with the amounts then on deposit in the Redemption Fund, the
Assessment Fund and the Reserve Fund, is fully sufficient to pay all Bonds, including all
principal, interest and redemption premiums, if any; or
(C) by irrevocably depositing with the Fiscal Agent or another fiduciary, in trust, cash
or noncallable Federal Securities in such amount as the City shall determine, as confirmed by an
Independent Financial Consultant, will, together with the interest to accrue thereon and amounts
then on deposit in the Redemption Fund, the Assessment Fund and the Reserve Fund, be fully
sufficient to pay and discharge the indebtedness on all Bonds (including all principal, interest
and redemption premiums) at or before their respective maturity dates; and if such Bonds are to
be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in
this Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for
the giving of such notice, then, at the election of the City, and notwithstanding that any Bonds
shall not have been surrendered for payment, the pledge of the Assessment Revenues and other
funds provided for in this Agreement and all other obligations of the City under this Agreement
with respect to all Bonds shall cease and terminate, except the obligation of the City to pay or
cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon,
the obligation of the City to pay all amounts owing to the Fiscal Agent pursuant to Section 7.05
hereof, and the obligations of the City pursuant to the covenants contained in Section 5.08
hereof, and thereafter Assessment Revenues shall not be payable to the Fiscal Agent. Notice of
such election shall be filed with the Fiscal Agent. The satisfaction and discharge of this
Agreement shall be without prejudice to the rights of the Fiscal Agent to charge and be
reimbursed by the City for the expenses which it shall thereafter incur in connection herewith.
Any funds held by the Fiscal Agent to pay and discharge the indebtedness on all Bonds,
upon payment of all fees and expenses of the Fiscal Agent, which are not required for such
purpose, shall be paid over to the City.
Section 9.04 Execution of Documents and Proof of Ownership bv Owners. Any
request, declaration or other instrument which this Agreement may require or permit to be
executed by Owners may be in one or more instruments of similar tenor, and shall be executed
by Owners in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any
Owner or his or her attorney of such a request, declaration or other instrument, or of a writing
appointing such an attorney, may be proved by the certificate of any notary public or other
officer authorized to take acknowledgments of deeds to be recorded in the state in which he or
36
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she purports to act, that the person signing such request, declaration or other instrument or
writing acknowledged to him or her the execution thereof, or by an affidavit of a witness of such
execution, duly sworn to before such a notary public or other officer.
Except as otherwise herein expressly provided, the ownership of registered Bonds and the
amount, maturity, number and date of holding the same shall be proved by the Registration
Books.
Any request, declaration, consent or other instrument or writing of the Owner of any
Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be
done by the City or the Fiscal Agent in accordance therewith.
Section 9.05 Waiver of Personal Liabilitv. No member, officer, agent or employee of
the City shall be individually or personally liable for the payment of the principal of, or interest
or any premium on, the Bonds- but nothing herein contained shall relieve any such member,
officer, agent or employee from the performance of any official duty provided by law.
Section 9.06 Notices. Any notice, request, complaint, demand or other communication
under this Agreement shall be given by first class mail or personal delivery to the party entitled
thereto at its address set forth below, or by telecopy or other form of telecommunication,
confirmed by telephone at its number set forth below. Notice shall be effective either (a) upon
transmission by telecopy or other form of telecommunication, (b) 48 hours after deposit in the
United States mail, postage prepaid, or (c) in the case of personal delivery to any person> upon
actual receipt.
If to the City: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260
Attention: City Manager
Telecopier: (760) 340-0574
If to the Fiscal Agent:
Attention: Corporation Trust Department
Telecopier: (213) 630-6215
The above parties may designate any further or different addresses to which subsequent notices,
certificates or other communications shall be sent.
The Fiscal Agent agrees to accept and act upon facsimile transmission of written
instructions and/or directions pursuant to this Agreement; provided, however, that:
(a) subsequent to such facsimile transmission of written instructions, there shall be provided to
the Fiscal Agent originally executed instructions and/or directions in a timely manner, (b) such
originally executed instructions and/or directions by the City shall be signed by a person as may
be designated and authorized to sign for the City and, (c) the City shall provide to the Fiscal
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Agent an incumbency certificate listing such designated persons and the City shall from time to
time provide the Fiscal Agent updated incumbency certificates, as necessary or appropriate,
reflecting persons who have been added or deleted from the listing.
Section 9.07 Severabilitv. If any section, paragraph, sentence, clause or phrase of this
Agreement shall for any reason be held by a court of competent jurisdiction to be illegal or
unenforceable, such holding shall not affect the validity of the remaining portions of this
Agreement. The City hereby declares that it would have executed and delivered this Agreement
and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the
issue of the Bonds pursuant thereto irrespective of the fact that any one or more sections,
paragraphs, sentences, clauses or phrases of this Agreement may be held illegal, invalid or
uncnforceable.
Section 9.08 Unclaimed Monevs. Anything contained herein to the contrary
notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of
the principal of, and the interest and any premium on, the Bonds which remains unclaimed for
two (2) years after the date when the payment of such principal, interest and premium have
become payable, if such moneys were held by the Fiscal Agent at such date, shall be repaid by
the Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent
shall have no responsibility or liability for such moneys.
Section 9.09 Applicable Law. This Agreement shall be governed by and enforced in
accordance with the laws of the State applicable to contracts made and performed in the State of
California.
Section 9.10 Conflict with 1915 Act. In the event of a conflict between any provision
of this Agreement with any provision of the 1915 Act as in effect on the Closing Date, the
provision of the 1915 Act, as applicable, shall prevail over the conflicting provision of this
Agreement.
Section 9.11 Conclusive Evidence of Regularity. Bonds issued pursuant to this
Agreement shall constitute conclusive evidence of the regularity of all proceedings under the
1984 Refunding Act relative to their issuance.
Section 9.12 Payment on Business Day. In any case where the date of the payment of
interest or of principal (and premium, if any) of the Bonds or the date �xed for redemption is
other than a Business Day, the payment of interest or principal (and premium, if any) need not be
made on such date but may be made on the next succeeding day which is a Business Day with
the same force and effect as if made on the date required, and no interest shall accrue for the
period from and after such date.
Section 9.13 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its
name and attested, and the Fiscal Agent, in acknowledgment of its acceptance of the duties
created hereunder, has caused this Agreement to be executed in its name, all as the date first
written above.
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CITY OF PALM DESERT
By:
Mayor
as Fiscal Agent
B y:
Authorized Officer
39
P6401-I 033\953463 v2.dc�c
EXHIBIT A
[FORM OF BOND]
Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New
York corporation ("DTC"), to the City or the Fiscal Agent for registration of transfer,exchange, or
payment, and any Bond issued is registered in the name of Cede &Co. or in such other name as is
requested by an authorized representative of DTC(and any payment is made to Cede &Co. or to such
other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede &Co.,has an interest herein.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
REGISTERED REGISTERED
NO. ^ $
CITY OF PALM DESERT
SECTION 29 ASSESSMENT DISTRICT (NO. 2004-02)
LIMITED OBLIGATION IMPROVEMENT BOND
SERIES 2007
INTEREST RATE MATURITY DATE BOND DATE
September 2, 20_ , 2007
REGISTERED OWNER:
PRINCIPAL AMOUNT:
Under and by virtue of the Improvement Bond Act of 1915, as set forth in Division 10
(commencing with Section 8500) of the California Streets and Highways Code (the "1915 Act")
the City of Palm Desert, County of Riverside, California (the "City"), will, out of the
Redemption Fund for the payment of the Bonds issued upon the unpaid Assessments made for
the acquisition, work and improvements more fully described in proceedings taken pursuant to
Resolution No. 06-151, adopted by the City Council of the City on November 16, 2006 (the
"Resolution of Intention"), pay to the registered owner hereof, or registered assigns, on the
maturity date sta�ed above, the principal sum shown hereon in lawful money of the United States
of America and in like manner will pay interest at the rate per annum stated above, payable
semiannually on March 2 and September 2 (each an "Interest Payment Date") in each year
commencing on . This Bond bears interest from the Interest Payment Date next
preceding its date of authentication and registration, unless this Bond is authenticated and
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P6401-1033\953463v2.doc
registered (i) on an Interest Payment Date, in which event interest shall be payable from such
date of authentication and registration, (ii} prior to an Interest Payment Date and after the close
of business on the fifteenth (15th) day of the month immediately preceding such Interest
Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) prior
to the close of business on the 15th day of the month immediately preceding the first Interest
Payment Date, in which event it shall bear interest from the Bond Date stated above, until
payment of such principal sum shall have been discharged; provided, however, that if at the time
of authentication of such Bond, interest is in default, interest on that Bond shail be payable from
the last Interest Payment Date to which the interest has been paid or made available for payment.
Both the principal hereof and redemption premium hereon are payable upon presentation and
surrender hereof at the corporate trust office of Wells Fargo Bank, National Association, or its
successor, as Fisca] Agent (the "Fiscal Agent"), in Los Angeles, California, or such other place
as may be designated by the Fiscal Agent and the interest hereon is payable by check mailed, by
first-class mail, to the owner hereof at such owner's address as it appears on the registration
books of the Fiscal Agent of the fifteenth (15th) day of the month immediately preceding each
Interest Payment Date, or by wire transfer made on the Interest Payment Date upon instructions
of any owner of $1,000,000 or more in aggregate principal amount of Bonds delivered to the
Fiscal Agent prior to the fifteenth (15th) day of the month immediately preceding the Interest
Payment Date.
This Bond will continue to bear interest after maturity at the rate above stated, provided
that it is presented at maturity and payment thereof is refused upon the sole ground that there are
not sufficient moneys in the Redemption Fund with which to pay same. If it is not presented at
maturity interest hereon will run only until maturity.
This Bond is one of several annual series of bonds of like date, tenor and effect, but
differing in amounts, maturities and interest rates, issued by the City of Palm Desert under the
1915 Act, Resolution No. of the City Council of the City, adopted on March 8, 2007 (the
"Resolution of Issuance") and a Fiscal Agent Agreement dated as of , 2007 (the
"Fiscal Agent Agreement") by and between the City and the Fiscal Agent in the aggregate
principal amount of $ for the purpose of providing means for the
acquisitions and improvements described in the proceedings, and is secured by the moneys in the
Redemption Fund and by the unpaid Assessments made for the payment of such improvements,
and, including principal and interest, is payable exclusively out of the Redemption Fund and
certain other funds and accounts as provided in the Fiscal Agent Agreement. The City will not
obligate itself to advance available funds from the City Treasury to cure any deficiency
which may occur in the Redemption Fund.
If this Bond matures on September 2, 20_, it is subject to mandatory sinking fund
redemption by lot, at a redemption price equal to the principal amount thereof to be redeemed,
without premium, on September 2 of each year (commencing September 2, _) in the aggregate
respective principal amounts set forth in the Fiscal Agent Agreement, by giving at least 30 days'
notice by registered or certified mail, postage prepaid, or by personal service to the registered
owners thereof at the owners' address as they appear on the registration books of the Fiscal
Agency; provided, however, in lieu of redemption thereof such Bonds may be purchased by the
City pursuant to the Fiscal Agent Agreement.
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In addition, this Bond or any portion of it in the amount of five thousand dollars ($5,000),
or any integral multiple thereof, may be redeemed and paid in advance of maturity upon March 2
or September 2 in any year by giving at least 30 days' notice by registered or certified mail,
postage prepaid, or by personal service to the registered owner hereof at the registered owner's
address as it appears on the registration books of the Fiscal Agent at the following redemption
prices expressed as percentages of the principal amount of the Bonds to be redeemed together
with interest accrued to the date of redemption:
Redemption Dates Redemption Prices
Prior to March 2, 103%
March 2, and thereafter 100
This Bond is subject to refunding pursuant to the procedure of Division 11 (commencing
with Section 9000) or Division 11.5 (commencing with Section 9500) of the Streets and
Highways Code of the State of California prior to maturity subject to the terms set forth in the
Fiscal Agent Agreement.
This Bond is transferable by the registered owner hereof, in person or by the owner's
attorney duly authorized in writing, at the office of the Fiscal Agent, subject to the terms and
conditions provided in the Fiscal Agent Agreement including the payment of certain charges, if
any, upon surrender and cancellation of this Bond. Upon transfer, a new registered Bond or
Bonds, of any authorized denomination or denominations, of the same maturity, and for the same
aggregate principal amount, will be issued to the transferee in exchange therefor.
Neither the City nor the Fiscal Agent shall be required to exchange or to register the
transfer of Bonds during the fifteen days immediately preceding any interest payment date or of
any Bonds selected for redemption in advance of maturity.
The City and the Fiscal Agent may treat the owner hereof as the absolute owner for all
purposes, and the City and the Fiscal Agent shall not be affected by any notice to the contrary.
This Bond shall not be entitled to any benefit under the 1915 Act, the Resolution of
Issuance or the Fiscal Agent Agreement, or become valid or obligatory for any purpose, until the
certificate of authentication and registration hereon endorsed shall have been dated and manually
signed by the Fiscal Agent.
IN WITNESS WHEREOF, the City of Palm Desert has caused the Bond to be signed and
attested by the facsimile signatures of the City Treasurer and by the City Clerk, and has caused
its corporate seal to be reproduced hereon all the Bond Date above.
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CITY OF PALM DESERT
By
Treasurer
[SEAL]
Attest:
City Clerk
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P6401-]033\953463 v2.doc
CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This is one of the Bonds described in the within mentioned Fiscal Agent Agreement
which has been authenticated and registered on
WELLS FARGO BANK, NATIONAL
ASSOCIATION
,
as Fiscal Agent
B y:
Authorized Signatory
---------------------------------------------------------------------
---------------------------------------------------------------------
ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto
the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s)
attorney,
to transfer the same on the books kept for registration hereof with full power of substitution in
the premises.
Dated: , 20_
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the within Bond in every particular,
without alteration or enlargement or any change
whatsoever.
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EXHIB IT B
[FORM OF IMPROVEMENT FUND REQUISITION]
Requisition No.
with reference to
$
City of Palm Desert
Section 29 Assessment District (No. 2004-02)
Limited Obligation Improvement Bonds
Series200?
1. The City of Palm Desert (the "City") hereby requests Wells Fargo Bank, National
Association, as Fiscal Agent under the Fiscal Agent Agreement, dated as of 1,
2007 (the "Fiscal Agent Agreement"), to pay from the moneys in the Improvement Fund, the
amounts shown on Schedule I attached hereto to the parties indicated in Schedule I.
2. The payees, the purposes for which the costs have been incurred, and the amount
of the disbursements requested are itemized on Schedule I hereto.
3. Each obligation mentioned in Schedule I hereto has been properly incurred and is
a proper charge against the Improvement Fund. None of the items for which payment is
requested has been reimbursed previously from the Improvement Fund.
Capitalized terms not defined herein have to meanings ascribed to them in the Fiscal
Agent Agreement.
Dated: , 20_
CITY OF PALM DESERT
B y:
[Name]
[Title]
B-1
PG401-1033\953463v2.doc
Jones Hall Draft 2/18/07
$
CITY OF PALM DESERT
SECTION 29 ASSESSMENT DISTRICT (NO. 2004-2)
LIMITED OBLIGATION IMPROVEMENT BONDS
SERIES 2007
PURCHASE CONTRACT
, 2007
City of Palm Desert
Section 29 Assessment District (No. 2004-2)
73-510 Fred Waring Drive
Palm Desert, California 92260-2578
Ladies and Gentlemen:
The undersigned Stinson Securities, LLC on behalf of itself and Kinsell Newcomb 8�
DeDios, Inc. (together the "Underwriter") offers to enter into this Purchase Contract (this
"Purchase Contract") with the City of Palm Desert (the "City") on behalf of City of Palm Desert
Section 29 Assessment District (No. 2004-2) (the "DistricY'), which upon acceptance will be
binding upon the Underwriter, the City and the District. The agreement of the Underwriter to
purchase the Bonds (as hereinafter defined) is contingent upon the City satisfying all of the
obligations imposed upon it under this Purchase Contract. This offer is made subject to the
City's acceptance by the execution of this Purchase Contract and its delivery to the Underwriter
on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter
upon notice delivered to the City at any time prior to the acceptance hereof by the City. All
capitalized terms used herein, which are not otherwise defined, shall have the meaning
provided for such terms in the Fiscal Agent Agreement (as hereinafter defined).
Section 1. Purchase, Sale and Delivery of the Bonds.
(a) Subject to the terms and conditions, and in reliance upon the representations,
warranties and agreements set forth herein, the Underwriter hereby agrees to purchase from
the City, and the City hereby agrees to sell to the Underwriter, all (but not less than all) of the
$ aggregate principal amount of the City of Palm Desert Section 29
Assessment District (No. 2004-2), Limited Obligation Improvement Bonds, Series 2007 (the
"Bonds"), dated the Closing Date (as hereinafter defined), bearing interest at the rates and
maturing on the dates and in the principal amounts set forth in Exhibit A hereto. The purchase
price for the Bonds shall be $ (representing the principal of amount of the Bonds,
less an original issue discount of $ , less an underwriter's discount of $ ).
The Bonds shall be substantially in tF�� form described in, shall be issued and secured under the
provisions of, and shall be payable from the Assessments as provided in the Fiscal Agent
Agreement, dated as of 1, 2007 (the "Fiscal Agent AgreemenY'), between the
District and Wells Fargo Bank, National Association, as fiscal agent (the "Fiscal AgenY'), the
Official Statement (as hereinafter defined), and the Improvement Bond Act of 1915, being
Division 10 of the California Streets and Highways Code (the "Act"). The City will acquire and
own certain improvements to be financed with the proceeds of the Bonds pursuant to an
Agreement dated , 2007 (the "Acquisition AgreemenY') between the
City and (as defined herein).
(b) Pursuant to the authorization of the City, the Underwriter has distributed copies
of the Preliminary Official Statement, dated , 2007, relating to the Bonds, which,
together with the cover page and appendices thereto, is herein called the "Preliminary Official
Statement." By its acceptance of this Purchase Contract, the City hereby ratifies the use by the
Underwriter of the Preliminary Official Statement; and the City agrees to execute a final official
statement relating to the Bonds (the "Official Statement") which will consist of the Preliminary
Official Statement with such changes as may be made thereto, with the approval of Richards,
Watson & Gershon, A Professional Corporation, the City's Bond Counsei (herein cailed "Bond
Counsel") and the Underwriter, and to provide copies thereof to the Underwriter as set forth in
Section 2(n) hereof. The City hereby authorizes the Underwriter to use and promptly distribute,
in connection with the offer and sale of the Bonds, the Preliminary Official Statement, the Official
Statement and any supplement or amendment thereto. The City further authorizes the
Underwriter to use and distribute, in connection with the Purchase Contract and all information
contained herein, and all other documents, certificates and statements furnished by or on behalf
of the City or the District to the Underwriter in connection with the transactions contemplated by
this Purchase Contract.
(c) Except as the Underwriter and the City may otherwise agree, at 8:00 A.M.
California time, on , 2007 (the "Closing Date"), the City will deliver to the Underwriter,
at the offices of Richards, Watson 8� Gershon, A Professional Corporation, Los Angeles,
California, or at such other location as may be mutually agreed upon by the Underwriter and the
City, the documents hereinafter mentioned and the City will deliver to the Underwriter through
the facilities of The Depository Trust Company ("DTC") in New York, New York, the Bonds, in
definitive form (all Bonds bearing CUSIP numbers}, duly executed by the City and authenticated
by the Fiscal Agent in the manner provided for in the Fiscal Agent Agreement and the Act, and
the Undenroriter will accept such delivery and pay the purchase price of the Bonds as set forth in
paragraph (a) of this Section in immediately available funds (such delivery and payment being
herein referred to as the "Closing"). The Bonds shall be made available to the Underwriter for
inspection not later than two Business Days prior to the Closing Date. The Bonds shall be in
fully registered book-entry form (which may be typewritten) and shall be registered in the name
of Cede & Co., as nominee of DTC.
Section 2. Representations, Warranties and AQreements of the Citv. The City
represents, warrants to, covenants and agrees with, the Underwriter that:
(a) (i) The District is an Assessment District duly organized and validly existing under
the Constitution and laws of the State of California; (ii) the District has, and at the Closing Date
will have, full legal right and power to enter into, execute, and deliver the Fiscal Agent
Agreement and to carry out, give effect to, and consummate the transactions contemplated
thereby, and (iii) the City, acting on behalf of the District, has, and at the Closing Date will have,
full legal right and power to enter into, execute, and deliver this Purchase Contract, the
Continuing Disclosure Agreement, dated as of Closing {the "Issuer Continuing Disclosure
Agreement"), by and between the City and , as dissemination agent (the
"Dissemination AgenY'), and the Official Statement, and to carry out, give effect to, and
consummate the transactions contemplated hereby and thereby.
2
(b) The City has complied, and will at the Closing Date be in compliance, in all
respects with the Fiscal Agent Agreement, the Issuer Continuing Disclosure Agreement, the Act
and this Purchase Contract.
(c) The City Council has duly and validly: (i) made all the necessary findings and
determinations required under the Act in connection with the formation of the District and the
issuance of the Bonds, (ii) approved and authorized the execution and delivery of the Fiscal
Agent Agreement, the Bonds, the Issuer Continuing Disclosure Agreement, this Purchase
Contract and the Official Statement and approved the distribution of the Preliminary Official
Statement, and (ii)authorized and approved the performance by the City of its obligations
contained in, and the taking of any and all action as may be necessary to carry out, give effect
to and consummate the transactions contemplated by, each of such documents.
(d) Except as described in the Preliminary Official Statement, neither the City nor the
District is, in any respect material to the transactions referred to herein or contemplated hereby,
in breach of or in default under, any law or administrative rule or regulation of the State of
California, the United States of America, or of any department, division, agency or
instrumentality of either thereof, or under any applicable court or administrative decree or order,
or under any loan agreement, note, resolution, indenture, contract, agreement or other
instrument to which the City or the District is a party or is otherwise subject or bound, and the
performance by the City on behalf of the District of its obligations under the Fiscal Agent
Agreement, the Bonds, the Issuer Continuing Disclosure Agreement and this Purchase Contract
and any other instruments contemplated by any of such documents, and compliance with the
provisions of each thereof, will not conflict with or constitute a breach of or default under any
applicable law or administrative rule or regulation of the State of California, the United States of
America, or of any department, division, agency or instrumentafity of either thereof, or under any
applicable court or administrative decree or order, or under any loan agreement, note,
resolution, indenture, contract, agreement or other instrument to which the City or the District is
a party or is otherwise subject or bound, in any manner which would materially and adversely
affect the performance by the City on behalf of the District of its obligations under the Fiscal
Agent Agreement, the Bonds, the Issuer Continuing Disclosure Agreement or this Purchase
Contract.
(e) Except as may be required under the "blue sky" or other securities laws of any
jurisdiction, all approvals, consents, authorizations, elections and orders of, or filings or
registrations with, any governmental authority, board, agency or commission having jurisdiction
which would constitute a condition precedent to, or the absence of which would materially
adversely affect the performance by the City on behalf of the District of its obligations hereunder
or under the Fiscal Agent Agreement, the Bonds or the Issuer Continuing Disclosure Agreement
have been or will be obtained at the Closing Date and are or will be at the Closing Date in full
force and effect.
(f) The Fiscal Agent Agreement creates a valid pledge of, first lien upon and security
interest in, the Assessment Revenues and the amounts in the Redemption Fund and the
Reserve Fund established pursuant to the Fiscal Agent Agreement, on the terms and conditions
set forth in the Fiscal Agent Agreement.
(g) As of the date hereof the information in the Preliminary Official Statement is true,
correct and complete in all material respects and does not and, on the Ciosing Date the
information in the Official Statement will not, contain any untrue statement of a material fact or
3
omit to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
(h) If after the date of this Purchase Contract and until ninety (90) days after the End
of the Underwriting Period (as hereinafter defined), any event shall occur, of which the City has
notice, as a result of which it may be necessary to supplement the Official Statement in order to
make the statements therein, in the light of the circumstances existing at such time, not
misleading, the City shall forthwith notify the Underwriter of any such event of which it has
knowledge and, if in the opinion of the Underwriter and the City Manager on behalf of the
District, such event requires an amendment or supplement to the Official Statement, the City will
at its own expense amend or supplement the Official Statement in a form and manner jointly
approved by the City and the Underwriter so that the statements therein as so amended or
supplemented will not be misleading in the light or the circumstances existing at such time and
the City will promptly furnish to the Underwriter a reasonable number of copies of such
amendment or supplement. As used herein the term "End of the Underwriting Period" means
the later of such time as (i)the City on behalf of the District delivers the Bonds to the
Underwriter, or (ii)the Underwriter do not retain an unsold balance of the Bonds for sale to the
public. Unless the Underwriter gives notice to the contrary, the End of the Underwriting Period
shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be
written notice delivered to the City at or prior to the Closing Date, and shall specify a date (other
than the Closing Date)to be deemed the"End of the Underwriting Period."
(i) Except as disclosed in the Preliminary Official Statement, no action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory
agency or public board or body to which the City or the District is a party and has been served
with a summons or other notice thereof, is pending, or to the knowledge of the City threatened,
in any way affecting the existence of the District, the existence of the City or the titles of its
officers to their respective offices or seeking to restrain or to enjoin the issuance, sale or
delivery of the Bonds, the application of the proceeds thereof in accordance with the Fiscal
Agent Agreement, the collection or application of the Assessments pledged or to be pledged to
pay the principal of, and interest on, the Bonds, or the pledge thereof, or the collection or
application of the Assessments pledged or to be pledged to pay the principal of, and interest on,
the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or
enforceability of the Fiscal Agent Agreement, the Bonds, the Issuer Continuing Disclosure
Agreement or this Purchase Contract, any action of the City or the District contemplated by any
of such documents, or in any way contesting the completeness or accuracy of the Preliminary
Official Statement or the Official Statement or the powers of the City or the District with respect
to the Fiscal Agent Agreement, the Bonds, the Issuer Continuing Disclosure Agreement or this
Purchase Contract or any action of the City or the District contemplated by any of such
documents, or which contests the exclusion from gross income for federal income tax purposes
of interest paid on the Bonds or the exemption of interest paid on the Bonds from State of
California personal income taxation.
(j) The City will furnish such information, execute such instruments and take such
other action in cooperation with the Underwriter as the Underwriter may reasonably request in
order for the Underwriter to qualify the Bonds for offer and sale under the "blue sky" or other
securities laws and regulations of such states and other jurisdictions of the United States of
America as the Undenivriter may designate; provided, however, that neither the City nor the
District shall be required to register as a dealer or broker of securities or to consent to service of
process or qualify to do business in any jurisdiction where it is not now so subject. It is
understood that such "blue sky" registration is the sole responsibility of the Underwriter.
4
(k) Any certificate signed by any authorized officer or employee of the City
authorized to do so shall be deemed a representation and warranty by the City on behalf of the
District as to the statements made therein.
(I) The City on behalf of the District will apply the proceeds of the Bonds in
accordance with the Fiscal Agent Agreement.
(m) Until such time as moneys have been set aside in an amount sufficient to pay all
then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity,
plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if
redeemed prior to maturity, the City on behalf of the District will faithfully perform and abide by
all of the covenants, undertakings and provisions contained in the Fiscal Agent Agreement.
(n) The Preliminary Official Statement heretofore delivered to the Underwriter has
been deemed final by the City as of its date, except for the omission of such information as is
permitted to be omitted in accordance with Rule 15c2-12 promulgated under the Securities
Exchange Act of 1934 ("Rule 15c2-12"). The City hereby covenants and agrees that, within
seven (7) business days from the date hereof, or upon reasonable written notice from the
Underwriter within sufficient time to accompany any confirmation requesting payment from any
customers of the Underwriter, the City shall cause a final printed form of the Official Statement
to be delivered to the Underwriter in sufficient quantity to comply with Rule 15c2-12 and the
applicable rules of the Municipal Securities Rulemaking Board.
(o) Except as disclosed in the Official Statement, to the best of the City's knowledge,
no other public debt secured by a tax or assessment levied by the City on the land in the District
is in the process of being authorized and no assessment districts or Assessment District have
been or are in the process of being formed by the City which include any portion of the land
within the District.
The execution and delivery of this Purchase Contract by the City on behalf of the District
shall constitute a representation to the Underwriter that the representations and warranties
contained in the Section 2 are true as of the date hereof.
Section 3. Conditions to the Obliqation of the Underwriter. The obligation of the
Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at
the option of the Underwriter, to the accuracy in all material respects of the representations and
warranties on the part of the City contained herein, to the accuracy in all material respects of the
statements of the officer and other officials of the City made in any certificates or other
documents furnished pursuant to the provisions hereof, to the performance by the City on behalf
of the District of its obligations to be performed hereunder at or prior to the Closing Date and to
the following conditions:
(a) At the Closing Date, the Fiscal Agent Agreement, the Issuer Continuing
Disclosure Agreement, the Continuing Disclosure Agreement (Landowner), by and between
and MuniFinancial, as dissemination agent and dated as of the date of Closing
(the "Landowner Continuing Disclosure AgreemenY') and this Purchase Contract shall be in full
force and effect, and shall not have been amended, modified or supplemented, except as may
have been agreed to in writing by the Underwriter, and there shall have been taken in
connection therewith, with the issuance of the Bonds, and with the transactions contemplated
5
thereby, by this Purchase Contract, all such actions as, in the opinion of Bond Counsel, shall be
necessary and appropriate.
(b) At the Closing Date, except as was described in the Preliminary Official
Statement, neither the City nor the District shall be, in any respect material to the transactions
referred to herein or contemplated hereby, in breach of or in default under, any law or
administrative rule or regulation of the State of California, the United States of America, or of
any department, division, agency or instrumentality of either thereof, or under any applicable
court or administrative decree or order, or under any loan agreement, note, resolution,
indenture, contract, agrAement or other instrument to which the City or the District is a party or
is otherwise subject or bound, and the performance by the City on behalf of the District of its
obligations under the Bonds, the Fiscal Agent Agreement, the Issuer Continuing Disclosure
Agreement and this Purchase Contract, and any other instruments contemplated by any of such
documents, and compliance with the provisions of each thereof, will not conflict with or
constitute a breach of or default under any applicable law or administrative rule or regulation of
the State of California, the United States of America, or of any department, division, agency or
instrumentality of either thereof, or under any applicable court or administrative decree or order,
or under any loan agreement, note, resolution, indenture, contract, agreement or other
instrument to which the City or the District is a party or is otherwise subject or bound, in any
manner which would materially and adversely affect the performance by the City on behalf of
the District of its obligations under the Bonds, Fiscal Agent Agreement, the Issuer Continuing
Disclosure Agreement and this Purchase Contract.
(c) At the Closing Date, except as may be required under the "blue sky" or other
securities laws of any jurisdiction, all approvals, consents, authorizations, elections and orders
of, or filings or registrations with, any governmental authority, board, agency or commission
having jurisdiction which would constitute a condition precedent to, or the absence of which
would materially adversely affect, the performance by the City on behalf of the District of its
obligations hereunder, and the Fiscal Agent Agreement, the Bonds or the Issuer Continuing
Disclosure Agreement will have been obtained and will be in full force and effect.
(d} The information contained in the Official Statement is, as of the Closing Date and
as of the date of any supplement or amendment thereto pursuant to Section 2(h) hereof, true,
correct and complete in all material respects and does not, as of the Closing Date or as of the
date of any supplement or amendment thereto pursuant to Section 2(h) hereof, contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(e) Between the date hereof and the Closing Date, the market price or marketability,
at the initial offering prices set forth on the inside cover page of the Official Statement, of the
Bonds shall not have been materially adversely affected (evidenced by a written notice to the
City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds),
by reason of any of the following;
(1) Legislation introduced in or enacted (or resolution passed) by the
Congress of the United States of America or recommended to the Congress by
the President of the United States, the Department of the Treasury, the Internal
Revenue Service, or any member of Congress, or favorably reported for passage
to either House of Congress by any committee of such House to which such
legislation had been referred for consideration, or a decision rendered by a court
6
established under Article III of the Constitution of the United States of America or
by the Tax Court of the United States of America, or an order, ruling, regulation
(final, temporary or proposedj, press release or other form of notice issued or
made by or on behalf of the Treasury Department of the United States of
America or the Internal Revenue Service, with the purpose or effect, directly or
indirectly, of imposing federal income taxation upon such interest as would be
received by any owners of the Bonds;
(2) Legislation introduced in or enacted (or resolution passed) by the
Congress or an order, decree or injunction issued by any court of competent
jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press
release or other form of notice issued or made by or on behalf of the Securities
and Exchange Commission, or any other governmental agency having
jurisdiction of the subject matter, to the effect that obligations of the general
character of the Bonds, including any or all underlying arrangements, are not
exempt from registration under or other requirements of the Securities Act of
1933, as amended, or that the Fiscal Agent Agreement is not exempt from
qualification under or other requirements of the Trust Fiscal Agent Agreement Act
of 1939, as amended, or that the issuance, offering or sale of obligations of the
general character of the Bonds, including any or all underlying arrangements, as
contemplated hereby or by the Official Statement or otherwise is or would be in
violation of the federal securities laws as amended and then in effect;
(3) A general suspension of trading in securities on the New York Stock
Exchange, or a general banking moratorium declared by Federal, State of New
York or State of California officials authorized to do so;
(4) The introduction, proposal or enactment of any amendment to the Federal
or California Constitution or any action by any Federal or California court,
legislative body, regulatory body or any other governmental body materially
adversely affecting the tax status of the District, its property, income, securities
(or interest thereon), the validity or enforceability of the Assessments, as
contemplated by the Fiscal Agent Agreement and the Official Statement;
(5) Any event occurring, or information becoming known which, in the
judgment of the Underwriter, makes untrue in any material respect any statement
or information contained in the Preliminary Official Statement or in the Official
Statement, or has the effect that the Preliminary Official Statement or the Official
Statement contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; or
(6) There shall have occurred any outbreak of hostilities or other local,
national or international calamity or crisis or the escalating of any hostilities,
calamity or crisis, the effect of which on the financial markets of the United States
of America, in the reasonable judgment of the Underwriter, is such as to
materially and adversely affect (A) the market price or the marketability of the
Bonds, or(B) the ability of the Underwriter to enforce contracts for the sale of the
Bonds.
7
(f) At or prior to the Closing Date, the Underwriter shall have received two
counterpart originals or certified copies of the following documents, in each case satisfactory in
form and substance to the Underwr'rter:
(1) The resolution authorizing the sale of the Bonds adopted on
2007 by the City Council, acting in its capacity as legislative body of the District (Resolution No�
), together with a certificate of the City Clerk, dated as of the Closing Date, to the effect
that such resolution is a true, correct and complete copy of the resolution duly adopted by the
City;
(2) The Official Statement, executed on behalf of the District by an authorized
signatory of the City;
(3) The Fiscal Agent Agreement duly executed and delivered by the City and
the Fiscal Agent;
(4) The Continuing Disclosure Agreements, duly authorized and executed by
the City, the Landowner and , as applicable;
(5) An unqualified opinion, dated the Closing Date and addressed to the City,
of Bond Counsel, to the effect that the Bonds are the valid, legal and binding obligations of the
City and that the interest thereon is excluded from gross income for federal income tax
purposes and exempt from personal income taxes of the State of California in substantially the
form included as Appendix C to the Official Statement, together with an unqualified opinion of
Bond Counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such
opinion addressed to the City may be relied upon by the Underwriter to the same extent as if
such opinion was addressed to the Underwriter;
(6) A supplemental opinion or opinions, dated the Closing Date and
addressed to the City and the Underwriter, of Bond Counsel, to the effect that (i) this Purchase
Contract has been duly authorized, executed and delivered by the City and, assuming due
authorization, execution and delivery by the other parties thereto, constitutes the legal, valid and
binding agreement of the City and the District, each enforceable in accordance with its terms,
except to the extent that enforceability may be limited by moratorium, bankruptcy,
reorganization insolvency or other similar laws affecting creditors' rights generally or by the
exercise of judicial discretion in accordance with general principles of equity or otherwise in
appropriate cases; (ii)the Bonds are exempt from registration pursuant to the Securities Act of
1933, as amended, and the Fiscal Agent Agreement is exempt from qualification under the
Trust Fiscal Agent Agreement Act of 1939, as amended; (iii)the Bonds and the Fiscal Agent
Agreement conform as to form and tenor to the descriptions thereof contained in the Official
Statement, and the statements contained in the Official Statement on the cover and under the
captions "THE BONDS," "SECURITY FOR THE BONDS," and "CONCLUDING INFORMATION-
Tax Matters" and in Appendix C to the Official Statement insofar as such statements purport to
summarize certain provisions of the Bonds, the Fiscal Agent Agreement, Bond Counsel's final
opinion and the Act, are accurate in all material respects; (iv) the District is a Assessment
District duly formed and validly existing under the Act; (v) the City Council has duly authorized
the Official Statement and the distribution thereof, this Purchase Contract, and the Issuer
Continuing Disclosure Agreement; (vi) the City, on behalf of the District, has duly and validly
executed and delivered this Purchase Contract and the Issuer Continuing Disclosure
Agreement, and assuming due authorization, execution, and delivery by the other parties
thereto, as necessary, each such document constitutes the legal, valid, and binding obligation of
8
the City and the District, enforceable against the City and the District in accordance with its
respective terms, subject to bankruptcy, insolvency, reorganization, moratorium, and other laws
affecting enforcement of creditors' rights in general and to the application of equitable principles
if equitable remedies are sought; and (vii)the Assessments and the levy thereof have been
duly and validly authorized in accordance with the provisions of the Act and, when levied, each
Assessment will be secured by a valid and binding lien upon the property against which it is
levied, enforceable by the City in accordance with the provisions of the Fiscal Agent Agreement
and the Act except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of creditor's rights;
(7) The opinion of Jones Hall, A Professional Law Corporation, San
Francisco, California, Disclosure Counsel, dated the Closing Date, addressed to the District and
to the Underwriter, to the effect that based upon an examination which they have made, and
without having undertaken to determine independently the accuracy or completeness of the
statements contained in the Official Statement, they have no reason to believe that the Official
Statement (other than financial statements and other statistical and financial data and
information relating to The Depository Trust Company, New York, New York, and its book-entry
system contained therein and incorporated therein by reference, as to which no view need be
expressed) contains any untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading;
(8) A certificate of the City, dated the Closing Date and signed by the City
Finance Director or City Manager or an authorized designee to the effect that (i)the
representations and warranties of the City contained herein are true and correct in all material
respects on and as of the Closing Date with the same effect as if made on the Closing Date,
except that all references herein to the Preliminary Official Statement shall be deemed to be
references to the Official Statement; (ii)to the best knowledge of such officer, no event has
occurred since the date of the Official Statement which should be disclosed in the Official
Statement for the purpose for which it is to be used or which it is necessary to disclose therein
in order to make the statements and information therein not misleading in any material respect;
and (ii) the City has complied with all the agreements and satisfied all the conditions on its part
to be satisfied under this Purchase Contract, the Fiscal Agent Agreement, the Issuer Continuing
Disclosure Agreement and the Official Statement at or prior to the Closing Date;
(9) An opinion, dated the Closing Date and addressed to the City and the
Underwriter, of the City Attorney, to the effect that (i) Resolution No. has been duly
approved at a meeting of the City Council on , 2007, acting as the legislative body of the
District, which was called and held pursuant to law and with all public notice required by law and
at which a quorum was present and acting throughout, and Resolution No. has not been
amended since its date of adoption and is now in full force and effect; (ii) other than as
disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or
in equity, before or by any court, regulatory agency, public board or body to which the City or
the District is a party and has been served with a summons or other notice thereof, is pending
or, to such counsel's knowledge, threatened, in any way affecting the existence of the District,
the existence of the City or the titles of its officers to their respective offices, or seeking to
restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds
thereof in accordance with the Fiscal Agent Agreement, the collection or application of the
Assessments 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 Fiscal Agent Agreement, this Purchase
Contract, the Issuer Continuing Disclosure Agreement, or any action of the City or the District
9
contemplated by any of such documents or in any way contesting the completeness or accuracy
of the Official Statement or the powers of the City or the District with respect to the Bonds, the
Fiscal Agent Agreement, this Purchase Contract, the Issuer Continuing Disclosure Agreement,
of any action on the part of the City or the District contemplated by any of such documents, or in
any way seeking to enjoin or restrain the City from approving the development of any of the
property within District, or which challenges the exclusion of the interest paid on the Bonds from
federal income tax purposes and the exemption of interest paid on the Bonds from State of
California personal income taxation; (iii)the statements in the Official Statement under the
heading "CONCLUDING INFORMATION — Absence of Litigation" are as of the date of the
Official Statement and as of the date of the opinion, true and correct in all material respects and
do not, as of the date of the Official Statement and as of the date of the opinion, contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading; and (iv)the City is duly organized and validly existing as a political
subdivision under the Constitution and laws of the State of California with full legal right, power
and authority to form the District;
(10) A transcript of all proceedings relating to the authorization, issuance, sale
and delivery of the Bonds, including certified copies of the Fiscal Agent Agreement and all
resolutions relating thereto;
(11) Certified copies of excerpts from the Bylaws of Wells Fargo Bank,
National Association, as Fiscal Agent, authorizing the execution and delivery of certain
documents by certain officers of Wells Fargo Bank, National Association, which resolution
authorizes the execution of the Fiscal Agent Agreement;
(12) A certificate of Wells Fargo Bank, National Association, addressed to the
Underwriter and the City dated the Closing Date, to the effect that (i) Wells Fargo Bank, National
Association is authorized to carry out corporate trust powers, and has full power and to perform
its duties under the Fiscal Agent Agreement; (ii)Wells Fargo Bank, National Association is duly
authorized to execute and deliver the Fiscal Agent Agreement, to accept the obligations created
by the Fiscal Agent Agreement, and to authenticate the Bonds pursuant to the terms of the
Fiscal Agent Agreement; (iii) no consent, approval, authorization or other action by any
governmental or regulatory authority having jurisdiction over Wells Fargo Bank, National
Association that has not been obtained is or will be required for the authentication of the Bonds,
of the consummation by it of the other transactions contemplated to be perFormed by it in
connection with the authentication of the Bonds and the acceptance and performance of the
obligations created by the Fiscal Agent Agreement; and (v) to the best of its knowledge,
compliance with the terms of the Fiscal Agent Agreement will not conflict with, or result in a
violation or breach of, or constitute a default under, any loan agreement, fiscal agent
agreement, bond, note, resolution or any other agreement or instrument to which Wells Fargo
Bank, National Association is a party or by which it is bound, or any law or any rule, regulation,
order or decree of any court or governmental agency or body having jurisdiction over Wells
Fargo Bank, National Association or any of its activities or properties;
(13) Certificates dated the Closing Date from the following:
(each, a "Landowner") and the Appraiser substantially in the form
of Exhibits B and D hereto, respectively;
(14) An opinion, dated the Closing Date, of counsel to each Landowner,
addressed to the City and the Underwriter, substantially in the form of Exhibit C hereto.
10
(15) A copy of the Appraisal;
(16) A tax certificate of the City on behalf of the District in form and substance
acceptable to Bond Counsel and the Underwriter;
(17) Such additional legal opinions, certificates, instruments and other
documents as the Underwriter, Bond Counsel, or the City may reasonably request, including but
not limited to instruments to evidence the truth and accuracy, as of the date hereof and as of the
Closing Date, of the material representations and warranties of the City contained herein, and of
the statements and information contained in the Official Statement and the due performance or
satisfaction by the City or any Landowner at or prior to the Closing of all agreements then to be
performed and all conditions then to be satisfied by the City or such Landowner, as applicable,
in connection with the transactions contemplated hereby, the Fiscal Agent Agreement, the
Continuing Disclosure Agreements, the Official Statement, the Acquisition Agreement, and the
J C FA.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to
purchase, accept delivery of and pay for the Bonds contained in this Purchase Contract, or if the
obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be
terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall
terminate and none of the City, the District nor the Underwriter shall be under any further
obligation hereunder, except that the respective obligations of the Underwriter, the City and the
District set forth in Section 4 hereof shall continue in full force and effect.
The Unden�vriter, jointly and severally, agrees, at its sole cost and expense, to defend,
protect, indemnify, and hold harmless the City, the District, and each of their respective
Councilmembers, directors, officials, officers, employees, consultants, agents, and volunteers,
and each and every one of them (including independent contractors who serve as the City's or
DistricYs officers or officials), from and against any and all losses, actions, demands, damages,
injuries, claims, causes of action, liabilities, costs, or expenses of every type and description to
which they may be subjected or put, arising or claimed to arise, directly or indirectly, out of, in
connection with, resulting from, or related to the failure of any Landowner and/or such
Landowner's counsel to provide and deliver any document to be executed, delivered, or
provided by or on behalf of a Landowner or counsel to a Landowner at or prior to 8:00 A.M.,
California time, on , 2007 pursuant to this Purchase Contract, the Fiscal Agent
Agreement and the Acquisition Agreement.
11
Section 4. Expenses.
(a) Whether or not the Underwriter accepts delivery of and pays for the Bonds as set
forth herein, it shall be under no obligation to pay, and the City shall pay out of the proceeds of
the Bonds or any other legally available funds of the City, all expenses incidental to the
performance of the City's obligations hereunder, including but not limited to the cost of printing,
engraving and delivering the Bonds to the Underwriter; the costs of printing and shipping the
Preliminary Official Statement and the Official Statement; the fees and disbursements of the
District, the City, the Fiscal Agent, the Dissemination Agent, Bond Counsel, accountants,
engineers, appraisers, economic consultants and any other experts or consultants retained by
the City in connection with the issuance and sale of Bonds; and any other expenses not
specifically enumerated in paragraph (b) of this Section incurred in connection with the issuance
and sale of the Bonds.
(b) Whether or not the Bonds are delivered to the Underwriter as set for the herein,
the City shall be under no obligation to pay, and the Underwriter shall be responsible for and
pay, CUSIP Bureau and CDIAC fees and expenses to qualify the Bonds for sale under any
"blue sky" laws; and all other expenses incurred by the Underwriter in connection with its public
offering and distribution of the Bonds not specifically enumerated in paragraph (a) of this
Section, including the fees and disbursements of its counsel.
Section 5. Undertakinqs of the Citv. The City agrees (a)to inform the Underwriter,
from time to time, upon the reasonable request of the Underwriter, of the amount then on
deposit in the Reserve Fund and all accounts thereunder, and (b)to make available to the
Underwriter, upon reasonable request of the Underwriter, at the expense of the City, sufficient
copies of its audited financial statements, if any, resolutions of its legislative body with respect to
the Bonds, the Fiscal Agent Agreement, the Official Statement, any amendments or
supplements thereto, and other documents relating to the Bonds and pertaining to the District or
the City, to the extent that such documents are publicly available, as may be reasonably
required from time to time for the prompt and efficient performance by the Underwriter of their
obligations hereunder (except any portion of any such document which, by contract, is not
subject to disclosure).
Section 6. Notices. Any notice or other communication to be given to the City under
this Purchase Contract may be given by delivering the same in writing to the City of Palm Desert
at 73-510 Fred Waring Drive, Palm Desert, California 92260-2578, Attention: City Manager; any
notice or other communication to be given to the Underwriter under this Purchase Contract may
be given by delivering the same in writing to: Stinson Securities LLC, 55 San Francisco Street,
Suite 800, San Francisco, California 94133, Attention: Public Finance.
Section 7. Parties in Interest. This Purchase Contract is made solely for the benefit
of the City, the District and the Underwriter (including any successors or assignees of the
Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof.
Section 8. Survival of Representations and Warranties. The representations and
warranties of the City hereunder shall not be deemed to have been discharged, satisfied or
otherwise rendered void by reason of the Closing and regardless of any investigations made by
or on behalf of the Underwriter (or statements as to the results of such investigations)
concerning such representations and statements of the City and regardless of the delivery of
and payment for the Bonds.
12
Section 9. Execution in Counterparts. This Purchase Contract may be executed by
the parties hereto in separate counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together constitute but one and the same
instrument.
Section 10. No Prior Aqreements. This Purchase Contract supersedes and replaces
all prior negotiations, agreements and understandings among the parties hereto in relation to
the sale of the Bonds of the City.
13
Section 11. Effective Date. This Purchase Contract shall become effective and
binding upon the respective parties hereto upon the execution of the acceptance hereof by the
City and shall be valid and enforceable as of the time of such acceptance.
Very truly yours,
STINSON SECURITIES LLC
By:
Managing Director
KINSELL NEWCOMB � DeDIOS, INC.
By:
President and Principal
CITY OF PALM DESERT
on behalf of SECTION 29 ASSESSMENT
DISTRICT(NO. 2004-2)
By:
City Manager
14
EXHIBIT A
MATURITY SCHEDULE
Maturity Principal Interest
(September 2) Amount Rate Yield Price
A-1
Exhibit B
$
CITY OF PALM DESERT
SECTION 29 ASSESSMENT DISTRICT(NO. 2004-2)
LIMITED OBLIGATION IMPROVEMENT BONDS, SERIES 2007
Landowner Rearesentations, Warranties and Covenants
(the "Landowner") hereby makes the following
representations, warranties and covenants as of the date hereof to and for the benefit of the City
of Palm Desert (the "City") for itself and on behalf of Section 29 Assessment District (No. 2004-
2) (the "DistricY') and to Stinson Securities, LLC on behalf of itself and Kinsell Newcomb &
DeDios, Inc. (together the "Underwriter") in connection with the pricing by the City of its Section
29 Assessment District (No. 2004-2) Limited Obligation Improvement Bonds, Series 2007 (the
"Bonds"). Capitalized terms not otherwise defined herein, are defined as provided in the
Purchase Contract dated , 2007 (the "Purchase ContracY') between the Underwriter
and the City.
1. Due Orqani2ation, Existence and Authoritv. The Landowner is a
and is duly formed and validly existing under the laws of its
organization and has full rights, power and authority to execute, deliver and perform its
obligations under the [Acquisition Agreement, the Cost Sharing and Bond Proceeds Allocation
Agreement, First Amendment, the Joint Community Facilities Agreement dated as of January
12, 2006 by and among the City, the Coachella Valley Water District and the Continuing
Disclosure Agreement (Landowner)] and to carry out and consummate the transactions
contemplated by the [Acquisition Agreement, the Allocation Agreement, First Amendment, the
JCFA, and the Continuing Disclosure Agreement (Landowner)] (collectively, the "Landowner
Documents").
2. Due Authorization and Approval. By all necessary action of the corporation, the
Landowner has duly authorized and approved the execution and delivery of, and the
performance by the Landowner of the obligations of the Landowner contained in the Landowner
Documents and as of the date hereof, such authorizations and approvals are in full force and
effect and have not been amended, modified or rescinded. The Landowner acknowledges that
it has an obligation to pay Assessments on property it owns in the District.
3. No Breach or Default. The execution and delivery of the Landowner pocuments
and compliance with the provisions thereof, under the circumstances contemplated thereby, do
not and will not in any material respect conflict with or constitute on the part of the Landowner a
breach or default under any agreement or instrument to which the Landowner is a party or by
which it is bound, and no event has occurred and is continuing which, with the passage of time
or the giving of notice, or both, would, in any material respect, constitute a default or an event of
default under the Landowner pocuments.
4. No LitiQation. There is no action, suit, p�oceeding, inquiry or investigation, at law
or in equity, before or by any court, government agency, public board or body, pending (with
service of process having been accomplished) or, to the actual knowledge of the undersigned,
B-1
threatened by or against the Landowner: (i) in any way questioning the due formation and valid
existence of the Landowner; (ii) in any way contesting or affecting the validity of the Landowner
Documents or the consummation of the transactions contemplated thereby; (iii) in any way
questioning or contesting the validity of any governmental approval of the City or any aspect
thereof, or (iv)which would have a material adverse effect upon the financial condition of the
Landowner or the ability to develop the property it owns within the District.
5. Information. The information submitted by the Landowner to the City or the
Underwriter in connection with the preparation of the Preliminary Official Statement and the
Official Statement was, as of the date of its submittal, true and correct in all material respects.
6. Official Statement. The Landowner has provided the information set forth in the
Preliminary Official Statement and the Official Statement describing the Landowner and the
development undertaken and proposed to be undertaken by the Landowner, and the
Underwriter is authorized to use such information in the distribution of the Preliminary Official
Statement and the Official Statement. With respect to the discussion in the Preliminary Official
Statement and the Official Statement under the captions "THE DISTRICT" (except for any
discussion of the other owners of property in the District or their property, for which no
certification is provided), "PROPERTY OWNERSHIP OF PROPERTY — [Landowner relevant
information]," insofar as such statements purport to summarize information with respect to the
Landowner, the proposed development of its property in the District, the property owned by the
Landowner within the District, and pending or threatened litigation in which the Landowner is a
litigant, nothing has come to the Landowner's attention as of the date of this Certificate which
would lead the Landowner to believe that such discussion contains any untrue statements of a
material fact or omits to state a material fact necessary, to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
7. Landowner's Financial Statements. The financial statements, if any, and other
financial information submitted to the Underwriter are true, correct and complete in all material
respects and fairly present the financial position of the Landowner as of the date thereof. No
material adverse change has occurred in such financial position since the date of such financial
statements.
8. Taxes and Assessments. All taxes and assessments are current on the property
which the Landowner currently owns within the District.
9. A�praisal. The Landowner has reviewed the Appraisal Report dated
, 2007 ("Appraisal") prepared by Capital Realty Analysts and believes that the
estimate that the Improvements (as defined in the Appraisal) will be completed within 12 months
following the issuance of the Bonds is a reasonable assumption.
10. Consent to Bond Issuance. The Landowner hereby consents to the issuance of
the Bonds.
11. Consent to Fiscal Aqent AQreement. The Landowner hereby consents to all of
the terms and conditions contained in that certain Fiscal Agent Agreement, dated as of
, 2007 by and between the City and Wells Fargo Bank, National Association, as
trustee (the "Fiscal AgenY').
12. AQreement. In addition to the foregoing, the Landowner covenants that, while
the Bonds are outstanding, the Landowner will not bring any action, suit, proceeding, inquiry or
B-z
investigation at law or in equity, before any court, regulatory agency, public board or body which
in any way seeks to challenge or overturn the District, the levy of the Assessment in accordance
with the terms of the resolutions and ordinances previously adopted by the District or the validity
of the Bonds or the proceedings leading up to their issuance. The foregoing agreement shall
not prevent the Landowner in any way from bringing any other action, suit or proceeding
including, without limitation, an action or suit contending that the Assessment has not been
levied in accordance with the methodologies contained in the DistricYs Rate and Method of
Apportionment of Assessment pursuant to which the Assessments are fevied, an action or suit
with respect to the application or use of the Assessments levied and collected, or an action or
suit to enforce the obligations of the City and the District under the Acquisition Agreement or
any other agreements between the Landowner, the City and/or the District, or to which the
Landowner is a beneficiary.
Dated: , 2007
[DEVELOPER]
By:
Authorized Representative
B-3
Exhibit C
$
CITY OF PALM DESERT
SECTION 29 ASSESSMENT DISTRICT (NO. 2004-2)
LIMITED OBLIGATION IMPROVEMENT BONDS, SERIES 2007
Form of Landowner's Counsel Opinion
[Letterhead of Landowner Counsel]
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert California 92260-2578
Stinson Securities LLC
55 San Francisco Street, Suite 800
San Francisco, CA 94133
Kinsell Newcomb 8� DeDios, Inc.
462 Stevens Avenue, Suite 308
Solana Beach, CA 92075
Re: $ City of Palm Desert Assessment District
No. 2005-1 (Universitv Park) Limited Obliqation Improvement Bonds, Series
2007
Ladies and Gentlemen:
We have acted as counsel to (the "Landowner") in connection with
(i)the proposed development known as (the "DevelopmenY') to be
located in the City of Palm Desert (the "City") as described in the Preliminary Official Statement
(as defined herein), and (ii)the issuance and sale of $ City of Palm Desert
Section 29 Assessment District (No. 2004-2) Limited Obligation Improvement Bonds, Series
2007 (the "Bonds"). This opinion is rendered pursuant to the Purchase Contract dated
, 2007 (the "Purchase Contract") between the City, acting for itself and on behalf of
the City of Palm Desert Section 29 Assessment District (No. 2004-2), and the Underwriters
named therein. Capitalized terms used herein without definition shall have the meanings set
forth in the Purchase Contract.
In rendering the opinions set forth herein, we have reviewed and examined such
documents as we have determined to be appropriate, including the following documents:
A. The Purchase Contract;
B. The Official Statement for the offer and sale of the Bonds dated
, 2007 (the"Official StatemenY');
C-1
C. The Continuing Disclosure Agreement (Landowner), dated , 2006,
by and between the Landowner and Wells Fargo National Bank, as dissemination agent
(the"Continuing Disclosure AgreemenY');
D. A litigation search of Landowner, dated , 2006 (the "Litigation
Search"), conducted by , but without warranty as to the
completeness and accuracy thereof due to the potential for errors or inaccuracies in the
data and files made available to us from the applicable courts.
E. [The Acquisition Agreement dated as of , 2006, between
and the City (the "Acquisition AgreemenY'] and together with the
Continuing Disclosure Agreement, the "Landowner Agreements");]
F. [The Articles of Incorporation for dated as of
, certified by the Secretary of State of the State of California on
;l
G. [The Bylaws of the Landowner certified by the Secretary of Landowner to
be the bylaws in effect on the date hereof;]
H. Resolutions of the Board of Directors of Landowner dated
2007;
I. Certificate of Good Standing for Landowner, issued by the Secretary of
State of the State of California on , 2007; and
J. The Landowner Certificate provided by Landowner to the City and
Underwriter pursuant to the Purchase Contract.
With respect to factual matters underlying our opinions herein, we have made no
independent investigation or inquiry and have relied solely upon the Landowner Certificate. We
advise you that the phrase "to our knowledge," as used herein, means that no facts have come
to our attention, based upon an inquiry of attorneys in this firm who devote substantive legal
attention to Landowner, or as a result of our examination of the Landowner Certificate, that
indicate to us anything contrary to the statement to which the phrase relates. Except as
expressly set forth above, the phrase does not mean that we have conducted any investigation
or inquiry or performed any other examination, or review. We have no reason to believe that
any factual matters or assumptions relied upon by us are not true, correct and complete.
Our opinions herein are limited to the internal laws of the State of California and the
federal laws of the United States of America. We express no opinion whatsoever with respect
to the laws of any other jurisdiction and assume no responsibility for the applicability of such
laws. In rendering our opinions herein, we have assumed the following, with your approval:
(i) The genuineness and authenticity of all signatures on original documents
submitted to us (other than any signatures on behalf of Landowner); the authenticity and
completeness of all documents submitted to us as originals; the conformity to originals of
atl documents submitted to us as copies; where any signature, other than any signature
on behalf of Landowner purports to have been made in a corporate, governmental,
G2
fiduciary or other capacity, the person who affixed such signature had the full power and
authority to do so;
(ii) The due authorization, execution and delivery of the applicable
agreements by the parties thereto, other than the Landowner, and the legality, validity,
binding effect and enforceability against such parties of their respective obligations
under such agreements;
(iii) The truth, accuracy and completeness of all factual representations and
warranties of all parties under the documents described in paragraphs A through J,
above; and
(iv) The constitutionality or validity of a relevant statute, rule, regulation or
agency action is not in issue unless a reported decision in the State of California has
specifically addressed but not resolved, or has established, its unconstitutionality or
invalidity.
Based upon the foregoing and in reliance thereon, and based on our examination of
such questions of law as we have deemed appropriate under the circumstances, and subject to
any further assumptions, comments, exceptions, qualifications and limitations set forth below,
as of the date hereof, it is our opinion that:
1. Landowner is a corporation duly incorporated and validly existing in the
State of California and in good standing under the laws of the State of California.
Landowner is qualified to do business in the State of California.
2. The Landowner Agreements have been duly authorized, executed and
delivered by Landowner, and constitute legal, valid and binding obligations of the
Landowner, enforceable against the Landowner in accordance with their respective
terms.
3. The execution and delivery by Landowner of the Landowner Agreements
and the performance of its obligations thereunder wiil not conflict with or result in a
violation of, or breach of or a default under, as applicable (a)the Articles of Incorporation
or Bylaws of Landowner, (b)to our knowledge, any indenture, mortgage, deed of trust,
lease, note, commitment, agreement or other instrument to which Landowner is a party,
or by which Landowner or its property is bound or (c)to our knowledge, of any order,
rule or regulation of any court or other governmental body having jurisdiction over
Landowner, the conflict, violation or breach of which, in the case of clauses (b) or (c)
woufd have a material adverse effect on Landowner or the development, use, occupancy
or operation of the Development or any material portion thereof.
4. To our knowledge, and otherwise based solely upon a review of the
Litigation Search, there are no actions, suits or proceedings pending or threatened
against Landowner which, if determined adversely, would have a material adverse effect
(a) on the ability of Landowner to perform its obligations under the Landowner
Agreements or (b) on the development, construction, use, occupancy or operation of the
Development or a material portion thereof.
6. Without having undertaken to independently determine the
accuracy, completeness or fairness of the discussion contained in the Preliminary
C-3
Official Statement under the captions "THE DISTRICT" (except for any discussion of any
of the other owners of property in the District or their property, for which no certification
is provided) and "PROPERTY OWNERSHIP — [Landowner relevant information ]" insofar
as such statements purport to summarize information with respect to the Landowner, the
proposed development of its property in the District, the property owned by the
Landowner within the District, and pending or threatened fitigation in which the
Landowner is a litigant, nothing has come to our attention which would lead us to believe
that such discussion contains any untrue statements of a material fact or omits to state a
material fact necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
In addition, all of our opinions expressed hereinabove are specifically subject to and
limited by the following:
(a) The effect of laws or court decisions relating to bankruptcy, insolvency,
fraudulent conveyance, equitable subordination, reorganization, arrangement,
moratorium or other laws or court decisions relating to or affecting creditors' rights
generally.
(b) Limitations imposed by California or federal law or equitable principles
upon the availability of the remedy of specific performance of any of the remedies,
covenants or other provisions of any document or agreement and upon the availability of
injunctive relief or other equitable remedies.
In addition, we express no opinion as to the title of the property within the District or any
entitlements, permits, approvals or other assets relating to the Development.
This letter is intended solely for your use in accordance with the Purchase Contract and
may not be reproduced or filed publicly or relied upon for any other purpose by you or for any
purpose whatsoever by any other party without the express written consent of the undersigned
except that this Opinion may be copied and distributed as part of a closing book of the bond
transaction documents, provided that such distribution shall not expand in any way the
permitted uses of this letter. We assume no responsibility for the effect of any fact or
circumstance occurring subsequent to the date of this letter, including without limitation,
legislative or other changes in the law. Further, we assume no responsibility to advise you of
any facts or circumstances of which we become aware after the date hereof, regardless of
whether or not they may affect our opinions herein. This opinion is given as of the date hereof
and we assume no obligation to update our opinions herein after the date hereof.
Very truly yours,
[COUNSEL]
By:
G4
Exhibit D
$
CITY OF PALM DESERT
SECTION 29 ASSESSMENT DISTRICT (NO. 2004-2)
LIMITED OBLIGATION IMPROVEMENT BONDS, SERIES 2007
Certificate of Appraiser
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert. California 92260-2578
Stinson Securities LLC
55 San Francisco Street, Suite 800
San Francisco, CA 94133
Kinsell Newcomb & DeDios, Inc.
462 Stevens Avenue, Suite 308
Solana Beach, CA 92075
The undersigned hereby states and certifies:
1. That he or she is an authorized principal of Capital Realty Analysts (the
"Appraiser") and as such is familiar with the facts herein certified and is authorized and qualified
to certify the same.
2. That the Appraiser has prepared an appraisal report dated January_, 2007 (the
"Appraisal Report"), on behalf of the City of Palm Desert (the "City") and in connection with the
sale by the City on behalf of the Section 29 Assessment District (No. 2004-2) (the "District") of
its City of Palm Desert Section 29 Assessment District (No. 2004-2) Limited Obligation
Improvement Bonds, Series 2007 (the "Bonds"). Capitalized terms not otherwise defined herein
shall be defined as provided in the Purchase Contract dated as of , 2007, between the
City and the Underwriter named therein.
3. That, as of the date of this Certificate, the conclusions set forth in the Appraisal
Report included as Appendix F to the Preliminary Official Statement dated , 2007 (the
"Preliminary Official Statement") and the Official Statement dated , 2007 (the "Official
StatemenY') are confirmed.
4. That, as of the date hereof, the information under the caption "PROPERTY
OWNERSHIP — The Appraisal" and the Appraisal Report appended to the Preliminary Official
Statement and the Official Statement, to the best of our knowledge and belief, and subject to all
of the General and Specific Assumptions and Limiting Conditions set forth in the Appraisal
Report, does not contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, in the light of the circumstances
under which they were made, not misleading, and no events or occurrences have been
ascertained by us or have come to our attention that would substantially change the estimated
values concluded in the Appraisal Report. However, we have not performed any procedures
since the date of the Appraisal Report to obtain knowledge of such events or occurrences nor
are we obligated to do so in the future.
5. We hereby consent to the reproduction and use of the Appraisal Report
appended to the Preliminary Official Statement and the Official Statement. We also consent to
the use of the references to our firm made in the Preliminary Official Statement.
Dated: , 2007
CAPITAL REALTY ANALYSTS
By:
Jones Hall Draft?J21/07
PRELIMINARY OFFICIAL STATEMENT DATED ,2007
NEW ISSUE-FULL BOOK-ENTRY NOT RATED
In the opinion of Richards, Watson & Gershon, A Professional Corporation, Los Angeles, Califomia, Bond Counsel,
based on existing law and assuming compliance with certain covenants set forth in the documents pertaining to the Bonds
and requirements of the Intemal Revenue Code of 1986, as amended (the "Code), as described herein, interest on the
Bonds is not inc/uded in gross income of fhe owners thereof for federal income fax purposes. !n the opinion of Bond
Counsel, interest on the Bonds is not treaied as an item of tax preference for the purposes of the federa!a/ternative minimum
tax imposed on individuals and corporations. �nterest on the Bonds may be subject to certain federa/ taxes imposed on
corporations, inc/uding the corporate altemative minimum tax on a portion of that interest. in the further opinion of Bond
Counsel, interest on the Bonds is exempt irom personal income taxes imposed by the State of California. See �T,vc
MATTERS."
� '
CITY OF PALM DESERT
SECTION 29 ASSESSMENT DISTRICT(NO.2004-02)
LIMITED OBLIGATION IMPROVEMENT BONDS,SERIES 2007
Dated: Date of Delivery Due: September 2,as shown below
The City of Palm Desert Section 29 Assessment District(No.2004-02)Limited Obligation Improvement Bonds,Series 2007
(the"Bonds")are being issued by the City of Palm Desert(the"City")pursuant to the provisions of the Improvement Bond
The Bonds Act of 1915 (Division'10 of the Catifornia Streeis and Highways Code) for the purpose of financing certain infrastructure
improvements within the City's Section 29 - Assessment District (No. 2004-02) (the "District"). Interest on the Bonds is
payable September 2,2007,and thereafter semiannually on March 2 and September 2 of each year.
The Bonds are issued upon and secured by the unpaid special assessments levied on parcels within the District. The
Bonds are special limited obligations of the City and are not payable from the City's general fund. Assessment installmenis
of principal and interest sufficient to meet annual debt service on the Bonds are to be included on the regular Riverside
Security County tax bills sent to owners of property against which there are unpaid assessments. These annual assessment
installments are to be used to pay dabt service on the Bonds as it becomes due. To provide funds for payment of the Bonds
and the interest thereon in the event of any delinquent installments, the City will establish a Reserve Fund (rom Bond
proceeds,as described herein. See"SECURITY FOR THE BONDS."
The District Property in the District consists of 189 assessment parcels on approximately 340.33 acres which is partially deveioped. See
"THE DISTRICT."
Early The Bonds are subject to optional and mandatory redemption as more fully described herein. Transfers of property
Redemption ownership and other similar circumstances could result in prepayment of all or part of the assessments. Such prepayment
would result in redemption of a portion of the Bonds prior to their stated maturities.
THE BONDS ARE LIMITED OBLIGATION IMPROVEMENT BONDS AND ARE SECURED SOLELY BY THE SPECIAL
ASSESSMENTS AND THE AMOUNTS IN THE REDEMPTION FUND AND THE RESERVE FUND. THE BONDS ARE NOT SECURED BY
THE GENERAL TAXING POWER OF THE CITY OF PALM DESERT,THE COUNTY OF RIVERSIDE(THE"COUNTY"),OR THE S7ATE OF
CALIFORNIA(THE"STATE")OR ANY POLITICAL SUBDIVISION OF THE STATE. NEITHER THE FAITH AND CREDIT NOR THE TAXING
POWER OF THE CITY,THE COUNTY,THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF
THE BONDS. THE INFORMATION SET FORTH IN THIS OFFICIAL STATEMENT, INCLUDING INFORMATION UNDER THE HEADING
"SPECIAL RISK FACTORS,"SHOULD BE READ IN ITS ENTIRETY.
This cover page contains certain information for general reference only. It is not a summary of this issue. Investors are advised to
read the entire Qfflcial Statement to obtain information essential to the making of an informed investment decision.
MATURITY SCHEDULE
Maturtty Principal Interest CUSIP Maturity Prtnc(pal Interest CUSIP
September 2 Amount Rate Price ( ) September 2 Amount Rate Price ( )
� °fo Term Bond Due September 2, ;Price: 100.000%,CUSIP
t Copyright 2007,American Bankers Association. CUSIP data herein are pravided by Standard 8 Poor's CUSIP Service Bureau,a division of The
McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the City nor the Underwriter assumes any responsibility for the
accuracy of these CUSIP data.
The Bonds ara being offered when, as, and if issued by the City and received by the Underwriter, subject to prior sale and to the
approval of validity by Richards, Watson 8 Gershon, A Professional Law Corporation, Los Mgeles, California, Bond Counsel, and the
approval of certain matters for the City by the City Attomey of the City of Palm Desert. Certain legal matters will be passed upon by Jones
Hall,A Professional Law Corporation, San Francisco, California, Disclosure Counsel. It is expected that the Bonds in book-entry form will be
available for delivery on or about ,2007.
Stinson Securities, LLC Kinsell, Newcomb& De Dios, Inc.
Dated: ,2007
CITY OF PALM DESERT, CALIFORNIA
City Council
Richard S. Kelly, Mayor
Jean M. Benson, Mayor Pro Tem
Jim Ferguson, Councilman
Cindy Finerty, Councilmember
Robert A. Spiegel, Councilman
City Staff
Carlos L. Ortega, City Manager
Justin McCarthy, Assistant City Manager/Redevelopment
Homer Croy, Assistant City Manager/Development Services
Sheila R. Gilligan, Assistanf City Manager/Community Services
Paul S. Gibson, Finance DirectorlTreasurer
Jose Luis Espinoza, Assistant Finance Director
David Yrigoyen, Director of Redevelopment & Housing
Rachelle Klassen, City Clerk
SPECIAL SERVICES
Bond Counsel
Richards, Watson & Gershon, A Professional Corporation
Los Angeles, California
Fiscal Agent
Wells Fargo Bank, National Association
Los Angeles, California
Financial Advisor
Del Rio Advisors, LLC
Modesto, California
Assessment Engineers
MuniFinancial
Temecula, California
Wildan
Anaheim, California
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Offlcial Statement. This Official Statement is submitted in connection with the sale of the
Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
This O�cial Statement is not to be construed as a contract with the purchasers of the Bonds.
Estimates and Forecasts. When used in this Official Statement, in any press release and in any
oral statement made with the approval of an authorized officer of the City, the words or phrases "will likely
result," "are expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect,"
"intend" and similar expressions identify "forward looking statements." Such statements are subject to
risks and uncertainties that could cause actual results to differ materially from those contemplated in such
forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions
used to develop the forecasts will not be realized and unanticipated events and circumstances may occur.
Therefore, there are likely to be differences between forecasts and actual results, and those differences
may be material. The information and expressions of opinion herein are subject to change without notice,
and neither the delivery of this Official Statement nor any sale made hereunder shali, under any
circumstances, give rise to any implication that there has been no change in the affairs of the City since
the date hereof.
Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the
City to give any information or to make any representations in connection with the offer or sale of the
Bonds other than those contained herein and if given or made, such other information or representation
must not be relied upon as having been authorized by the City or the Underwriter. This Official Statement
does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the
Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer,
solicitation or sale.
Involvement of Underwrlter. The Underwriter has reviewed the information in this Official
Statement in accordance with, and as a part of, their responsibilities to investors under the federal
securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not
guarantee the accuracy or completeness of such information. The information and expressions of
opinions herein are subject to change without notice and neither delivery of this Official Statement nor any
sale made hereunder shall, under any circumstances, create any implication that there has been no
change in the affairs of the Ciry since the date hereof. All summaries of the documents referred to in this
Official Statement, are made subject to the provisions of such documents, respectively, and do not
purport to be complete statements of any or all of such provisions.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATIOfV REQUIREMENTS
CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATE.
TABLE OF CONTENTS
IfVTRODUCT{ON................................................................................................................................................. 1
THE FINANCING PLAN ..................................................................................................................................... 3
TheImprovements......................................................................................................................................... 3
Costof the Improvements .............................................................................................................................4
Allocationof District Cost...............................................................................................................................4
AssessmentSpread....................................................................................................................................... 5
Construction ofthe Improvements................................................................................................................ 5
Estimated Sources and Uses of Funds........................................................................................................ 5
THEBONDS........................................................................................................................................................ 7
AuthorityFor Issuance...................................................................................................................................7
Registration..................................................................................................................................................... 7
Payment.......................................................................................................................................................... 7
Redemption ....................................................................................................................................................8
DebtService Schedule................................................................................................................................ 10
SECURITY FOR THE BONDS ........................................................................................................................ 11
Assessments................................................................................................................................................ 11
Collection of Assessments.......................................................................................................................... 12
Riverside County Tax Loss Reserve.......................................................................................................... 12
Covenant to Commence Superior Court Foreclosure............................................................................... 13
Establishmentof Special Fund.................................................................................................................... 13
Priorityof Lien............................................................................................................................................... 16
THEDISTRICT.................................................................................................................................................. 17
TheCity of Palm Desert............................................................................................................................... 17
Locationof the District................................................................................................................................. 17
Anticipated Development in the District...................................................................................................... 17
EnvironmentalMatters.................................................................................................................................20
PROPERTYOWNERSHIP...............................................................................................................................21
Ownership of Properry in the District..........................................................................................................21
TheAppraisal ...............................................................................................................................................24
AppraisedValue to Burden Ratio................................................................................................................26
NoOverlapping Bonded Debt.....................................................................................................................27
SPECIALRISK FACTORS...............................................................................................................................27
General .........................................................................................................................................................27
Limited Obligation of the City Upon Delinquency......................................................................................28
Unavailabilityof City Funds.........................................................................................................................28
Bankruptcy and Foreclosure .......................................................................................................................29
LandValue and Development.....................................................................................................................29
AppraisedValues.........................................................................................................................................32
NoAcceleration Provision ...........................................................................................................................32
Absence of Market for the Bonds................................................................................................................32
Proposition218 ............................................................................................................................................33
CONCLUDING INFORMATION.......................................................................................................................33
Enforceabilityof Remedies..........................................................................................................................33
Absenceof Material Litigation.....................................................................................................................33
Certain Information Concerning the Ciry....................................................................................................34
TaxMatters...................................................................................................................................................34
ContinuingDisclosure..................................................................................................................................35
Approvalof Legality .....................................................................................................................................36
Underwriting .................................................................................................................................................36
FinancialAdvisor..........................................................................................................................................37
Miscellaneous...............................................................................................................................................37
APPENDIX A - Engineer's Report
APPENDIX B - City of Palm Desert General Information
APPENDIX C - Form of Bond Counsel Opinion
APPENDIX D - Form of Issuer Continuing Disclosure Undertaking
APPENDIX E - Form of Property Owner Continuing Disclosure Undertaking
APPENDIX F - Appraisal Report
APPENDIX G - The Book-Entry System
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OFFICIAL STATEMENT
� *
CITY OF PALM DESERT
SECTION 29 ASSESSMENT DISTRICT (NO. 2004-02)
LIMITED OBLIGATION IMPROVEMENT BONDS, SERIES 2007
INTRODUCTION
This Official Statement sets forth certain information concerning the issuance and sale
by the City of Palm Desert, California (the "City") of $ * in principal amount of its
Section 29 Assessment District (No. 2004-02) Limited Obligation Improvement Bonds, Series
2007 (the "Bonds"). The Bonds are issued pursuant to the Improvement Bond Act of 1915,
being Division 10 of the California Streets and Highways Code (the "1915 AcY'), an Resolution
approving the issuance of the Bonds adopted by the City Council of the City on
, 2007 and a Fiscal Agent Agreement dated as of 1, 2007 (the "Fiscal
Agent Agreement") by and between the City and Wells Fargo Bank, National Association, as
Fiscal Agent, registrar, and transfer agent (the "Fiscal Agent").
The District. The Section 29 - Assessment District (No. 2004-02) (the "District") was
formed in accordance with the Municipal Improvement Act of 1913, being Division 12 of the
California Streets and Highways Code (the "1913 Act"). The District is generally located in the
northwest portion of the City, at the Northwest corner of Portola Avenue and Gerald Ford Drive.
Property Ownership and Deve/opment. The property in the District is approximately
340 acres, mostly undeveloped, and planned for mostly residential uses, and to a lesser extent,
commercial uses. The property is currently owned by homebuilders and land developers, as
described under"PROPERTY OWNERSHIP AND PROPOSED DEVELOPMENT."
Use of Proceeds of the Bonds. Proceeds of the Bonds will primarily be used to pay for
a portion of the infrastructure improvements in the District, as described in the Engineer's
Report (described herein), including street improvements, water and sewer improvements and,
to a lesser extent, other related capital improvements. See "THE DISTRICT" and "THE
IMPROVEMENT PROJECT."
'Preliminary,subject to change.
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Source of Payment of the Bonds. The Bonds are issued upon and secured by the
unpaid assessments (the "Assessments") and, together with interest thereon, constitute a trust
fund for the redemption and payment of the principal of the Bonds and the interest thereon.
Under the provisions of the 1915 Act, Assessment installments sufficient to meet annual debt
service on the Bonds are to be collected on the regular property tax bills sent to owners of
property within the District against which there are unpaid Assessments. These annual
installments are to be paid into an Assessment Fund (the "Assessment Fund"), which will be
held by the City and used to pay Bond principal and interest as it becomes due.
Security for the Bonds. The Bonds are secured by a pledge (which pledge shall be
effected in the manner and to the extent herein provided) of all of the Assessment Revenues
and all moneys deposited in the Redemption Fund and the Reserve Fund. "Assessment
Revenues" means the revenues received by the City in each Fiscal Year from the collection of
the annual installments of the unpaid Assessments and proceeds from the sale of property for
delinquent Assessment instaliments. Each respective parcel in the District which is subject to
an unpaid Assessment is security for such Assessment. The unpaid Assessments represent
fixed liens on the parcels of land assessed under the proceedings and failure to pay the
Assessments could result in proceedings to foreclose title to the delinquent property. The
Assessments do not constitute the personal indebtedness of the owners of assessed parcels
and no proceedings to collect directly from an owner are permitted. See "SECURITY FOR THE
BONDS."
Value of Property in the District. Capital Realty Analysts, Palm Desert, California (the
"Appraiser") prepared an appraisal report dated February 15, 2007 of property within the
District subject to the Assessments, with a date of value of January 31, 2007 (the "Appraisal").
The Appraiser estimated that the fee simple interest of the property subject to the lien of the
Assessments had an estimated market value of $225,893,000. See "THE DISTRICT — The
Appraisal" and "APPENDIX F—APPRAISAL REPORT."
Reserve Fund. The City will direct the Fiscal Agent to establish a Reserve Fund (the
"Reserve Fund") in the amount of the Reserve Requirement (described herein) from Bond
proceeds, which amount will be transferred to the Redemption Fund in the event of
delinquencies in the payment of the Assessment installments to the extent of such
delinquencies. The Reserve Fund will be maintained from available Assessment payments, in
an amount equal to the Reserve Requirement, as defined herein. See "SECURITY FOR THE
BONDS — Establishment of Special Funds — Reserve Fund." If there are additional
delinquencies after depletion of funds in the Reserve Fund, the City is not obligated to transfer
into the Assessment Fund the amount of such delinquencies out of any other available monies
of the City.
Limited Obligation of the City. The Bonds are not payable from or secured by the
general fund of the City. The Bonds are not secured by the general taxing power of the
City, the County of Riverside (the "County"), or the State of California (the "State") or any
political subdivision of the State, and neither the City, the County, nor the State nor any
political subdivision of the State has pledged its full faith and credit for the payment of
the Bonds.
Summary of/nformation. There follow brief descriptions of the Bonds, the District, the
Improvements, the City, the Fiscal Agent Agreement, and certain other matters. Such
descriptions and the discussions and information contained herein do not purport to be
comprehensive or definitive. All references in this Official Statement to documents, the Bonds,
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and the assessment proceedings are qualified in their entirety by references to the actual
documents and the City's resolutions setting forth the terms thereof. Copies of the Fiscal Agent
Agreement and other documents described in this Official Statement may be obtained from the
City.
THE FINANCING PLAN
The Improvements
Proceeds of the Bonds will be used in part to pay for a portion of the cost of
infrastructure improvements of benefit to the property within the District, as described in the
Engineer's Report pertaining to the District prepared by MuniFinancial, Temecula, California
(the "Engineer's Report"). The Engineer's Report identifies the City infrastructure
improvements necessary for development in the District, consisting generally of sanitary sewer
lines, storm drain lines, roadway improvements, and water lines and improvements (collectively,
the "Improvements") to be funded in part by the Bonds. The Improvements are described in
detail in the Engineer's Report as items representing separate components of the total work.
The following description of the Improvements is taken from the Engineer's Report.
Street /mprovements. Streets to be constructed are arterial streets and collector
streets. These streets will function to carry traffic around and within the developments for
proper circulation. The arteriaf streets consist of new streets or street widening of existin�
streets. The arterial streets are Monterey Avenue, Gerald Ford Drive, Portola Avenue, 35t
Avenue and Dinah Shore Drive. Collector streets to serve the internal portions of the District
are Gateway Drive, "A" Street, Dolce Avenue and Cortesa Way.
The streets will be constructed andlor widened to City standards. These standards may
include curb and gutter, pavement, medians and median landscaping, sidewalks and utility
relocation.
Storm Drain Improvements. Storm Drains are required so that increased run-off from
the developed properties does not negatively affect downstream properties. The storm drains
will generally be constructed in the existing or proposed streets. The storm drains will outlet into
an existing drainage basin at the northeasterly portion of the District. This basin will retain the
storm flows so that it does not negatively affect downstream properties.
The drainage basin is privately held and will need to be acquired to allow the properties
to develop. The basin will also need to be deepened to increase storm run-off capacity and the
sidewalls will need to be stabilized from erosion.
Sewer Improvements. Sanitary sewer improvements will be constructed to serve most
of the properties in the District. The sewers will be the backbone collection system to serve the
properties as they develop. The sewers will be extended to an existing 12-inch pipe owned by
the Coachella Valley Water District that crosses the Southern Pacific Railroad tracks and
Interstate 10. The 12-inch pipe will be removed and replaced with an 18-inch pipe to provide
capacity for the District properties.
As the properties develop, the sewers will be extended to serve the individual
lots/buildings in the development and the cost of these extensions are not part of the
Improvements.
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Water System Improvements. Water mains and hydrants will be constructed in the
District to provide fire protection and domestic water to each of the properties as they develop.
As development proceeds, these water mains will be extended to serve individual lots/buildings
in the development and are not part of the Improvements.
Re/ocation of Utilities. Existing overhead utilities along some but not all of the arterial
streets will be relocated to construct street improvements.
Rights-of-Way/Land Acquisition. Rights-of-Way and/or land will be required to
construct the improvements and benefit the parcels where existing street or utility easements do
not exist.
Cost of the Improvements
Approved costs which may be reimbursed from Bond proceeds include the
Improvements and costs associated with the planning, engineering, and designing the
Improvements, costs associated with the creation of the District, issuance of the Bonds,
determination of the amount of the Assessment, collection of the Assessment and costs
otherwise incurred in order to carry out the authorized purposes of the District; and any other
expenses incidental to the construction, completion and inspection of the Improvements.
Details of the nature of each component of the Improvements are set forth in the Description of
Work in the Engineer's Report included as Appendix A hereto. The total cost of construction of
the Improvements to be funded with Bond proceeds is estimated in the Engineer's Report to be
$38,454,875.
The cost of the Improvements is summarized in the Engineer's Report as follows:
Descrlption Total
Construction Costs $19,049,240
Impact Fees 1,718,309
Rights-of-Way 5,577,296
Contingencies 2,731,826
Engineering and Incidentals 3,189,950
Bond Costs 7,025,321
Total Improvement Costs 39,291,942
Less City Contributions (713,246)
Less Sewer General Benefit (123,821)
TOTAL TO ASSESSMENT $38,454,875
Souroe: MuniFinancial; Wildan.
Allocation of District Cost
The objective of the assessment spread is to distribute costs over the area within the
District in proportion to the special benefits that are derived by each parcel from the District
Improvemens. The method of assessment is determined by an analysis of the benefit a
property receives rather than the specific cost of providing improvements to an individual
property. The Act does not define specific formulas for allocation of project costs among the
parcels within the District. The Act, however, requires each parcel to be assessed its share of
the project costs in accordance with the benefit conferred on each parcel by the Improvements.
Assessment spread formulae are typically based on land area, actual or adjusted street
frontage, utility service consumption, and traffic generation or a combination thereof. The
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Engineer of Work has provided the assessment spread for property within the District and the
District assessment for each property as shown below.
Assessment Spread
The following table summarizes the assessments set forth in the Engineer's Report.
City of Palm Desert
Limited Obligation Improvement Bonds
Section 29 -Assessment District (No. 2004-02)
Assessment Spread
Assessment
Parcel Assessment
ID No. Amount Owner
1 Summit Monte�ey Properties
2 Noble & Co.
3 Ponderosa Homes II, Inc.
4 Lowes HIW, Inc.
5 Verizon
6 MacLeod Couch Land Co.
7 MacLeod Couch Land Co.
8 MacLeod Couch Land Co.
9 Palm Springs Unified School District
10 Lomas De Arena
11 Ponderosa Homes II, Inc.
12 Ponderosa Homes II, Inc.
13 Ponderosa Homes II, Inc.
14 Desert Wells 237, LLC
15 Desert Wells 237, LLC
16-189 Rilington Dolce, LLC
Construction of the Improvements
[Construction of the Improvements is being pertormed by the Property Owners and is
expected to be compieted in . The City will acquire the Improvements under a
Funding, Construction and Acquisition Agreement dated as of (the "Funding and
Acquisition Agreement"), by and between the City and the Property Owners.
Under the Funding and Acquisition Agreement, the City agrees to acquire the
Improvements from the Property Owners, at the purchase price set forth in the Funding and
Acquisition Agreement, solely from amounts on deposit in the Improvement Fund established
under the Fiscal Agent Agreement. ]
Estimated Sources and Uses of Funds
The proceeds of the sale of the Bonds will be deposited with the Fiscal Agent in trust
pursuant to the terms of the Fiscal Agent Agreement in the amounts set forth below. The
moneys in the Improvement Fund established for the Bonds will be held by the Fiscal Agent and
will be used to finance the Improvements and to pay certain costs associated with the issuance
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and delivery of the Bonds. A portion of the net proceeds of the Bonds will be deposited in the
Reserve Fund.
A summary of the estimated sources and uses of funds associated with the sale of the
Bonds follows:
Estimated Sources of Funds:
Principal Amount of Bonds
Less: Underwriter's Discount
Total
Estimated Uses of Funds:
Deposit to Improvement Fund
Deposit to Costs of Issuance Fund�'�
Deposit to Reserve Fund
Total
Includes fees of Bond Counsel, fees of Disclosure Counsel, initial fees,expenses and
charges of the Fiscal Agent,costs of printing the Official Statement,administrative fees
of the City and other costs of issuance.
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THE BONDS
Authority For Issuance
The District proceedings were conducted pursuant to the 1913 Act and a resolution of
intention adopted by the City Council of the City. The Bonds, which represent the unpaid
Assessments levied against privately awned property in the District, are issued pursuant to the
provisions of the 1915 Act, the Resolution and the Fiscal Agent Agreement.
Registration
The Bonds will be issued in fully registered form, without coupons, in the denomination
of$5,000 each or in any integral multiple thereof. The Bonds will be dated the date of delivery,
and will bear interest at the rates per annum, and mature on the dates and in the amounts set
forth on the front cover of this Official Statement.
The Bonds are being issued as fully registered bonds, registered in the name of Cede &
Co. as nominee of The Depository Trust Company, New York, New York ("DTC") and will be
available to ultimate purchasers in the denomination of $5,000 or any integral multiple thereof,
under the book-entry system maintained by DTC. Ultimate purchasers of Bonds will not receive
physical certificates representing their interest in the Bonds. So long as the Bonds are
registered in the name of Cede 8� Co., as nominee of DTC, references herein to the Owners will
mean Cede & Co., and will not mean the ultimate purchasers of the Bonds. Payments of the
principal, premium, if any, and interest on the Bonds will be made directly to DTC, or its
nominee, Cede & Co. so long as DTC or Cede & Co. is the registered owner of the Bonds.
Disbursements of such payments to DTC's Participants is the responsibility of DTC and
disbursements of such payments to the Beneficial Owners is the responsibility of DTC's
Participants and Indirect Participants, as more fully described herein. See "APPENDIX D —The
Book-Entry System" below.
Payment
Interest on the Bonds is payable September 2, 2007, and thereafter semiannually on
March 2 and September 2 of each year (each an "Interest Payment Date"). Interest will be
calculated on the basis of a 360-day year composed of twelve 30-day months. Each Bond shall
bear interest from the Interest Payment Date next preceding the date of authentication thereof
unless (i) it is authenticated after a Record Date and before the close of business on the next
Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or
(ii) it is authenticated on or before the Record Date preceding the first Interest Payment Date, in
which event it shall bear interest from the Closing Date; provided, however, that if at the time of
authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the
Interest Payment Date to which interest has previously been paid or made available for payment
thereon or from the Closing Date, if no interest has previously been paid or made available for
payment thereon.
Interest on the Bonds is payable by check of the Fiscal Agent mailed by first class mail,
postage prepaid, on each Interest Payment Date, until the principal amount of a Bond has been
paid or made available for payment, to the registered Owner thereof at such registered Owner's
address as it appears on the Registration Books at the close of business on the Record Date
preceding the Interest Payment Date or by wire transfer made on such Interest Payment Date
upon written instructions of any owner of $1,000,000 or more in aggregate principal amount of
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Bonds delivered to the Fiscal Agent prior to the applicable Record Date. The principal of the
Bonds and any premium on the Bonds are payable in lawful money of the United States of
America upon surrender of such Bonds at the Principal Office of the Fiscal Agent.
Redemption
Optiona/ Redemption. The Bonds are subject to redemption prior to their stated
maturity dates on any Interest Payment Date, as selected by the City, in integral multiples of
$5,000, at the option of the City from moneys derived by the City from any source, at the
following redemption prices expressed as percentages of the principal amount of the Bonds to
be redeemed, together with accrued interest to the date of redemption:
Redemption Dates Redemption Prices
Mandatory Sinking Fund Redemption. The term bonds maturing on September 2,
are subject to mandatory redemption on or after September 2, , by lot, at a
redemption price equal to the principal amount thereof to be redeemed (accrued interest to the
redemption date is mailed separately), without premium, solely from amounts deposited in the
Redemption Fund pursuant to the Fiscal Agent Agreement, as follows:
Sinking Fund
Redemption Date Principal
(September 2) Amount
Redemption Procedure by Fiscal Agent. The Fisca� Agent shall cause notice of any
redemption to be provided by registered or certified mail or by personal service or in any such
other manner as is acceptable to such other institutions at least thirty (30) days prior to the date
fixed for redemption, to the Securities Depositories and the Information Services selected by the
City, and to the respective registered Owners of any Bonds designated for redemption, at their
addresses appearing on the Registration Books.
Such notice shall state the date of such notice, the date of issue of the Bonds, the place
or places of redemption, the redemption date, the redemption price and, if less than all of the
then Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers (if
any) and Bond numbers of the Bonds to be redeemed, or shall state that all Bonds between two
stated Bond numbers, both inclusive, are to be redeemed or that al! of the Bonds of one or more
maturities have been called for redemption, shall state as to any Bond called for redemption in
part the portion of the principal of the Bond to be redeemed, shall require that such Bonds be
then surrendered at the Principal Office of the Fiscal Agent for redemption at the said
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redemption price, and shall state that further interest on such Bonds will not accrue from and
after the redemption date.
Neither failure to receive any redemption notice nor any defect in such redemption notice
so given shall affect the sufficiency of the proceedings for the redemption of such Bonds. Upon
the payment of the redemption price of Bonds being redeemed, each check or other transfer of
funds issued for such purpose shall, to the extent practicable, bear the CUSIP number
identifying, by issue, maturity and Bond number, the Bonds being redeemed with the proceeds
of such check or other transfer.
Effect of Redemption. From and after the date fixed for redemption, if funds available
for the payment of the redemption prices of the Bonds called for redemption shall have been
deposited in the Redemption Fund or the Assessment Prepayment Account, as applicabie, such
Bonds or portions thereof shall cease to be entitled to any benefit under this Agreement other
than the right to receive payment of the redemption price, and interest shall cease to accrue on
the Bonds or portions thereof to be redeemed on the redemption date specified in the notice of
redemption.
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Debt Service Schedule
Set forth below is the debt service schedule for the Bonds.
City of Palm Desert
Limited Obligation Improvement Bonds
Section 29 -Assessment District(No. 2004-02)
Annual Bond Debt Service
Year Ending Principal Total Bond
September 2 Amount Interest Debt Service
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SECURITY FOR THE BONDS
Assessments
The Bonds are issued upon and secured by the unpaid Assessments against the
property in the District, together with interest thereon, and the unpaid Assessments, together
with interest thereon, constitute a trust fund for the redemption and payment of the principal of
the Bonds and the interest thereon. The Bonds are further secured by the monies in the
Redemption Fund and the Reserve Fund created pursuant to the Fiscal Agent Agreement.
Principal of and interest and redemption premiums, if any, on the Bonds are payable exclusively
out of the Redemption Fund.
The Bonds are secured by a pledge (which pledge shall be effected in the manner and
to the extent herein provided) of all of the Assessment Revenues and all moneys deposited in
the Redemption Fund and the Reserve Fund. "Assessment Revenues" means the revenues
received by the City in each Fiscal Year from the collection of the annual instaNments of the
unpaid Assessments and proceeds from the sale of property for delinquent Assessment
installments.
The Assessments and each installment thereof and any interest and penalties thereon
constitute a lien against the parcels of land on which the Assessments are levied until the same
are paid. Such lien is subordinate to all fixed special assessment liens previously imposed upon
the same property, but has priority over all existing and future private liens and over all fixed
special assessment liens which may thereafter be created against the property. Such lien is co-
equal to and independent of the lien for general property taxes.
The Bonds are not secured by the general taxing power of the City, the County, or
the State or any political subdivision of the State, and neither the City, the County, the
State nor any political subdivision of the State has pledged its full faith and credit for the
payment thereof.
Although the unpaid Assessments constitute fixed liens on the parcels assessed, they
do not constitute the personal indebtedness of the owners of said parcels. Furthermore, there
can be no assurance as to the ability or the willingness of such owners to pay the unpaid
Assessments. In addition, there can be no assurance that the present owners will continue to
own their parcel in the District.
The unpaid Assessments will be collected in annual installments, together with interest
on the declining balance, on the Riverside County tax roll on which general taxes on real
property are coflected, and are payable and become delinquent at the same time and in the
same proportionate amounts and bear the same proportionate penalties and interest after
delinquency as do said general taxes, and the property upon which the Assessments were
levied is subject to foreclosure, sale and redemption if the Assessment installments are not paid
when due. These annual installments are to be paid into the Assessment Fund held by the City,
for transfer into the Redemption Fund, which will be held by the Fiscal Agent and used to pay
the principal of and interest on the Bonds as they become due. The installments billed against
all of the parcels of property in the District subject to the Assessments will be equal to the total
principal and interest coming due on all of the Bonds that year, plus, with respect to each parcel
in the District, an amount to cover the administrative charges of the City related to the Bonds
and the Assessments.
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Collection of Assessments
Pursuant to the 1913 Act and the 1915 Act, installments of principal and interest
sufficient to meet annual debt service on the Bonds will be billed by the County to the owner of
each parcel within the District and against which there are assessments. Upon receipt by the
County and transferral to the City, assessment installments are to be deposited into the
Redemption Fund, which shall be held by the City and used to pay principal and interest
payments on the Bonds as they become due. The assessment installments billed against each
parcel each year represent pro rata shares of the totaf principal and interest coming due that
year, based on the percentage which the assessment against that parcel bears to the total of
assessments in connection with the financing. Pursuant to the Fiscal Agent Agreement,
payment of the principal of and interest on the Bonds is secured by moneys in the Redemption
Fund and certain other funds established under the Fiscal Agent Agreement.
The City has no obligation to advance funds to replenish the Reserve Fund except to the
extent that delinquent assessments are paid or proceeds from foreclosure sales are realized.
Additionally, the City has covenanted to cause the institution of judicial foreclosure proceedings
following a delinquency, and thereafter to diligently cause prosecution to completion of such
foreclosure proceedings upon the lien of delinquent unpaid assessments as described in
"Covenant to Commence Superior Court Foreclosure" below. The City is not required to bid at
the foreclosure sale.
Riverside County Tax Loss Reserve
The County and its subsidiary political subdivisions operate under the provisions of
Sections 4701 through 4717, inclusive, of the Revenue and Taxation Code of the State of
California, commonly referred to as the "Teeter Plan," with respect to property tax collection and
disbursement procedures. These sections provide an alternative method of apportioning
secured taxes whereby agencies levying taxes through the County tax roll may receive from the
County 100% of their taxes at the time they are levied. The County treasury's cash position
(from taxes) is insured by a special tax losses reserve fund (the "Tax Losses Reserve Fund")
accumulated from delinquent penalties. Pursuant to the Teeter Plan, each taxing entity in the
County may draw on the amount of uncollected taxes and assessments credited to its fund, in
the same manner as if the amount credited had been collected. The tax losses reserve fund is
used exclusively to cover losses occurring in the amount of tax liens as a result of sales of tax-
defaulted property. Monies in this fund are derived from delinquent tax penalty collections.
This method of apportioning taxes extends to all assessments collected on the County
tax roll. Although a local agency currently receives the tota! levy for its special assessments
without regard to actual collections, the basic legal liability for assessment deficiencies at all
times remains with the sponsoring agency and, therefore, the alternative method of tax
apportionment only assists the agency in the current financing of the maturing debt service
requirements.
The Board of Supervisors may discontinue the procedures under the Teeter Plan
altogether, or with respect to any tax or assessment levying agency in the County, if the rate of
secured tax and assessment delinquency in that agency in any year exceeds 3% of the total of
all taxes and assessments levied on the secured rolls for that agency.
The assessment installments with respect to the Local Obligations will be collected
pursuant to the procedures described above. Thus, so long as the County maintains its policy
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of collecting Assessments pursuant to said procedures and the City meets the Teeter Plan
requirements, the City will receive 100% of the annual assessment installments levied without
regard to actual collections in the Districts. There is no assurance, however, that the County
Board of Supervisors will maintain its policy of apportioning assessments pursuant to the
aforementioned procedures.
Covenant to Commence Supe�ior Court Foreclosure
The 1913 Act provides that in the event any assessment or installment thereof or any
interest thereon is not paid when due, the City may order the institution of a court action to
foreclose the lien of the unpaid assessment and acquire title to the parcel to which the
delinquency relates. In such an action, the real property subject to the unpaid assessment may
be sold at judicial foreclosure sale. This foreclosure sale procedure is not mandatory, however,
the City has covenanted that it will order, and cause to be commenced, judicial foreclosure
proceedings against properties with delinquent assessment installments in excess of $5,000 by
the October 1 following the close of the Fiscal Year in which such installments were due, and
will commence judicial foreclosure proceedings against all properties with delinquent
assessment installments by the October 1 following the close of each Fiscal Year in which it
receives assessments in an amount which is less than ninety-five percent (95%) of the total
assessments which were to be received in the Fiscal Year and diligently pursue to completion
such foreclosure proceedings; provided, however, the City may elect to defer the
commencement of foreclosure proceedings with respect to any property so long as (i}the
amount on deposit in the respective Reserve Fund is equal to the Reserve Requirement and (ii)
the City is current in the payment of debt service on the Bonds.
Notwithstanding the foregoing, if at any time, the County's Teeter Plan is in effect and
applicable to the District and the assessment being levied in connection with the Bonds, the City
may, in its discretion, elect not to commence any judicial foreclosure proceeding or defer the
commencement of such proceedings until such time as the City deems appropriate.
Prior to July 1, 1983, the statutory right of redemption from such a judicial foreclosure
sale was fimited to a period of one year from the date of sale. Legislation effective July 1, 1983
amended this statutory right of redemption to provide that before notice of sale of the foreclosed
parcel can be given following court judgment of foreclosure, a redemption period of 120 days
must elapse. Furthermore, if the purchaser at the sale is the judgment creditor (here, the City)
an action may be commenced by the delinquent property owner within six months after the date
of sale to set aside such sale. The constitutionality of the aforementioned legislation which
repeals the one-year redemption period has not been tested and there can be no assurance
that, if tested, such legislation will be upheld. In the event such Superior Court foreclosure or
foreclosures are necessary, there may be a delay in payments to Owners pending prosecution
of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale; it
is also possible that no bid for the purchase of the applicable property would be received at the
foreclosure sale. See also "BONDOWNERS' RISKS - Bankruptcy and Foreclosure" and "-
Collection of the Assessments" herein.
Establishment of Special Fund
For administering the proceeds of the sale of Bonds and payment of interest and
principal on the Bonds, the Fiscal Agent will establish and maintain three funds or accounts
under the Fiscal Agent Agreement to be known as the Improvement Fund, the Redemption
Fund and the Reserve Fund.
-13-
Improvement Fund. Moneys in the Improvement Fund shall be held by the Fiscal
Agent for the benefit of the City and shall be disbursed by the Fiscal Agent for the payment or
reimbursement of costs of the Improvements. The Fiscal Agent shall make the requested
payment upon receipt of a requisition therefor executed by an Authorized Officer of the City.
Upon the filing with the Fiscal Agent of a certificate by the City Engineer stating that the
Improvements has been compieted and that all costs of the Improvements have been paid or
are not required to be paid from the Improvement Fund, the Fiscal Agent shall transfer the
amount, if any, remaining in the Improvement Fund in accordance with written instructions from
the City Treasurer as directed by the City Council, which directions shall be pursuant to the
Resolution of Intention and to the applicable provisions of the 1913 Act, and the Improvement
Fund shall be closed.
Assessment Fund. There is established in the Fiscal Agent Agreement, as a separate
account to be held by the Fiscal Agent, the "Assessment Fund" to the credit of which the Fiscal
Agent shall deposit all Assessment Revenues received by the Fiscal Agent from the City except
for the prepayment of assessments. Upon receiving any Assessment Revenues from the
County, the City shall deduct therefrom the amounts included therein, or a portion thereof, for
payment of the City's expenses associated with the collection of the Assessment Revenues and
payment of the annual costs associated with the registration of the Bonds and the other duties
of the Fiscal Agent provided for herein, and transfer the remainder thereof to the Fiscal Agent
for deposit in the Assessment Fund. Moneys in the Assessment Fund shall be held by the
Fiscal Agent for the benefit of the City and the Owners of the Bonds, as provided in the Fiscal
Agent Agreement, shall be disbursed as provided therein and, pending disbursement, shall be
subject to a lien in favor of the Owners of the Bonds.
The Fiscal Agent shall establish and maintain within the Assessment Fund an
"Assessment Prepayment AccounY' for administration of prepayments of the Assessments.
Not later than the third Business Day preceding each Interest Payment Date, the Fiscal
Agent shall withdraw from the Assessment Fund and deposit in the Redemption Fund the
amount which is necessary to pay Debt Service on the Interest Payment Date.
On September 3 of each year, beginning on September 3, 2007, the amount on deposit
in the Assessment Fund, together with the amount then on deposit in the Redemption Fund,
shall not exceed the greater of (i) one year's eamings on such amounts, or (ii) one-twelfth
(1/12th) of Annual Debt Service for the then current Bond Year. If on September 3 of any year
the amount on deposit in the Assessment Fund, together with the amount then on deposit in the
Redemption Fund, exceeds the maximum amount allowable pursuant to the preceding sentence
and if on such September 3 the City shall have delivered to the Fiscal Agent an Officer's
Certificate containing the information raquired below in this paragraph, the excess shall be paid
by the Fiscal Agent to the City as directed by such Officer's Certificate. On September 3 of
each year, after any such excess amount has been transferred as hereinabove provided, the
amount on deposit in the Assessment Fund, together with the amount then on deposit in the
Redemption Fund, shall not exceed in the aggregate the greater of (i) one year's earnings
thereon, or (ii) one-twelfth (1/12th) of Annual Debt Service for the then current Bond Year. An
Officer's Certificate delivered by the City to the Fiscal Agent pursuant to this paragraph shall
specify the dollar amount of the excess determined pursuant to the first sentence of this
paragraph which the Fiscal Agent is to pay to the City.
-14-
Redemption Fund. There is established under the Fiscal Agent Agreement, as a
separate account to be held by the Fiscal Agent, the "Redemption Fund" to the credit of which
deposits shall be made as required by the provisions of such agreement. Moneys in the
Redemption Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds,
shall be disbursed for the payment of the principal of, and interest and any premium on, the
Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of
the Owners of the Bonds.
On each Interest Payment Date, the Fiscal Agent shall withdraw from the Redemption
Fund and pay to the Owners of the Bonds the principal of and interest and any premium then
due and payable on the Bonds on the Interest Payment Date. If, on any Interest Payment Date,
there will be insufficient funds in the Redemption Fund to make the payments required, the
Fiscal Agent shall apply the available funds first to the payment of interest on the Bonds, and
then to the payment of principal due on the Bonds.
On September 3 of each year, beginning on September 3, 2007, the amount on deposit
in the Redemption Fund, together with the amount then on deposit in the Assessment Fund,
shall not exceed the greater of (i) one year's earnings on such amounts, or (ii) one-twelfth
(1/12th) of Annual Debt Service for the then current Bond Year. If on September 3 of any year
the amount on deposit in the Redemption Fund, together with the amount then on deposit in the
Assessment Fund, exceeds the maximum amount allowable pursuant to the preceding
sentence and if on such September 3 the City shall have delivered to the Fiscal Agent an
Officer's Certificate containing the information required below in this paragraph, the excess shall
be paid by the Fiscal Agent to the City as directed by such Officer's Certificate. On September
3 of each year, after any such excess amount has been paid as hereinabove provided, the
amount on deposit in the Redemption Fund, together with the amount then on deposit in the
Assessment Fund, shall not exceed the greater of (i) one year's earnings thereon, or (ii) one-
twelfth (1/12th) of Annual Debt Service for the then current Bond Year.
Reserve Fund. Out of the proceeds of the sale of the Bonds, there is established under
the Fiscal Agent Agreement, as a separate account to be held by the Fiscal Agent, the "Reserve
Fund" to the credit of which a deposit of Bond proceeds shall be made, which deposit is equal to
the Reserve Requirement as of the Closing Date. The "Reserve Requirement" is defined in
the Fiscal Agent Agreement as, on any date in any Bond Year, the least of (i) 10 percent of the
proceeds of the sale of ths Bonds (within the meaning of the Code), (ii) Maximum Annual Debt
Service; or (iii) 125 percent of average Annual Debt Service on the Bonds, as determined by the
City. Moneys in the Reserve Fund shall be held by the Fiscal Agent for the benefit of the
Owners of the Bonds as a reserve for the payment of the principal of and interest and any
premium on the Bonds and shall be subject to a lien in favor of the Owners of the Bonds.
Except as provided below, moneys in the Reserve Fund shall be used solely for the
purpose of paying the principal of and interest on the Bonds when due in the event that the
moneys in the Redemption Fund are insufficient therefor, and for deposit to the Rebate Fund as
required under the Fiscal Agent Agreement. Based upon a calculation provided to the Fiscal
Agent by the City, the Fiscal Agent shall withdraw funds from the Reserve Fund as necessary
for deposit in the Redemption Fund on or before the first day of March and September of each
year. Amounts transferred from the Reserve Fund to the Redemption Fund shall be restored by
the City from the collection of delinquent installments on the Assessments levied on parcels for
which such installments are delinquent, and penalties and interest thereon, whether by judicial
foreclosure proceedings or otherwise, as soon as is reasonably possible following the receipt by
the City of such delinquent installments, penalties and interest.
-15-
Whenever an Assessment levied on a fot or parcel of property within the District is paid
off, the Fiscal Agent shall, upon receiving an Officer's Certificate regarding such Assessment,
transfer from the Reserve Fund to the Assessment Prepayment Account an amount equal to the
reduction in such Assessment determined pursuant to Section 8881 of the California Streets
and Highways Code, which amount shall be specified in the Officer's Certificate.
Whenever the balance in the Reserve Fund exceeds the amount required to redeem or
pay all of the then Outstanding Bonds, including interest accrued to the date of payment or
redemption and premium, if any, due upon redemption, the Fiscal Agent shall, upon receiving
written direction from the City, transfer money from the Reserve Fund to the Assessment
Prepayment Account and the Redemption Fund as provided in the next succeeding sentence to
redeem all of the Outstanding Bonds on the next succeeding Interest Payment Date. To effect
such redemption, the Fiscal Agent shall make the following transfers from the Reserve Fund: (i)
an amount equal to the principal and premium on the Bonds due upon redemption to the
Assessment Prepayment Account, and (ii) an amount equal to the interest thereon accrued to
the redemption date to the Redemption Fund. In the event that the amounts so transferred from
the Reserve Fund to the Assessment Prepayment Account and the Redemption Fund exceeds
the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve
Fund shall be transferred by the Fiscal Agent to the City to be applied as provided in Section
8885 of the California Streets and Highways Code.
All amounts remaining in the Reserve Fund in the year in which the last Assessment
Installments become due and payable shall be credited toward said Assessments as provided in
the Fiscal Agent Agreement.
Priority of Lien
Each Assessment (and any reassessment) and each installment thereof, and any
interest and penalties thereon, constitutes a lien against the parcel of land on which it was
imposed until the same is paid. Such a lien is subordinate to all fixed special assessment liens
previously imposed upon the same property, but has priority over all private liens and over all
fixed special assessment liens which may thereafter be created against the property. Such a
lien is co-equal to and independent of the lien for general property taxes and special taxes,
including, without limitation, special taxes created pursuant to the "Mello-Roos Community
Facilities Act of 1982" (being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of
the State of California), whenever created against the property. There are currently no other
assessment liens on property in the District.
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THE DISTRICT
The City of Palm Desert
The City of Palm Dese�t is located in the Coachella Valley and is approximately midway
between the cities of Indio and Palm Springs, 117 miles east of Los Angeles, 118 miles
northeast of San Diego and 515 miles southeast of San Francisco. The City was incorporated
on November 26, 1973, as a general law city. In 1997 the City became a charter city. The
estimated City population as of January 1, 2006 was approximately 49,539. The City occupies
an area of 24.75 square miles. Elevation of the City is 243 feet and the mean temperature is
73.1 degrees. Except for the summers, the weather is mild and annual average rainfall is 3.38
inches. According to State Department of Finance estimates, the City population as of January
1, 2006 was 49,539. The City covers an area of 24.75 square miles. See "Appendix B — THE
CITY OF PALM DESERT GENERAL INFORMATION" for general demographic information on
the City and County.
Location of the District
The District is located entirely within the City at the northwest corner of Portola Avenue
and Gerald Ford Drive. The area is generally known as the Gateway Area of North Palm
Desert. The area is predominantly residential, with some commercial uses along Gerald Ford
Drive in the vicinity of the District.
Anticipated Development in the District
The owners of property in the District have provided the following information with
respect to development within the District. No assurance can be given that all information is
complete. No assurance can be given that development of the property will be completed, or
that it will be completed in a timely manner. Since the ownership of the parcels is subject to
change, the development plans outlined below may not be continued by any subsequent owner
if the parcels are sold, although development by any subsequent owner will be subject to fhe
policies and requirements of the City. No assurance can be given that the plans or projections
detailed below will actually occur.
Property in the District consists of approximately 340.33 acres, most of which is
undeveloped. The property is planned for mixed-use development including industrial,
commercial, multifamily and single family residential.
-17-
Zoning. Property in the District is expected to be developed for residential, industrial
and commercial uses, as described herein. According to the City's General Plan Land Use
Map, approved in March 2004, the parcels in the District are included in the Zoning/General
Plan designations shown in the table below. These designations are subject to change as
development progresses.
Assessment ID Zonfng Designation General Plan Designation
1 Service Industrial Medium/High Density Residential
2 Service Industrial Industrial Business Park
3 Planned Residential Medium Density Residential
4 Planned Commercial Regional Commercial
5 Planned Community Development Public Facilities
6 Planned Community Development Regional Commercial, MediumlHigh Density Residential
7 Planned Community Development MediumlHigh Density Residential
8 Planned Community Development Regional Commercial, Medium/High Densily Residential
9 Planned Community Development School;Open Space and Parks
10 Planned Residential MediumlHigh Density Residential
11 Planned Residential MediumiHigh Densiry Residential
12 Planned Residentiai Medium/High Densiry Residential
13 Planned Residential Medium Densiry Residential
14 Service Industrial Medium/High Density Residential
15 Service Industrial Medium/High Densiry Residential
16-189 Planned Residential Medium Density Residential
lnfrastructure lmprovements. Currently, construction of a Lowe's Home Improvement
Center is complete on a portion of Parcel 4, construction of an apartment complex underway on
Parcel 10, and single-family residential construction is underway on Parcels 11-13.
Construction has also commenced on a portion of Tract 31071 (Parcels 16-189}. Infrastructure
improvements to be completed with the proceeds of the Bonds include sanitary sewer lines,
storm drain lines, roadway improvements, and water lines and improvements.
Utilities. All typical urban utility services will be extended to the parcels. These utilities
include electric power, natural gas, telephone, cable television, water, and sanitary sewer and
storm water facilities. Southern California Edison provides electric, Southern California Gas
Company provides natural gas, and the Coachella Valley Water District provides water and
sewer and has issued a "will serve" letter for the development.
Parcel 1. Parcel 1 is 19.29 acres of �and zoned for residential development. Summit
Monterey Properties ("SummiY') is developing the property as 247 townhomes to be known as
"Falling Waters". The land is currently being graded and construction of the townhomes has
recently commenced.
Parcel 2. Parcel 2 consists of a 4.35 acre strip of land owned by Noble & Co. to be
used as a retention basin for the Gateway Business Park.
Parce/s 3, 11, 12 and 13. Parcels 3, 11, 12 and 13 are being developed as singly family
housing by Ponderosa Homes II, Inc ("Ponderosa"). Parcel 13 has received final map approval
for development as 237 detached single-family residential lots. Six model homes in two
complexes have been completed and construction of 11 production homes on Parcel 13 is
underway. Parcels 3, 11 and 12 are currently vacant. Ponderosa has submitted a tentative
map for development of 4-units per acre on Parcel 11, but this map may be withdrawn in the
future, in favor of a higher density map.
-18-
Parcel 4. Parcel 4 is the site of a Lowe's Home Improvement Warehouse that opened in
2006. Eight acres of the site are currently vacant and Lowe's HIW, Inc. is currently marketing
the property for sale to a commercial developer.
Parcel 5. Parcel 5 is owned by Verizon and is a 1.42 acre utility substation.
Parce/s 6, T, and 8. Parcels 6, 7 and 8 are owned by MacLeod Couch Land Company
("MacLeod"). Parcels 6 and 8 are designated for regional commercial and medium/high density
residential development. Parcel 7 is designated for medium/high density residential
development. The land is currently unimproved. MacLeod purchased the property over 10
years ago and has been holding the property for investment purposes. MacLeod does not
intend to develop the property itself and is marketing the property for safe to a developer.
[Portion of Parcel 8 for use as school site?]
Assessment Parcel 9. Parcel 9 was sold by MacLeod to the Palm Springs Unified
School District in April 2006. The District plans to develop a school on the site. [Exempt from
assessment lien?]
Assessment Parce/ 10. Parcel 10 was purchased by Lomas de Arena in June 2004.
Lomas De Arena originally planned to develop the property as condominiums, but is now
developing the project as 320 rental apartments to be known as "The Enclave". The first 20
units are nearing completion and all 320 units are under construction. As of January 31, 2007,
11 apartments had signed leases in place.
Lomas de Arena's projected unit mix for its property in the District is set forth below.
Proposed Unit Mix
Number Approx.
Plan of Units Bed/Bath Square Footage
A1-1 (Harlow) 16 1/1 889
A1-2 (Harlow) 16 1/1 889
A2-1 (Bogart) 32 1/1 887
A2-2 (Bogart) 32 1/1 887
61-1 (Gable) 16 2/2 1115
61-2 (Gable) 16 2/2 1115
61-3 (Gable) 16 2!2 1115
62-1 (Hughes) 16 2/2 1280
62-2 (Hughes) 16 2/2 1280
B3-1 (Lombard) 32 2/2 1194
63-1 (Lombard) 32 2/2 1246
63-3 (Lombard} 32 2/2 1246
B3-4 (Lombard) 16 2/2 1194
C1-1 (Fairbanks) 16 3/2 1454
C1-2 (Fairbanks) 16 3/2 1454
320
Assessment Parcels 14 and 15. Parcels 14 and 15 were purchased by Desert Wells
237 on January 18, 2006. The parcels are planned for high-density residential development.
-19-
Desert Wells 237 does not intend to develop the property itself and is marketing the property for
sale to a developer.
Assessment Parce/s 16 through 189. Rilington Dolce, LLC ("Rilington") purchased
Parcels 16 through 189 in October 2004 and is developing the property as a single family
residential subdivision called "Dolce." These parcels have final map approval for development
as 159 single family residential units. A 3 unit model complex was completed in October 2006
and 21 production homes are nearing completion. Rilington reports that 5 sales contracts are in
place.
Rilington's anticipated construction schedule and unit mix for its property in the District
are set forth below. No assurance can be given thaf home construction and sales will be carried
out on the schedule and according fo fhe plans outlined below, or that Rilington's home
construction and sale plans or base prices will not change after the date of this Official
Statement.
Proposed Construction and Sales Schedule
Begin
Production Opened First Home
Number Home Model Sale Last Home
Tract of Units Construction Homes Closings Sale Closings
31071 159 April 2006 October 2006 April 2007
Proposed Unit Mix
Number No.of Plan Approx. Anticipated
Tract of Units Types Square Footage Base Prices
31071 159 4 2,000—2,600 $450,000—550,000
Environmental Matters
Earthquake Hazard. According to the Apprasial, the property in the District lies within a
boundary IV Earthshaking Zone. The property is not located in an Alquist-Priolo Special Studies
Zone or in a liquefaction hazard area.
-20-
PROPERTY OWNERSHIP
Ownership of Property in the District
Neither the Bonds nor the Assessments are persona! obligafions of any person or entity
owning property within the District or having any interest in such property at the present time or
at any time in the future, including the homeowners. An owner of land in the Districf can elect at
any time to not pay Assessments and ailow the property to be foreclosed and in doing so, such
owner will incur no personal liability for the Assessments.
The landowners have provided the info�mation set forth in this section entitled
"Ownership of Property in the District." No assurance can be given that all information is
complete. In addition, any Internet addresses included below are for reference only, and the
information on those Internet sites is not a part of this Official Statement or incorporated by
reference into this Official Statement.
The owners of parcels in the District (the "Property Owners") as of January 31, 2007
are summarized as follows:
APN Assessment ID Acres Owner of Record
653-250-056 1 19.290 Summit Monterey Properties
653-250-073 2 4.360 Noble & Co.
653-260-016 3 3.000 Ponderosa Homes II, Inc.
653-260-018 4 20.670 Lowes HIW, Inc.
653-260-021 5 1.420 Verizon
653-260-022 6 23.580 MacLeod Couch Land Co.
653-260-023 7 3.480 MacLeod Couch Land Co.
653-260-024 8 30.160 MacLeod Couch Land Co.
653-260-025 9 13.420 Palm Springs Unified School District
653-260-029 10 25.060 Lomas De Arena
653-260-033 11 41.960 Ponderosa Homes II, Inc.
653-260-035 12 0.340 Ponderosa Homes II, Inc.
653-260-036 13 80.790 Ponderosa Homes II, Inc.
653-260-041 14 18.920 Desert Wells 237, LLC
653-260-042 15 17.260 Desert Wells 237, LLC
Rilington Parcels 16-189 36.620 Rilington Dolce, LLC
Each Property Owner is not under legal obligafion of any kind to expend funds for the
development of property in the District and will expend such funds only if it determines that
doing so is in its best interests. All expectations of the owners described above are based on
the current and actual knowledge of the respective Property Owner and present facts and
circumstances. Such expectations may change as the result of facts and circumstances
occurring, or discovered, after the date of this Official Stafement. There is no assurance that
the Property Owner's expectations described above will actually materialize or that the money
necessary in order to implement the planned development will in fact be available for such
purpose. See "SPECIAL R/SK FACTORS."
-21-
The percent of the lien of the Assessment in the District is estimated to be allocated
among the Property Owners as follows:
APN Assessment ID Acres Owner of Record
653-250-056 1 19.290 Summit Monterey Properties
653-250-073 2 4.360 Noble &Co.
653-260-016 3 3.000 Ponderosa Homes II, Inc.
653-260-018 4 20.670 Lowes HIW, Inc.
653-260-021 5 1.420 Verizon
653-260-022 6 23.580 MacLeod Couch Land Co.
653-260-023 7 3.480 MacLeod Couch Land Co.
653-260-024 8 30.160 MacLeod Couch Land Co.
653-260-025 9 13.420 Palm Springs Unified School District
653-260-029 10 25.060 Lomas De Arena
653-260-033 11 41.960 Ponderosa Homes II, Inc.
653-260-035 12 0.340 Ponderosa Homes II, Inc.
653-260-036 13 80.790 Ponderosa Homes II, Inc.
653-260-041 14 18.920 Desert Wells 237, LLC
653-260-042 15 17.260 Desert Wells 237, LLC
Rilington Parcels 16-189 36.620 Rilington Dolce, LLC
Assessment Lien Percent of Lien of
Property Owner Amount Assessments
Summit Monterey Properties
Noble & Co.
Ponderosa Homes II, Inc.
Lowes HIW, Inc.
Verizon
MacLeod Couch Land Co.
Palm Springs Unified School District
Lomas De Arena
Ponderosa Homes II, Inc.
Desert Wells 237, LLC
Rilington Dolce, LLC
Assessment Parcel '1 - Summit Monterey Properties ( % of the Assessments).
Summit Monterey Properties ("SummiY') owns Parcel 1 and is developing the property as 247
townhomes. Summit is [to comeJ. Summit purchased its property in the District in November
2005.
Assessment Parce/ 2 - Noble 8 Company, LLC. ( % of the Assessments).
Parcel 2 is owned by Noble 8� Company, LLC ("Noble"}. Noble previously owned Parcels 11, 12
and 13, and sold those parcels to Ponderosa in 2002. [Parcel 2 is a 4.38 acre strip of land
serving as a retention basin for adjacent business park development.] Noble is [to comeJ.
Assessment Parce/ 3,11,12,13 - Ponderosa Homes //, lnc. ( % of fhe
Assessments). Parcels 3, 11, 12 and 13 are owned by Ponderosa Homes II, Inc.
("Ponderosa"). Ponderosa is developing the parcels as a single family residential subdivision.
Ponderosa is [to come].
-22-
Ponderosa purchased Parcefs 11, 12 and 13 in September 2002. Purchase financing in
the amount of $7,656,993 was provided by American Realty Trust and is secured by a deed of
trust on Parcels 11, 12 and 13. In addition, Ponderosa purchased Parcel 3 in November 2004
for$375,000.
Assessment Parcel 4 — Lowes HIW, tnc. ( % of the Assessments). Parcel 4 is
the site of a Lowe's Home Improvement Warehouse that opened in 2006. Eight acres of the '
site are currently vacant and Lowe's HIW, Inc. is currently marketing the property for sale to a
commercial developer.
Assessment Parce/5— Verizon ( % of the Assessments). Parcel 5 is owned by
communications company Verizon and is a 1.42 acre utility substation.
Assessment Parce/s 6,7,8 - MacLeod Couch Land Co. ( % of the
Assessments). Parcels 6, 7 and 8 are owned by MacLeod Couch Land Co. ("MacLeod").
MacLeod is [to come]. MacLeod purchased its property in the District over ten years ago and
reports that there is no debt secured by the property. MacLeod is currently holding the land for
investment purposes and is not actively marketing Parcels 6, 7 and 8 for sale.
[Is part of parcel 8 owned by the school district?]
Assessment Parce/ 9 — Palm Springs Unified Schoo/ District. ( % of the
Assessments).
[to come].
Assessment Parce/ 10 - Lomas De Arena ( % of the Assessments). Parcel 10
is owned by Lomas De Arena and is being developed as a 320 unit rental residential complex.
Lomas De Arena is [to come]. Lomas De Arena purchased its property in the District in June
2004.
Assessment Parce/s 14,15 - Desert Wells 237 ( % of the Assessments).
Parcels 14 and 15 are owned by Desert Wells 237, LLC ("Desert Wells"), a California limited
liability company. Desert Wells is managed and majority owned by entities controlled by the
Michael S. Marix family. Mr. Marix has been in the real estate business since 1960.
Subsequent to founding and operating (from 1971 to 1986) Marix Housing Corporation, a land
development and construction firm, in 1986 Mr. Marix founded Cornerstone Developers, Inc., a
homebuilding operation which he operated until the assets of the company were sold to Lennar
related entities in 2003. He is currently President of Cornerstone Investors, Inc. of Palm
Springs.
Desert Wells purchased its property in the District in January 20Q6. Desert Wells is
currently marketing the property to potential residential developers.
Assessment Parcel 16-189 - Rilington Do/ce, LLC. ( % of the Assessments).
Parcels 16-189 are owned by Rilington Dolce, LLC ("Rilington"). Rilington is developing the
parcels as a single family residential subdivision. Rilington is [to come]. Rilington completed
over 125 homes in 2006 and expects to complete over 75 homes in 2007. Rilington currently
has the following developments underway:
-23-
Proiect Name C� Number of Lots
Palazzo Indio 151
Prado Coachella 232
Affresco Indio 278
Avante Indio 150
Cantania lndio 250
Nicelcreek Coachella 250
Hot Springs Rancheros Desert Hot Springs 50
Additional information about Rilington can be obtained from its website at
www.rilinqton.com. This Internet address is included for reference only, and fhe information on
this Internet site is not a part of this Official Statement or incorporated by reference into this
Official Statement.
The Appraisal
Genera/. Capital Realty Analysts, Palm Desert, California (the "Appraiser") prepared an
appraisal report dated February 15, 2007, with a date of value of January 31, 2007 (the
"Appraisal"). The Appraisal was prepared at the request of the City.
The Appraisal is set forth in APPENDIX F hereto. The description herein of the
Appraisal is intended for limited purposes only; the Appraisal should be read in its entirety. The
complete Appraisal is on file with the City and is available for public inspection at the City offices
at 73-510 Fred Waring Drive, Palm Desert California 92260-2578 or from the Underwriter during
the initial marketing period. The conclusions reached in the Appraisal reflect the Appraiser's
opinion of value and are subject to certain assumptions and qualifications which are set forth in
the Appraisal.
The Appraiser valued the fee simple estate of the taxable property in the District to
estimate the hypothetical (in light of the fact that the improvements financed by the Bonds were
not in place as of the date of valuation) market value of the property (not as a bulk sale),
assuming completion of improvements to be financed in part by the Bonds (based on a total
projected cost of $39,291,942) (herein, the "Assumed Improvements"). The valuation
accounts for the impact of the lien of the Assessments. The property appraised excludes
property in the District designated for public and quasi-public purposes. The value estimate for
the property as of the January 31, 2007 date vf value, using the methodologies described in the
Appraisal and subject to the limiting conditions and special assumptions set forth in the
Appraisal, and based on the ownership of the property as of that date is $225,893,000. The
va/uation is not a "bulk sa/e" valuation of a/l of the property in the District The valuation
is determined as a sum or individual parcel valuations, summarized as follows:
-24-
Value
Value Estimate,
Assessment Estimate, Commercial/ Total
ID APN Residential Industrial Value Estimate
1 653-250-056 $13,100,Od0 $13,100,000
2 653-250-073 1,045,000 1,045,000
3 653-260-016 1,640,000 1,640,000
4 653-260-018 26,320,000 26,320,000
5 653-260-021 780,000�'� 780,000
6 653-260-022 13,355,000 13,355,000
7 653-260-023 1,915,000 1,915,000
8 653-260-024 17,080,000 17,08Q,000
9 653-260-025 7,380,000 7,380,000
10 653-260-029 29,840,000 29,840,000
11 653-260-033 18,880,000 18,880,000
12 653-260-035 155,000 155,000
13 653-260-036 44,175,000 44,175,000
14 653-260-041 8,985,000 8,985,000
15 653-260-042 8,200,000 8,200,000
16— 189�2� (2) 33,043,000 33,043,000
Total $197,748,000 $28,145,000 $225,893,000
(1) Utiliry substation.
(2) See"APPENDIX F—APPRAISAL REPORT"for a breakdown of these value estimates
by parcel.
The appraisal methodology used in the Appraisal is based on the sales comparison
approach to estimate the aggregate value for the property's various land components. The
approach to value was conducted as set forth below. See "Aggregate Value; Not a Bulk Value
or Market Value of the District" below. See also "Assumptions and Limiting Conditions" below.
Aggregate Va/ue; Not a Bulk Value or Market Va/ue of the District. The valuation set
forth in the Appraisal is not a bulk sale value, which would represent the most probable price of
all the parcels within District to a single purchaser or sales to multiple buyers, over a reasonable
absorption period discounted to present value. The retail value for the property presented in the
appraisal represents the aggregate total estimates of what separate end users would pay for
each parcel under conditions requisite to a fair sale. This value estimate was determined by
applying the sales comparison approach to each parcel, as described in the Appraisal. The
aggregate value presented in the Appraisal is the sum of the individual parcel valuations. The
valuation does not represent a bulk va/uation of aii the property in the District or a sum
or bulk valuations based on ownership or projected property uses. This value estimate
excludes all discounts or allowances for carrying costs and is not equal to the market value of all
the subject properties as a whole. See "APPENDIX F-APPRAISAL REPORT."
No Property Absorption Study. No absorption study was conducted by the Appraiser
or by an independent source in connection with determining the value of the property in the
District.
Hypothetica/ Condition. The Assumed Improvements estimated to cost approximately
$39,291,942 to be financed in part by the Bonds were not in place as of the date of inspection
but included in the valuation as if they were in place; thus, the value estimate is subject to a
hypothetical condition (of such Assumed Improvements being in place), defined as that which is
contrary to what exists but is supposed for the purposes of analysis.
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Assumptions and Limiting Conditions. In considering the estimate of value
evidenced by the Appraisal, the Appraisal is based upon a number of standard and special
assumptions which affect the estimates as to value, some of which include the following. See
"APPENDIX F—APPRAISAL REPORT."
• The value estimates assume the completion of the public facilities to be
financed in part by the Bonds (based on a total Assumed Improvements cost
of$39,291,942). See "THE FINANCING PLAN — The Improvements."
• The Appraiser has also assumed that there is no hazardous material on
or in the property that would cause a loss in value. Should future conditions
and events reduce the level of permitted development or delay the
completion of any projected development, the value of the undeveloped land
would likely be reduced from that estimated by the Appraiser. See
"APPENDIX F —APPRAISAL REPORT" hereto for a description of certain
assumptions made by the Appraiser. Accordingly, because the Appraiser
arrived at an estimate of current market value based upon certain
assumptions which may or may not be fulfilled, no assurance can be given
that should the parcels become delinquent due to unpaid Assessments, and
be foreclosed upon and offered for sale for the amount of the delinquency,
that any bid would be received for such property or, if a bid is received, that
such bid would be sufficient to pay such delinquent Assessments.
Limitations of Appraisa/ Valuation. Property values may not be evenly distributed
throughout the District; thus, certain parcels may have a greater value than others. This
disparity is significant because in the event of nonpayment of the Assessments, the only remedy
is to foreclose against the delinquent parcel.
No assurance can be given that the foregoing valuation can or will be maintained during
the period of time that the Bonds are outstanding in that the City has no control over the market
value of the property within the District or the amount of additional indebtedness that may be
issued in the future by other public agencies, the payment of which, through the levy of a tax or
an assessment, may be on a parity with the Assessments. See "Overlapping Liens and Priority
of Lien" below.
For a description of certain risks that might affect the assumptions made in the
Appraisal, see "SPECIAL RISK FACTORS" herein.
Appraised Value to Burden Ratio
General Information Regarding Va/ue-to-Lien Ratios. The value-to-lien ratio on
bonds secured by assessments will generally vary over the life of such bonds as a result of
changes in the value of the property which is security for the assessments and the principal
amount of the Bonds.
In comparing the aggregate assessed value of the real property within the District and
the principal amount of the Bonds, it should be noted that only real property upon which there is
a delinquent Assessment can be foreclosed. In any event, individual parcels may be foreclosed
upon to pay delinquent installments of the assessments levied against such parcels. The
principal amount of the Bonds is not allocated pro-rata among the parcels within the District;
rather, the total Assessment for the District has been allocated among the parcels within the
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District according to the method of assessment apportionment shown in the Engineer's Report.
The value to lien ratio includes the liens of special taxes or other assessments affecting property
in the District. See "SECURITY FOR THE BONDS— Priority of Lien."
Economic and other factors beyond the property owners' control, such as economic
recession, deflation of fand values, financial difficulty or bankruptcy by one or more property
owners (or anyone who claims an interest in such property), ar the complete or partial
destruction of taxable property caused by, among other possibilities, earthquake, flood, fire or
other natural disaster, could cause a reduction in the assessed value within the District. See
"SPECIAL RISK FACTORS — Environmental Conditions that Could Affect Future Parcel
Values."
Tota/ Va/ue to Burden Ratio. The table below shows the projected value to burden
ratio for the Assessment Parcels in the District, based on the appraised values set forth in the
Appraisal and the lien represented by the Assessments.
No assurance can be given that fhe amounts shown in this table will conform to those
ulfimately realized in the event of a foreclosure action following delinquency in the payment of
the Assessments.
[value to lien table to come]
No Overlapping Bonded Debt
The City indicates that no overlapping liens currently exist on the property that support
outstanding bonded indebtedness.
SPECIAL RISK FACTORS
General
Under the provisions of the 1915 Act, Assessment installments, from which funds for the
payment of annual installments of principal of and interest on the Bonds are derived, will be
billed to properties against which there are unpaid assessments on the regular property tax bills
sent to owners of such properties. Such assessment installments are due and payable, and
bear the same penalties and interest for non-payment, as do regular property tax installments.
Therefore, the unwillingness or inability of a property owner to pay regular property tax bills as
evidenced by property tax delinquencies may also indicate an unwillingness or inability to make
regular property tax payments and assessment installment payments in the future.
In order to pay debt service on the Bonds, it is necessary that unpaid installments of
assessments on land within the District are paid in a timely manner. Should the installments not
be paid on time, the City has established a Reserve Fund which is required to be maintained in
the amount of the Reserve Requirement, to cover delinquencies in the payment of
assessments. The assessments are secured by a lien on the parcels of land and the City can
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institute foreclosure proceedings to sell land in the District with delinquent installments for the
amount of such delinquent installments in order to obtain funds to pay debt service on the
Bonds.
Failure by owners of the parcels to pay installments of assessments when due, depletion
of the Reserve Fund, or the inability of the City to sell parcels which have been subject to
foreclosure proceedings for amounts sufficient to cover the delinquent installments of
assessments levied against such parcels may result in the inability of the City to make full or
punctual payments of debt service on the Bonds, and Bondowners would therefore be adversely
affected.
The Bonds are not secured by the general taxing power of the City, the County, or the
State or any political subdivision of the State, and neither the City, the County, nor the State nor
any political subdivision of the State has pledged its full faith and credit for the payment thereof.
Unpaid assessments do not constitute a personal indebtedness of the owners of the lots
and parcels within the District. There is no assurance the owners will be able to pay the
assessment installments or that they will pay such installments even though financially able to
do so.
Limited Obligation of the City Upon Delinquency
If a delinquency occurs in the payment of any assessment installment, the City has a
duty only to cause the transfer into the Redemption Fund the amount of the delinquency out of
the Reserve Fund and to undertake judicial foreclosure proceedings to recover such
delinquencies. This duty of the City is continuing during the period of delinquency, until
reinstatement, redemption, or sale of the delinquent property. There is no assurance that funds
will be available for this purpose and if, during the period of delinquency, there are insufficient
funds in the Reserve Fund, a delay may occur in payments to the owners of the Bonds. If there
are additional delinquencies after exhaustion of funds in the Reserve Fund, the City is not
obligated to transfer into the applicable Redemption Fund the amount of such delinquency out
of any other available moneys of the City. The City's legal responsibilities with respect to
such delinquent installments are limited to advancing the amount thereof solely from any
available moneys in the Reserve Fund and to undertaking judicial foreclosure
proceedings to recover such delinquencies. This duty of the City to advance funds
continues during the period of delinquency only to the extent of funds available from the
Reserve Fund, until reinstatement, redemption, or sale of the delinquent property. In
accordance with Section 8769(b) of the 1915 Act, the City has determined that it will not
be obligated to advance funds from its treasury to cure any deficiency in the Redemption
Fund.
Unavailability of City Funds
As discussed in the section "SECURITY FOR THE BONDS," if a delinquency occurs in
the payment of any assessment, the City has the duty to cause the transfer of the amount of
such delinquent assessment from the Reserve Fund into the Redemption Fund. If there are
additional delinquencies after exhaustion of the Reserve Fund, the City has no direct or
contingent liability for payment of the Bonds in the event of default in the payment of an
assessment installment but does have the duty to undertake judicial foreclosure as provided in
the Fiscal Agent Agreement.
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Bankruptcy and Foreclosure
The payment of property owners' assessments and the ability of the City to foreclose the
lien of a delinquent unpaid assessment pursuant to the foreclosure covenant, may be limited by
bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the
State relating to judicial foreclosure. See "SECURITY FOR THE BONDS."
The various legal opinions to be delivered concurrently with the delivery of the Bonds
(including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of
the various legal remedies, by bankruptcy, reorganization, insolvency or other similar laws
affecting the rights of creditors generally.
Although bankruptcy proceedings would not cause the assessments to become
extinguished, bankruptcy of a property owner could result in a delay in procuring Superior Court
foreclosure proceedings. Such delay would increase the likelihood of a delay or default in
payment of the principal of, and interest on, the Bonds and the possibility of delinquent tax
installments not being paid in full. To the extent that property in the District continues to be
owned by a limited number of property owners, the chances are increased that the Reserve
Fund could be fully depleted during any such delay in obtaining payment of delinquent
assessments. As a result, sufficient monies would not be available in the Reserve Fund for
transfer to the Redemption Fund to make up any shortfalls resulting from delinquent payments
of assessments and thereby to pay principal of and interest on the Bonds on a timely basis.
To the extent that bankruptcy or similar proceedings were to involve a large
property owner, the chances would increase the likelihood that the Reserve Fund could
be fully depleted during any resulting delay in receiving payment of delinquent
assessments. As a result, sufficient monies would not be available in the Reserve Fund
for transfer to the Redemption Fund to make up any shortfalls resulting from delinquent
payments of assessments and thereby to pay principal of and interest on the Bonds on a
timely basis.
Land Value and Development
Land Value. The value of land within the District is an important factor in determining the
investment quality of the Bonds. If a property owner defaults in the payment of Assessment
installments, the City's only remedy is to commence foreclosure proceedings in an attempt to
obtain funds to pay the delinquent assessment.
Land development and land values could be adversely affected by economic and other
factors beyond the District's control, such as: a general economic downturn; adverse judgments
in future litigation that could affect the scope, timing or viability of development; relocation of
employers out of the area; stricter land use regulations; shortages of water, electricity, natural
gas or other utilities; destruction of property caused by earthquake, flood or other natural
disasters; environmental pollution or contamination.
The Appraisal information included as APPENDIX F sets forth certain assumptions of
the Appraiser in estimating the market value of the property within the District as of the date
indicated. No assurance can be given that the land values are accurate if these assumptions
are incorrect or that the values will not decline in the future if one or more events, such as
natural disasters or adverse economic conditions, occur. See "Appraised Values" above.
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Neither the District nor the Cify has evaluated development risks. Since these are
largely business risks of the type that property owners customarily evaluate individually, and
inasmuch as changes in land ownership may well mean changes in the evaluation with respect
to any particular parcel, the District is issuing the Bonds without regard to any such evaluation.
Thus, the creation of the District and the issuance of the Bonds in no way implies that the
District or the City has evaluafed these risks or the reasonableness of these risks.
The following is a discussion of specific risk factors that could affect the timing or scope
of property development in the District or the value of property in the District.
Land Development. Land values are influenced by the level of development in the area
in many respects.
First, undeveloped or partially developed land is generally less valuable than developed
land and provides iess security to the owners of the Bonds should it be necessary for the District
to foreclose on undeveloped or partially developed property due to the nonpayment of
Assessments.
Second, failure to complete development on a timely basis could adversely affect the
land values of those parcels that have been completed. Lower land values would result in less
security for the payment of principal of and interest on the Bonds and lower proceeds from any
foreclosure sale necessitated by delinquencies in the payment of the Assessments. See "THE
DISTRICT — Appraised Value to Burden Ratio." No assurance can be given that the proposed
development within the District will be completed, and in assessing the investment quality of the
Bonds, prospective purchasers should evaluate the risks of noncompletion.
Risks of Real Estate Investment Generally. Continuing development of land within
the District may be adversely affected by changes in general or local economic conditions,
fluctuations in the real estate market, increased construction costs, development, financing and
marketing capabilities of individual property owners, water or electricity shortages, and other
similar factors. Development in the District may also be affected by development in surrounding
areas, which may compete with the District. In addition, land development operations are
subject to comprehensive federal, state and local regulations, including environmental, land use,
zoning and building requirements. There can be no assurance that proposed land development
operations within the District will not be adversely affected by future government policies,
including, but not limited to, governmental policies to restrict or control development, or future
growth control initiatives. There can be no assurance that land development operations within
the District will not be adversely affected by these risks.
Natura/Disasters. The value of the parcels in the District in the future can be adversely
affected by a variety of natural occurrences, particularly those that may affect infrastructure and
other public improvements and private improvements on the parcels in the District and the
continued habitability and enjoyment of such private improvements. For example, the areas in
and surrounding the District, like those in much of California, may be subject to earthquakes or
other unpredictable seismic activity, however, the District is not located in a seismic special
studies zone.
Other natural disasters could include, without limitation, landslides, floods, droughts or
tornadoes. One or more natural disasters could occur and could result in damage to
improvements of varying seriousness. The damage may entail significant repair or replacement
costs and that repair or replacement may never occur either because of the cost, or because
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repair or replacement will not facilitate habitability or other use, or because other considerations
preclude such repair or replacement. Under any of these circumstances there could be
significant delinquencies in the payment of Assessments, and the value of the parcels may well
depreciate.
Lega/ Requirements. Other events that may affect the value of a parcel include
changes in the law or application of the law. Such changes may include, without limitation, local
growth control initiatives, local utility connection moratoriums and local application of statewide
tax and governmental spending limitation measures. Development in the District may also be
adversely affected by the application of laws protecting endangered or threatened species.
Hazardous Substances. Any discovery of a hazardous substance detected on property
within the District would affect the marketability and the value of some or all of the property in
the District. In that event, the owners and operators of a parcel within the District may be
required by law to remedy conditions of the parcel relating to releases or threatened releases of
hazardous substances. The federal Comprehensive Environmental Response, Compensation
and Liability Act of 1960, sometimes referred to as "CERCLA" or the "Superfund Act," is the
most well-known and widely applicable of these laws. California laws with regard to hazardous
substances are also applicable to property within the District and are as stringent as the federal
laws. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous
substance condition of property whether or not the owner (or operator) has anything to do with
creating or handling the hazardous substance. The effect, therefore, should any of the parcels
be contaminated by a hazardous substance is to reduce the marketability and value of the
parcel by the costs of remedying the condition, because the purchaser, upon becoming owner,
wifl become obligated to remedy the condition just as is the seller.
The values set forth in the Appraisal do not take into account the possible reduction in
marketability and value of any of the parcels within the District by reason of the possible liability
of the owner (or operator) for the remedy of a hazardous substance condition on a parcel.
Although neither the City nor the District are aware whether any owner (or operator) of any of
the property within the District has a current liability for a hazardous substance with respect to
any of the parcels, it is possible that such liabilities do currently exist and that the City and the
District are not aware of them.
Further, it is possible that liabilities may arise in the future with respect to any of the
parcels within the District resulting from the existence, currently, on the parcel of a substance
presently classified as hazardous but which has not been released or the release of which is not
presently threatened, or may arise in the future resulting from the existence, currently, on the
parcel of a substance not presently classified as hazardous but which may in the future be so
classified. Further, such liabilities may arise not simply from the existence of a hazardous
substance but from the method of handling it. All of these possibilities could significantly affect
the value of a parcel within the District that is realizable upon a foreclosure sale.
Endangered and Threatened Species. It is illegal to harm or disturb any plants or
animals in their habitat that have been listed as endangered species by the United States Fish 8
Wildlife Service under the Federal Endangered Species Act or by the California Fish 8� Game
Commission under the California Endangered Species Act without a permit. Although the
landowners believe that no federally listed endangered or threatened species would be affected
by the proposed development within the District, other than any that are permitted by the
entitfements already received, the discovery of an endangered plant or animal could delay
development of vacant property in the District or reduce the value of undeveloped property.
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Appraised Values
The Appraisal in APPENDIX F estimates the value of the taxable property within the
District. This value estimate is merely the present opinion of the Appraiser, and is subject to the
assumptions and limiting conditions stated in the Appraisal. The City and the District have not
sought the present opinion of any other appraiser of the value of the taxed parcels. A different
present opinion of value might be rendered by a different appraiser.
The valuation set forth in the Appraisal is not a bulk sale valus, which would represent
the most probable price of all the parcels within District to a single pu�chaser or sales to multiple
buyers, over a reasonable absorption period discounted to present value. The Appraisal
estimates the aggregate value of property in the District expressed as the sum of the individual
parcel valuations. This value estimate was determined by applying the sales comparison
approach to each parcel, as described in the Appraisal. The va/uation does not represent a
bulk valuation of al/ the property in the District or a sum or bulk valuations based on
ownership or projected property uses. This value estimate excludes all discounts or
allowances for carrying costs and is not equal to the market value of all the subject properties as
a whole.
The opinion of value relates to sale by a willing seller to a willing buyer of each parcel as
of the date of valuation, each having similar information and neither being forced by other
circumstances to sell or to buy. Consequently, the opinion is of limited use in predicting the
selfing price at a foreclosure sale, because the sale is forced and the buyer may not have the
benefit of full information.
In addition, the opinion is a present opinion. {t is based upon present facts and
circumstances. Differing facts and circumstances may lead to differing opinions of value. The
appraised market value is not evidence of future value because future facts and circumstances
may differ significantly from the present.
No assurance can be given that any of the appraised property in the District could be
sold in a foreclosure for the estimated market value contained in the Appraisal. Such sale is the
primary remedy available to Bondowners if that property should become delinquent in the
payment of assessments.
No Acceleration Provision
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the
event of a payment default or other default under the terms of the Bonds.
Absence of Market for the Bonds
No application has been made for a credit rating for the Bonds, and it is not known
whether a credit rating could be secured either now or in the future for the Bonds. There can be
no assurance that there will ever be a secondary market for purchase or sale of the Bonds, and
from time to time there may be no market for them, depending upon prevailing market
conditions, the financial condition or market position of firms who may make the secondary
market and other factors. The Bonds should therefore be considered long-term investments in
which funds are committed to maturity, subject to redemption prior to maturity as described
herein.
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Proposition 218
On November 5, 1996, the voters of the State approved Proposition 218, the so-called
"Right to Vote on Taxes Act." Proposition 218 added Articies XIIIC and XIIID to the State
Constitution, which contain a number of provisions affecting the ability to the City to fevy and
collect both existing and future taxes, assessments and property related fees and charges.
Article XIIID requires that, beginning July 1, 1997, the proceedings for the levy of any
assessment by the City (including, if applicable, any increase in such assessment or any
supplemental assessment) must be conducted in conformity with the provisions of Section 4 of
Article XIIID. The City has conducted its proceedings with respect to the levy of the assessment
within the District in a manner which it reasonably believes complies with the new requirements.
Article XIIIC removes limitations on the initiative power in matters of local taxes,
assessments, fees and charges. Article XIIIC does not define the term "assessment," and it is
unclear whether this term is intended to include assessments levied under the Act. In the case
of the unpaid assessments which are pledged as security for payment of the Bonds, the laws of
the State provide a mandatory, statutory duty of the City and the County Auditor to post
installments on account of the unpaid assessments to the property tax roll of the County each
year while any of the Bonds are outstanding, in amounts equal to the principal of and interest on
the Bonds coming due in the succeeding calendar year.
The interpretation and application of Proposition 218 will ultimately be determined by the
courts with respect to a number of the matters discussed above, and it is not possible at this
time to predict with certainly the outcome of such determination.
CONCLUDING INFORMATION
Enforceability of Remedies
The remedies available to the Fiscal Agent, the City, or the Owners of the Bonds upon
any nonpayment of assessment installments are in many respects dependent upon judicial
actions, which are ofte� subject to discretion and delay. Under existing constitutional and
statutory law and judicial decisions, including specifically Title 11 of the United States Code (the
federal bankruptcy code) and relevant banking and insurance law, the remedies provided in the
1915 Act and the 1913 Act may not be readily available or may be limited. The various legal
opinions to be delivered concurrently with the delivery of the Bonds, including Bond Counsel's
approving legal opinion, will be qualified as to the enforceabifity of the various legal instruments
by limitations imposed by bankruptcy, reorganization, insolvency, or other similar laws affecting
the rights of creditors generally, to the application of equitable principles, to the exercise of
judicial discretion in appropriate cases, and to the limitations on legal remedies in the State of
California.
Absence of Material Litigation
There is no controversy or litigation now pending against the City, or, to the knowledge
of its officers, threatened, restraining, or enjoining the issuance, sale, execution, or delivery of
the Bonds or in any way contesting or affecting the validity of the Bonds.
-33-
Certain Information Concerning the City
Certain general information concerning the City is included herein as APPENDIX D
hereto. THE GENERAL FUND OF THE CITY IS NOT LIABLE FOR THE PAYMENT OF THE
BONDS OR THE INTEREST THEREON, AND THE TAXING POWER OF THE CITY IS NOT
PLEDGED FOR THE PAYMENT OF THE BONDS OR THE INTEREST THEREON.
Tax Matters
In the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond
Counsel, under existing law interest on the Bonds is excluded from gross income for federal
income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended
(the "Code"), and is not an item of tax preference for purposes of the federal alternative
minimum tax imposed on individuals and corporations. Bond Counsel will express no opinion
as to any other federal tax consequences regarding the Bonds.
The opinion on federal tax matters will be based on and will assume the accuracy of
certain representations and certifications, and continuing compliance with certain covenants, of
the District that are intended to assure the foregoing, including that the Bonds are and will
remain obligations the interest on which is excluded from gross income for federal income tax
purposes. Bond Counsel will not independently verify the accuracy of those representations
and certifications.
The Code prescribes a number of qualifications and conditions for the interest on state
and local government obligations to be and to remain excluded from gross income for federal
income tax purposes. Some of these qualifications and conditions require future or continued
compliance after issuance of the obligations for the interest to be and to continue to be excluded
from the date of issuance. Noncompliance with these qualifications and conditions by the
District may cause the interest on the Bonds to be included in gross income for federal income
tax purposes retroactively to the date of issuance of the Bonds. The District has covenanted to
take the actions required of it for the interest on the Bonds to be and to remain excluded from
gross income for federal income tax purposes, and not to take any actions that would adversely
affect that exclusion.
Under the Code, a portion of the interest on the Bonds earned by ce�tain corporations
may be subject to a corporate alternative minimum tax. In addition, interest on the Bonds may
be subject to a branch profits tax imposed on certain foreign corporations doing business in the
United States and to a tax imposed on excess net passive income of certain S corporations.
Under the Code, the exclusion of interest from gross income for federal income tax
purposes may have certain adverse federal income tax consequences on items of income,
deduction or credit for certain taxpayers, including financial institutions, certain insurance
companies, recipients of Social Security and Railroad Retirement benefits, those that are
deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations, and
individuals otherwise eligible for the earned income tax credit. The applicability and extent of
these and other tax consequences will depend upon the particular tax status or other tax items
of the owners of the Bonds. Bond Counsel will express no opinion regarding those
consequences.
Any excess of the stated redemption price at maturity of the Bonds over the initial
offering price to the public of the Bonds set forth on the inside cover of this Official Statement is
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"original issue discount." Such original issue discount accruing on a Bond is treated as interest
excluded from the gross income of the owner thereof for federal income tax purposes and
exempt from California personal income tax. Original issue discount on any Bond purchased at
such initial offering price and pursuant to such initial offering wiil accrue on a semiannual basis
over the term of the Bond on the basis of a constant yield method and, within each semiannual
period, will accrue on a ratable daily basis. The amount of original issue discount on such a
Bond accruing during each period is added to the adjusted basis of such Bond to determine
taxable gain upon disposition (including sale, redemption or payment on maturity) of such Bond.
The Code includes certain provisions relating to the accrual of original issue discount in the
case of purchasers of the Bonds who purchase the Bonds other than at the initial offering price
and pursuant to the initial offering. Any person considering purchasing a Bond should consult
his or her own tax advisors with respect to the tax consequences of ownership of bonds with
original issue discount, including the treatment of purchasers who do not purchase in the
original offering and the original offering price, the allowance of a deduction for any loss on a
sale or other disposition, and the treatment of accrued original issue discount on such bonds
under federal individual and corporate alterative minimum taxes.
If the Bonds were offered and sold to the public at a price in excess of their stated
redemption price (the principal amount) at maturity, that excess constitutes "premium." For
federal income tax purposes, that premium is amortized over the period to maturity of the
Bonds, based on the yield to maturity of the Bonds, compounded semiannually. No portion of
that premium is deductible by the owner of a Bond. For purposes of determining the owner's
gain or loss on the sale, redemption (including redemption at maturity) or other disposition of a
Bond, the owner's tax basis in the Bond is reduced by the amount of premium that accrues
during the period of ownership. As a result, an owner may realize taxable gain for federal
income tax purposes from the sale or other disposition of a Bond for an amount equal to or less
than the amount paid by the owner for that Bond. A purchaser of a Bond in the initial public
offering at the price for that Bond stated on the cover of this Official Statement who holds that
Bond to maturity will realize no gain or loss upon the retirement of that Bond. Owners of the
Bonds should consult their own tax advisers as to the determination for federal income tax
purposes of the amount of premium properly accruable in any period with respect to the Bonds
and as to other federal tax consequences and the treatment of premium for purposes of state
and local taxes on, or based on, income.
Purchasers of the Bonds at other than their original issuance at the respective prices
indicated on the cover of this Official Statement should consult their own tax advisers regarding
other tax considerations such as the consequences of market discount.
A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix
C.
Continuing Disclosure
The City has covenanted for the benefit of owners of the Bonds to provide certain
financial information and operating data relating to the District by not later than the next January
15th after the end of the City's fiscal year (presently June 30) in each year (the "City Annual
Report") commencing with its report for the 2006-07 fiscal year (due January 15, 2008) and to
provide notices of the occurrence of certain enumerated events.
Certain of the Property Owners, including , have covenanted for the benefit of
holders and beneficial owners of the Bonds, to provide certain information relating to the
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Property Owner and the parcels it owns within the District (the "Property Owner Annual
Report"), and to provide notices of the occurrence of certain enumerated events. The
obligation of each such respective Property Owner to provide such information is in effect only
so long as each such respective Property Owner and its affiliates, or their successors, are
collectively responsible for a certain percentage of the lien of the Assessments, as described in
"APPENDIX E — FORM OF PROPERTY OWNER CONTINUING DISCLOSURE
UNDERTAKING."
The City Annual Report and Property Owner Annual Report will be filed with each
Nationally Recognized Municipal Securities Information Repository. The notices of material
events will be filed with the Municipal Securities Rulemaking Board. These covenants have
been made in order to assist the Underwriter in complying with Securities Exchange
Commission Rule 15c2-12(b)(5) (the "Rule"). The specific nature of the information to be
contained in the Annual Reports or the notices of material events is summarized in
"APPENDIX D— FORM OF ISSUER CONTINUING DISCLOSURE UNDERTAKING" and
"APPENDIX E — FORM OF PROPERTY OWNER CONTINUING DISCLOSURE
UNDERTAKING."
The City has had no instance in the previous five years in which it failed to comply in all
material respects with any previous continuing disclosure obligation under the Rule.
Approval of Legality
The validity of the Bonds and certain other legal matters are subject to the approving
opinion of Richards, Watson & Gershon, A Professional Law Corporation, Bond Counsel. A
complete copy of the proposed form of Bond Counsel opinion is contained in APPENDIX C
hereto and is printed on the Bonds. Bond Counsel undertakes no responsibility for the
accuracy, completeness, or fairness of this Official Statement. Certain matters will be passed
upon for the City by the City Attorney of the City.
Undervvriting
Stinson Securities, LLC and Kinsell, Newcomb & De Dios, Inc. (collectively, the
"Underwriter") has agreed to purchase the Bonds if and when issued pursuant to a contract of
purchase by and between the City and the Underwriter for $ , (representing the
aggregate principal amount of the Bonds less an underwriter's discount of $ ).
The purchase contract pursuant to which the Underwriter is purchasing the Bonds provides that
the Underwriter will purchase all of the Bonds if any are purchased. The obligation of the
Unden�vriter to make such purchase is subject to certain terms and conditions set forth in such
contract of purchase.
The Underwriter may offer and sell the Bonds to certain dealers and others at prices
different from the prices stated on the cover page of this Official Statement. The offering prices
may be changed from time to time by the Underwriter.
-36-
Financial Advisor
The City has retained Del Rio Advisors, LLC, of Modesto, California, as financial advisor
(the "Financial Advisor") in connection with the issuance of the Bonds. The Financial Advisor
is not obligated to undertake, and has not undertaken to make, an independent verification or
assume responsibility for the accuracy, completeness, or fairness of the information contained
in this Official Statement. Del Rio Advisors, LLC, is an independent financial advisory firm and
is not engaged in the business of underwriting, trading or distributing municipal securities or
other public securities.
Miscellaneous
The foregoing summaries or descriptions of provisions of the Bonds, the Fiscal Agent
Agreement, and all references to other materials not purporting to be quoted in full are only brief
outlines of some of the provisions thereof and do not purport to summarize or describe all of the
provisions thereof, and reference is made to said documents for full and complete statements of
their provisions. The appendices hereto are a part of this Official Statement.
Any statements in this Official Statement involving matters of opinion, whether or not
expressly so stated, are intended as such and not as representations of fact. The Official
Statement is not to be construed as a contract or agreement between the City and the
purchasers or Owners of any of the Bonds.
The execution and delivery of this Official Statement has been duly authorized by the
City.
CITY OF PALM DESERT
By:
City Manager
-37-
APPENDIX A
ENGINEER'S REPORT
A-1
APPENDIX B
CITY OF PALM DESERT GENERAL INFORMATION
The following information concerning fhe City of Palm Desert, the County of Riverside
and surrounding areas is included only for the purpose of supplying general information
regarding fhe community. The Bons are not an obligation of the City.
The following information concerning the City and surrounding areas are included only
for the purpose of supplying general information regarding the community. The Local
Obligations and the Bonds are not a debt of the City, the State, or any of its political
subdivisions and neither said City, said State, nor any of its political subdivisions is liabie
therefor. See the section herein entitled "SECURITY FOR THE BONDS AND SOURCES �F
PAYMENT THEREFOR."
General Description and Background
The City of Palm Desert (the "City") is located in the Coachella Valley and is
approximately midway between the cities of Indio and Palm Springs, 117 miles east of Los
Angeles, 118 miles northeast of San Diego and 515 miles southeast of San Francisco. The City
was incorporated on November 26, 1973, as a general law city. In 1997 the City became a
charter city.
Elevation of the City is 243 feet and the mean temperature is 73.1 degrees. Except for
the summers, the weather is mild and annual average rainfall is 3.38 inches. According to State
Department of Finance estimates, the City population as of January 1, 2006 was 49,539. The
City covers an area of 24.75 square miles.
Population
The following sets forth the City, the County and the State population estimates as of
January 1 for the years 2002 to 2006:
CITY OF PALM DESERT, RIVERSIDE COUNTY AND STATE OF CALIFORNIA
Estimated Population
Year City of Riverside State of
�January 11 Palm Desert Countv California
2002 43,129 1,654,220 35,088,671
2003 44,490 1,726,754 35,691,442
2004 45,604 1,807,624 36,245,016
' 2005 49,595 1,888,311 36,728,196
2006 49,539 1,953,330 37,172,015
Source: Stafe of Califomia Deparfinent of Finance, Demographic Research Unit.
B-1
Commercial Activity
Total taxable transactions reported during calendar year 2005 in the City were reported
to be $1,529,342,000, a 6.7% increase over the total taxable transactions of $1,433,296,000
reported during calendar year 2004. The number of establishments selling merchandise subject
to sales tax and the valuation of taxable transactions in the City is presented in the following
table.
CITY OF PALM DESERT
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in Thousands)
Retail Stores Total All Outlets
Number Taxable % Number Taxable °lo
of Permits Transactions Change of Permits Transactions Change
2001 1,529 $1,015,932 — 2,833 $1,211,069 —
2002 1,532 1,019,327 0.3°!0 2,979 1,209,385 -0.1%
2003 1,538 1,103,689 8.3% 3,146 1,296,730 7.2°!0
2004 1,684 1,228,411 11.3% 3,254 1,433,296 10.5%
2005 1,733 1,317,337 7.2% 3,263 1,529,342 6.7%
Source: Califomia State Board of Equalization, Taxab/e Sales in California(Sales&Use Tax).
Total taxable transactions reported during calendar year 2005 in the County were
reported to be $28,256,491,000, a 12.0% increase over the total taxable transactions of
$25,237,148,000 that were reported in the County during calendar year 2004. The number of
establishments selling merchandise subject to sales tax and the valuation of taxable
transactions in the County is presented in the following table.
COUNTY OF RIVERSIDE
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in Thousands)
Retail Stores Total All Outlets
Number Taxable % Number Taxable %
of Permits Transactions Change of Permits Transactions Chan e
2001 17,403 313,173,281 — 38,011 $18,231,555 —
2002 17,646 14,250,733 8.2% 38,767 19,496,994 7.0°l0
2003 18,300 16,030,952 12.5% 40,833 21,709,135 11.3°/a
2004 20,642 18,715,949 16.7% 42,826 25,237,148 16.3%
2005 22,691 20,839,212 11.3% 44,222 28,256,491 12.0%
Source: California State Board of Equalization, Taxab/e Sa/es in California (Sa/es& Use Tax).
B-2
Employment and Industry
The City is included in the Riverside-San Bernardino labor market area. The
unemployment rate in the Riverside-San Bernardino-Ontario MSA was 4.4 percent in December
2006. This compares with an unadjusted unemployment rate of 4.6 percent for California and
4.5 percent for the nation during the same period. The unemployment rate was 4.6 percent for
Riverside County and 4.2 percent in San Bernardino County.
The following table shows the average annual estimated numbers of wage and salary
workers by industry. Does not include proprietors, the self-employed, unpaid volunteers or
family workers, domestic workers in households, and persons in labor management disputes.
RIVERSIDE-SAN BERNARDINO METROPOLITAN STATISTICAL AREA
(RIVERSIDE COUNTY)
Civilian Labor Force, Employment and Unemployment
(Annual Averages)
2001 2002 2003 2004 2005
Civilian Labor Force"� 1,562,300 1,639,700 1,668,300 1,650,500 1,714,000
Employment 1,484,100 1,543,400 1,588,700 1,556,100 1,627,700
Unemployment 78,200 96,300 99,600 94,400 86,300
Unemployment Rate 5.0°l0 5.9% 5.9% 5.7% 5.0%
WaQe and Salary Emplovment:�Z�
Agriculture 20,900 20,300 20,300 18,700 18,200
Natural Resources and Mining 1,200 1,200 1,200 1,200 1,300
Construction 88,400 90,900 99,000 111,800 122,200
Manufacturing 118,600 115,400 116,100 120,100 120,200
Wholesale Trade 41,600 41,900 43,500 45,600 49,200
Retail Trade 132,200 137,500 142,700 153,800 165,OOQ
Transportation, Warehousing and Utilities 45,600 46,800 50,100 55,500 59,700
Information 14,600 14,100 13,900 14,000 14,400
Finance and Insurance 22,900 23,500 25,700 28,Q00 29,900
Real Estate and Rental and Leasing 15,300 15,900 16,900 17,700 18,700
Professional and Business Services 101,700 106,800 115,400 125,500 132,500
Educational and Health Services 106,000 112,400 115,800 118,400 120,�00
Leisure and Hospitality 104,400 107,200 109,000 116,700 122,400
OtherServices 37,100 38,100 38,400 39,300 41,200
Federal Govemment 16,900 16,900 17,000 17,300 18,600
State Government 25,800 26,600 26,600 26,500 27,000
Local Government 157,600 169,300 167,900 168,700 174,800
Total All Industries�3� 1,050,700 1,084,800 1,119,400 1,178,700 1,235,400
(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household
domestic workers,and workers on strike.
(2) Industry employment is by place of work;excludes self-employed individuals, unpaid family workers, household
domestic workers, and workers on strike.
(3) Totals may not add due to rounding.
Source: State of California Emp/oyment Deve/opment Department.
B-3
Major Employers
The following table lists the largest employers within the County, listed alphabetically:
COUNTY OF RIVERSIDE
Major Employers
(As of January 2007)
Employer Name Location Industry
C A State Transportation Lake Elsinore Government Offices-State
Casino Morongo Cabazon Tourist Attractions
Chase Home Finance Moreno Valley Real Estate Loans
Crossroads Truck Dismantling Mira Loma Automobile Dismantling/Recycling (Whol)
Desert Regional Medicai Ctr Palm Springs Hospitals
Eisenhower Medical Ctr Rancho Mirage Clinics
Handsome Rewards Perris Internet & Catalog Shopping
Hemet Valley Medical System Hemet Hospitals
La Quinta Resort& Club La Quinta Hotels & Motels
Labtechniques Rancho Mirage Laboratories-Medical
Marriott Desert Springs Resort Palm Desert Hotels 8� Motels
Mountain & Dunes Golf Courses La Quinta Golf Courses-Private
Oasis Distributing Thermal Fruits &Vegetables-Growers & Shippers
Pechanga Resort&Casino Temecula Casinos
Riverside Community College Riverside Schools-Universities &Colleges Academic
Riverside Community Hospital Riverside Hospitals
Riverside County Regional Med Moreno Valley Hospitals
Riverside Forklift Training Riverside Trucks-Industrial (Wholesale)
Robertson's Ready-Mix Corona Concrete Contractors
Signatures Perris Internet&Catalog Shopping
Starcrest Products Of Ca Perris Internet&Catalog Shopping
Starcrest Products-California Perris Internet&Catalog Shopping
Sun World Intl Inc Coachella Fruits &Vegetables-Growers 8� Shippers
University Of California Riverside Schools-Universities &Colleges Academic
Watson Pharmaceuticals Inc Corona Drug Millers
Source: Califomia Employment Development Departmenf, extracted from The America's Labor Market Information
System(ALMIS) Employer Database.
B-4
Construction Activity
The following is a five year summary of the valuation of building permits issued in the
City and the County.
CITY OF PALM DESERT
Building Permit Valuation
(Valuation in Thousands of Dollars)
2001 2002 2003 2004 2005
Permit Valuation
New Single-family $82,145.0 $60,526.9 $65,066.1 $81,436.8 $46,917.6
New Multi-family 28,885.0 27,001.6 11,992.5 11,198.0 17,553.1
Res.AlterationslAdditions 9.043.2 12,957.5 9.326.9 11.103.3 13.660.2
Total Residential 120,073.2 100,486.0 86,387.6 103,738.2 78,130.9
New Commercial 11,177.0 14,707.5 7,272.6 19,863.5 60,005.2
New Industrial 5,438.4 3,012.0 712.6 3,005.1 13,495.5
New Other 1,264.2 1,160.0 1,249.8 7,896.1 5,278.0
Com.Alterations/Additions 18,439.4 22,534.2 10,888.0 12.347.4 13,756.7
Total Nonresidential 36,319.0 41,413.7 20,123.0 43,112.1 92,535.4
New Dwellinp Units
Single Family 255 221 237 325 100
Multiple Family 411 310 101 111 135
TOTAL 666 531 338 436 235
Source: Construction Industry Research Board, Building Permit Summary.
COUNTY OF RIVERSIDE
Building Permit Valuation
(Valuation in Thousands of Dollars)
2001 2002 2003 2004 2005
Permit Valuation
New Single-family $3,051,190.4 $3,670,371.4 $4,665,675.7 $5,997,513.2 $6,243,791.7
New Multi-family 174,628.0 165,413.0 406,483.0 404,615.9 407,432.1
Res.Alterations/Additions 70.849.7 87.842.9 106,855.8 135.176.6 164,312.5
Total Residential 3,296,668.2 3,923,627.4 5,179,014.5 6,537,305.6 6,815,536.3
New Commercial 287,068.6 297,963.6 360,707.4 580,057.8 552,666.9
New Industrial 74,766.3 80,881.6 112,706.6 203,311.9 120,367.6
New Other 152,854.0 187,510.6 261,793.6 334,001.0 344,703.2
Com.Alterations/Additions 143.351.7 174,785.7 173,165.5 222,495.5 274,337.7
Total Nonresidential 658,040.6 741,141.5 908,373.1 1,339,866.1 1,292,075.4
New Dwellina Units
Singls Family 16,556 20,591 25,137 29,478 29,994
Multiple Family 2.458 2,073 5,224 4,748 4,140
TOTAL 19,014 22,664 30,361 34,226 34,134
Source: Construction Industry Research Board, Building Permit Summary.
B-5
Effective Buying Income
"Effective Buying Income" is defined as personal income less personal tax and nontax
payments, a number often referred to as "disposable" or "after-tax" income. Personal income is
the aggregate of wages and salaries, other labor-related income (such as employer
contributions to private pension funds), proprietor's income, rental income (which includes
imputed rental income of owner-occupants of non-farm dwellings), dividends paid by
corporations, interest income from all sources, and transfer payments (such as pensions and
welfare assistance). Deducted from this total are personal taxes (federal, state and local),
nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as
"disposable personal income."
The following table summarizes the total effective buying income for the City of Palm
Desert, the County of Riverside, the State and the United States for the period 2001 through
2005.
CITY OF PALM DESERT; COUNTY OF RIVERSIDE
Effective Buying Income
2001 through 2005
Total Effective Median Household
Buying Income Effective Buying
Year Area (000's Omitted) Income
2001 Ciry of Palm Desert $1,008,568 $37,975
Riverside County 23,617,301 37,480
California 650,521,407 43,532
United States 5,303,481,498 38,365
2002 City of Palm Desert $1,184,128 $42,299
Riverside County 25,180,040 38,691
California 647,879,427 42,484
United States 5,340,682,818 38,035
2003 City of Palm Dese�t $1,238,323 $41,699
Riverside County 27,623,743 39,321
California 674,721,020 42,924
United States 5,466,880,008 38,201
2004 City of Palm Desert $1,295,785 $42,769
Riverside County 29,468,208 40,275
California 705,108,410 43,915
United States 5,692,909,567 39,324
2005 City of Palm Desert $1,364,255 $43,784
Riverside County 32,004,437 41,326
California 720,798,106 44,681
United States 5,894,663,750 40,529
Source:Sa/es&Marketing Management Survey of Buying Power for 2001 through 2004;
Claritas Demographics for 2005.
B-6
Utilities Services
Water is supplied to the City by the Coachella Valley Water District. Sewage treatment
and disposal is provided by the Coachella Valley Water District. Southern California Gas
Company supplies natural gas to the City and electric power is provided by the Southern
California Edison Company. Telephone service is available through Verizon. Cable television
services are provided by Time Warner.
Transportation
Inter-City transportation is provided by Greyhound Bus which provides service from its
connection points in the City to its lines located outside of the City in addition to the community
owned and operated Sunline Bus System which provides service throughout the entire
Coachella Valley. IntraCity transportation is provided by Tel-a-Ride and local taxi firms. The
City's central highways are California Highway 111 and 74 which connect to US Interstate 10
and to California Highway 63 and 86.
A full service airport is located in Palm Springs, twelve miles northwest of the City, with
approximately seven carriers providing service. The airport has an 8,500-foot runway and
general aviation facilities. There is also a private airport in Bermuda Dunes, eight miles
northeast of the City. In addition, shipping is provided by numerous truck carriers which have
overnight service to Los Angeles, San Francisco, San Diego and Phoenix. Rail transportation is
provided by the Southern Pacific Railroad located in Indio, 10 miles east of the City, and by
Amtrak, which has two stations located in the Coachella Valley.
Community Service Facilities
The City provides both police and fire protection through contracts with the County of
Riverside . Educational services are provided through the Desert Sands Unified School District.
The College of Desert is the Coachella Valley's Community College and is located in Palm
Desert. A satellite campus of Cal State University, San Bernardino is located on the College of
the Desert Campus. Cultural and recreational facilities include sixteen churches. The City has
library services provided by the Riverside County Public Library System. The City has one
public library located on the College of the Desert campus. This 43,000 square foot library is
jointly used by the College of the Desert and the public library system.
B-7
APPENDIX C
FORM OF BOND COUNSEL OPINION
C-1
APPENDIX D
FORM OF ISSUER CONTINUING DISCLOSURE UNDERTAKING
CONTINUING DISCLOSURE AGREEMENT
(City)
THIS CONTINUING DISCLOSURE AGREEMENT (the "Disclosure Agreement") is
dated as of , 2007, is by and between the City of Palm Desert, a charter city,
corporate and politic, organized and existing under and by virtue of the laws of the State of
Caiifornia (the "Issuer" or the "City"), and MuniFinancial, Temecula, California, in its capacity as
Dissemination Agent (the "Dissemination Agent").
WITNESSETH :
WHEREAS, pursuant to a Fiscal Agent Agreement dated as of 1, 2007 (the
"Indenture") by and between the City and Welfs Fargo Bank, National Association, as the Fiscal
Agent, the City has issued its City of Palm Desert Section 29 Assessment District (No. 2004-02)
Limited Obligation Improvement Bonds Series 2007 (the "Bonds"), in the aggregate principal
amount of$ ; and
WHEREAS, this Disclosure Agreement is being executed and delivered by the City and
the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds and
in order to assist the Participating Underwriter of the Bonds in complying with Securities and
Exchange Commission Rule 15c2-12(b)(5);
NOW, THEREFORE, for and in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
SECTION 1. Def�itions. In addition to the definitions set forth in the Agreement, which
apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this
Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Repo�t provided by the City pursuant to, and as
described in, Sections 2 and 3 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly,
to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons
holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the
owner of any Bonds for federal income tax purposes.
"Disclosure Representative" shall mean the designees of the City to act as the
disclosure representative.
"Dissemination AgenY' shall mean MuniFinancial, acting in its capacity as Dissemination
Agent hereunder, or any successor Dissemination Agent designated in writing by the City.
"Listed Events" shall mean any of the events listed in Section 4(a) of this Disclosure
Agreement and any other event legally required to be reported pursuant to the Rule.
0-1
"National Repository" shall mean any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule. Any filing under this Disclosure Agreement
with a National Repository may be made solely by transmitting such filing to the Texas
Municipal Advisory Council (the "MAC") as provided at "http://www.disclosureusa.org" unless
the United States Securities and Exchange Commission has withdrawn the interpretive advice
in its letter to the MAC dated September 7, 2004.
"Official Statement" means the Official Statement, dated , 2007, relating to
the Bonds.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds
required to comply with the Rule in connection with offering of the Bonds.
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from
time to time.
"State" shall mean the State of California.
"State Repository" shall mean any public or private repository or entity designated by the
State as a state repository for the purpose of the Rule and recognized as such by the Securities
and Exchange Commission. As of the date of this Disclosure Agreement, there is no State
Repository.
SECTION 2. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than
January 15 after the end of the City's fiscal year, commencing with the fiscal year ending June
30, 2007 (for the report due January 15, 2008), provide to each Repository an Annual Report
which is consistent with the requirements of Section 3 of this Disclosure Agreement. The
Annual Report may be submitted as a single document or as separate documents comprising a
package, and may include by reference other information as provided in Section 3 of this
Disclosure Agreement. Not later than fifteen (15) Business Days prior to said date, the City
shall provide the Annual Report to the Dissemination Age�t. The City shall provide an Officer's
Certificate with each Annual Report furnished to the Dissemination Agent to the effect that such
Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
The Dissemination Agent may conclusively rely upon such Officer's Ce�tificate of the City.
(b) If by fifteen (15) Business Days prior to the date specified in subsection (a) for
providing the Annual Report to the Repositories, the Dissemination Agent has not received a
copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the
City is in compliance with subsection (a).
(c) If the Dissemination Agent is unable to verify that an Annual Report has been
provided to the Repositories by the date required in subsection (a), the Dissemination Agent
shall provide to {i) each National Repository or the Municipal Securities Rulemaking Board and
(ii) each appropriate State Repository (with a copy to the Fiscal Agent) a notice, in substantially
the form attached as Exhibit A.
D-2
(d) With respect to the Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the
name and address of each National Repository and the State Repository, if any;
and
(i) (if the Dissemination Agent is other than the City), to the extent
appropriate information is available to it, file a report with the City certifying that
the Annual Report has been provided pursuant to this Disclosure Agreement,
stating the date it was provided and listing all the Repositories to which it was
provided.
SECTION 3. Content of Annual Reports. The City's Annual Report shall contain or
include by reference the following:
(a) The following information:
1. Principal amount of Bonds outstanding.
2. Balance in the improvement fund.
3. Balance in debt service Reserve Fund, and statement of the Reserve Fund
requirement. Statement of projected Reserve Fund draw, if any.
4. Balance in other funds and accounts held by City or fiscal agent related to the
Bonds.
5. Additional debt authorized by the City and payable from or secured by
assessments or special taxes with respect to property within the District.
6. The assessment delinquency rate, total amount of delinquencies, number of
parcels delinquent in payment for the five most recent fiscal years.
7. Notwithstanding the June 3Qth reporting date for the Annual Report, the following
information shall be reported as of the last day of the month immediately preceding the date of
the Annual Report rather than as of June 30th. Identity of each delinquent taxpayer responsible
for 5 percent or more of total assessment levied, and the following information: assessor parcel
number, assessed value of applicable properties, amount of assessments levied, amount
delinquent by parcel number and status of foreclosure proceedings. If any foreclosure has been
completed, summary of results of foreclosure sales or transfers.
8. Most recently available total assessed value of all parcels subject to the special
tax or assessment.
9. Audited financial statements prepared in accordance with generally accepted
accounting principles as promulgated to apply to governmental entities from time to time by the
Governmental Accounting Standards Board. If the City's audited financial statements are not
available by the time the Annual Report is required to be filed pursuant to Section 2(a), the
Annual Report shall contain unaudited financial statements in a format similar to that used for
the City's audited financial statements, and the audited financial statements shall be filed in the
same manner as the Annual Report when they become available; provided, that in each Annual
D-3
Report or other filing containing the City's financial statements, the following statement shall be
included in bold type:
THE CITY'S ANNUAL FINANCIAL STATEMENT IS PROVIDED SOLELY TO COMPLY
WITH THE SECURITIES EXCHANGE COMMISSION STAFF'S INTERPRETATION OF RULE
15C2-12. NO FUNDS OR ASSETS OF THE CITY OF PALM DESERT (OTHER THAN THE
PROCEEDS OF THE ASSESSMENTS LEVIED IN THE DISTRIC7 AND SECURING THE
BONDS) ARE REQUIRED TO BE USED TO PAY DEBT SERVICE ON THE BONDS AND THE
CITY IS NOT OBLIGATED TO ADVANCE AVAILABLE FUNDS FROM THE CITY TREASURY
TO COVER ANY DELINQUENCIES. INVESTORS SHOULD NOT RELY ON THE FINANCIAL
CONDITION OF THE CITY IN EVALUATING WHETHER TO BUY, HOLD OR SELL THE
BONDS.
Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues with respect to which the City is an
"obligated person" (as defined by the Rule), which have been filed with each of the Repositories
or the Securities and Exchange Commission. If the document included by reference is a final
official statement, it must be available from the Municipal Securities Rulemaking Board. The
City shall clearly identify each such other document so included by reference.
SECTION 4. Reportinq of Siqnificant Events.
(a) Pursuant to the provisions of this Section 4, the City shall give an Officer's
Certificate including notice of the occurrence of any of the following events with respect to the
Bonds, if material:
1. Principal and interest payment delinquencies.
2. Non-payment related defaults.
3. Modifications to rights of Bondholders.
4. Optional, contingent or unscheduled Bond calls.
5. Defeasances.
6. Rating changes.
7. Adverse tax opinions or events affecting the tax-exempt status of the
Bonds.
8. Unscheduled draws on the debt service reserves, if any, reflecting
financial difficulties.
9. Unscheduled draws on credit enhancements reflecting financial
difficulties.
10. Substitution of credit or liquidity providers, or their failure to perform.
11. Release, substitution, or sale of property securing repayment of the
Bonds.
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the
City shall as soon as possible determine if such event would constitute material information for
Holders of Bonds, provided, that any event under subsection (a)(6) will always be defined to be
material.
(c) If the City determines that knowledge of the occurrence of a Listed Event would
be material under applicable Federal securities law, the City shall, or by written direction cause
the Dissemination Agent (if not the City) to, promptly file a notice of such occurrence with (i)
each National Repository or the Municipal Securities Rulemaking Board and (ii) each
D-4
appropriate State Repository with a copy to the Fiscal Agent, together with written direction to
the Fiscal Agent whether or not to notify the Bond holders of the filing of such notice. In the
absence of any such direction, the Fiscal Agent shall not send such notice to the Bond holders.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5)
need not be given under this subsection any earlier than the notice (if any) of the underlying
event is given to holders of affected Certificates pursuant to the Indenture.
(d) If in response to a request under subsection (b), the City determines that the
Listed Event would not be material under applicable federal securities laws, the City shall so
notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the
occurrence pursuant to subsection (e).
(e) If the Dissemination Agent has been instructed by the City to report the
occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with
the Repository. Notwithstanding the foregoing:
SECTION 5. Termination of Reportinq ObliQation. The obligations of the City, the
Dissemination Agent under this Disclosure Agreement shall terminate upon the legal
defeasance, prior redemption or payment in fulf of all of the Bonds. If such termination occurs
prior to the final maturity of the Bonds, the City shall give notice of such termination in the same
manner as for a Listed Event under Section 4(e) hereof. If the City's obligations under the
Agreement are assumed in full by some other entity, such person shall be responsible for
compliance with this Disclosure Agreement in the same manner as if it were the City, and the
City shall have no further responsibility hereunder.
SECTION 6. Dissemination Aqent. The City may, from time to time, appoint or
engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure
Agreement, and may discharge any such Dissemination Agent, with or without appointing a
successor Dissemination Agent. The Dissemination Agent may resign at any time by providing
at least 30 days' notice in writing to the Issuer and the City.
SECTION 7. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Agreement, the City and the Dissemination Agent may amend this Disclosure
Agreement (and the Dissemination Agent shall agree to any amendment so requested by the
Issuer, provided no amendment increasing or affecting the obligations or duties of the
Dissemination Agent shall be made without the consent of either such party) and any provision
of this Disclosure Agreement may be waived if such amendment or waiver is supported by an
opinion of counsel expert in federal securities laws acceptable to the Issuer, the City and the
Dissemination Agent to the effect that such amendment or waiver would not, in and of itself,
cause the undertakings herein to violate the Rule if such amendment or waiver had been
effective on the date hereof but taking into account any subsequent change in or official
interpretation of the Rule.
SECTION 8. Additional Information. Nothing in this Disclosure Agreement shall be
deemed to prevent the City from disseminating any other information, using the means of
dissemination set forth in this Disclosure Agreement or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by this Disclosure Agreement. If the City chooses to include
any information in any Annual Report or notice of occurrence of a Listed Event, in addition to
that which is specifically required by this Disclosure Agreement, the City shall have no obligation
D-5
under this Agreement to update such information or include it in any future Annual Report or
notice of occurrence of a Listed Event.
SECTION 9. Duties. Immunities and Liabilities of Dissemination Aqent. The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure
Agreement, and the City agrees to indemnify and save the Dissemination Agent, its officers,
directors, employees and agents, harmless against any loss, expense and liabilities which they
may incur arising out of or in the exercise or performance of their respective powers and duties
hereunder, including the costs and expenses (including attorneys' fees) of defending against
any claim of liability, but excluding liabilities due to the Dissemination AgenYs negligence or
willful misconduct. The Dissemination Agent shall be paid compensation by the City for its
services provided hereunder in accordance with its schedule of fees as amended from time to
time, and all expenses, legal fees and advances made or incurred by the Dissemination Agent
in the performance of its duties hereunder. The Dissemination Agent shall have no duty or
obligation to review any information provided to it hereunder and shall not be deemed to be
acting in any fiduciary capacity for the Issuer, the Bondholders, or any other party. The
obligations of the City under this Section shall survive resignation or removal of the
Dissemination Agent and payment of the Bonds.
SECTION 10. Notices. Any notices or communications to or among any of the parties
to this Disclosure Agreement may be given as follows:
City: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260
(760)346-0611
(760) 346-0574 Fax
Dissemination Agent: MuniFinancial, Inc.
27368 Via lndustria, Suite 110
Temecula, California 92590
(909) 587-3500
(909) 587-3510 fax
Any person may, by written notice to the other persons listed above, designate a
different address or telephone number(s) to which subsequent notices or communications
should be sent.
SECTION 11. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit
of the City, the Dissemination Agent, the Participating Underwriter and Holders and Beneficial
Owners from time to time of the Bonds, and sha11 create no rights in any other person or entity.
SECTION 12. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement
as of the date first above written.
CITY OF PALM DESERT, for and on behalf
of City of Palm Desert Section 29 -
Assessment District (No. 2004-02)
By:
Authorized Officer
MUNIFINANCIAL, as Dissemination Agent
By:
Authorized Officer
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EXHIBIT A
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Palm Desert
Name of Bond Issue: $ City of Palm Desert Section 29 Assessment District (No.
2004-02} Limited Obligation Improvement Bonds Series 2007
Date of Issuance: , 2007
NOTICE IS HEREBY GIVEN that the City of Palm Desert (the "City") on behalf of City of
Palm Desert Section 29 - Assessment District (No. 2004-02) has not provided an Annual Report
with respect to the above-named Bonds as required by the Fiscal Agent Agreement dated as of
1, 2007 by and between the City and Wells Fargo Bank, National Association, as
Fiscal Agent. The City anticipates that the Annual Report will be filed by
Dated:
MUNIFINANCIAL, as Dissemination Agent,
on behalf of City of Palm Desert Section 29
Assessment District (No. 2004-02)
By:
Authorized Officer
cc: City of Palm Desert
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APPENDIX E
FORM OF PROPERTY OWNER CONTINUING DISCLOSURE UNDERTAKING
CONTINUING DISCLOSURE AGREEMENT
(Property Owner)
THIS CONTINUING DISCLOSURE AGREEMENT (the "Disclosure Agreement") dated
as of , 2007, is by and between (the "Property Owner")
and MuniFinancial, Temecula, California, in its capacity as Dissemination Agent (the
"Dissemination Agent").
WITNESSETH:
WHEREAS, pursuant to a Fiscal Agent Agreement dated as of 1, 2007 (the
"Indenture") by and between the City and Wells Fargo Bank, Nationa� Association, as the Fiscal
Agent, the City has issued its City of Palm Desert Assessment District (No. 2004-02) Limited
Obligation Improvement Bonds, Series 2007 (the "Bonds"), in the aggregate principal amount of
$ ; and
WHEREAS, this Disclosure Agreement is being executed and delivered by the Property
Owner and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the
Bonds;
NOW, THEREFORE, for and in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
SECTION 1. Definitions. In addition to the definitions set forth in the 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 meanings:
"Annual Report" shall mean any Annual Report provided by the Property Owner
pursuant to, and as described in, Sections 2 and 3 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly,
to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons
holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the
owner of any Bonds for federal income tax purposes.
"Dissemination AgenY' shall mean MuniFinancial, acting in its capacity as Dissemination
Agent hereunder, or any successor Dissemination Agent designated in writing by the City.
"Issuer" shall mean the City of Palm Desert, Riverside County, California.
"National Repository" shall mean any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule. Any filing under this Disclosure Agreement
with a National Repository may be made solely by transmitting such filing to the Texas
Municipal Advisory Council (the "MAC") as provided at "http://www.disclosureusa.org" unless
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the United States Securities and Exchange Commission has withdrawn the interpretive advice
in its letter to the MAC dated September 7, 2004.
"Official StatemenY' means the Official Statement, dated , 2007, relating to the
Bonds.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds.
"Improvements" shall mean the proposed subdivision within the District, as described in
the Official Statement, to be developed by the Property Owner.
"Property" shall mean the property in the District owned by the Property Owner on the
date that the Annual Report is provided.
"Repository" shall mean each National Repository and each State Repository.
"State" shall mean the State of California.
SECTION 2. Provision of Annual Reaorts.
(a) The Property Owner shall, not later than April 1St of each year (reflecting reported
information as of December 31S` of the prior year or such later date identified in the Annual
Report) beginning with the report due April 1, 2008 and continuing while this Disclosure
Agreement is in effect, provide to the Dissemination Agent an Annual Report which is consistent
with the requirements of Section 3 of this Disclosure Agreement with a copy to the Issuer. The
Property Owner shall provide a written certification with each Annual Report furnished to the
Dissemination Agent and the Issuer to the effect that the Annual Report is being provided
pursuant to this Disclosure Agreement. The Annual Report may be submitted as a single
document or as separate documents comprising a package, and may cross-reference other
information as provided in Section 4 of this Disclosure Agreement. The Annual Reports shall be
submitted to the Repository not later than April 15 of each year, commencing April 15, 2008.
Additionally, the Property Owner shall provide to any Beneficial Owner, the Participating
Underwriter, or the Issuer that so requests by a written request made at least 30 calendar days
prior to any July 1, October 1 or January 1, beginning July 1, 2007, a quarterly report which is
consistent with the requirements of Section 3 of this Disclosure Agreement, except that the
reported information shall cover only the period from the April 1 next preceding the quarterly
reporting date. Such quarterly report shall be delivered to the address given in the notice
requesting such report, within 30 days after such applicable July 1, October 1 or January 1
requested report date.
(b) If by fifteen (15) calendar days prior to the date specified in subsection (a) for
providing the Annual Report to the Repositories, the Dissemination Agent has not received a
copy of the Annual Report, the Dissemination Agent shall contact the Property Owner to
determine if the Property Owner is in compliance with subsection (a).
(c) If the Property Owner is unable to provide to the Dissemination Agent an Annual
Report by the date required in subsection (a), the Dissemination Agent shall send a notice to the
Dissemination Agent substantially the form attached as Exhibit A.
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(d) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the
name and address of each National Repository and the State Repository,
if any;
(ii) file each Annual Report received with each National Repository and the
State Repository, if any; and
(iii) (if the Dissemination Agent is other than the Property Owner), to the
extent appropriate information is availabfe to it, file a report with the
Property Owner certifying that the Annual Report has been provided
pursuant to this Disclosure Agreement, stating the date it was provided
and listing all the Repositories to which it was provided.
SECTION 3. Content of Annual Reaorts. The Property Owner's Annual Report shall
contain or incorporate by reference the following, if material:
(a) Any significant changes in the information contained in the Official Statement
about the Property Owner and the Property under the headings: "THE DISTRICT - Anticipated
Development in the District" and the status of completion of the Improvements
(b) A general description of the development status of the Property within the
District.
(c) A summary of the Property within the District sold by the Property Owner since
the date of the last Annual Report.
(d) A description of any change in the legal structure of the Property Owner which is
material to Bond investors.
(e) Material changes in Improvements costs, status of any construction loans and
any permanent financing received by the Property Owner with respect to the Improvements that
could have a significant impact on the Property Owner's ability to complete the Improvements.
(f) Any denial of credit, lines of credit, loans or loss of source of capital that could
have a significant impact on the Property Owner's ability to pay the Assessments or other taxes
or assessments levied on the Property or on the Property Owner's ability to complete the
Improvements.
(g) Any failure by the Property Owner to pay prior to delinquency general property
taxes, assessments or special taxes with respect to its Property in the District.
(h) Any previously undisclosed amendments to the land use entitlements or
environmental conditions or other governmental conditions that are necessary to complete the
Improvements.
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SECTION 4. Reportinq of Siqnificant Events.
(a) Pursuant to the provisions of this Section 4, the Property Owner shall give, to the
Dissemination Agent, notice of the occurrence of any of the following events with respect to the
Bonds, if material:
(i) failure to pay any real property taxes (including any assessments or
special taxes) levied within the District on a parcel of Property owned by
the Property Owner.
(ii) the discovery of toxic material or hazardous waste which will require
remediation on any Property owned by the Property Owner subject to the
lien of the Assessments.
(iii) default by the Property Owner on any loan with respect to the
construction or permanent financing of public or private improvements
with respect to the Improvements.
(iv) Initiation of bankruptcy proceedings (whether voluntary or involuntary) by
the Property Owner or any related entity.
(b) Whenever the Property Owner obtains knowledge of the occurrence of an event
described in section (a), the Property Owner shall as soon as possible determine if such event
would be material to Bond investors under applicable federal securities laws.
(c) If the Property Owner determines that knowledge of the occurrence of such event
would be material under applicable federal securities laws, the Property Owner shall promptly
provide a notice of such occurrence to the Dissemination Agent, with a copy to the Issuer.
SECTION 5. Termination of Reportin� Obli�ation. The obligations of the Property
Owner and the Dissemination Agent under this Disclosure Agreement shall terminate upon the
legal defeasance, prior redemption or payment in full of all of the Bonds. In addition the Property
Owner shall have no obligations hereunder if the lien of the Assessments of the District on all
Property within the District owned by the Property Owner and affiliates or partners at the time of
calculation thereof is less than percent (_%) of the total lien of the Assessments for the
entire District. Automatically, upon the occurrence of an event of termination, the Property
Owner shall no longer have an obligation to submit an Annual Report or any other report as set
forth in Section 2(a). However, if such termination occurs prior to the final maturity of the
Bonds, the Property Owner shall give notice of such termination in the manner set forth under
Section 4(c).
SECTION 6. Amendment: Waiver. Notwithstanding any other provision of this
Disc{osure Agreement, the Property Owner and the Dissemination Agent may amend this
Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so
requested by the Property Owner, provided no amendment increasing or affecting the
obligations or duties of the Dissemination Agent shall be made without the consent of either
such party), and any provision of this Disclosure Agreement may be waived, provided that the
following conditions are satisfied:
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(a) If the amendment or waiver relates to the provisions of Sections 2(a), 3, or 4(a), it
may only be made in connection with a change in circumstances that arises from a
change in lega� requirements or change in law;
(b) The amendment or waiver either (i) is approved by the Bondholders of the Bonds
in the same manner as provided in the Agreement for amendments to the Agreement
with the consent of Bondholders, or (ii) does not, in the opinion of nationally recognized
bond counsel, materially impair the interests of the Bondholders or Beneficial Owners of
the Bonds.
in the event of any amendment or waiver of a provision of this Disclosure Agreement,
the Property Owner shall describe such amendment in the next Annual Report, and shall
include, as applicable, a narrative explanation of the reason for the amendment or waiver and
its impact on the type of information being presented by the Property Owner.
SECTION 7. Additional Information. Nothing in this Disclosure Agreement shall be
deemed to prevent the Property Owner from disseminating any other information, using the
means of dissemination set forth in this Disclosure Agreement or any other means of
communication, or including any other information in any Annual Report or notice of occurrence
of a material event, in addition to that which is required by this Disclosure Agreement. If the
Property Owner chooses to include any information in any Annual Report or notice of
occurrence of a material event in addition to that which is specifically required by this Disclosure
Agreement, the Property Owner shall have no obligation under this Disclosure Agreement to
update such information or include it in any future Annual Report or notice of occurrence of a
material event.
SECTION 8. Duties, Immunities and Liabilities of Dissemination Apent. The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure
Agreement, and the Property Owner agrees to indemnify and save the Dissemination Agent, its
officers, directors, employees and agents, harmless against any loss, expense and liabilities
which they may incur arising out of or in the exercise or performance of their respective powers
and duties hereunder, including the costs and expenses (including attorneys' fees) of defending
against any claim of liability, but excluding liabilities due to the Dissemination Agent's
negligence or willful misconduct. So long as the Dissemination Agent is Munifinancial, any fees
payable to the Dissemination Agent shall be payable as an administrative expense of the
District. For any other entity that serves as the Dissemination Agent, the Dissemination Agent's
compensation shall be paid by the Property Owner 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 pertormance of its duties
hereunder. The Dissemination Agent shall have no duty or obligation to review any information
provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the
Issuer, the Bondholders, or any other party. The obligations of the Property Owner under this
Section shall survive resignation or removal of the Dissemination Agent and payment of the
Bonds.
SECTION 9. Subseauent Companies. The Property Owner will require, as a condition
of sale of any portion of the Property which the Property Owner sells resulting in a new owner
who, together with affiliates or partners thereof, owns property responsible for at least
percent (_%) of the total lien of the Assessments for the entire District, that such purchaser
execute an agreement substantially in the form of this Disclosure Agreement, unless this
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Disclosure Agreement, as it may be amended from time to time, by its own terms would not
require the purchaser to provide any disclosure.
SECTION 10. Notices. Any notices or communications to or among any of the parties
to this Disclosure Agreement may be given as follows:
To the Property Owner:
City: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260
(760) 346-0611
(760) 346-0574 Fax
Dissemination Agent: MuniFinancial, Inc.
27368 Via lndustria, Suite 110
Temecula, California 92590
(909) 587-3500
(909) 587-3510 Fax
Any person may, by written notice to the other persons listed above, designate a
different address or telephone number(s) to which subsequent notices or communications
should be sent.
SECTION 11. Beneficiaries. This Disclosure Agreement shall inure solely to the
benefit of the City, the Dissemination Agent, the Participating Underwriter and Holders and
Beneficial Owners from time to time of the 8onds, and shall create no rights in any other person
or entity.
SECTION 12. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement
as of the date first above written.
[PROPERTY OWNER]
By:
its:
MUNIFINANCIAL, as Dissemination
Agent
By:
Authorized Officer
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EXHIBIT A
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Palm Desert
Name of Bond Issue: $ City of Palm Desert Assessment District (No. 2004-
02) Limited Obligation Improvement Bonds, Series 2007
Date of Issuance: , 2007
NOTICE IS HEREBY GIVEN that (the "Property Owner") has
not provided an Annual Report with respect to the above-named Bonds as required by the
Continuing Disclosure Agreement of the Property Owner dated as of the date of issuance of
such Bonds. The Property Owner anticipates that the Annual Report will be filed by
Dated:
on behalf of the Dissemination Agent
By:
its:
cc: Property Owner
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APPENDIX F
APPRAISAL REPORT
F-1
APPENDIX G
THE BOOK-ENTRY SYSTEM
General
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-
registered bonds registered in the name of Cede & Co. (DTC's partnership nominee). One fully-
registered Bond will be issued for each maturity of the Bonds, each in the aggregate principal
amount of such maturity, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "c�earing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934. DTC holds securities that its participants (the
"Participants") deposit with DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and dealers, banks,
and trust companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Purchases of the Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest
of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Bonds are to be accomplished by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Bonds, except in the event that use of
the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are
registered in the name of DTC's partnership nominee, Cede 8 Co. The deposit of Bonds with
DTC and their registration in the name of Cede 8� Co. effect no change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only
the identity of the Direct Participants to whose accounts such securities are credited, which may
or may not be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to
G-1
Beneficial Owners, will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the bonds within an
issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Bonds. Under its
usual procedures, DTC mails an Omnibus Proxy to an issuer as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Principal and interest payments on the Bonds will be made to DTC. DTC's practice is to
credit Direct Participants' accounts on payment dates in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will not receive
payment on the date payable. Payments by Participants to Beneficial Owners will be governed
by standing instructions and customary practices, as is the case with securities held for the
accounts of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Fiscal Agent, or the City, subject to any
statutory or regulatory requirements as may be in effect from time to time. Payment of principal
and interest to DTC is the responsibility of the City or the Fiscal Agent, disbursement of such
payments to Direct Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be responsibility of Direct and Indirect Participants.
The City cannot and does not give any assurances that DTC, DTC Participants or others
will distribute payments of principal, interest or premium with respect to the Bonds paid to DTC
or its nominee as the registered owner, or will distribute any redemption notices or other notices,
to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the
manner described in this Official Statement. The City is not responsible or liable for the failure
of DTC or any DTC Participant to make any payment or give any notice to a Beneficial Owner
with respect to the Bonds or an error or delay relating thereto.
The foregoing description of the procedures and record-keeping with respect to
beneficial ownership interests in the Bonds, payment of principal, interest and other payments
on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial
ownership interests in such Bonds and other related transactions by and between DTC, the
DTC Participants and the Beneficial Owners is based solely on information provided by DTC.
Accordingly, no representations can be made concerning these matters and neither the DTC
Participants nor the Beneficial Owners should rely on the foregoing information with respect to
such matters, but should instead confirm the same with DTC or the DTC Participants, as the
case may be.
Discontinuance of Book-Entry System
DTC may discontinue providing its services with respect to any Series of Bonds at any
time by giving notice to the Fiscal Agent and discharging its responsibilities with respect thereto
under applicable law or the City may terminate participation in the system of book-entry
transfers through DTC or any other securities depository at any time. In the event that the book-
entry system is discontinued, the City will execute, and the Fiscal Agent will authenticate and
make available for delivery, replacement Bonds in the form of registered bonds. In addition, the
G-2
following provisions would apply: the principal of and redemption premium, if any, on the Bonds
will be payable at the corporate trust office of the Fiscal Agent in Los Angeles, California, and
interest on the Bonds will be payable by check mailed to the registered owner as of the close of
business on the Record Date. See "General" above. Bonds will be transferable and
exchangeable on the terms and conditions provided in the Trust Agreement. See "Transfer and
Exchange of Bonds" above.
G-3
ACQUISITION AGREEMENT
by and between
City of Palm Desert
and Rilington Dolce, LLC
A California Limited Liability Company
relating to
City of Palm Desert Section 29 Assessment District (No. 2004-02)
P6401-1033\955059v l.doc
TABLE OF CONTENTS
PAGE
ARTICLEI. DEFINITIONS .......................................................................................................... 1
1.01 Definitions..................................................................................................................... 1
ARTICLEII. RECITALS............................................................................................................... 3
2.01 The Assessment District ............................................................................................... 3
2.02 The Development.......................................................................................................... 3
2.03 The Facilities................................................................................................................. 3
2.04 The Financing ............................................................................................................... 3
2.05 The Bonds..................................................................................................................... 3
2.06 No Advantage to City Construction.............................................................................. 3
2.07 Agreements................................................................................................................... 4
ARTICLE III. FUNDING............................................................................................................... 4
3.01 City Proceedings; Bonds...............................................................................................4
ARTICLE IV. CONSTRUCTION OF FACILITIES..................................................................... 4
4.01 Plans.............................................................................................................................. 4
4.02 Construction.................................................................................................................. 4
4.03 Independent Contractor................................................................................................. 5
4.04 Performance and Payment Bonds................................................................................. 5
4.05 Labor Code Provisions.................................................................................................. 5
4.06 Relationship to Public Works; Bidding Requirements................................................. 6
4.07 Contracts and Change Orders ....................................................................................... 7
ARTICLE V. ACQUISITION AND PAYMENT.......................................................................... 7
5.01 Agreement to Purchase and Sell Facilities; Payment Requests.................................... 7
5.02 Processing Payment Requests....................................................................................... 9
5.03 Payment......................................................................................................................... 9
5.04 Joint or Third Party Payments....................................................................................... 9
5.05 Restrictions on Payments............................................................................................ 10
5.06 Defective or Nonconforming Work............................................................................ 10
ARTICLE VI. MAINTENANCE AND WARRANTIES ............................................................ 11
6.01 Maintenance and Warranties....................................................................................... 11
ARTICLE VII. INSURANCE...................................................................................................... 11
7.01 Insurance Requirements.............................................................................................. 11
ARTICLE VIII. REPRESENTATIONS, WARRANTIES AND COVENANTS ....................... 14
8.01 Representations, Covenants and Warranties of the Owner......................................... 14
8.02 Indemnification and Hold Harmless........................................................................... 15
ARTICLEIX. TERMINATION................................................................................................... 16
9.01 No Bonds .................................................................................................................... 16
i
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TABLE OF CONTENTS
(Continued)
Page
9.02 Mutual Consent........................................................................................................... 16
9.03 City Election for Cause............................................................................................... 16
9.04 Force Majeure............................................................................................................. 17
ARTICLE X. MISCELLANEOUS .............................................................................................. 18
10.01 Limited Liability of City............................................................................................. 18
10.02 Excess Costs................................................................................................................ 18
�
10.03 Audit ........................................................................................................................... 18
10.04 Attorneys' Fees........................................................................................................... 18
10.05 Notices ........................................................................................................................ 18
10.06 Severability................................................................................................................. 19
10.07 Successors and Assigns............................................................................................... 19
10.08 Waiver......................................................................................................................... 19
10.09 Other Agreements....................................................................................................... 19
10.10 Merger......................................................................................................................... 19
10.11 Parties in Interest......................................................................................................... 19
10.12 Amendment................................................................................................................. 20
10.13 Counterparts................................................................................................................ 20
10.14 Conflict ....................................................................................................................... 20
ii
P6401-1033\955059v 1.doc
THIS ACQUISITION AGREEMENT (the "Acquisition Agreement"), dated as of ,
2007, is by and between the City of Palm Desert, a municipal corporation existing under the laws
of the State of California, (the "City") and Rilington Dolce, LLC, a California Limited Liability
Company (the "Owner').
ARTICLE I.
DEFINITIONS
1.01 Definitions. The following terms shall have the meanings ascribed to them in this
Section 1.01 for purposes of this Acquisition Agreement. Unless otherwise indicated, any other
terms, capitalized or not, when used herein shall have the meanings ascribed to them in the Fiscal
Agent Agreement (as hereinafter defined).
"Acceptable Title" means title to Facilities, in form acceptable to the Director, and
CVWD, if applicable, free and clear of all liens, taxes, assessments, leases, easements and
encumbrances, whether or not recorded, and with respect to land, as evidenced by such title
insurance as the Director and CVWD, if applicable, may require, but subject to any exceptions
(excluding liens) that are determined by the Director, and CVWD, if applicable, as not
interfering with the actual or intended use of the land and/or Facility.
"Acceptance Date" means the date the City, or CVWD, if applicable, takes final action to
purchase, accept dedication of, or transfer of title to, a Facility.
"AcQuisition A�reement" means this Acquisition Agreement, together with any
Supplement hereto.
"Act" means the Municipal Improvement Act of 1913, Section 10,000 et seg. of the
California Streets and Highways Code, as amended.
"Actual Cost" means the substantiated cost of a Facility, which costs may include: (i) the
costs (evidenced by payments to parties unrelated to the Owner) incurred by the Owner for the
construction of such Facility; (ii) the documented costs incurred by the Owner in preparing the
Plans for such Facility and the related costs of design and engineering of the Facility, (iii)
documented professional costs incurred by the Owner associated with such Facility, such as
engineering, legal, accounting, inspection, construction, staking, materials testing and any other
similar professional services; and (iv) documented costs directly related to the construction
and/or acquisition of such Facility, such as costs of payment, performance and/or maintenance
bonds, and insurance costs (including costs of any title insurance required hereunder}; provided
that the costs described in paragraphs (ii), (iii) and (iv) shall not exceed, in the aggregate, twenty
percent (20�10) of the costs described in paragraph (i).
"Affiliate" means any entity with respect to which fifty percent (50%) or more of the
ownership or voting power is held individually or collectively by the Owner and any other entity
owned, controlled or under common ownership or control by or with, as applicable, the Owner or
its managing member, and includes all general partners of any entity which is a partnership.
Control shall mean ownership of fifty percent (50°Io) or more of the voting power of or
ownership interest in the respective entity.
P6401-1033\955059v l.doc 1
"Assessment District" means the City of Palm Desert Section 29 Assessment District
(No. 2004-02) created by the City Council pursuant to the Act.
"Bonds" means the City of Palm Desert Section 29 Assessment District (No. 2004-02)
Limited Obligation Improvement Bonds, Series 2007, if and when issued by the City with
respect to the Assessment District.
"CVWD" means the Coachella Valley Water District.
"C1iV" means the City of Palm Desert, California.
"Citv Council" means the duly elected and constituted city council of the City.
"Citv Manager" means the appointed city manager of the City.
"Director" means the Director of Public Works of the City, or his written designee acting
as such under this Acquisition Agreement.
"Facilities" or"Facilit " means the facilities and land described in Exhibit A hereto.
"Finance Director" means the Director of Finance-Treasurer of the City or his written
dcsignee acting as such under this Acquisition Agreement.
"Fiscal Agent" means the fiscal agent as appointed by the City at the time the Bonds are
issued, in its capacity as fiscal agent under the Fiscal Agent Agreement, or any successor thereto
acting as fiscal agent under the Fiscal Agent Agreement.
"Fiscal Agent Agreement" means the agreement by that name between the City and the
Fiscal Agent, providing for, among other matters, the issuance of the Bonds and the
establishment of the Improvement Fund, as it may be amended from time to time.
"Improvement Fund" means the Acquisition and Improvement Fund established by the
Fiscal Agent Agreement.
"Owner" means Rilington Dolce, LLC, a California Limited Liability Company, and its
successors and assigns to the extent permitted under Section 10.07 hereof.
"Parties" means the City and the Owner.
"Payment Request" means a document, substantially in the form of Exhibit B hereto, to
be used by the Owner in requesting payment of a Purchase Price.
"Plans" means the plans and specifications for the Facilities approved pursuant to the
applicable standards of the City and/or CVWD, if applicable.
"Purchase Price" means the amount of the purchase price for a Facility determined by the
City in accordance with Article V hereof.
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"Risk Mana�er" shall mean the person acting in the capacity of Risk Manager for the
City.
"State" means the state of California.
"Supplement" means a written document amending, supplementing or otherwise
modifying this Acquisition Agreement or any exhibit hereto.
"Total Bud�eted Cost" means the sum of the estimated costs of the Facilities as shown on
Exhibit A hereto.
ARTICLE II.
RECITALS
2.01 The Assessment District. The City Council has established the Assessment
District under the Act for the financing of, among other things, the acquisition, construction and
installation of public facilities identified in the proceedings to form the Assessment District,
which include the Facilities listed in Exhibit A hereto.
2.02 The Development. The Owner is developing land owned by the Owner within
the Assessment District.
2.03 The Facilities. The City and the Owner will benefit from a coordinated plan of
design, engineering and construction of the Facilities and the development of the Owner's land
located within the Assessment District. The Owner acknowledges that the inclusion of Facilities
in Exhibit A hereto in no way, in itself, obligates the City to issue any Bonds to acquire the
Facilities from the Owner, or implies that the City has engaged the Owner in any way to
construcc the Facilities. The Facilities are only the facilities listed in Exhibit A hereto, as such
Exhibit may be amended, supplemented or otherwise modified by any Supplement.
2.04 The Financing. The Owner and the City wish to finance the acquisition of the
Facilities and the payment therefor from moneys in the Improvement Fund by entering into this
Acquisition Agreement.
2.05 The Bonds. The City is proceeding to consider the authorization and issuance of
the Bonds under the Act and the Fiscal Agent Agreement, the proceeds of which Bonds, if any,
shall be used, in part, to finance the acquisition of all or a portion of the Facilities, but only
pursuant to the terms and conditions of this Acquisition Agreement. The execution of this
Acquisition Agreement by the City in no way obligates the City to issue any bonds.
2.06 No Advantage to City Construction. The City, by its approval of this
Acquisition Agreement, has determined that it will obtain no advantage from undertaking the
construction by the City directly of the Facilities, and that the provisions of this Acquisition
Agreement require that the Facilities be constructed by the Owner, as if they had been
constructed under the direction and supervision of the City. The Owner represents that it has
experience in the supervision of the construction of public facilities of the character of the
Facility.
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PG401-1033\955059v l.doc
2.07 Agreements. In consideration of the mutual promises and covenants set forth
herein, and for other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the City and the Owner agree that the foregoing recitals, as applicable to each,
are true and correct and further make the agreements set forth herein.
ARTICLE III.
FUNDING
3.01 City Proceedings; Bonds. The City will consider conducting all necessary
proceedings under the Act for the issuance, sale and delivery of the Bonds; provided, however,
that nothing herein shall be construed as requiring the City to issue the Bonds; and provided
further that the legal proceedings and the principal amount, interest rates, terms and conditions
and timing of the sale of the Bonds shall be in all respects subject to the absolute discretion and
approval of the City Council or such City officers to whom the City Council has delegated the
authority for such absolute discretion and approval. The City shall be obligated to pay the
Purchase Price of the Facilities solely from amounts on deposit in the Improvement Fund on or
after the closing date of the Bonds. The City makes no warranty, express or implied, that the
proceeds of the Bonds deposited and held in the Improvement Fund, and any investment
earnings thereon deposited to the Improvement Fund, will be sufficient for payment of the
Purchase Price of all of the Facilities. The proceeds of the Bonds shall be deposited, held,
invested, reinvested and disbursed as provided in the Fiscal Agent Agreement.
The Owner acknowledges that any lack of availability of amounts in the Improvement
Fund to pay the Purchase Price of Facilities shall in no way diminish any obligation of the
Owner with respect to the construction of the Facilities or the construction of or contributions for
public facilities required by any agreements to which the Owner is a party, or any governmental
approval to which the Owner is subject. The Owner further acknowledges that the obligation of
the owner, to pay assessments levied in the Assessment District shall not in any way be
dependent on: (i) the availability of amounts in the Improvement Fund for payment of the
Purchase Price of the Facilities, or(ii) any alleged misconduct of the City in the performance of
its obligations under this Acquisition Agreement, the Fiscal Agent Agreement, or any other
agreement to which the Owner and the City are parties.
ARTICLE IV.
CONSTRUCTION OF FACILITIES
4.01 Plans. The Owner represents and warrants that it has caused Plans to be prepared
for the Facilities being constructed by Owner and has obtained the approval of the Plans in
accordance with applicable ordinances and regulations of the City and/or CVWD, as applicable,
in advance of any construction being initiated. Copies of all Plans shall be provided by the
Owner to the Director upon request therefor, and in any event, as built drawings and a written
assignment of the Plans for any Facility to be acquired hereunder shall be provided to the City or
CVWD, as applicable, prior to acceptance of the Facility.
4.02 Construction. The Owner represents and warrants that any Facilities specified in
Exhibit A hereto have been, and shall be constructed by or at the direction of the Owner in
accordance with the approved Plans. The Owner represents and warrants it performed, and shall
4
PG401-1033\955059v l.doc
continue to perform, all of its obligations hereunder and has conducted, and shall continue to
conduct, all operations with respect to the construction of the Facilities in a good, workmanlike
and commercially reasonable manner with the standard of diligence and care normally employed
by duly qualified persons utilizing their best efforts in the performance of comparable work and
in accordance with generally accepted practices appropriate to the activities undertaken. The
Owner represents and warrants it has employed, and shall continue to employ, at all times
adequate staff or consultants with the requisite experience necessary to adminisler and coordinate
all work related to the design, engineering, acquisition, construction and installation of the
Facilities. The Owner acknowledges that the Owner shall be obligated: (i) to construct and
cause to be conveyed to the City, or CVWD, if applicable, all Facilities, and (ii) to use its own
funds to pay all costs thereof in excess of the Purchase Prices thereof to be paid therefor
hereunder. The Owner shall not be relieved of its obligation to construct each Facility and
convey each such Facility to the City or CVWD, as applicable, in accordance with the terms
hereof, even if(i) because of the limitations imposed by Section 5.05 hereof, the Purchase Price
for such Facility is less than the Actual Cost of such Facility, or(ii) there are insufficient funds in
the Improvement Fund to pay the Purchase Prices thereof, and, in any event, this Acquisition
Agreement shall not affect any obligation of any owner of land in the Assessment District under
any other agreement or any governmental approval to which any land within the Assessment
District is subject, with respect to the public improvements required in connection with the
development of the land within the Assessment District. Such obligation of the Owner to
construct and convey such Facilities, and pay the costs thereof in excess of available monies in
the Improvement Fund, shall be an obligation of the Owner as a party to this Acquisition
Agreement without regard to any governmental conditions to development of the land in the
Assessment District that may otherwise apply to the land owners in the Assessment District.
4.03 Independent Contractor. When constructing the Facilities to be acquired in
accordance with this Acquisition Agreement, the Owner is an independent contractor and not the
agent or employee of the City. The City shall not be responsible for making any payments to
any contractor, subcontractor, agent, consultant, employee or supplier of the Owner.
4.04 Performance and Payment Bonds. The Owner represents and warrants that it
has complied, and agrees to continue to comply, with all applicable performance and payment
bonding requirements of the City and CVWD, if applicable, with respect to the construction of
the Facilities in accordance with applicable provisions of the State Civil Code, including Section
3247 and 3248, and Sections 66499 —66499.10 of the Government Code, if applicable.
4.05 Labor Code Provisions. Pursuant to Section 1781 of the California Labor Code
("Labor Code"), the City hereby states, and the Owner hereby acknowledges, that the
construction of the Facilities by the Owner, which will be paid in part out of public funds, is
"public work" (as defined in Section 1720 of the Labor Code) to which Section 1771 of the
Labor Code applies, and the Owner hereby agrees that it has caused and shall continue to cause
the construction of the Facilities to be performed as "public work" as required by Section 1781
of the Labor Code. Without limiting the foregoing, the Owner represents and warrants that it has
complied, and agrees to continue to comply, with the provisions of Sections 1720 et se�c. of the
Labor Code with respect to prevailing wages.
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P6401-1033\955059v1.doc
4.06 Relationship to Public Works; Bidding Requirements. The following shall
apply to all contracts applicable to the Facilities:
A. General. This Acquisition Agreement is for the acquisition by the City or CVWD, as
applicable, of the Facilities and payment therefor from moneys in the Improvement Fund and is
not intended to be a public works contract. The City and the Owner agree that the Facilities are
of local, and not state-wide concern, and that the provisions of the State Public Contract Code
shall not apply to the construction of the Facilities. The City and the Owner agree that (i) the
Owner has awarded all contracts for the construction of the Facilities, (ii)this Acquisition
Agrcement is necessary to assure the timely and satisfactory completion of the Facilities, and
(iii) compliance with the State Public Contract Code with respect to the Facilities would work an
incongruity and would not produce an advantage to the City.
B. Bidding Procedures. Notwithstanding the foregoing, the Owner represents and
warrants it has awarded all contracts for construction of the Facilities hereof, and materials
related thereto, by means of a bid process acceptable to the Director, and consistent with
applicable City regulations, including without limitation the applicable provisions of the State
Public Contract Code relating to Cities. The Owner represents and warrants it has evaluated
criteria such as experience, ability to perform on schedule, financial ability, and such other
criteria as required by the Director to determine qualified contractors for any contract. Such
contractors shall comply with any applicable City regulations.
The Owner represents and warrants it has prepared bid packages (including engineering
reports and estimates) for each of the Facilities, and has submitted such packages to the Director,
reasonably in advance of the anticipated bid, for review. The Owner represents and warrants that
it has proceeded to take bids on the applicable Facilities solely upon agreement by the Director
and the Owner on the content of such bid packages and a schedule of bid prices, plus an
acceptable margin of variance.
The Owner represents and warrants that the Owner has awarded the applicable contract to
the ]owest responsive and responsible bidder and that the bid was within the constraints of the
approved bid package. Upon written request of the Director, the Owner shall provide an analysis
of bids for construction and materials for the Facilities, indicating how the winning bid was
determined and how it was consistent with the applicable bid package.
At the request of the Director, the Owner shall develop and shall maintain a project
schedule providing for all major project elements included in the construction of the Facilities, so
that the whole project is scheduled in an efficient manner. If a schedule is requested, the Owner
shall provide the Director with complete copies of the schedule and each update to the schedule
for the Director's review.
C. Periodic Meetings. From time to time at the request of the Director, representatives
of the Owner shall meet and confer with City staff, consultants and contractors regarding matters
arising hereunder with respect to the Facilities and the progress in constructing and acquiring the
same, and as to any other matter related to the Facilities or this Acquisition Agreement. The
Owner shall advise the Director in advance of any coordination and scheduling meetings to be
held with contractors relating to the Facilities, in the ordinary course of performance of an
6
P6401-1033\955059v l.doc
individual contract. The Director, or the Director's designated representative, shall have the
right to be present at such meetings, and to meet and confer with individual contractors if
deemed advisable by the Director to resolve disputes or ensure the proper completion of the
Facilities.
4.07 Contracts and Change Orders. The Owner shall be responsible for entering
into all contracts and any supplemental agreements, commonly referred to as "change orders,"
required for the construction of the Facilities. All such contracts and supplemental agreements
shall be submitted to the Director or, as to any such contracts and supplemental agreements
entered into prior to the date of this Acquisition Agreement, the Owner represents and warrants
they have been submitted to the Director. Prior approval of supplemental agreements by the
Director shall be required for any change order which involve an amount of$1,000.00 (One
Thousand Dollars) or greater, or which in any way materially alter the quality or character of the
subject Facilities; provided, as to any such change orders meeting the thresholds set forth in the
foregoing and entered into prior to the date of this Acquisition Agreement, the Owner represents
and warrants it has obtained the prior approval of the Director. The City expects that such
contracts and supplemental agreements needing prior approval by the Director will be approved
or denied (any such denial to be in writing, stating the reasons for denial and the actions, if any,
that can be taken to obtain later approval) (i) if the amount involved is less than $10,000.00 (Ten
Thousand Dollars), within ten (10) business days of receipt by the Director thereof, and (ii) if the
amount involved is $10,000.00 (Ten Thousand Dollars) or greater, within thirty (30) business
day of receipt by the Director thereof. Any approval by the Director of a supplemental
agreement shall in no way affect the estimated costs listed in Exhibit A for any related Facility,
but to the extent that it increases the Actual Cost of a Facility, such increased cost may be
payable as part of the Purchase Price of the related Facility as provided in Section 5.06.A. hereof
in the sole discretion of the Finance Director.
ARTICLE V.
ACQUISITION AND PAYMENT
5.01 Agreement to Purchase and Sell Facilities; Payment Requests. The Owner
hereby agrees to sell the Facilities to the City or CVWD, if applicable, and the City hereby
agrees to use amounts in the Improvement Fund for each such Facility to pay the Purchase Price
thereof to the Owner, subject to the terms and conditions hereof.
The City shall not be obligated to pay the Purchase Price of any Facility unless and until:
1. the Facility has been inspected and found to be completed in accordance with the
approved Plans by the City and/or CVWD, if applicable and has been found to contain no
hazardous materials (City and/or CVWD shall have the right to perform Phase I and Phase II
environmental investigation). For Facilities to be acquired by CVWD, the Owner shall be
responsible for obtaining such inspections and findings by CVWD and providing written
evidence thereof to the Director. The Owner agrees to pay all inspection, permit and other
similar fees applicable to construction of the Facilities, subject to reimbursement therefor as an
Actual Cost of the related Facility.
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P6401-1033\955059v1.doc
2, the Director and CVWD, if applicable, has determined that the Facility is ready
for its intended use;
3. for any Facility to be owned by CVWD, the Owner has provided the Director
with evidence that CVWD has accepted dedication of, or title to, the Facility.
4. a notice of completion executed by the Owner as an owner pursuant to Section
3093 of the State Civil Code, in a form acceptable to the Director, has been recorded for the
Facility;
5. general lien releases conditioned solely upon payment from the proceeds of the
Bonds to be used to acquire such Facility have been submitted to the Director for the Facility;
6. the City is satisfied that any and all claims for labor and materials have been paid
by the Owner for the Facility that is the subject of a Payment Request, or conditional lien
releases have been provided by the Owner for such Facility. The City may waive this limitation
upon the provision by the Owner of sureties, undertakings, securities andlor bonds of the Owner
or appropriate contractors or subcontractors and deemed satisfactory by the Director to assure
payment of such claims.
7. The Owner shall have delivered to the Director the following:
a. a Payment Request in the form of Exhibit B hereto for such Facility,
together with all attachments and exhibits required by Exhibit B and this Section 5.02 to be
included therewith (including, but not limited to, Attachments I and 2 to Exhibit B);
b. for any Facility to be owned by the City, if the property on which the
Facility is located on, in, or over is not owned by the City at the time of the Payment Request, a
duly executed and acknowledged grant deed in the form acceptable to the City conveying to the
City Acceptable Title to such real property on, in or over which such Facility is located;
c. a title policy issued by a title insurance company acceptable to the City in
the amount of the Purchase Price insuring the City fee simple title to the property described in
paragraph b, above;
d. a copy of the recorded notice of completion of each Facility (meeting the
requirements specified in Section 5.05);
e. to the extent paid for with the proceeds of the Bonds, an assignment to the
City of any reimbursements that may be payable with respect to the Facility, such as public or
private utility reimbursements;
f. an assignment of the warranties and guaranties for such Facility, as
described in Section 6.01 hereof, in a form acceptable to the City.
g. proof of the Owner's authority and authorization to enter into this
Acquisition Agreement;
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P6401-1033\955059v l.doc
h. any other documents reasonably required by the City or CVWD, as
applicable, which does not increase the cost to, or increase the potential liability of, the Owner
beyond what is required under the terms of this Acquisition Agreement.
5.02 Processing Payment Requests. Upon receipt of a Payment Request (and all
accompanying documentation), the Director shall promptly conduct a review in order to confirm
that such request is complete and to confirm the matters in the request, that such Facility
identified therein was constructed in accordance with the Plans therefor, and to verify and
approve the Actual Cost of such Facility specified in such Payment Request. The Director shall
also conduct such review as is required in the Director's discretion to confirm the matters
certified in the Payment Request or otherwise provided herein. The Owner agrees to cooperate
with the Director in conducting each such review and to provide the Director with such
additional information and documentation as is reasonably necessary for the Director to conclude
each such review. For any Facilities to be acquired by CVWD, the Owner shall provide
evidence acceptable to the Director that such Facilities are acceptable to CVWD. Within thirty
(30) days of receipt of any Payment Request, the Director expects to review the request for
completeness and notify the Owner whether such Payment Request is complete, and, if not, what
additional documentation must be provided. If such Payment Request is complete, the Director
expects to provide a written approval, or denial specifying the reason for any denial, of the
request within thirty (30) days of its submittal. If a Payment Request seeking reimbursement for
more than one Facility is denied, the Director shall state whether the Payment Request is
nevertheless approved and complete for any one or more Facilities and any such Facilities shall
be processed for payment under Section 5.5 notwithstanding such partial denial.
5.03 Payment. Upon approval of the Payment Request by the Director, the Director
shall sign the Payment Request and forward the same to the Finance Director. Upon receipt of
the reviewed and fully signed Payment Request, the Finance Director shall, within the then
current City financial accounting payment cycle but in any event, within twenty (20) days of
receipt of the approved Payment Request, cause the same to be paid by the Fiscal Agent under
the applicable provisions of the Fiscal Agent Agreement, to the extent of funds then on deposit in
the Improvement Fund in the sole discretion of the Finance Director. Any approved Payment
Request not paid due to an insufficient of funds in the Improvement Fund shall be paid promptly
following the deposit of available moneys into the Improvement Fund as determined in the sole
discretion of the Finance Director.
The Purchase Price paid hereunder for any Facility shall constitute payment in full for
such Facility, including, without limitation, payment for all labor, materials, equipment,tools
and services used or incorporated in the work, supervision, administration, overhead, expenses
and any and all other things required, furnished or incurred for completion of such Facility, as
specified in the Plans. No payment in excess of the Total Budgeted Cost shall be made
hereunder unless total Bond proceeds and the earnings thereon are available therefor in the sole
discretion of the Finance Director.
5.04 Joint or Third Party Payments. The Purchase Price for the Facilities shall be
paid to the Owner and any holder of a lien encumbering the Facilities, as their interests may
appear in the absence of contrary written instructions by any such mortgagee or beneficiary. The
Owner agrees to provide the City with information regarding any such lien holders.
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P640]-1033\955059v1.doc
5.05 Restrictions on Payments. Notwithstanding any other provisions of this
Acquisition Agreement, the following restrictions shall apply to any payments made to the
Owner hereunder:
A. Amounts of Payments. Subject to the following paragraphs of this Section 5.04,
payments for a Facility will be made only in the amount of the Actual Cost for the respective
Facility. Nothing herein shall require the City in any event (i) to pay more than the Actual Cost
of a Facility, (ii) to make any payment beyond the Total Budgeted Cost or(iii)to make any
payment beyond the available amount in the Improvement Fund, as determined in the sole
discretion of the Finance Director.
B. Withholdin�Payments. The City shall be entitled, but shall not be required, to
withhold any payment hereunder for the Facility if the Owner or an Affiliate is delinquent in the
payment of ad valorem property taxes, special taxes or assessments ]evied in the Assessment
District.
C. Retention. The City shall withhold an amount equal to ten percent (10%) of the
Purchase Price of each Facility to be paid hereunder. Any such retention will not be released
until final completion and acceptance of the related Facility and the expiration of a maintenance
period consistent with applicable City policy thereafter(currently a warranty period of one (1)
year after the Acceptance Date of such Facility or the posting of a warranty bond to remain in
effect for one (1) year after the Acceptance Date thereof�.
Notwithstanding the foregoing, the Owner shall be entitled to payment of any such
retention upon the completion and acceptance of a Facility, if a maintenance or warranty bond is
posted in lieu thereof in accordance with Section 6.05 hereof. Payment of any retention shall
also be contingent upon the availability of monies in the Improvement Fund in the sole discretion
of the Finance Director. No retention shall apply if the Owner proves to the Director's
satisfaction that the Owner's contracts for the Facilities provide for the same retention as herein
provided, so that the Purchase Price paid for the Facility is at all times net of the required
retention.
D. Frequencv. Unless otherwise agreed to by the City, no more than one (1)
Payment Request shall be submitted by the Owner in any calendar month.
5.06 Defective or Nonconforming Work. If any of the work done or materials
furnished for a Facility are found by the City to be defective, or are found to be not in accordance
with applicable Plans: (i) and such finding is made prior to payment for the Purchase Price of
such Facility hereunder, the City may withhold payment therefor until such defect or
nonconformance is corrected to the satisfaction of the City (which approval shall not be
unreasonably delayed), or(ii) and such finding is made after payment of the Purchase Price of
such Facility, the City and the Owner shall act in accordance with the City's standard
specification for public works construction.
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ARTICLE VI.
MAINTENANCE AND WARRANTIE5
6.01 Maintenance and Warranties. The Owner shall maintain or cause to be
maintained each Facility to be owned by the City, including the repair or replacement thereof, for
a period of one (1) year from the Acceptance Date thereof, or, alternatively, shall provide a bond
reasonably acceptable in form and substance to the Director for such period and for such purpose
(specifically, a one-year maintenance period for landscaping improvements, and as to other
Facilities, the posting of a warranty bond to remain in effect for one (1) year after the Acceptance
Date thereof�, to insure that defects, which appear within said period will be repaired, replaced,
or corrected by the Owner, at its own cost and expense, to the satisfaction of the City. The
Owner shall commence to repair, replace or correct any such defects within thirty (30) days after
written notice thereof by the City to the Owner, and shall complete such repairs, replacement or
correction as soon as practicable. After such one-year period, the City shall be responsible for
maintaining such Facility. Any warranties, guarantees or other evidences of contingent
obligations of third persons with respeci to the Facilities to be acguired by the City shall be
delivered to the Director as part of the transfer of title.
ARTICLE VII.
INSURANCE
7.01 Insurance Requirements. The Owner represents and warrants that it has
provided to the Director evidence of insurance and endorsements thereto on forms acceptable to
the Risk Manager prior to any physical work on the Facilities being performed.
The Owner shal] maintain until acceptance of all Facilities pursuant to the terms of this
Acquisition Agreement the following minimum insurance coverage and limits against claims for
injuries to persons or damage to property which may arise from or in connection with the
performance of the work covered by this Acquisition Agreement by the Owner, its agents,
representatives, employees or subcontractors:
A. Premises, operation and mobile equipment.
B. Products and completed operations.
C. Explosion, collapse and underground hazards.
D. Personal injury.
E. Contractualliability.
F. Errors and omissions for work performed by design professionals.
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COVERAGE PER OCCURRENCE ISO FORM
Commercial General CG 00 0111 85 or 88 Rev.
Liability (Primary) $1,000,000
Umbrella Liability GL 00 0111 85 or 88 Rev.
(Over Primary, if required) $1,000,000
Business Auto CA 00 O1 06 92 $1,000,000
Workers' Compensation Statutory
Employers' Liability $1,000,000
Errors and Omissions $1,000,000
Combined single limit per occurrence shall include coverage for bodily injury, personal
injury, and property damage for each accident and a five million dollar($5,000,000) general
aggregate. Insurance shall be placed with insurers with a Best's Rating of no less than A:VII.
The Owner represents and warrants it has furnished to the Risk Manager certificates of
insurance and endorsements on forms specified by the Risk Manager, duly authenticated, giving
evidence of the insurance coverage required in this contract and other evidence of coverage or
copies of policies as may be reasonably required by the Risk Manager from time to time. Each
required insurance policy coverage shall not be suspended, voided, canceled by either Party,
reduced in coverage or in limits except after fifteen (15) days written notice by certified mail,
return receipt requested, has been given to the Risk Manager.
Liability coverage shall not be limited to the vicarious liability or supervising role of any
additional insured nor shall there be any limitation with the severability clause. Coverage shall
contain no limitation endorsements and there shall be no endorsement or modification limiting
the scope of coverage for liability arising from pollution,explosion, collapse, underground
property damage or employment related practices.
Any umbrella liability coverage shall apply to bodily injury/property damage, personal
injuryladvertising injury, and automobile coverage at a minimum, and shall include a "drop
down" provision providing primary coverage above a maximum $25,000.00 self-insured
retention for liability not covered by primary polices not covered by the umbrella policy.
Coverage shall be following form to any other underlying coverage. Coverage shall be on a "pay
on behalf' basis, with defense costs payable in addition to policy limits. There shall be no cross
policy exclusion and no limitation endorsement. The policy shall have starting and ending dates
concurrent with the underlying coverage.
All liability insurance shall be on an occurrence basis. Insurance on a claims made basis
will be rejected. Any deductibles or self-insured retentions shall be declared to and approved by
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the Risk Manager. The insurer shall provide an endorsement to the City eliminating such
deductibles or self-insured retentions as respects the City, and its consultants, and each of its
Board members, officials, employees and volunteers.
All subcontractors employed on the work referred to in this Acyuisition Agreement shall
meet the insurance requirements set forth in this Section 7.1 for the Owner. The Owner shall
furnish certificates of insurance and endorsements for each subcontractor(a) within twenty (20)
business days after the date of this Acquisition Agreement or(b) with respect any subcontractor
awarded a contract after the date of this Acquisition Agreement, at least five (5) days prior to the
subcontractor entering the job site, or the Owner shall furnish the Risk Manager an endorsement
including all subcontractors as insureds under its policies.
The City shall not be liable for any accident, loss, or damage to the work prior to its
completion and acceptance, and the Owner shall save, keep and hold harmless the City and its
consultants, and each of its Councilmembers, officers, directors, officials, employees, agents and
volunteers (including independent contractors who serve as the City's officers or officials) from
all damages, costs or expenses in law or equity that may at any time arise or be claimed because
of damages to property or personal injury received by reason of, or in the course of, performing
work, by the Owner or any of the Owner's employees, or any subcontractor, except to the extent
reimbursable as an Actual Cost.
The cost of insurance required by this subsection shall be born by the Owner and its
subcontractors, and no compensation for purchasing insurance or additional coverage needed to
meet these requirements will be paid for by the City.
In the event that any required insurance is reduced in coverage, canceled for any reason,
voided or suspended, the Owner agrees that the City may arrange for insurance coverage as
specified, and the Owner further agrees that administrative and premium costs may be deducted
from any deposits or bonds the City may have, or from the Improvement Fund. A reduction or
cancellation will be grounds for termination of this Acquisition Agreement and will cause a halt
to payment for any work on the Facilities until the insurance is reestablished and accepted by
City.
Liability policies shall contain, or be endorsed to contain the following provisions:
A. General Liabilitv and Automobile Liability. The City and its consultants, and each of
its Councilmembers, officers, directors, officials, employees and volunteers shall be covered as
additional insureds using ISO form CG 20 10 II 85 as it respects: liability arising out of activities
performed by or on behalf of the Owner; products and completed operations of the Owner's
premises owned, occupied or used by the Owner; or automobiles owned, leased, hired or
borrowed by the Owner. The coverage shall contain no special limitations on the scope ar
protection afforded to the City and its consultants, and each of its Councilmembers, officers,
directors, officials, employees, or volunteers.
The Owner's and its subcontractors' insurance coverage shall be primary insurance with
respect to the City and its consultants, and each of its Councilmembers, officers, directors,
officials, employees and volunteers. Any insurance or self-insurance maintained by the City and
13
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its consultants, and each of its Councilmembers, officers, directors, officials, employees and
volunteers shall be excess of the Owner's insurance and shall not contribute with it.
Any failure to comply with reporting provisions of the policies shall not affect coverage
provided to the City and its consultants, and each of its Councilmembers, officers, directors,
officials, employees and volunteers.
The Owner's and its subcontractors' insurance shall apply separately to each insured
against whom claim is made or suit is brought,except with respect to the limits of the insurer's
liability.
B. Workers' Compensation and Emplover's Liability. The Owner and all
subcontractors shall have workers' compensation for all employees in conformance with the
requirements in Section 3700 of the Labor Code.
C. Enor and Omissions Liability. The Owner and alt subcontractors who are design
professionals shall have and maintain errors and omissions insurance.
ARTICLE VIII.
REPRESENTATIONS, WARRANTIES AND COVENANTS
8.01 Representations, Covenants and Warranties of the Owner. The Owner
represents and warrants for the benefit of the City as follows:
A. Organization. The Owner is a duly organized and validly existing limited liability
company under the laws of the state of California, with the legal authority to do business in the
State of California and is in compliance with the laws of the State, and has the power and
authority to own its properties and assets and to carry on its business as now being conducted
and as now contemplated.
B. Authoritv. The Owner has the power and authority to enter into this Acquisition
Agreement, and has taken all action necessary to cause this Acquisition Agreement to be
executed and delivered, and this Acquisition Agreement has been duly and validly executed and
delivered by the Owner.
C. Bindin� Obligation. This Acquisition Agreement is a legal, valid and binding
obligation of the Owner, enforceable against the Owner in accordance with its terms, subject to
bankruptcy and other equitable principles.
D. Compliance with Laws. The Owner shall not with knowledge commit, suffer or
permit any act to be done in, upon or to the lands in the Assessment District or the Facilities in
violation of any law, ordinance, rule, regulation or order of any governmental authority or any
covenant, condition or restriction now or hereafter affecting the lands in the Assessment District
or the Facilities.
E. Requests for Pavment. The Owner represents and warrants that (i) it will not request
payment from the City for the acquisition of any improvements that are not part of the Facilities,
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and (ii) it will diligently follow all procedures set forth in this Acquisition Agreement with
respect to the Payment Requests.
F. Financial Records. Until the date which is one year following final acceptance of the
Facilities, the Owner covenants to maintain proper books of record and account for the
construction of the Facilities and all costs related thereto. Such accounting books shall be
maintained in accordance with generally accepted accounting principles, and shall be available
for inspection by the City or its agent at any reasonable time during regular business hours on
reasonable notice.
G. ContinuinQ and Initial Disclosure. The Owner agrees to comply with any continuing
disclosure agreement or undertaking required in connection with the offering and sale of any of
the Bonds and cooperate with the City in any reasonable request for information necessary to
provide initial disclosure related to an issuance of Bonds.
8.02 Indemnification and Hold Harmless. The Owner shall take and assume al1
responsibility for the work performed as part of the Facilities constructed pursuant to this
Acquisition Agreement. The Owner shall bear all losses and damages directly or indirectly
resulting to it, to the City, and its respective consultants, and its respective Councilmembers,
officers, employees and agents, or to others on account of the performance or character of the
work, unforeseen difficulties, accidents or any other causes whatsoever.
The Owner and its successors and assigns shall assume the defense of, indemnify, protect
and save harmless the City, and its Councilmembers, officers, attorneys, employees and agents
(each an "Indemnified Party"), and each and every one of them (including independent
contractors who serve as the City's officers or officials), from and against all actions, demands,
damages, claims, losses, causes of action, liabilities or expenses of every type and description to
which they may be subjected or put, whether known or unknown, existing or potential,
anticipated or unanticipated, by reason of, or resulting or arising from, the performance by the
Owner(or any of its officers, agents, servants, employees, subcontractors, materialmen, or
suppliers) of its obligations under this Acquisition Agreement, the construction of the Facilities
(including, but not limited to, failure of the Owner to pay any amount due to any contractor hired
by the Owner for the construction of any Facility and any fines or penalties arising therefrom,
and all damages to property or personal injury received by reason of, or in the course of,
performing work, which may be caused by any willful or negligent act or omission by the Owner
or any of the Owner's employees, or any subcontractor), the nature or physical condition of the
Facilities or any land conveyed to the City hereunder(including, but not limited to, the presence
of any hazardous materials thereon or therein), or an alleged misstatement or omission of fact
relating to the Owner or its development of the property within the Assessment District in any
official statement for the District or the Bonds (including, but not limited to, any statements
regarding the presence of any hazardous materials or endangered species thereon or therein). No
provision of this Acquisition Agreement shall in any way limit the extent of the Owner's
responsibility for payment of damages resulting from the operations of the Owner and its
contractors; provided, however, that the Owner shall not be required to indemnify an
Indemnified Party as to damages resulting from the sole negligence or willful misconduct of an
Indemnified Party in performing its obligations under this Acquisition Agreement.
15
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The City does not, and shall not, waive any rights against the Owner which the City may
have by reason of the aforesaid hold harmless agreements because of the acceptance by the City,
or deposit with the City by the Owner of any insurance policies described herein. The aforesaid
hold harmless agreement by the Owner shall apply to all damages �nd claims for damages of
every kind suffered, or alleged to have been suffered by reasons of any of the aforesaid
operations of the Owner, or any subcontractor, regardless of whether or not such insurance
policies are determined to be applicable to any of such damages or claims for damages.
No act by the City or its representatives in processing or accepting any plans, in releasing
any bond, in inspecting or accepting any work, or of any other nature, shall in any respect relieve
the Owner or anyone else from any legal responsibility, obligation or liability it might otherwise
have.
The indemnification and hold harmless provisions of this Section shall survive the
termination of this Acquisition Agreement, the completion of construction of the Facilities, and
the conveyance of title thereto to the City.
ARTICLE IX.
TERMINATION
9.01 No Bonds. If, for any reason, the City does not issue any of the Bonds by January
1, 2008, this Acquisition Agreement shall terminate and be null and void and of no further effect.
9.02 Mutual Consent. This Acquisition Agreement may be terminated by the mutual,
written consent of the Parties, in which event the City may let contracts for any remaining work
related to the Facilities not theretofore acquired from the Owner hereunder, and use all or any
por[ion of the monies in the Improvement Fund to pay for same, and the Owner shall have no
claim or right to any further payments for the Purchase Price of Facilities hereunder, except as
otherwise may be provided in such written consent.
9.03 City Election for Cause. The following events shall constitute grounds for the
City to terminate this Acquisition Agreement, without the consent of the Owner:
A. The Owner shall voluntarily file for reorganization or other relief under any
Federal or State bankruptcy or insolvency law.
B. The Owner shall have any involuntary bankruptcy or insolvency action filed
against it, or shall suffer a trustee in bankruptcy or insolvency or receiver to take possession of
the assets of the Owner, or shall suffer an attachment or levy of execution to be made against the
property it owns within the Assessment District unless, in any of such cases, such circumstance
shall have been terminated or released within thirty (30) days thereafter.
C. The Owner shall abandon construction of the Facilities. Failure for a period of
ninety (90) consecutive days to undertake substantial work related to the construction of the
Facilities, other than for a reason specified in Section 9.03 hereof, shall constitute such
abandonment.
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D. The Owner shall breach any material covenant or default in the performance of
any material obligation hereunder.
E. The Owner shall transfer any of its rights or obligations under this Acquisition
Agreement without the prior written consent of the City.
F. The Owner shall have made any material misrepresentation or omission in any
written materials furnished in connection with any preliminary official statement, official
statement, continuing disclosure agreement, or bond purchase contract used in connection with
the sale of the Bonds.
G. The Owner or any of its Affiliates shall at any time challenge the validity of the
Assessment District or any of the Bonds, or the levy of assessments within the Assessment
District, other than on the grounds that such levy was not made in accordance with the terms of
the Fiscal Agent Agreement.
H. If any such event occurs, the City shall give written notice of its knowledge
thereof to the Owner, and the Owner agrees to meet and confer with the Director and other
appropriate City staff and consultants within ten (10) business days of receipt of such notice as to
options available to assure timely completion of the Facilities. Such options may include, but
not be limited to, the termination of this Acquisition Agreement by the City. If the City elects to
terminate this Acquisition Agreement, the City shall first notify the Owner (and any mortgagee
or trust deed beneficiary specified in writing by the Owner to the City to receive such notice) of
the grounds for such termination and allow the Owner a minimum of thirty (30) business days to
eliminate or mitigate to the satisfaction of the Director the grounds for such termination. Such
period may be extended, at the sole discretion of the City, if the Owner, to the satisfaction of the
City, is proceeding with diligence to eliminate or mitigate such grounds for termination. If at the
end of such period (and any extension thereofi�, as determined solely by the City, the Owner has
not eliminated or completely mitigated such grounds, to the satisfaction of the City, the City may
then terminate this Acquisition Agreement.
Notwithstanding the foregoing, so long as any event listed in any of clauses (A) through
and including (0) above has occurred, notice of which has been given by the City to the Owner,
and such event has not been cured or otherwise eliminated by the Owner, the City may in its
discretion cease making payments for the Purchase Price of Facilities.
9.04 Force Majeure. Whenever performance is required of a Party hereunder, that
Party shall use all due diligence and take all necessary good-faith measures to perform, but if
completion of performance is delayed by reasons of floods, earthquakes or other acts of God,
war, civil commotion, riots, strikes, picketing or other labor disputes, damage to work in
progress by casualty, or by other cause beyond the reasonable control of the Party (financial
inability excepted), then the specified time for performance shall be extended by the amount of
the delay actually so caused.
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ARTICLE X.
MISCELLANEOUS
10.41 Limited Liability of City. The Owner agrees that any and all obligations of the
City arising out of or related to this Acquisition Agreement are special and limited obligations of
the City and the City's obligations to make any payments hereunder are restricted entirely to the
moneys, if any, in the Improvement Fund and from no other source. No member of the City
Council, or City staff inember, employee or agent shall incur any liability hereunder to the
Owner or any other party in their individual capacities by reason of their actions hereunder or
execution hereof.
10.02 Excess Costs. The Owner agrees to pay all costs of the Facilities that it
constructs and/or conveys pursuant to the terms of this Acquisition Agreement in excess of the
moneys available therefor in the Improvement Fund.
10.03 Audit. The Finance Director of the City, or his/her representative, shall have the
right, during normal business hours and upon the giving of two (2) business days prior written
notice to the Owner, to review all books and records of the Owner pertaining to costs and
expenses incurred by the Owner in connection with any of the Facilities, and any bids taken or
received for the construction thereof or materials therefor.
10.04 Attorneys' Fees. In the event that any action or suit is instituted by either Party
against the other arising out of this Acquisition Agreement, the party in whose favor final
judgment shall be entered shall be entitled to recover from the other Party all costs and expenses
of suit, including reasonable attorneys' fees. �
10.05 Notices. Any notice, payment or instrument required or permitted by this
Acquisition Agreement to be given or delivered to either Party shall be deemed to have been
received when personally delivered, or transmitted by facsimile transmission or electronic mail
(which shall be immediately confirmed by telephone and shall be followed by mailing an
original of the same within 24 hours after such transmission), or 72 hours following deposit of
the same in any United States Post Office, registered or certified mail, postage prepaid,
addressed as follows:
If to City:
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
If to Owner:
Rilington Dolce, LLC
30885 Date Palm Drive, #D3
Cathedral City, CA 92234
18
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Each Party may change its address or addresses for delivery of notice by delivering
written notice of such change of address to the other Party.
10.06 Severability. If any part of this Acquisition Agreement is held to be illegal or
unenforceable by a court of competent jurisdiction, the remainder of this Acquisition Agreement
shall be given effect to the fullest extent possible.
10.07 Successors and Assigns. This Acquisition Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Parties hereto. This Acquisition
Agreement shall not be assigned by the Owner, except in whole to an Affiliate, without the prior
written consent of the City, which consent shall not be unreasonably withheld or delayed. In
connection with any such consent of the City, the City may condition its consent upon the
acceptability of the relevant experience and financial condition of the proposed assignee, the
assignee's express assumption of all obligations of the Owner hereunder, andlor upon any other
factor which the City deems relevant in the circumstances. In any event, any such assignment
shall be in writing, shall clearly identify the scope of the rights and/or obligations assigned, and
shall not be effective until approved in writing by the City. No assignment, whether or not
consented to by the City shall release the Owner from its obligations and liabilities under this
Acquisition Agreement.
10.08 Waiver. Failure by a Party to insist upon the strict performance of any of the
provisions of this Acquisition Agreement by the other Party, or the failure by a Party to exercise
its rights upon the default of the other Party, shall not constitute a waiver of such Party's right to
insist and demand strict compliance by the other Party with the terms of this Acquisition
Agreement thereafter.
10.09 Other Agreements. The obligations of the Owner hereunder shall be those of a
party hereto and not as an owner of property in the Assessment District. Nothing herein shall be
construed as affecting the City's or the Owner's rights, or duties to perform their respective
obligations, under other agreements, use regulations or subdivision requirements relating to the
development of the lands in the Assessment District. This Acquisition Agreement shall not
confer any additional rights, or waive any rights given, by either Par[y hereto under any
development or other agreement to which they are a party.
10.10 Merger. No other agreement, statement or promise made by any party or any
employee, officer or agent of any Party with respect to any matters covered hereby that is not in
writing and signed by all the Parties to this Acquisition Agreement shall be binding.
10.11 Parties in Interest. Nothing in this Acquisition Agreement, expressed or
implied, is intended to or shall be construed to confer upon or to give to any person or entity
other than the City and the Owner any rights, remedies or claims under or by reason of this
Acquisition Agreement or any covenants, conditions or stipulations hereof; and all covenants,
conditions, promises, and agreements contained in this Acquisition Agreement by or on behalf of
the City or the Owner shall be for the sole and exclusive benefit of lhe City and the Owner.
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10.12 Amendment. This Acquisition Agreement may be amended, from time to time,
by written Supplement hereto and executed by both the City and the Owner.
10.13 Counterparts. This Acquisition Agreement may be executed in counterparts,
each of which shall be deemed an original.
10.14 Conflict. If any provision of this Agreement is in conflict with or inconsistent
with any provision of the Act, the provision of the Act shall control.
20
P6401-1033\955059v1.doc
IN WITNESS WHEREOF, the Parties have executed this Acquisition Agreement as of
the day and year first-above written.
CITY OF PALM DESERT: RILINGTON DOLCE, LLC
A public body, corporate and politic A California Limited Liability Company
Mayor By:
Title:
ATTEST:
RACHELLE D. KLASSEN,
CITY CLERK
APPROVED AS TO FORM:
Richards, Watson & Gershon
A Professional Corporation
21
Pfi401-1033\955059v 1.doc
EXHIBIT A
DESCRIPTION OF LAND
Land for the improvements was dedicated to the City of Palm Desert with Tract No. 31071
filed in the Office of the County Recorder, Riverside County, State of California.
A-1
P6401-1033\955059v l.doc
Description of Facilities Estimated Cost
Water mains $183,260.00
Street Improvements $409,367.50
Construction Management and Incidentals $ 60,000.00
There are no land acquisition costs
The above improvements are included in that certain contract
identified as DOLCE PROFECT Project No. (AD 2005-02) of the
City of Palm Desert
Total Estimated Costs of Facilities $652,627.50
A-2
Pfi401-1033\9550S9v l.doc
ACQUISITION AGREEMENT
EXHIBIT B
FORM OF PAYMENT REQUEST
PAYMENT REQUEST NO.
The undersigned (the "Owner"), hereby requests payment in the total amount of
$ for the Facilities (as defined in the Acquisition Agreement, dated as of
, 2007, by and between the City of Palm Desert (the "City") and the Owner, as more
fully described in Attachment I hereto. In connection with this Payment Request, the
undersigned hereby represents and warrants to the City as follows:
1. The Undersigned is a duly authorized officer of the Owner, qualified to execute
this Payment Request for payment on behalf of the Owner and is knowledgeable as to the matters
set forth herein.
2. The Owner has submitted or submits herewith to the City as-built drawings or
similar plans and specifications for the items to be paid for as listed in Attachment 1 hereto with
respect to any completed Facility, and such drawings or plans and specifications, as applicable,
are true, correct and complete. All costs of the Facilities for which payment is requested hereby
are Actual Costs (as defined in the Agreement referenced above) and have not been inflated in
any respect. The items for which payment is requested have not been the subject of any prior
payment request submitted to the City.
3. Supporting documentation (such as third party invoices) is attached with respect
to each cost for which payment is requested.
4. There has been compliance with applicable laws relating to prevailing wages for
the work to construct the Facilities for which payment is requested.
5. The Facilities for which payment is requested were constructed in accordance
with all applicable City or other governmental standards, and in accordance with the as-built
drawings or plans and specifications, as applicable, referenced in paragraph 2 above.
6. The Owner is in compliance with the terms and provisions of the Acquisition
Agreement and no portion of the amount being requested to be paid was previously paid.
7. The Purchase Price for each Facility (a detailed calculation of which is shown in
an Attachment 2 hereto for each such Facility), has been calculated in conformance with the
terms of Article V of the Acquisition Agreement.
S. Neither the Owner nor any Affiliate (as defined in the Acquisition Agreement) is
in default in the payment of ad valorem real property taxes, special taxes, or special assessments
levied in the Assessment District (as defined in the Acquisition Agreement), except as follows:
B-1
P6401-1033\955059v l.doc
I hereby declare under penalty of perjury that the above representations and warranties
are true and correct.
OWNER: CITY:
Payment Request Approved for Submission
to the Finance Director of the City
By: By:
Name: Public Works Director
Its:
Date: Date:
B-2
P6401-1033\95S059vl.doc
ATTACHMENT 1
EXHIBIT B
(list here all Facilities for which payment is requested, and attach support documentation)
1
P6401-1033\955059v l.doc
ATTACHMENT 2
EXHIBIT B
CALCULATION OF PURCHASE PRICE.
[Use a separate sheet for each Facility
for which payment is being requested]
1. Description (by reference to Exhibit B to the Acquisition Agreement) of the Facility
2. Actual Cost (list here total of supporting
invoices and/or other documentation
supporting determination of Actual Cost): $
3. Subtractions from Purchase Price:
A. Holdback for Lien releases (see
Section 5.05(B) of the Acquisition
Agreement) $
B. Retention (see Section 5.05(C) of
the Acc�uisition Agreement) $
4. Total disbursement requested (amount listed
in 2, less amounts, if any, listed in 3) $
2
P6401-1033\95S059vl.doc
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
This PURCHASE AND SALE AGREEMENT AND ESCROW 1NSTRUCTIONS (this
"Agreement") is dated as of March_, 2007 (the "Effective Date"), and is entered into by and
between the CITY OF PALM DESERT, a California municipal corporation (the "Buyer"), and
BERDAN PARCEL C LLC, a California limited liability company, and NFT PARCEL C LLC, a
California limited liability company (collectively, "Seller").
RECITALS
A. Seller is the owner of the unimproved land in the City of Palm Desert,
County of Riverside, State of California that is more particularly described on Exhibit "A"
attached hereto and made a part hereof, together with all improvements thereon, and all rights
and appurtenances pertaining to such land, including all right, title and interest of Scller in and to
adjacent streets, alleys or rights-of-way and appurtenant easements (collectively, the "Property").
B. Buyer has established the City of Palm Desert Section 29 Assessment
District in the City of Palm Desert (the "Assessment District") pursuant to the provisions of the
Municipal Improvement Act of 1913 (California Streets and Highways Code Section 10000, et
se�c.), which Assessment District includes the Property.
C. Buyer intends to authorize the issuance and sale of not to exceed
$40,000,000 principal amount of City of Palm Desert, Section 29 Assessment District (No. 2004-
02), Limited Obligation Bonds, Series 2007 pursuant to the Improvement Bond Act of 1915
(California Streets and Highways Code Section 8500, et seg.) (the "Bonds") to represent
assessments levied against properties in the Assessment District which remain unpaid at the end
of a thirty-day cash collection period for the purpose of financing certain acquisitions and
improvements, including the acquisition of the Property.
D. Buyer desires to purchase the Property from Seller from Bond Proceeds,
and Seller desires to sell the Property to Buyer.
NOW, THEREFORE, in consideration of the terms and conditions of this Agreement and
for other valuable consideration, the receipt of which is hereby acknowledged, Buyer and Seller
hereby agree as follows:
l. Purchase and Sale. Subject to and in accordance with the terms and conditions
hereinafter set forth, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the
Property from Seller.
2. Escrow; Outside ClosinQ Date. Promptly after their execution of this Agreement,
the parties shall open escrow (the "Escrow") at Stewart Title of California, Inc. (the "Escrow
Holder"), 44-350 Monterey Avenue, Palm Desert, California 92660, Attn: Ms. Patty McHugh
(Escrow Officer) Phone: (760) 341-4605; Fax: (760)418-8156, email: pmchugh@stewart.com,
PG401-1033\937186v8.doc
and the parties shall promptly deliver to Escrow Holder a fully executed copy of this Agreement.
The "Close of Escrow" shall be the date that a grant deed for the Property in favor of Buyer is
recorded in the Official Records of the Riverside County Recorder's Office and the Title
Company (defined in Section 4b) shall have committed to issue the Title Policy (defined in
Section 5) to Buyer. The Close of Escrow shall occur as soon as reasonably possible after
issuance of the Bonds, but in no event later than June 30, 2007 (the "Outside Closing Date").
3. Purchase Price. The purchase price for the Property to be paid by Buyer is the
sum of$1,056,401.56 (One Million Fifty-Six Thousand Four Hundred and One Dollars and
56/100) (the "Purchase Price").
4. Delivery of Deed,Title and Possession.
(a) On the Close of Escrow, Seller shall cause to be delivered to Buyer a duly
executed and acknowledged Grant Deed in the form attached as Exhibit "B" attached hereto (the
"Grant Deed"}conveying to Buyer all of Seller's interest in the Property subject only to the
Permitted Title Exceptions (as hereinafter defined), as provided below.
(b) At the Close of Escrow, Buyer shall receive a Title Policy (as defined in
Section 5) issued by Stewart Title of California, Inc. (the"Title Company") insuring in Buyer i�ee
simple title to the Property, free and clear of all liens and encumbrances other than the Permitted
Title Exceptions (as defined in Section 5).
(c) At the Close of Escrow, Seller shall deliver possession of the Property to
Buyer free and clear of all leases and any other possessory interests in the Property that are not
Permitted Title Exceptions.
5. Title and Title Insurance.
(a) Within ten (10) days after the Effective Date, Seller shall deliver to Buyer
any surveys of the Property in Seller's possession or under Seller's control, if any (the "Existing
Surveys"). Buyer shall have the right in its sole and absolute discretion to update the Existing
Surveys, or prepare a new ALTA survey, at Buyer's cost (such updated or new survey is
hereinafter referred to as the"Survey"}, provided that Buyer's and its contractors' entry onto the
Property shall be subject to Section 9.
(b) Prior to the Close of Escrow, Seller shall remove all monetary liens
granted by Seller, all mechanics liens arising from work performed by or for Seller, ali judgment
liens against Seller, and all delinquent taxes and assessments secured by the Property
(collectively, the "Seller Liens"), and if Seller does not do so, Buyer may (as its sole remedy)
terminate this Agreement by written notice to Seller and Escrow Holder. Buyer shall also have
the right to object in writing prior to the end of the Due Diligence Period (defined in Section 9)
to any other matters disclosed by the title report dated January 17, 2007 issued by the Title
Company under Order No. 511415898, the Existing Surveys or any new ALTA survey performed
or obtained by Buyer(the "Objectionable Matters"), and if Seller does not irrevocably agree in
writing within ten (10) days after written notice from Buyer objecting to any such matter to cure
P6401-1033\937186v8.doc 2
the matter on or before the Close of Escrow, then Buyer may (as its sole remedy) terminate this
Agreement by written notice to Seller. The Seller's Liens and the Objectionable Matters are
hereinaf�er collectively referred to as the "Disapproved Exceptions."
(c) Buyer's fee title to the Property shall be insured at the Close of Escrow by a
CLTA (or if elected by Buyer,ALTA)Coverage Owner's Policy of Title Insurance in the amount of
the Purchase Price,issued by Title Company together with all endorsements requested by Buyer that
are acceptable to the Title Company prior to the end of the Due Diligence Period (collectively, the
"Title Policy"), provided the Buyer pays the premiums for the Title Policy. The Title Policy shall
insure Buyer's fee interest in the Property(i) free and clear of all Disapproved Exceptions, and (ii)
subject only to real property taxes for the then current tax fiscal year which are a lien not yet due and
payable,and any other title exceptions to which Buyer does not timely object. However,Buyer shall
not be obligated to take title subject to any matter which attaches to the Property after the execution
of this Agreement.
Scller shall not improve, alter, encumber, lease or sell or transfer (or otherwise agree to sell or
transfer) the Property or any portion thereof or interest therein to any other party during the period
from the Effective Date to the Close of Escrow or the date of the termination of this Agreement, as
applicable,except for the actions which Seller is required to take under Section 17(d)of that certain
Amended and Restated Agreement of Purchase and Sale and Joint Escrow Instructions dated January
11,2006 between Seller,NFI'Parcel A,LLC and Desert Wells 237,LLC,as amended(the"Existing
Agreement"); however, Seller shall be under no obligation to Buyer to take any such actions.
6. Denosit of Documents and Funds in Escrow.
(a) Seller and Buyer, as applicable, hereby covenant and agree to deliver lo
Escrow Holder at least one(1)business day prior to the Close of Escrow the following instruments,
documents, and funds, the delivery of each of which to Escrow Holder shall be a condition of the
Close of Escrow.
(b) Seller shall deliver:
(i) The Grant Deed duly executed and acknowledged by Seller;
(ii) A Withholding Exemption Certificate Form 593 as contemplated
by California Revenue and Taxation Code §18662 (the
"Withholding Affidavit") duly executed by Seller;
(iii) A Certification of Non-Foreign Status in accordance with Internal
Revenue Code Section 1445 duly executed by Seller;
(iv) Such proof of Seller's authority and authorization to enter into this
transaction as the Title Company may reasonably require in order
to issue the Title Policy.
P6401-]033\937186v8.doc 3
(c) Buyer shall deliver:
(i) The Purchase Price together with such funds as are required to pay
for costs and expenses payable by Buyer hereunder;
(ii) a Certificate of Acceptance for the Grant Deed;
(iii) a letter to Seller indicating that had the sale of the Property by Seller
to Buyer under this Agreement not occurred, Buyer would consider
condemnation;
(iv) Such proof of Buyer's authority and authorization to enter into this
transaction as the Title Company may reasonably require in order
to issue the Title Policy.
7. Authorization to Record Documents and Disburse Funds. Escrow Holder is
hereby authorized to record the documents and disburse the funds and distribute the documents
called for hereunder upon the Close of Escrow, provided each of the following conditions has
then been fulfilled:
(a) The Title Company can issue the Title Policy, with a liability amount
equal to the Purchase Price, showing fee title to the Property vested in Buyer, subject only to the
Permitted Title Exceptions;
(b) Escrow Holder shall have received Buyer's authorization to close and
Buyer's notice of approval or satisfaction or waiver of all of the contingencies/conditions to
Buyer's obligations hereunder, as provided for in Section 12;
(c) Escrow Holder shall have received Seller's authorization to close and
Seller's notice of approval or satisfaction or waiver of all of the contingencies/conditions to
Seller's obligations hereunder, as provided for in Section 13; and
(d) Seller and Buyer shall have deposited in Escrow the documents and funds
required pursuant to Section 6.
Unless otherwise instructed in writing, Escrow Holder is authorized to record at the Close of
Escrow any instrument delivered through this Escrow if necessary or proper for the issuance of
the Title Policy.
8. Escrow Charges and Prorations.
(a) Seller shall pay: (i) one-half(1/2) of the escrow fees and charges of
Escrow Holder; (ii) Seller's share of the charges prorated under this Agreement; and (iii} all costs
of Seller's legal counsel and consultants, if any. If the Escrow shall fail to close for any reason
other than Buyer's or Seller's default, Seller shall pay one-half(1/2) of any applicable Escrow
cancellation charges; if Escrow shall fail to close due to Seller's default, Seller shall pay all
Escrow and Title Company cancellation charges.
Nbaoi-►o����3��ab�s.ao� 4
(b) Buyer shall pay: (i) one-half(1/2) of the escrow fees and charges of
Escrow Holder; (ii) the cost of the premium for the Owner's Title Policy; (iii) the cost of all
endorsements to the Title Policy; (iv) Buyer's share of the charges prorated under this
Agreement; (v) the cost of an ALTA survey, if required by Buyer; and (vi) all costs of Buyer's
legal counsel and consultants. If the Escrow shall fail to close for any reason other than Buyer's
or Seller's default, Buyer shall pay one-half(1/2) of any applicable Escrow cancellation charges;
if Escrow shall fail to close due to Buyer's default, then Buyer shall pay all Escrow and Title
Company cancellation charges.
(c) The following shall be apportioned with respect to the Property as of 12:01
a.m., on the day on which the Close of Escrow occurs, as if Buyer were vested with title to the
Property during the entire day upon which the Close of Escrow occurs:
(i} taxes and assessments levied against the Property;
(ii) any operating expenses or other items pertaining to the Property.
(d) Notwithstanding anything contained in Section 8(c), any installment of
taxes or assessments for the current year paid at or prior to the Close of Escrow shall be prorated
based upon the amounts actually paid. If taxes and assessments for the current year have not
been paid before the Close of Escrow, Seller shall be charged at the Close of Escrow an amount
equal to that portion of such taxes and assessments which relates to the period before the Close
of Escrow and Buyer shall pay the taxes and assessments prior to their becoming delinquent.
Any such apportionment made with respect to a tax year for which the tax rate or assessed
valuation, or both, have not yet been fixed shall be based upon the tax rate and/or assessed
valuation last fixed. To the extent that the actual taxes and assessments for the current year differ
from the amount apportioned at the Close of Escrow, the parties shall make all necessary
adjustments by appropriate payments between themselves following the Close of Escrow. All
delinquent taxes and assessments (and any penalties therein) for periods prior to the Close of
Escrow, if any, affecting the Property shall be paid by Seller.
(e) All prorations shall be determined on the basis of a 360-day year. The
provisions of this Section 8 shall survive the Close of Escrow.
9. Documents and Reports; Due Diligence Date and Due Diligence Period; Access.
Within ten (10) days after the Effective Date, Seller shall deliver to Buyer copies of any and all
material written notices, reports and other documents in Seller's possession relating to the
Property, including without limitation, all surveys and, all environmental site assessments
(collectively, "Documents and Reports").
Until the date that is ninety (90) days after the Effective Date (the "Due Diligence
Period"), Buyer may inspect the Documents and Reports and Buyer and its contractors shall have
the right to enter upon the Property during the Due Diligence Period to make inspections and
other examinations of the Property, including without limitation, the right to perform surveys,
soil and geological tests of the Property and the right to perform environmental site assessments
and studies of the Property; however, Buyer shall give Seller at least five (5) business days' prior
P6401-1�33\937186v8.doc 5
writtcn notice of any invasive tests. In the event that Buyer elects not to purchase the Property
due to a matter disclosed by the Documents and Reports or due to the condition of the Property,
Buyer shall so notify Seller within ten (10) days after the end of the Due Diligence Period
whercupon this Agreement shall automatically terminate.
Seller hereby grants to Buyer and its employees, representatives, agents, affiliates and
independent contractors (Buyer, such parties and any other person or entity purporting to act with
the authorization or at the direction of any of Buyer or and such parties being collectively
referred to herein as the"Buyer's Parties") the right to enter upon the Property during the Due
Diligence Period for the purpose of conducting feasibility studies, physical examinations, surveys
and test of the Property during normal business hours and upon not less than 48 hours' prior
written notice to Seller if Buyer should desire to perform any tests which would disturb the
Property. Buyer's Parties shall not disturb or remove any existing improvements on the Property
in the course of their investigations. At least forty-eight (48) hours' prior to Buyer's Parties'
entry onto the Property, Buyer's Parties shall deliver written notice to Seller, in accordance with
Section 19, below, setting forth in detail the investigations that Buyer intends to perform upon its
entry onto the Property and the estimated duration of such investigations. Buyer hereby
indemnifies and agrees to defend and hold harmless Seller and the Property from and against any
and all damages, losses, costs, fees (including, without limitation, the actual fees and costs of
attorneys and expert witnesses), expenses and liabilities, (including without limitation, (A)
personal injuries and property damage and (B} any mechanic's liens or claims of lien), resulting
from or in ay way pertaining to the activities of any of the Buyer's Parties and/or any other
person or entity purporting to act with the authorization or at the direction of any of the Buyer's
Parties. In the event that the Escrow does not close, to the extent Buyer's Parties alter the
physical condition of the Property, Buyer shall promptly at its sole cost and expense, return the
Property to substantially the same physical condition that the Property was in as of the date
hereof, as modified by Seller in connection with any�work performed by Seller on the Property
on or after the date hereof, and Buyer shall immediately repair any damage resulting from
Buyer's Parties' activities thereon.
10. Wananties, Representations and Covenants of Seller Re�`ardin�The Property.
Seller hereby represents, warrants and covenants to Buyer the following, it being expressly
understood and agreed that all such representations, warranties and covenants shall survive the
Close of Escrow and delivery of the Grant Deed:
(a) Hazardous Substances.
(i) Except as disclosed in the Documents and Reports, to Seller's
actual knowledge, the Property is free and has always been free
from Hazardous Substances (as defined in Exhibit "C") and is not
and has never been in violation of any Environmental Laws (as
defined in Exhibit"C") except that Buyer acknowledges that
water runoff may have contained Hazardous 5ubstances that may
have been released on the Property.
P6401-]033\937186v8.doc 6
(ii) To Seller's actual knowledge, there are no buried or partially
buried storage tanks located on the Property.
(iii) Seller has received no written notice, warning, notice of violation,
administrative complaint,judicial complaint, or other formal or
informal notice alleging that conditions on the Property are or have
been in violation of any Environmental Law, or informing Seller
that the Property is subject to investigation or inquiry regarding
Hazardous Substances on the Property or the potential violation of
any Environmental Law.
(iv) To Seller's actual knowledge there is no monitoring program
required by the Environmental Protection Agency or any similar
state agency concerning the Property.
(v) To Seller's actual knowledge, the Property has never been used as
a dump or landfill.
(vi) Seller shall provide Buyer a Natural Hazards Disclosure Statement
in accordance with California Civil Code Section 1103.2.
(vii) Seller has received no written request, directive, administrative
order or judicial order to impose any type of land use restriction or
institutional control relating to Hazardous Substances on the
Property.
(viii) Seller has received no outstanding written order, directive or
administrative complaint from any government agency, no
outstanding judicial complaint or order, and no cunent agreement
with any government agency for any investigation or cleanup of
any Hazardous Substance that is on or was released from the
Property.
(b) Seller has full right and power to execute, deliver and perform its
obligations under this Agreement, and when executed and delivered, Seller and all parties having
an interest in the Property shall be lawfully bound by the terms of this Agreement. Seller shall
not further transfer or encumber the Property or allow the Property to be further encumbered
prior to the earlier of the Close of Escrow or termination of this Agreement.
(c) To the actua] knowledge of Seller, there is no pending litigation or
litigation threatened in writing, which does or may adversely affect the Property.
(d) To the actual knowledge of Seller, and except for any condemnation by
Buyer, there is no eminent domain or similar condemnation proceeding affecting any portion of
the Property now pending and none has been threatened in writing. Further, to the actual
knowledge of Seller, there are no actions or proceedings pending or threatened against Seller or
P64Q1-1033\937186v8.doc 7
the Property, before any court or administrative agency in any way connected with or relating to
the Property, or affecting Seller's ability to fulfill all of its obligations under this Agreement.
(e) To the actual knowledge af Seller, and except for the Permitted
Exceptions and the documents that are part of the Documents and Reports (copies of which will
be delivered to Buyer), there are no written commitments to or written agreements with any
governmental authority or agency materially and adversely affecting the Property, or any part
thereof or any interest therein, which will survive the Close of Escrow. Seller has entered into no
understanding or agreement with any taxing or assessing authority respecting the imposition or
deferment of any taxes or assessments respecting the Property.
(fi� Neither this Agreement nor anything provided to be done hereunder
including the transfer of title to the Property to Buyer, violates or shall violate, any contract,
instrument, partnership agreement, trust agreement, or any other agreement to which Seller is a
party, or which affects the Property or any part thereof, and the sale of the Property herein
contemplated does not require the consent of any party not a signatory hereto.
(g) To the actual knowledge of Seller, Seller is not in default of its obligations
under any contract, agreement or instrument to which Seller is a party which would adversely
affect the value of the Property or Seller's ability to perform its obligations hereunder.
(h) To the actual knowledge of Seller, there are no natural or artificial
conditions upon the Property or any part of the Property that could result in a material and
adverse change in the condition of the Property, except that Buyer acknowledges that the
Property may suffer erosion from wind and water runoff.
(i) To the actual knowledge of Seller, except for the Permitted Exceptions
and the documents that are part of the Documents and Reports (copies of which will be delivered
to Buyer), Seller has not entered into any oral or written leases, contracts, agreements, licenses,
commitments, or undertakings respecting maintenance of the Property, or the performance of
services on the Property, or the use or occupancy of the Property or any part of it by which Buyer
would become obligated or liable to any person after the Close of Escrow, and Seller hereby
covenants not to enter into any of the same after the date hereof.
(j) To the actual knowledge of Seller, and except for the Permitted
Exceptions, except for this Agreement, Seller has not entered into any unrecorded written or oral
leases or contractual rights or options to lease, purchase, or otherwise enjoy possession, or any
other unrecorded rights or interests of any nature in and to the Property or any part thereof.
(k) Seller is not a "foreign person" within the meaning of Section 1445(f�(3)
of the Internal Revenue Code.
Seller shall notify Buyer of any facts that would cause any of the representations
contained in this Agreement to be untrue as of the Close of Escrow, whereupon Buyer may
terminate this Agreement by written notice to Seller. The provisions of this Section shall survive
the Close of Escrow and delivery of the Grant Deed or the termination of this Agreement (as
Pfi401-1033\937 l 86v8.doc g
applicable); however, if Buyer learns prior to the Close of Escrow that any of the representations
or warranties of Seller are incorrect, but does not terminate this Agreement (by written notice to
Seller), then Seller shall not be liable for the applicable breach of representation or warranty.
Except for the representations, warranties and covenants of Seller as expressly stated
herein, Buyer is relying solely upon its own inspection, investigation and analyses of the Property
in entering into this Agreement and is not relying in any way upon any representations,
statements, agreements, warranties, studies, reports, descriptions, guidelines or other information
or material furnished by Seller or its representatives, including without limitation the Documents
and Reports, whether oral or written, express or implied, of any nature whatsoever regarding any
such matters or otherwise pertaining to the Property. Seller does not make any representation or
warranties with respect to the truth, accuracy, or completeness of any environmental reports, any
geologic reports, or any plans and specifications, or any other type or be entitled to rely on such
reports or any information contained therein. Subject to the express representations, warranties
and covenants set forth in this Agreement, and except as otherwise expressly stated herein,
BUYER IS ACQiJIRING THE PROPERTY "AS IS," in its present state and condition as of the
Effective Date, without representation or warranty by Seller or its representatives as to any
matter.
Except for claims relating to Seller's representations, warranties and covenants in this
Agreement and tort claims by third parties and breach of contract claims by third parties based on
events occurr-ing prior to the Close of Escrow and not caused by Buyer, Buyer waives and
releases as of the Close of Escrow any and all claims it may have against Seller relating to the
physical condition of the Property. To the extent of such waiver and release, Buyer expressly
waives its rights, if any, under California Civil Code Section 1542 which provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
Buyer's Initials
I 1. Representations and Warranties of Buyer. Buyer hereby represents and warrants
to Seller the following, it being expressly understood and agreed that all such representations and
warranties are to be true and correct at the date of this Agreement and as of the Close of Escrow:
(a) Buyer has the full power and authority to enter into this Agreement and
consummate the transactions contemplated hereby. The execution, delivery and performance of
this Agreement has been duly and validly authorized by Buyer, and no other action by Buyer is
requisite to the valid and binding execution, delivery, and performance of this Agreement by
Buyer.
P6401-1033\937186v8.doc 9
(b) There is no pending litigation or, to the best of Buyer's knowledge,
threatened litigation, which does or will materially and adversely affect Buyer's ability to
consummate this transaction.
12. Buver's Conditions. Buyer's obligations under this Agreement are expressly
made subject to the following conditions precedent solely for the benefit of Buyer. The Close of
Escrow and Buyer's obligation to consummate the purchase of Property shall be contingent upon
and subject to written notice to Escrow Holder by Buyer of the occurrence of all of the following
(or Buyer's written waiver thereof, on or before the Close of Escrow:
(a) The Title Company's irrevocable and unconditional commitment to issue
the Title Policy in favor of Buyer (subject to Buyer's payment of premiums) with a liability
amount equal to the Purchase Price showing Buyer's fee interest in the Property subject only to
the Permitted Title Exceptions.
(b) As of the Close of Escrow, the representations and warranties of Seller
contained in this Agreement are true and correct in all material respects.
(c) Seller's delivery of all documents required to be delivered by Seller
pursuant to Section 6 hereof.
(d) Buyer's approval, prior to the end of the Due Diligence Period, of the
physical condition of the Property, including without limitation, any and all inspections, tests,
Survey(s), and other studies to be conducted by Buyer, in Buyer's sole and absolute discretion,
including without limitation, any environmental site assessments, investigations, studies and
reports, and Buyer's approval, prior to the end of the Due Diligence Period, of the Documents
and Reports, and the absence of any material adverse change in the condition of the Property
prior to the Close of Escrow. Buyer's approval of any such inspections of the Property shall not
alter or diminish Seller's representations or warranties under this Agreement, and Seller
acknowledges and agrees that Buyer is nonetheless relying on Seller's representations and
warranties made herein, unless such representation or warranty is specifically waived in whole or
in part by Buyer in writing.
(e) The issuance and sale of the Bonds and the deposit in the acquisition account
of the improvement fund established in connection with the Assessment District of an amount
sufficient to pay the Purchase Price and any closing costs(including title insurance costs)payable by
Buyer. The Buyer shall be obligated to pay the Purchase Price and such costs solely from amounts
on deposit in the acquisition account on or after the closing date of the Bonds. The Buyer makes no
warranty, express or implied, that the proceeds of the Bonds deposited and held in the acquisition
account will be sufficient for payment of the Purchase Price. Nothing herein shall be construed as
requiring the Buyer to issue the Bonds or any portion thereof or even to use"good faith"efforts to do
so. The lega] proceedings and the principal amount, interest rates, terms, conditions and timing of
the issuance and sale of the Bonds shall be in all respects subject to the absolute discretion and
approval of the City Council or such Buyer officers to whom the City Council has delegated the
authority for such absolute discretion and approval.
P6401-1033\937186v8.doc 1�
(� The Seller shall not have made any material misrepresentation or omission in
any written materials furnished in connection with any preliminary official statement or official
statement used in connection with the sale of the Bonds.
(g) The Seller shall not have at any time challenged the validity of City of Palm
Desert Benefit Assessment District No. 1, the Assessment District, any of the Bonds or the levy of
assessments in City of Palm Desert Benefit Assessment District No. 1 or the Assessment District.
(h) Seller shall not be in default under this Agreement.
If any of the foregoing conditions precedent has not been either met to Buyer's sole and
absolute satisfaction (and has not been expressly waived in writing by Buyer on or prior to the
Closing Date), then this Agreement shall, at the option of Buyer, terminate, in which event,
except as expressly set forth in this Agreement, neither party shall have any further rights, duties
and obligations hereunder.
13. Seller's Conditions. For the benefit of Seller, the Close of Escrow and Seller's
obligation to consummate the sale of the Property shall be contingent upon and subject to
occurrence of all of the following (or Seller's written waiver thereof�, as of the Close of Escrow:
(a) Buyer shall not be in default under this Agreement.
(b) As of the Close of Escrow, the representations and warranties of Buyer
contained in this Agreement are true and correct in all material respects.
14. Change in Condition; Condemnation. If at any time prior to the Close of Escrow,
the Property becomes contaminated with Hazardous Substances, then Buyer may terminate this
Agreement. Buyer agrees (to the extent permitted under applicable law) that Buyer will not
condemn any portion of the Property. If at any time prior to the Close of Escrow, the Property, or
any portion thereof, is taken or appropriated by an entity other than Buyer through eminent
domain or similar proceedings, or is condemned by an entity other than Buyer for any public or
quasi-public use, Buyer may terminate this Agreement, but if Buyer does not do so, then Buyer
shall be entitled to receive all condemnation proceeds actually paid for that portion of the
Property taken.
15. Default; Limitation of Dama�. In the event of a breach or default under this
Agreement by either Seller or Buyer, the non-defaulting party shall have the right to terminate
this Agreement and the Escrow by delivering written notice thereof to the defaulting party and to
Escrow Holder. If Buyer is the non-defaulting party, Buyer shall have the right to obtain
damages provided that Buyer's damages shall, except for Seller's breach of i.e., the inaccuracy
o� a representation or warranty discovered by Buyer after the Close of Escrow, not exceed
$50,000 of the Buyer's out-of-pocket costs incurred to negotiate and prepare this Agreement and
perform due diligence with respect to the Property (including inspection and analyzing title to the
Property and the physical condition of the Property}, or Buyer may obtain specific performance.
If Seller is the non-defaulting party prior to the Close of Escrow, then Seller shall have the right
to terminate this Agreement and obtain the following damages ("Seller's Damages") but no other
P6401-l 033\937186v8.doc 11
damages, and Seller hereby expressly waives, releases and covenants not to assert any claims for
damages for Buyer's default prior to the Close of Escrow other than Seller's Damages:
(a) The reasonable attorneys' fees and costs incurred by Seller in negotiating the
Agreement; and
(b) The out-of- pocket costs incurred by Seller in copying surveys and the
Documents and Reports and delivering them to Buyer.
16. No Relocation Assistance. The total compensation to be paid by Buyer for the
Property is the Purchase Price, which consideration covers al] land and improvements,
equipment, loss of business goodwill, and relocation assistance, and is the full and complete
acquisition cost of the Property. Buyer shall have no obligation to Seller under the California
Relocation Assistance and Real Property Acquisition statutes and guidelines. Seller waives and
forever releases Buyer, including its successors, officers, employees, attorneys, agents,
representatives and anyone else acting on Buyer's behalf, of and from any and all claims,
demands, actions or causes of action, obligations, liabilities, or claims for further compensation,
known or unknown, for the payment of providing of relocation assistance based upon or relating
to the facts or allegations and circumstances arising from Buyer's acquisition of the Property. To
the extent applicable to such waiver and release, Seller expressly waives its rights, if any, under
California Civil Code Section 1542 which provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR 5USPECT
TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
Seller's Initials
17. Notices. All notices and demands shall be given in writing by certified mail,
postage prepaid, and return receipt requested, or by personal delivery. Notices shall be
considered given upon the earlier of(a) personal delivery, (b) two (2) business days following
deposit in the United States mail, postage prepaid, certified or registered, return receipt
requested, or(c) 24 hours after deposit with a reputable overnight delivery service (such as
Federal Express). Notices shall be addressed as provided below for the respective party;
provided that if any party gives notice in writing of a change of name or address, notices to such
party shall thereafter be given as demanded in that notice:
Buyer: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260
Attn: Finance Director
Phone: (760) 346-0611
P6401-1033\93718Gv8.doc I Z
Seller: c!o Berdan Holdings
501 Spectrum Circle
Oxnard, California 93030
Attn: Mr. Daniel Rosenthal
Phone: (805) 278-8220
With a
Copy to: Friedman & Solomon LLP
9665 Wilshire Boulevard, Suite 810
Beverly Hills, California 90212
Attn: Robert Solomon, Esq.
Phone: (310) 553-7379
Escrow
Holder: As set forth in Section 2.
18. Broker's Commissions. Buyer represents and warrants to Seller that Buyer has
used no broker, agent, finder or other person in connection with the transaclion contemplated
hereby to whom a brokerage or other commission or fee may be payable. Seller represents and
warrants to Buyer that Seller has used no broker, agent, finder or other person in connection with
the transaction contemplated hereby to whom a brokerage or other commission or fee may be
payable. Each party indemnifies and agrees to defend and hold the other harmless from any
claims resulting from its breach of the warranties, representations and covenants made by it in
this Section.
19. Standard Escrow Instructions. Each party agrees to execute Escrow Holder's
supplemental reasonable standard instructions as may be necessary or proper in order to
consummate the transactions contemplated by this Agreement; provided, however, in the event
of a conflict between the terms hereof and the terms of such standard instructions, the terms
hereof shall control.
20. Time is of the Essence. The parties hereto agree that time is of the essence with
respect to each term, condition and covenant hereof.
21. Entire A�reement. This Agreement, together with all exhibits hereto, integrates
all of the terms and conditions mentioned herein or incidental hereto, and supersedes all
negotiations or previous agreements between the parties or their predecessors in interest with
respect to all or any part of the subject matter hereof.
22. Severabilitv. Invalidation of any of the terms, conditions, covenants, or other
provisions contained herein by judgment or court order shall in no way affect any of the other
terms, conditions, covenants, or provisions hereof, and the same shall remain in full force and
effect.
P6401-1033\937186v8.doc 13
23. Amendments. Any amendments to this Agreement shall be effective only when
duly executed by Seller and Buyer and deposited with Escrow Holder.
24. Attorneys' Fees. In the event that suit is brought for the enforcement of this
Agreement or as the result of any alleged breach thereof, the prevailing party or parties in such
suit shall be entitled to recover their reasonable attorneys' fees, costs, and expenses from the
losing party or parties, and any judgment or decree rendered in such proceedings shall include an
award thereof.
25. No Third Party Beneficiaries. This Agreement is entered into for the sole benefit
of Seller and Buyer, and no other parties are intended to be direct or incidental beneficiaries of
this Agreement and no third party shall have any right in, under or to this Agreement.
26. Governin�Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
27. Counterparts. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
28. Assi�inment of A�reement. Neither party may assign or transfer their respective
rights or obligations under this Agreement without the prior written consent of the other.
29. Construction of Document. This Agreement is the result of a negotiation and is
not the product of any one party. There shall be no presumption in the interpretation hereof that
any ambiguity is to be resolved against any party hereto. The parties hereto waive expressly each
and all provisions of California Civil Code Section 1654, which provides: "IN CASES OF
UNCERTAINTY IVOT REMOVED BY THE PRECEDING RULES,THE LANGUAGE OF A
CONTRACT SHOULD BE INTERPRETED MOST STRONGLY AGAINST THE PARTY
WHO CAUSED THE UNCERTAINTY TO EXIST."
30. Sgecial Release and Covenant bv City. Buyer shall be responsible for the design and
construction of any improvements to the Property that are made after the Close of Escrow ("Future
Improvemen[s"), and Buyer hereby releases any claim it may have against Seller relating to the
design and construction of Future Improvements. Buyer acknowledges that Section 17(d) of the
Existing Agreement contains certain material rights and obligations not described in this Agreement,
and Buyer agrees that Buyer shall perform all obligations of Seller thereunder arising after the Close
of Escrow, and that the foregoing covenant shall survive the Close of Escrow.
31. Tax-Deferred Exchan�e. Buyer shall reasonably cooperate with Seller if Seller elects
to convey the Property in connection with a tax-deferred exchange within the meaning of Section
1031 of the Internal Revenue Code.
P6401-1033\937186v8.doc 14
IN WTTNESS WHEREOF, the parties have caused this Agreement to be executed as of the
date first above written.
BUYER: SELLER:
THE CITY OF PALM DESERT, BERDAN PARCEL C LLC,
a California municipal corporation a California limited liability company
By: By:Berdan Holdings, LLC
Print Name: a Delaware limited liability company,
Title: Member
By:
Attest: Print Name:
Title:
By:
Print Name:
Title: NFT PARCEL C LLC,
a California limited liability company
Approved as to form by: By;
Thomas S. Noble, as Trustee of the
RICHARDS, WATSON & GERSHON, Noble Family Trust dated November
Special Counsel 23, 1998, Member
By: By;
Frances L. Noble, as Trustee of the
Noble Family Trust dated November
23, 1998, Member
P6401-1033\937186v8.doc 15
EXHIBIT "A"
LEGAL DESCRIPTION OF THE LAND
The land referred to herein is situated in the State of California,County of Riverside,City of PALM
DESERT, described as follows:
PARCEL `C' OF PMW 04-18:
THOSE PORTIONS OF PARCEL 1,PARCEL 2 AND LOT `G',ALL AS SHOWN ON PARCEL
MAP NO. 24255,ON FILE IN BOOK 206 PAGES 94 THROUGH 99,INCLUSIVE,OF PARCEL
MAPS,RECORDS OF RIVERSIDE COUNTY,CALIFORNIA,AND A PORTION OF PARCEL
`C' OF PARCEL MAP WAIVER (P.M.W.) 02-22 RECORDED DECEMBER 4, 2002 AS
1NSTRUMENT NO. 02-720251 OF OFFICIAL RECORDS, ALL LYING WITHIN A PORTION
OF THE EAST HALF OF SECTION 29, TOWNSHIP 4 SOUTH, RANGE 6 EAST, SAN
BERNARDINO BASE AND MERIDIAN, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF THE SOUTHEAST QUARTER OF SAID
SECTION 29, SAID POINT ALSO BEING THE NORTHEAST CORNER OF PARCEL `C' OF
P.M.W. 02-22; THENCE SOUTH 00°16'S6" EAST ALONG THE EASTERLY LINE OF SAID
PARCEL `C' OF P.M.W. 02-22, A DISTANCE OF 241.35 FEET; THENCE LEAVING SAID
EASTERLY LINE NORTH 54°31'11" WEST A DISTANCE OF 1,208.67 FEET; THENCE
NORTH 65°07'22" EAST A DISTANCE OF 197.59 FEET TO A POINT ON THE
NORTHEASTERLY LINE OF SAID PARCEL 2; THENCE SOUTH 54°32'32" EAST ALONG
SAID NORTHEASTERLY LINE A DISTANCE OF 936.56 FEET TO A POINT ON THE
NORTHERLY LINE OF SAID PARCEL `C' OF P.M.W. 02-22; THENCE NORTH 89°59'20"
EAST ALONG SAID NORTHERLY LINE A DISTANCE OF 40.90 FEET TO THE POINT OF
BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND RIGHTS OF WAY
RECORD.
PURSUANT TO CERTIFICATE OF COMPLIANCE PMW04-18 RECORDED 9/30/04 AS
INSTRUMENT NO. 04-779269 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY,
CALIFORNIA.
Pfi401-1033\937186v8.doc A-1
EXHIBIT "B"
FORM OF GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260
Attn:
APN:
Exemnt from recordina changes under Government Code Section 6103
[SPACE ABOVE FOR REC'ORDER'S USE ONLY]
GRANT DEED
THE UNDERSIGNED GRANTOR DECLARES AS FOLLOWS:
This transfer is exempt from documentary Transfer Tax pursuant to Revenue & Taxation
Code Section 11922.
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
BERDAN PARCEL C LLC, a California limited liability company, and NFT PARCEL C LLC, a
California limited liability company (collectively, the "Grantor") hereby grants to the CITY OF
PALM DESERT, a California municipal corporation, the real property located in the City of
Palm Desert, County of Riverside, State of California, that is described on "Exhibit A" attached
hereto and incorporated herein by reference.
IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of the date set forth
below.
Dated: , 2007
GRANTOR:
BERDAN PARCEL.C LLC,
a California limited liability company
By:Berdan Holdings, LLC
a Delaware limited liability company,
Member
B y:
Print Name:
Title:
P6401-]033\937186v8.doc B-1
NFT PARCEL C LLC,
a California limited liability company
By:
Thomas S. Noble, as Trustee of the
Noble Family Trust dated November
23, 1998, Member
By:
Frances L. Noble, as Trustee of the
Noble Family Trust dated November
23, 1998, Member
P6401-1033\937186v8.doc B-2
STATE OF CALIFORNIA )
) ss.
COUNTY OF RIVERSIDE )
On the day of ,2007,before me, ,personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that by his signature on
the instrument the person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
SEAL:
STATE OF CALIFORNIA )
) ss.
COUNTY OF RIVERSIDE )
On the day of ,2007,before me, ,personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that by his signature on
the instrument the person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
SEAL:
PG401-1033\937186v8.doc B-3
EXHIBIT A TO GRANT DEED
LEGAL DESCRIPTION
The land referred to herein is situated in the State of California,County of Riverside,City of PALM
DESERT, described as follows:
PARCEL `C' OF PMW 04-18:
THOSE PORTIONS OF PARCEL 1, PARCEL 2 AND LOT `G', ALL AS SHOWN ON PARCEL
MAP NO. 24255,ON FII.E IN BOOK 206 PAGES 94 THROUGH 99,INCLUSIVE,OF PARCEL
MAPS,RECORDS OF RIVERSIDE COUNTY,CALIFORNIA,AND A PORTION OF PARCEL
`C' OF PARCEL MAP WAIVER (P.M.W.) 02-22 RECORDED DECEMBER 4, 2002 AS
INSTRUMENT NO. 02-720251 OF OFFICIAL RECORDS, ALL LYING WITHIN A PORTION
OF THE EAST HALF OF SECTION 29, TOWNSHIP 4 SOUTH, RANGE 6 EAST, SAN
BERNARDINO BASE AND MERIDIAN, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF THE SOUTHEAST QUARTER OF SAID
SECTION 29, SAID POINT ALSO BEING THE NORTHEAST CORNER OF PARCEL `C' OF
P.M.W. 02-22; THENCE SOLJTH 00°16'S6" EAST ALONG THE EASTERLY LINE OF SAID
PARCEL `C' OF P.M.W. 02-22, A DISTANCE OF 241.35 FEET; THENCE LEAVING SAID
EASTERLY LINE NORTH 54°31'11" WEST A DISTANCE OF 1,208.67 FEET; THENCE
NORTH 65°07'22" EAST A DISTANCE OF 197.59 FEET TO A POINT ON THE
NORTHEASTERLY LINE OF SAID PARCEL 2; THENCE SOUTH 54°32'32" EAST ALONG
SAID NORTHEASTERLY LINE A DISTANCE OF 936.56 FEET TO A POINT ON THE
NORTHERLY LINE OF SAID PARCEL `C' OF P.M.W. 02-22; THENCE NORTH 89°59'20"
EAST ALONG SAID NORTHERLY LINE A DISTANCE OF 40.90 FEET TO THE POINT OF
BEGINNING.
SUBJECT TO EXISTING EASEMENTS, COVENANTS, RIGHTS AND RIGHTS OF WAY
RECORD.
PURSUANT TO CERTIFICATE OF COMPLIANCE PMW04-18 RECORDED 9/30/04 AS
INSTRUMENT NO. 04-779269 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY,
CALIFORNIA.
P6401-]033\937I86v8.doc B-4
CERTIFICATE OF ACCEPTANCE FOR GRANT DEED
This is to certify that the interest in real property conveyed by the deed dated ,
2007, from BERDAN PARCEL C LLC and NFT PARCEL C LLC to the CITY OF PALM
DESERT is hereby accepted by the undersigned officer or agent on behalf of the City of Palm
Desert pursuant to authority conferred by resolution of the City Council of the City of Palm
Desert, adopted on , 2007, and the grantee consents to recordation thereof by its
duly authorized officer. The City of Palm Desert also hereby acknowledges that the interest in
real property is accepted for maintenance.
CITY OF PALM DESERT
By:
Name:
Title:
DATED: , 2007
P6401-1033\937186v8.doc $-$
STATE OF CALIFORNIA )
)ss.
COUNTY OF RIVERSIDE )
On the day of ,2007,before me, ,personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that by his signature on
the instrument the person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
SEAI,:
STATE OF CALIFORNIA )
)ss.
COUNTY OF RIVERSIDE )
On the day of ,2007,before me, ,personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that by his signature on
the instrument the person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
SEAL:
PG401-]033\937186v8.doc B-6
EXHIBIT ��C"
CERTAIN DEFINITIONS
Environmental Laws means all federal, state, local, or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, or requirements of any government authority
regulating, relating to, or imposing liability or standards of conduct concerning any Hazardous
Substance (as later defined), or pertaining to occupational health or industrial hygiene(and only to
the extent that the occupational health or industrial hygiene laws,ordinances,or regulations relate to
Hazardous Substances on, under, or about the Property), occupational or environmental conditions
on, under, or about the Property, as now or may at any later time be in effect, including without
limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980
(CERCLA) �42 USCS �� 9601 et seq.J; the Resource Conservation and Recovery Act of 1976
(RCRA) [42 USCS �� 6901 et seq.J; the Clean Water Act, also known as the Federal Water
Pollution Control Act (FWPCA) (33 USCS ¢§ 1251 et seq.]; the Toxic Substances Control Act
(TSCA)[1 S USCS��2601 et sey.];the Hazardous Materials Transportation Act(HMTA)[49 USCS
¢§ 1801 et seq.J;the Insecticide,Fungicide,Rodenticide Act[7 USCS�¢136 et sey.];the Superfund
Amendments and Reauthorization Act[42 USCS�§ 6901 et seq.];the Clean Air Act [42 USCS��
7401 et seq.J;the Safe Drinking Water Act[42 USCS§�300f et sey.J;the Solid Waste Disposal Act
[42 USCS�¢6901 et seq.J; the Surface Mining Control and Reclamation Act[30 USCS¢¢ 1201 et
seq.];the Emergency Planning and Community Right to Know Act[42 USCS�¢ 11001 et seg.J;the
Occupational Safety and Health Act[29 USCS��655 arid 657j;the Califomia Underground Storage
of Hazardous Substances Act [H & S C §§ 25280 et seq.]; the California Hazardous Substances
Account Act(H&S C��25300 et seq.j;the California Hazardous Waste Control Act[H&S C¢�
25100 et seq.];the California Safe Drinking Water and Toxic Enforcement Act[H&S C��24249.5
et seq.J; the Porter-Cologne Water Quality Act [Wat C �� 13000 et sey.] together with any
amendments of or regulations promulgated under the statutes cited above and any other federal,state,
or local law, statute, ordinance, or regulation now in effect or later enacted that pertains to
occupational health or industrial hygiene, and only to the extent that the occupational health or
industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or
about the Property, or the regulation or protection of the environment, including ambient air, soil,
soil vapor, groundwater, surface water, or land use.
Hazardous Substances includes without limitation:
(a) Those substances included within the definitions of hazardous substance, hazardous
waste, hazardous material, toxic substance, solid waste, or pollutant or contaminant in CERCLA,
RCRA,TSCA, HMTA, or under any other Environmental Law;
(b)Those substances listed in the United States Department of Transportation (DOT)Table
[49 CFR 172.101 J, or by the Environmental Protection Agency(EPA),or any successor agency,as
hazardous substances [40 CFR Part 302J;
(c) Other substances, materials, and wastes that are or become regulated or classified as
hazardous or toxic under federal, state, or local laws or regulations; and
P640 I-]033\937186v8.doc C-1
(d) Any material, waste, or substance that is
(i) a petroleum or refined petroleum product,
(ii) asbestos,
(iii) polychlorinated biphenyl,
(iv) designated as a hazardous substance pursuant to 33 USCS § 1321 or listed
pursuant to 33 USCS § 1317,
(v) a f7ammable explosive, or
(vi) a radioactive material.
PG401-1033\937186v8.doc C-2
ACQUISITION AGREEMENT
by and between
City of Palm Desert
and Lomas De Arena
relating to
City of Palm Desert Section 29 Assessment District (No. 2004-02)
P6401-1033\955067v l.doc
TABLE OF CONTENTS
PAGE
ARTICLEI. DEFINITIONS .......................................................................................................... 1
1.01 Definitions..................................................................................................................... 1
ARTICLEII. RECITALS............................................................................................................... 3
2.01 The Assessment District ............................................................................................... 3
2.02 The Development.......................................................................................................... 3
2.03 The Facilities................................................................................................................. 3
2.04 The Financing ............................................................................................................... 3
2.05 The Bonds..................................................................................................................... 3
2.06 No Advantage to City Construction.............................................................................. 3
2.07 Agreements................................................................................................................... 4
ARTICLEIII. FUNDING............................................................................................................... 4
3.01 City Proceedings; Bonds............................................................................................... 4
ARTICLE IV. CONSTRUCTION OF FACILITIES..................................................................... 4
4.01 Plans.............................................................................................................................. 4
4.02 Construction..................................................................................................................4
4.03 Independent Contractor................................................................................................. 5
4.04 Performance and Payment Bonds................................................................................. 5
4.05 Labor Code Provisions.................................................................................................. 5
4.06 Relationship to Public Works; Bidding Requirements................................................. 6
4.07 Contracts and Change Orders ....................................................................................... 7
ARTICLE V. ACQUISITION AND PAYMENT.......................................................................... 7
5.01 Agreement to Purchase and Sell Facilities; Payment Requests.................................... 7
5.02 Processing Payment Requests....................................................................................... 9
5.03 Payment......................................................................................................................... 9
5.04 Joint or Third Party Payments....................................................................................... 9
5.05 Restrictions on Payments............................................................................................ 10
5.06 Defective or Nonconforming Work............................................................................ 10
ARTICLE VI. MAINTENANCE AND WARRANTIES ............................................................ 1 l
6.01 Maintenance and Warranties....................................................................................... 11
ARTICLEVII. INSURANCE...................................................................................................... 11
7.01 Insurance Requirements.............................................................................................. 11
ARTICLE VIII. REPRESENTATIONS, WARRANTIES AND COVENANTS ....................... 14
8.01 Representations, Covenants and Wananties of the Owner......................................... 14
8.02 Indemnification and Hold Harmless........................................................................... 15
ARTICLEIX. TERMINATION................................................................................................... 16
9.01 No Bonds .................................................................................................................... 16
i
P6401-1033\955067v1.doc
TABLE OF CONTENTS
(Continued)
Page
9.02 Mutual Consent........................................................................................................... 16
9.03 City Election for Cause............................................................................................... 16
9.04 Force Majeure............................................................................................................. 17
ARTICLE X. MISCELLANEOUS .............................................................................................. 18
10.01 Limited Liability of City............................................................................................. 18
10.02 Excess Costs................................................................................................................ 18
10.03 Audit ........................................................................................................................... 18
10.04 Attorneys' Fees........................................................................................................... 18
10.05 Notices ........................................................................................................................ 18
10.06 Severability................................................................................................................. 19
10.07 Successors and Assigns............................................................................................... 19
10.08 Waiver......................................................................................................................... 19
10.09 Other Agreements....................................................................................................... 19
10.10 Merger......................................................................................................................... 19
10.11 Parties in Interest......................................................................................................... 19
10.12 Amendment................................................................................................................. 20
10.13 Counteiparts................................................................................................................ 20
10.14 Conflict ....................................................................................................................... 20
ii
P6401-1033\955067v l.doc
THIS ACQUISITION AGREEMENT (the "Acquisition Agreement"), dated as of ,
2007, is by and between the City of Palm Desert, a municipal corporation existing under the laws
of the State of California, (the "City") and Lomas De Arena, a (the
"Owner').
ARTICLE I.
DEFINITIONS
1.01 DeCnitions. The following terms shall have the meanings ascribed to them in this
Section 1.01 for purposes of this Acquisition Agreement. Unless otherwise indicated, any other
terms, capitalized or not, when used herein shall have the meanings ascribed to them in the Fiscal
Agent Agreement (as hereinafter defined).
"Acceptable Title" means title to Facilities, in form acceptable to the Director, and
CVWD, if applicable, free and clear of all liens, taxes, assessments, leases, easements and
encumbrances, whether or not recorded, and with respect to land, as evidenced by such title
insurance as the Director and CVWD, if applicable, may require, but subject to any exceptions
(excluding liens) that are determined by the Director, and CVWD, if applicable, as not
interfering with the actual or intended use of the land and/or Facility.
"Acceptance Date" means the date the City, or CVWD, if applicable, takes final action to
purchase, accept dedication of, or transfer of title to, a Facility.
"Acquisition A�reement" means this Acquisition Agreement, together with any
Supplement hereto.
"Act" means the Municipal Improvement Act of 1913, Section 10,000 et se�c . of the
California Streets and Highways Code, as amended.
"Actual Cost" means the substantiated cost of a Facility, which costs may include: (i) the
costs (evidenced by payments to parties unrelated to the Owner) incurred by the Owner for the
construction of such Facility; (ii)the documented costs incurred by the Owner in preparing the
Plans for such Facility and the related costs of design and engineering of the Facility, (iii)
documented professional costs incurred by the Owner associated with such Facility, such as
engineering, legal, accounting, inspection, construction, staking, materials testing and any other
similar professional services; and (iv) documented costs directly related to the construction
and/or acquisition of such Facility, such as costs of payment, performance and/or maintenance
bonds, and insurance costs (including costs of any title insurance required hereunder); provided
that the costs described in paragraphs (ii), (iii) and (iv) shall not exceed, in the aggregate, twenty
percent (20°Io) of the costs described in paragraph (i).
"Affiliate" means any entity with respect to which fifty percent(50%) or more of the
ownership or voting power is held individually or collectively by the Owner and any other entity
owned, controlled or under common ownership or control by or with, as applicable, the Owner or
its managing member, and includes all general partners of any entity which is a partnership.
Control shall mean ownership of fifty percent (50%) or more of the voting power of or
ownership interest in the respective entity.
P6401-1033\955067 v l.doc 1
"Assessment District" means the City of Palm Desert Section 29 Assessment District
(No. 2004-02) created by the City Council pursuant to the Act.
"Bonds" means the City of Palm Desert Section 29 Assessment District (No. 2004-02)
Limited Obligation Improvement Bonds, Series 2007, if and when issued by the City with
respect to the Assessment District.
"CVWD" means the Coachella Valley Water District.
"Citv" means the City of Palm Desert, California.
"Citv Council" means the duly elected and constituted city council of the City.
"Citv Manager" means the appointed city manager of the City.
"Director" means the Director of Public Works of the City, or his written designee acting
as such under this Acquisition Agreement.
"Facilities" or"Facilitv" means the facilities and land described in Exhibit A hereto.
"Finance Director" means the Director of Finance-Treasurer of the City or his written
designee acting as such under this Acquisition Agreement.
"Fiscal Agent" means the fiscal agent as appointed by the City at the time the Bonds are
issued, in its capacity as fiscal agent under the Fiscal Agent Agreement, or any successor thereto
acting as fiscal agent under the Fiscal Agent Agreement.
"Fiscal A e� nt Agreement" means the agreement by that name between the City and the
Fiscal Agent, providing for, among other matters, the issuance of the Bonds and the
establishment of the Improvement Fund, as it may be amended from time to time.
"Improvement Fund" means the Acquisition and Improvement Fund established by the
Fiscal Agent Agreement.
"Owner" means Lomas De Arena, a , and its successors
and assigns to the extent permitted under Section 10.07 hereof.
"Parties" means the City and the Owner.
"Payment Request" means a document, substantially in the form of Exhibit B hereto, to
be used by the Owner in requesting payment of a Purchase Price.
"Plans" means the plans and specifications for the Facilities approved pursuant to the
applicable standards of the City and/or CVWD, if applicable.
"Purchase Price" means the amount of the purchase price for a Facility determined by the
City in accordance with Arlicle V hereof.
2
P6401-1033\955067v1.doc
"Risk Mana�er" shall mean the person acting in the capacity of Risk Manager for the
City.
"State" means the state of California.
"Supplement" means a written document amending, supplementing or otherwise
modifying this Acquisition Agreement or any exhibit hereto.
"Total Bud�eted Cost" means the sum of the estimated costs of the Facilities as shown on
Exhibit A hereto.
ARTICLE II.
RECITALS
2.01 The Assessment District. The City Council has established the Assessment
District under the Act for the financing of, among other things, the acquisition, construction and
installation of public facilities identified in the proceedings to form the Assessment District,
which include the Facilities listed in Exhibit A hereto.
2.02 The Development. The Owner is developing land owned by the Owner within
the Assessment District.
2.03 The Facilities. The City and the Owner will benefit from a coordinated plan of
design, engineering and construction of the Facilities and the development of the Owner's land
located within the Assessment District. The Owner acknowledges that the inclusion of Facilities
in Exhibit A hereto in no way, in itself, obligates the City to issue any Bonds to acquire the
Facilities from the Owner, or implies that the City has engaged the Owner in any way to
construct the Facilities. The Facilities are only the facilities listed in Exhibit A hereto, as such
Exhibit may be amended, supplemented or otherwise modified by any Supplement.
2.04 The Financing. The Owner and the City wish to finance the acquisition of the
Facilities and the payment therefor from moneys in the Improvement Fund by entering into this
Acquisition Agreement.
2.05 The Bonds. The City is proceeding to consider the authorization and issuance of
the Bonds under the Act and the Fiscal Agent Agreement, the proceeds of which Bonds, if any,
shall be used, in part, to finance the acquisition of all or a portion of the Facilities, but only
pursuant to the terms and conditions of this Acquisition Agreement. The execution of this
Acquisition Agreement by the City in no way obligates the City to issue any bonds.
2.06 No Advantage to City Construction. The City, by its approval of this
Acquisition Agreement, has determined that it will obtain no advantage from undertaking the
construction by the City directly of the Facilities, and that the provisions of this Acquisition
Agreement require that the Facilities be constructed by the Owner, as if they had been
constructed under the direction and supervision of the City. The Owner represents that it has
experience in the supervision of the construction of public facilities of the character of the
Facility.
3
P6401-]033\955067v1.doc
2.07 Agreements. In consideration of the mutual promises and covenants set forth
herein, and for other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the City and the Owner agree that the foregoing recitals, as applicable to each,
are true and correct and further make the agreements set forth herein.
ARTICLE III.
FUNDING
3.01 City Proceedings; Bonds. The City will consider conducting all necessary
proceedings under the Act for the issuance, sale and delivery of the Bonds; provided, however,
that nothing herein shall be construed as requiring the City to issue the Bonds; and provided
further that the legal proceedings and the principal amount, interest rates, terms and conditions
and timing of the sale of the Bonds shall be in all respects subject to the absolute discretion and
approval of the City Council or such City officers to whom the City Council has delegated the
authority for such absolute discretion and approval. The City shall be obligated to pay the
Purchase Price of the Facilities solely from amounts on deposit in the Improvement Fund on or
after the closing date of the Bonds. The City makes no warranty, express or implied, that the
proceeds of the Bonds deposited and held in the Improvement Fund, and any investment
earnings thereon deposited to the Improvement Fund, will be sufficient for payment of the
Purchase Price of all of the Facilities. The proceeds of the Bonds shall be deposited, held,
invested, reinvested and disbursed as provided in the Fiscal Agent Agreement.
The Owner acknowledges that any lack of availability of amounts in the Improvement
Fund to pay the Purchase Price of Facilities shall in no way diminish any obligation of the
Owner with respect to the construction of the Facilities or the construction of or contributions for
public facilities required by any agreements to which the Owner is a party, or any governmental
approval to which the Owner is subject. The Owner further acknowledges that the obligation of
the owner, to pay assessments levied in the Assessment District shall not in any way be
dependent on: (i) the availability of amounts in the Improvement Fund for payment of the
Purchase Price of the Facilities, or (ii) any alleged misconduct of the City in the performance of
its obligations under this Acquisition Agreement, the Fiscal Agent Agreement, or any other
agreement to which the Owner and the City are parties.
ARTICLE IV.
CONSTRUCTION OF FACILITIES
4.01 Plans. The Owner represents and warrants that it has caused Plans to be prepared
for the Facilities being constructed by Owner and has obtained the approval of the Plans in
accordance with applicable ordinances and regulations of the City and/or CVWD, as applicable,
in advance of any construction being initiated. Copies of all Plans shall be provided by the
Owner to the Director upon request therefor, and in any event, as built drawings and a written
assignment of the Plans for any Facility to be acquired hereunder shall be provided to the City or
CVWD, as applicable, prior to acceptance of the Facility.
4.02 Construction. The Owner represents and warrants that any Facilities specified in
Exhibit A hereto have been, and shall be constructed by or at the direction of the Owner in
accordance with the approved Plans. The Owner represents and warrants it performed, and shall
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continue to perform, all of its obligations hereunder and has conducted, and shall continuc to
conduct, all operations with respect to the construction of the Facilities in a good, workmanlike
and commercially reasonable manner with the standard of diligence and care normally employed
by duly qualified persons utilizing their best efforts in the performance of comparable work and
in accordance with generally accepted practices appropriate to the activities undertaken. The
Owner represents and warrants it has employed, and shall continue to employ, at all times
adequate staff or consultants with the requisite experience necessary to administer and coordinate
all work related to the design,engineering, acquisition, construction and installation of the
Facilities. The Owner acknowledges that the Owner shall be obligated: (i) to construct and
cause to be conveyed to the City, or CVWD, if applicable, all Facilities, and (ii)to use its own
funds to pay all costs thereof in excess of the Purchase Prices thereof to be paid therefor
hereunder. The Owner shall not be relieved of its obligation to construct each Facility and
convey each such Facility to the City or CVWD, as applicable, in accordance with the terms
hereof, even if(i) because of the limitations imposed by Section 5.05 hereof, the Purchase Price
for such Facility is less than the Actual Cost of such Facility, or(ii) there are insufficient funds in
the Improvement Fund to pay the Purchase Prices thereof, and, in any event, this Acquisition
Agreement shall not affect any obligation of any owner of land in the Assessment District under
any other agreement or any governmental approval to which any land within the Assessment
District is subject, with respect to the public improvements required in connection with the
development of the land within the Assessment District. Such obligation of the Owner to
construct and convey such Facilities, and pay the costs thereof in excess of available monies in
the Improvement Fund, shall be an obligation of the Owner as a party to this Acquisition
Agreement without regard to any governmental conditions to development of the land in the
Assessment District that may otherwise apply to the land owners in the Assessment District.
4.03 Independent Contractor. When constructing the Facilities to be acquired in
accordance with this Acquisition Agreement, the Owner is an independent contractor and not the
agent or employee of the City. The City shall not be responsible for making any payments to
any contractor, subcontractor, agent, consultant, employee or supplier of the Owner.
4.04 Performance and Payment Bonds. The Owner represents and warrants that it
has complied, and agrees to continue to comply, with all applicable performance and payment
bonding requirements of the City and CVWD, if applicable, with respect to the construction of
the Facilities in accordance with applicable provisions of the State Civil Code, including Section
3247 and 3248, and Sections 66499—66499.10 of the Government Code, if applicable.
4.05 Labor Code Provisions. Pursuant to Section 1781 of the California Labor Code
("Labor Code"), the City hereby states, and the Owner hereby acknowledges, that the
construction of the Facilities by the Owner, which will be paid in part out of public funds, is
"public work" (as defined in Section 1720 of the Labor Code) to which Section 1771 of the
Labor Code applies, and the Owner hereby agrees that it has caused and shall continue to cause
the construction of the Facilities to be performed as "public work" as required by Section 1781
of the Labor Code. Without limiting the foregoing, the Owner represents and warrants that it has
complied, and agrees to continue to comply, with the provisions of Sections 1720 et seg. of the
Labor Code with respect to prevailing wages.
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4.06 Relationship to Public Works; Bidding Requirements. The following shall
apply to all contracts applicable to the Facilities:
A. General. This Acquisition Agreement is for the acquisition by the City or CVWD, as
applicable, of the Facilities and payment therefor from moneys in the Improvement Fund and is
not intended to be a public works contract. The City and the Owner agree that the Facilities are
of local, and not state-wide concern, and that the provisions of the State Public Contract Code
shall not apply to the construction of the Facilities. The City and the Owner agree that (i) the
Owner has awarded all contracts for the construction of the Facilities, (ii) this Acquisition
Agreement is necessary to assure the timely and satisfactory completion of the Facilities, and
(iii) compliance with the State Public Contract Code with respect to the Facilities would work an
incongruity and would not produce an advantage to the City.
B. Biddin� Procedures. Notwithstanding the foregoing, the Owner represents and
warrants it has awarded all contracts for construction of the Facilities hereof, and materials
related thereto, by means of a bid process acceptable to the Director, and consistent with
applicable City regulations, including without limitation the applicable provisions of the State
Public Contract Code relating to Cities. The Owner represents and warrants it has evaluated
criteria such as experience, ability to perform on schedule, financial ability, and such other
criteria as required by the Director to determine qualified contractors for any contract. Such
contractors shall comply with any applicable City regulations.
The Owner represents and warrants it has prepared bid packages (including engineering
reports and estimates) for each of the Facilities, and has submitted such packages to the Director,
reasonably in advance of the anticipated bid, for review. The Owner represents and warrants that
it has proceeded to take bids on the applicable Facilities solely upon agreement by the Director
and the Owner on the content of such bid packages and a schedule of bid prices, plus an
acceptable margin of variance.
The Owner represents and warrants that the Owner has awarded the applicable contract to
the lowest responsive and responsible bidder and that the bid was within the constraints of the
approved bid package. Upon written request of the Director, the Owner shall provide an analysis
of bids for construction and materials for the Facilities, indicating how the winning bid was
determined and how it was consistent with the applicable bid package.
At the request of the Director, the Owner shall develop and shall maintain a project
schedule providing for all major project elements included in the construction of the Facilities, so
that the whole project is scheduled in an efficient manner. If a schedule is requested, the Owner
shall provide the Director with complete copies of the schedule and each update to the schedule
for the Director's review.
C. Periodic Meetin�s. From time to time at the request of the Director, representatives
of the Owner shall meet and confer with City staff, consultants and contractors regarding matters
arising hereunder with respect to the Facilities and the progress in constructing and acquiring the
same, and as to any other matter related to the Facilities or this Acquisition Agreement. The
Owner shall advise the Director in advance of any coordination and scheduling meetings to be
held with contractors relating to the Facilities, in the ordinary course of performance of an
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individual contract. The Director, or the Director's designated representative, shall have the
right to be present at such meetings, and to meet and confer with individual contractors if
deemed advisable by the Director to resolve disputes or ensure the proper completion of the
Facilities.
4.07 Contracts and Change Orders. The Owner shall be responsible for entering
into all contracts and any supplemental agreements, commonly referred to as "change orders,"
required for the construction of the Facilities. All such contracts and supplemental agreements
shall be submitted to the Director or, as to any such contracts and supplemental agreements
entered into prior to the date of this Acquisition Agreement, the Owner represents and warrants
they have been submitted to the Director. Prior approval of supplemental agreements by the
Director shall be required for any change order which involve an amount of$1,000.00 (One
Thousand Dollars) or greater, or which in any way materially alter the quality or character of the
subject Facilities; provided, as to any such change orders meeting the thresholds set forth in the
foregoing and entered into prior to the date of this Acquisition Agreement, the Owner represents
and wanants it has obtained the prior approval of the Director. The City expects that such
contracts and supplemental agreements needing prior approval by the Director will be approved
or denied (any such denial to be in writing, stating the reasons for denial and the actions, if any,
that can be taken to obtain later approval) (i) if the amount involved is less than $10,000.00 (Ten
Thousand Dollars), within ten (10) business days of receipt by the Director thereof, and (ii) if the
amount involved is $10,000.00 (Ten Thousand Dollars) or greater, within thirty (30) business
day of receipt by the Director thereof. Any approval by the Director of a supplemental
agreement shall in no way affect the estimated costs listed in Exhibit A for any related Facility,
but to the extent that it increases the Actual Cost of a Facility, such increased cost may be
payable as part of the Purchase Price of the related Facility as provided in Section 5.06.A. hereof
in the sole discretion of the Finance Director.
ARTICLE V.
ACQUISITION AND PAYMENT
5.01 Agreement to Purchase and Sell Facilities; Payment Requests. The Owner
hereby agrees to sell the Facilities to the City or CVWD, if applicable, and the City hereby
agrees to use amounts in the Improvement Fund for each such Facility to pay the Purchase Price
thereof to the Owner, subject to the terms and conditions hereof.
The City shall not be obligated to pay the Purchase Price of any Facility unless and until:
1. the Facility has been inspected and found to be completed in accordance with the
approved Plans by the City and/or CVWD, if applicable and has been found to contain no
hazardous materials (City and/or CVWD shall have the right to perform Phase I and Phase II
environmental investigation). For Facilities to be acquired by CVWD, the Owner shall be
responsible for obtaining such inspections and findings by CVWD and providing written
evidence thereof to the Director. The Owner agrees to pay all inspection, permit and other
similar fees applicable to construction of the Facilities, subject to reimbursement therefor as an
Actual Cost of the related Facility.
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2. the Director and CVWD, if applicable, has determined that the Facility is ready
for its intended use;
3. for any Facility to be owned by CVWD, the Owner has provided the Director
with evidence that CVWD has accepted dedication of, or title to, the Facility.
4. a notice of completion executed by the Owner as an owner pursuant to Section
3093 of the State Civil Code, in a form acceptable to the Director, has been recorded for the
Facility;
5. general lien releases conditioned solely upon payment from the proceeds of the
Bonds to be used to acquire such Facility have been submitted to the Director for the Facility;
6. the City is satisfied that any and all claims for labor and materials have been paid
by the Owner for the Facility that is the subject of a Payment Request, or conditional lien
releases have been provided by the Owner for such Facility. The City may waive this limitation
upon the provision by the Owner of sureties, undertakings, securities and/or bonds of the Owner
or appropriate contractors or subcontractors and deemed satisfactory by the Director to assure
payment of such claims.
7. The Owner shall have delivered to the Director the following:
a. a Payment Request in the form of Exhibit B hereto for such Facility,
together with all attachments and exhibits required by Exhibit B and this Section 5.02 to be
included therewith (including, but not limited to, Attachments I and 2 to Exhibit B);
b. for any Facility to be owned by the City, if the property on which the
Facility is located on, in, or over is not owned by the City at the time of the Payment Request, a
duly executed and acknowledged grant deed in the form acceptable to the City conveying to the
City Acceptable Title to such real property on, in or over which such Facility is located;
c. a title policy issued by a title insurance company acceptable to the City in
the amount of the Purchase Price insuring the City fee simple title to the property described in
paragraph b, above;
d. a copy of the recorded notice of completion of each Facility (meeting the
requirements specified in Section 5.05);
e. to the extent paid for with the proceeds of the Bonds, an assignment to the
City of any reimbursements that may be payable with respect to the Facility, such as public or
private utility reimbursements;
f. an assignment of the warranties and guaranties for such Facility, as
described in Section 6.01 hereof, in a form acceptable to the City.
g. proof of the Owner's authority and authorization to enter into this
Acquisition Agreement;
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h. any other documents reasonably required by the City or CVWD, as
applicable, which does not increase the cost to, or increase the potential liability of, the Owner
beyond what is required under the terms of this Acquisition Agreement.
5.02 Processing Payment Requests. Upon receipt of a Payment Request (and all
accompanying documentation), the Director shall promptly conduct a review in order to confirm
that such request is complete and to confirm the matters in the request, that such Facility
identified therein was constructed in accordance with the Plans therefor, and to verify and
approve the Actual Cost of such Facility specified in such Payment Request. The Director shall
also conduct such review as is required in the Director's discretion to confirm the matters
certified in the Payment Request or otherwise provided herein. The Owner agrees to cooperate
with the Director in conducting each such review and to provide the Director with such
additional information and documentation as is reasonably necessary for the Director to conclude
each such review. For any Facilities to be acquired by CVWD, the Owner shall provide
evidence acceptable to the Director that such Facilities are acceptable to CVWD. Within thirty
(30) days of receipt of any Payment Request, the Director expects to review the request for
completeness and notify the Owner whether such Payment Request is complete, and, if not, what
additional documentation must be provided. If such Payment Request is complete, the Director
expects to provide a written approval, or denial specifying the reason for any denial, of the
request within thirty (30) days of its submittal. If a Payment Request seeking reimbursement for
more than one Facility is denied, the Director shall state whether the Payment Request is
nevertheless approved and complete for any one or more Facilities and any such Facilities shall
be processed for payment under Section 5.5 notwithstanding such partial denial.
5.03 Payment. Upon approval of the Payment Request by the Director, the Director
shall sign the Payment Request and forward the same to the Finance Director. Upon receipt of
the reviewed and fully signed Payment Request, the Finance Director shall, within the then
current City financial accounting payment cycle but in any event, within twenty (20) days of
receipt of the approved Payment Request, cause the same to be paid by the Fiscal Agent under
the applicable provisions of the Fiscal Agent Agreement, to the extent of funds then on deposit in
the Improvement Fund in the sole discretion of the Finance Director. Any approved Payment
Request not paid due to an insufficient of funds in the Improvement Fund shal] be paid promptly
following the deposit of available moneys into the Improvement Fund as determined in the sole
discretion of the Finance Director.
The Purchase Price paid hereunder for any Facility shall constitute payment in full for
such Facility, including, without limitation, payment for all labor, materials, equipment, tools
and services used or incorporated in the work, supervision, administration, overhead, expenses
and any and all other things required, furnished or incuned for completion of such Facility, as
specified in the Plans. No payment in excess of the Total Budgeted Cost shall be made
hereunder unless total Bond proceeds and the earnings thereon are available therefor in the sole
discretion of the Finance Director.
5.04 Joint or Third Party Payments. The Purchase Price for the Facilities shall be
paid to the Owner and any holder of a lien encumbering the Facilities, as their interests may
appear in the absence of contrary written instructions by any such mortgagee or beneficiary. The
Owner agrees to provide the City with information regarding any such lien holders.
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5.05 Restrictions on Payments. Notwithstanding any other provisions of this
Acquisition Agreement, the following restrictions shall apply to any payments made to the
Owner hereunder:
A. Amounts of Pa,Yments. Subject to the following paragraphs of this Section 5.04,
payments for a Facility will be made only in the amount of the Actual Cost for the respective
Facility. Nothing herein shall require the City in any event (i) to pay more than the Actual Cost
of a Facility, (ii) to make any payment beyond the Total Budgeted Cost or(iii) to make any
payment beyond the available amount in the Improvement Fund, as determined in the sole
discretion of the Finance Director.
B. Withholding Pavments. The City shall be entitled, but shall not be required, to
withhold any payment hereunder for the Facility if the Owner or an Affiliate is delinquent in the
payment of ad valorem property taxes, special taxes or assessments levied in the Assessment
District.
C. Retention. The City shall withhold an amount equal to ten percent (10%) of the
Purchase Price of each Facility to be paid hereunder. Any such retention will not be released
until final completion and acceptance of the related Facility and the expiration of a maintenance
period consistent with applicable City policy thereafter(currently a warranty period of one (1)
year after the Acceptance Date of such Facility or the posting of a warranty bond to remain in
effect for one (1) year after the Acceptance Date thereo�.
Notwithstanding the foregoing, the Owner shall be entitled to payment of any such
retention upon the completion and acceptance of a Facility, if a maintenance or warranty bond is
posted in lieu thereof in accordance with Section 6.05 hereof. Payment of any retention shall
also be contingent upon the availability of monies in the Improvement Fund in the sole discretion
of the Finance Director. No retention shall apply if the Owner proves to the Director's
satisfaction that the Owner's contracts for the Facilities provide for the same retention as herein
provided, so that the Purchase Price paid for the Facility is at all times net of the required
retention.
D. Frequency. Unless otherwise agreed to by the City, no more than one (1)
Payment Request shall be submitted by the Owner in any calendar month.
5.06 Defective or Nonconforming Work. If any of the work done or materials
furnished for a Facility are found by the City to be defective, or are found to be not in accordance
with applicable Plans: (i) and such finding is made prior to payment for the Purchase Price of
such Facility hereunder, the City may withhold payment therefor until such defect or
nonconformance is corrected to the satisfaction of the City (which approval shall not be
unreasonably delayed), or(ii) and such �nding is made after payment of the Purchase Price of
such Facility, the City and the Owner shall act in accordance with the City's standard
specification for public works construction.
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ARTICLE VI.
MAINTENANCE AND WARRANTIES
6.01 Maintenance and Warranties. The Owner shall maintain or cause to be
maintained each Facility to be owned by the City, including the repair or replacement thereof, for
a period of one (1) year from the Acceptance Date thereof, or, alternatively, shall provide a bond
reasonably acceptable in form and substance to the Director for such period and for such purpose
(specifically, a one-year maintenance period for landscaping improvements, and as to other
Facilities, the posting of a warranty bond to remain in effect for one (1) year after the Acceptance
Date thereo�, to insure that defects, which appear within said period will be repaired, replaced,
or corrected by the Owner, at its own cost and expense, to the satisfaction of the City. The
Owner shall commence to repair, replace or correct any such defects within thirty (30) days after
written notice thereof by the City to the Owner, and shall complete such repairs, replacement or
correction as soon as practicable. After such one-year period, the City shall be responsible for
maintaining such Facility. Any warranties, guarantees or other evidences of contingent
obligations of third persons with respect to the Facilities to be acquired by the City shall be
delivered to the Director as part of the transfer of title.
ARTICLE VII.
INSURANCE
7.01 Insurance Requirements. The Owner represents and warrants that it has
provided to the Director evidence of insurance and endorsements thereto on forms acceptable to
the Risk Manager prior to any physical work on the Facilities being performed.
The Owner shall maintain until acceptance of all Facilities pursuant to the terms of this
Acquisition Agreement the following minimum insurance coverage and limits against claims for
injuries to persons or damage to property which may arise from or in connection with the
performance of the work covered by this Acquisition Agreement by the Owner, its agents,
representatives, employees or subcontractors:
A. Premises, operation and mobile equipment.
B. Products and completed operations.
C. Explosion, collapse and underground hazards.
D. Personal injury.
E. Contractualliability.
F. Errors and omissions for work performed by design professionals.
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COVERAGE PER OCCURRENCE ISO FORM
Commercial General CG 00 0111 85 or 88 Rev.
Liability (Primary) $1,000,000
Umbrella Liability GL 00 0111 85 or 88 Rev.
(Over Primary, if required) $1,000,000
Business Auto CA 00 O1 06 92 $1,000,000
Workers' Compensation Statutory
Employers' Liability $1,000,000
Enors and Omissions $1,000,000
Combined single limit per occurrence shall include coverage for bodily injury, personal
injury, and property damage for each accident and a five million dollar($5,000,000) general
aggregate. Insurance shall be placed with insurers with a Best's Rating of no less than A:VII.
The Owner represents and wanants it has furnished to the Risk Manager certificates of
insurance and endorsements on forms specified by the Risk Manager, duly authenticated, giving
evidence of the insurance coverage required in this contract and other evidence of coverage or
copies of policies as may be reasonably required by the Risk Manager from time to time. Each
required insurance policy coverage shall not be suspended, voided, canceled by either Party,
reduced in coverage or in limits except after fifteen (15) days written notice by certified mail,
return receipt requested, has been given to the Risk Manager.
Liability coverage shall not be limited to the vicarious liability or supervising role of any
additional insured nor shall there be any limitation with the severability clause. Coverage shall
contain no limitation endorsements and there shall be no endorsement or modification limiting
the scope of coverage for liability arising from pollution, explosion, collapse, underground
property damage or employment related practices.
Any umbrella liability coverage shall apply to bodily injurylproperty damage, personal
injury/advertising injury, and automobile coverage at a minimum, and shall include a "drop
down" provision providing primary coverage above a maximum $25,000.00 self-insured
retention for liability not covered by primary polices not covered by the umbrella policy.
Coverage shall be following form to any other underlying coverage. Coverage shall be on a "pay
on behalf' basis, with defense costs payable in addition to policy limits. There shall be no cross
policy exclusion and no limitation endorsement. The policy shall have starting and ending dates
concurrent with the underlying coverage.
All liability insurance shall be on an occurrence basis. Insurance on a claims made basis
will be rejected. Any deductibles or self-insured retentions shall be declared to and approved by
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the Risk Manager. The insurer shall provide an endorsement to the City eliminating such
deductibles or self-insured retentions as respects the City, and its consultants, and each of its
Board members, officials, employees and volunteers.
All subcontractors employed on the work referred to in this Acquisition Agreement shall
meet the insurance requirements set forth in this Section 7.1 for the Owner. The Owner shall
furnish certificates of insurance and endorsements for each subcontractor(a) within twenty (20)
business days after the date of this Acquisition Agreement or(b) with respect any subcontractor
awarded a contract after the date of this Acquisition Agreement, at least five (5) days prior to the
subcontractor entering the job site, or the Owner shall furnish the Risk Manager an endorsement
including all subcontractors as insureds under its policies.
The City shall not be liable for any accident, loss, or damage to the work prior to its
completion and acceptance, and the Owner shall save, keep and hold harmless the City and its
consultants, and each of its Councilmembers, officers, directors, officials, employees, agents and
volunteers (including independent contractors who serve as the City's officers or officials) from
all damages, costs or expenses in law or equity that may at any time arise or be claimed because
of damages to property or personal injury received by reason of, or in the course of, performing
work, by the Owner or any of the Owner's employees, or any subcontractor,except to the extent
reimbursable as an Actual Cost.
The cost of insurance required by this subsection shall be born by the Owner and its
subcontractors, and no compensation for purchasing insurance or additional coverage needed to
meet these requirements will be paid for by the City.
In the event that any required insurance is reduced in coverage, canceled for any reason,
voided or suspended, the Owner agrees that the City may arrange for insurance coverage as
specified, and the Owner further agrees that administrative and premium costs may be deducted
from any deposits or bonds the City may have, or from the Improvement Fund. A reduction or
cancellation will be grounds for termination of this Acquisition Agreement and will cause a halt
to payment for any work on the Facilities until the insurance is reestablished and accepted by
City.
Liability policies shall contain, or be endorsed to contain the following provisions:
A. General Liability and Automobile Liabilitv. The City and its consultants, and each of
its Councilmembers, officers, directors, officials, employees and volunteers shall be covered as
additional insureds using ISO form CG 20 10 II 85 as it respects: liability arising out of activities
performed by or on behalf of the Owner; products and completed operations of the Owner's
premises owned, occupied or used by the Owner; or automobiles owned, leased, hired or
borrowed by the Owner. The coverage shall contain no special limitations on the scope or
protection afforded to the City and its consultants, and each of its Councilmembers, officers,
directors, officials, employees, or volunteers.
The Owner's and its subcontractors' insurance coverage shall be primary insurance with
respect to the City and its consultants, and each of its Councilmembers, officers, directors,
officials, employees and volunteers. Any insurance or self-insurance maintained by the City and
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its consultants, and each of its Councilmembers, officers, directors, officials, employees and
volunteers shall be excess of the Owner's insurance and shall not contribute with it.
Any failure to comply with reporting provisions of the policies shall not affect coverage
provided to the City and its consultants, and each of its Councilmembers, officers, directors,
officials, employees and volunteers.
The Owner's and its subcontractors' insurance shall apply separately to each insured
against whom claim is made or suit is brought, except with respect to the limits of the insurer's
liability.
B. Workers' Compensation and Emplo�er's Liability. The Owner and all
subcontractors shall have workers' compensation for all employees in conformance with the
requirements in Section 3700 of the Labor Code.
C. Error and Omissions Liabilitv. The Owner and alt subcontractors who are design
professionals shall have and maintain errors and omissions insurance.
ARTICLE VIII.
REPRESENTATIONS, WARRANTIES AND COVENANTS
8.01 Representations, Covenants and Warranties of the Owner. The Owner
represents and warrants for the benefit of the City as follows:
A. Organization. The Owner is a duly organized and validly existing
company under the laws of the state of , with the legal authority to do business in the
State of California and is in compliance with the laws of the State, and has the power and
authority to own its properties and assets and to carry on its business as now being conducted
and as now contemplated. •
B. Authoritv. The Owner has the power and authority to enter into this Acquisition
Agreement, and has taken all action necessary to cause this Acquisition Agreement to be
executed and delivered, and this Acquisition Agreement has been duly and validly executed and
delivered by the Owner.
C. Binding Obli ag tion. This Acquisition Agreement is a legal, valid and binding
obligation of the Owner, enforceable against the Owner in accordance with its terms, subject to
bankruptcy and other equitable principles.
D. Compliance with Laws. The Owner shall not with knowledge commit, suffer or
permit any act to be done in, upon or to the lands in the Assessment District or the Facilities in
violation of any law, ordinance, rule, regulation or order of any governmental authority or any
covenant, condition or restriction now or hereafter affecting the lands in the Assessment District
or the Facilities.
E. Requests for Payment. The Owner represents and warrants that (i) it will not request
payment from the City for the acquisition of any improvements that are not part of the Facilities,
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and (ii) it will diligently follow all procedures set forth in this Acquisition Agreement with
respect to the Payment Requests.
F. Financial Records. Until the date which is one year following final acceptance of the
Facilities, the Owner covenants to maintain proper books of record and account for the
construction of the Facilities and all costs related thereto. Such accounting books shall be
maintained in accordance with generally accepted accounting principles, and shall be available
for inspection by the City or its agent at any reasonable time during regular business hours on
reasonable notice.
G. Continuing and Initial Disclosure. The Owner agrees to comply with any continuing
disclosure agreement or undertaking required in connection with the offering and sale of any of
the Bonds and cooperate with the City in any reasonable request for information necessary to
provide initial disclosure related to an issuance of Bonds.
8.02 Indemnification and Hold Harmless. The Owner shall take and assume all
responsibility for the work performed as part of the Facilities constructed pursuant to this
Acquisition Agreement. The Owner shall bear all losses and damages directly or indirectly
resulting to it, to the City, and its respective consultants, and its respective Councilmembers,
officers, employees and agents, or to others on account of the performance or character of the
work, unforeseen difficulties, accidents or any other causes whatsoever.
The Owner and its successors and assigns shall assume the defense of, indemnify, protect
and save harmless the City, and its Councilmembers, officers, attorneys, employees and agents
(each an "Indemnified Party"), and each and every one of them (including independent
contractors who serve as the City's officers or officials), from and against all actions, demands,
damages, claims, losses, causes of action, liabilities or expenses of every type and description to
which they may be subjected or put, whether known or unknown, existing or potential,
anticipated or unanticipated, by reason of, or resulting or arising from, the performance by the
Owner(or any of its officers, agents, servants, employees, subcontractors, materialmen, or
suppliers) of its obligations under this Acquisition Agreement,the construction of the Facilities
(including, but not limited to, failure of the Owner to pay any amount due to any contractor hired
by the Owner for the construction of any Facility and any fines or penalties arising therefrom,
and all damages to property or personal injury received by reason of, or in the coursc of,
performing work, which may be caused by any willful or negligent act or omission by the Owner
or any of the Owner's employees, or any subcontractor), the nature or physical condition of the
Facilities or any land conveyed to the City hereunder(including, but not limited to, the presence
of any hazardous materials thereon or therein), or an alleged misstatement or omission of fact
relating to the Owner or its development of the property within the Assessment District in any
official statement for the District or the Bonds (including, but not limited to, any statements
regarding the presence of any hazardous materials or endangered species thereon or therein). No
provision of this Acquisition Agreement shall in any way limit the extent of the Owner's
responsibility for payment of damages resulting from the operations of the Owner and its
contractors; provided, however, that the Owner shall not be required to indemnify an
Indemnified Party as to damages resulting from the sole negligence or willful misconduct of an
Indemnified Party in performing its obligations under this Acquisition Agreement.
15
P6401-1033\955067v l.doc
The City does not, and shall not, waive any rights against the Owner which the City may
have by reason of the aforesaid hold harmless agreements because of the acceptance by the City,
or deposit with the City by the Owner of any insurance policies described herein. The aforesaid
hold harmless agreement by the Owner shall apply to all damages and claims for damages of
every kind suffered, or alleged to have been suffered by reasons of any of the aforesaid
operations of the Owner, or any subcontractor, regardless of whether or not such insurance
policies are determined to be applicable to any of such damages or claims for damages.
No act by the City or its representatives in processing or accepting any plans, in releasing
any bond, in inspecting or accepting any work, or of any other nature, shall in any respect relieve
the Owner or anyone else from any legal responsibility, obligation or liability it might otherwise
have.
The indemnification and hold harmless provisions of this Section shall survive the
termination of this Acquisition Agreement, the completion of construction of the Facilities, and
the conveyance of title thereto to the City.
ARTICLE IX.
TERMINATION
9.01 No Bonds. If, for any reason, the City does not issue any of the Bonds by January
1, 2008, this Acquisition Agreement shall terminate and be null and void and of no further effect.
9.02 Mutual Consent. This Acquisition Agreement may be tereninated by the mutual,
written consent of the Parties, in which event the City may let contracts for any remaining work
related to the Facilities not theretofore acquired from the Owner hereunder, and use all or any
portion of the monies in the Improvement Fund to pay for same, and the Owner shall have no
claim or right to any further payments for the Purchase Price of Facilities hereunder, except as
otherwise may be provided in such written consent.
9.03 City Election for Cause. The following events shall constitute grounds for the
City to terminate this Acquisition Agreement, without the consent of the Owner:
A. The Owner shall voluntarily file for reorganization or other relief under any
Federal or State bankruptcy or insolvency law.
B. The Owner shall have any involuntary bankruptcy or insolvency action filed
against it, or shall suffer a trustee in bankruptcy or insolvency or receiver to take possession of
the assets of the Owner, or shall suffer an attachment or levy of execution to be made against the
property it owns within the Assessment District unless, in any of such cases, such circumstance
shall have been terminated or released within thirty (30) days thereafter.
C. The Owner shall abandon construction of the Facilities. Failure for a period of
ninely (90) consecutive days to undertake substantial work related to the construction of the
Facilities, other than for a reason specified in Section 9.03 hereof, shall constitute such
abandonment.
16
P640 I-1033\95S067v l.doc
D. The Owner shall breach any material covenant or default in the performance of
any material obligation hereunder.
E. The Owner shall transfer any of its rights or obligations under this Acquisition
Agreement without the prior written consent of the City.
F. The Owner shall have made any material misrepresentation or omission in any
written materials furnished in connection with any preliminary official statement, official
statement, continuing disclosure agreement, or bond purchase contract used in connection with
the sale of the Bonds.
G. The Owner or any of its Affiliates shall at any time challenge the validity of the
Assessment District or any of the Bonds, or the levy of assessments within the Assessment
District, other than on the grounds that such levy was not made in accordance with the terms of
the Fiscal Agent Agreement.
H. If any such event occurs, the City shall give written notice of its knowledge
thereof to the Owner, and the Owner agrees to meet and confer with the Director and other
appropriate City staff and consultants within ten (10) business days of receipt of such notice as to
options available to assure timely completion of the Facilities. Such options may include, but
not be limited to, the termination of this Acquisition Agreement by the City. If the City elects to
terminate this Acquisition Agreement, the City shall first notify the Owner(and any mortgagee
or trust deed beneficiary specified in writing by the Owner to the City to receive such notice) of
the grounds for such termination and allow the Owner a minimum of thirty (30) business days to
eliminate or mitigate to the satisfaction of the Director the grounds for such termination. Such
period may be extended, at the sole discretion of the City, if the Owner, to the satisfaction of the
City, is proceeding with diligence to eliminate or mitigate such grounds for termination. If at the
end of such period (and any extension thereo�, as determined solely by the City, the Owner has
not eliminated or completely mitigated such grounds, to the satisfaction of the City, the City may
then terminate this Acquisition Agreement.
Notwithstanding the foregoing, so long as any event listed in any of clauses (A) through
and including (0) above has occurred, notice of which has been given by the City to the Owner,
and such event has not been cured or otherwise eliminated by the Owner, the City may in its
discretion cease making payments for the Purchase Price of Facilities.
9.04 Force Majeure. Whenever performance is required of a Party hereunder, that
Party shall use all due diligence and take all necessary good-faith measures to perform, but if
completion of performance is delayed by reasons of floods, earthquakes or other acts of God,
war, civil commotion, riots, strikes, picketing or other labor disputes, damage to work in
progress by casualty, or by other cause beyond the reasonable control of the Party (financial
inability excepted), then the specified time for performance shall be extended by the amount of
the delay actually so caused.
17
P6401-1033\955067v1.doc
ARTICLE X.
MISCELLANEOUS
10.01 Limited Liability of City. The Owner agrees that any and all obligations of the
City arising out of or related to this Acquisition Agreement are special and limited obligations of
the City and the City's obligations to make any payments hereunder are restricted entirely to the
moneys, if any, in the Improvement Fund and from no other source. No member of the City
Council, or City staff inember, employee or agent shall incur any liability hereunder to the
Owner or any other party in their individual capacities by reason of their actions hereunder or
execution hereof.
10.02 Excess Costs. The Owner agrees to pay all costs of the Facilities that it
constructs and/or conveys pursuant to the terms of this Acquisition Agreement in excess of the
moneys available therefor in the Improvement Fund.
10.03 Audit. The Finance Director of the City, or his/her representative, shall have the
right, during normal business hours and upon the giving of two (2) business days prior written
notice to the Owner, to review all books and records of the Owner pertaining to costs and
expenses incurred by the Owner in connection with any of the Facilities, and any bids taken or
received for the construction thereof or materials therefor.
10.04 Attorneys' Fees. In the event that any action or suit is instituted by either Party
against the other arising out of this Acquisition Agreement, the party in whose favor final
judgment shall be entered shall be entitled to recover from the other Party all costs and expenses
of suit, including reasonable attorneys' fees.
10.05 Notices. Any notice, payment or instrument required or permitted by this
Acquisition Agreement to be given or delivered to either Party shall be deemed to have been
received when personally delivered, or transmitted by facsimile transmission or electronic mail
(which shall be immediately confirmed by telephone and shall be followed by mailing an
original of the same within 24 hours after such transmission), or?2 hours following deposit of
the same in any United States Post Office, registered or certified mail, postage prepaid,
addressed as follows:
If to City:
City of Palm DeseR
73-510 Fred Waring Drive
Palm Desert, CA 92260
If to Owncr:
Lomas De Arena
18802 Bardeen Avenue
Irvine, CA 92612
18
P6401-1033\955067v1.doc
Each Party may change its address or addresses for delivery of notice by delivering
written notice of such change of address to the other Party.
10.06 Severability. If any part of this Acquisition Agreement is held to be illegal or
unenforceable by a court of competent jurisdiction, the remainder of this Acquisition Agreement
shall be given effect to the fullest extent possible.
10.07 Successors and Assigns. This Acquisition Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Parties hereto. This Acquisition
Agreement shall not be assigned by the Owner, except in whole to an Affiliate, without the prior
written consent of the City, which consent shall not be unreasonably withheld or delayed. In
connection with any such consent of the City, the City may condition its consent upon the
acceptability of the relevant experience and financial condition of the proposed assignee, the
assignee's express assumption of all obligations of the Owner hereunder, and/or upon any other
factor which the City deems relevant in the circumstances. In any event, any such assignment
shall be in writing, shall clearly identify the scope of the rights and/or obligations assigned, and
shall not be effective until approved in writing by the City. No assignment, whether or not
consented to by the City shall release the Owner from its obligations and liabilities under this
Acquisition Agreement.
10.08 Waiver. Failure by a Party to insist upon the strict performance of any of the
provisions of this Acquisition Agreement by the other Party, or the failure by a Party to excrcise
its rights upon the default of the other Party, shall not constitute a waiver of such Party's right to
insist and demand strict compliance by the other Party with the terms of this Acquisition
Agreement thereafter.
10.09 Other Agreements. The obligations of the Owner hereunder shall be those of a
party hereto and not as an owner of property in the Assessment District. Nothing herein shall be
construed as affecting the City's or the Owner's rights, or duties to perform their respective
obligations, under other agreements, use regulations or subdivision requirements relating to the
development of the lands in the Assessment District. This Acquisition Agreement shall not
confer any additional rights, or waive any rights given, by either Party hereto under any
development or other agreement to which they are a party.
10.10 Merger. No other agreement, statement or promise made by any party or any
employee, officer or agent of any Party with respect to any matters covered hereby that is not in
writing and signed by all the PaRies to this Acquisition Agreement shall be binding.
10.11 Parties in Interest. Nothing in this Acquisition Agreement, expressed or
implied, is intended to or shall be construed to confer upon or to give to any person or entity
other than the City and the Owner any rights, remedies or claims under or by reason of this
Acquisition Agreement or any covenants, conditions or stipulations hereof; and all covenants,
conditions, promises, and agreements contained in this Acquisition Agreement by or on behalf of
the City or the Owner shall be for the sole and exclusive benefit of the City and the Owner.
19
P6401-1033\95.5067v 1.doc
10.12 Amendment. This Acquisition Agreement may be amended, from time to time,
by written Supplement hereto and executed by both the City and the Owner.
10.13 Counterparts. This Acquisition Agreement may be executed in counterparts,
each of which shall be deemed an original.
10.14 Conflict. If any provision of this Agreement is in conflict with or inconsistent
with any provision of the Act, the provision of the Act shall control.
20
Y6401-1033\955067v1.doc
IN WITNESS WHEREOF, the Parties have executed this Acquisition Agreement as of
the day and year first-above written.
CITY OF PALM DESERT: LOMAS DE ARENA
A public body, corporate and politic
Mayor By�
Title:
ATTEST:
RACHELLE D. KLASSEN,
CITY CLERK
APPROVED AS TO FORM:
Richards, Watson & Gershon
A Professional Corporation
21
P6401-1033\955067 v 1.doc
EXHIBIT A
DESCRIPTION OF LAND
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{LGGAI.D�5CRlP71t3Nj .
RtQfiT-Q�•WAY OED{CAT10T!
PAPGEL."A"
IN 7HE GlTY OF PAl.hi DESEF�"f, C�IUNTY �� RtVGt�SIDt=, 5T/�TE OF
; r/�i.S�ORhfA;
THAT P�RrIC�'�E Of FAk�t:E�l 'A" Cif ChtA�t t;£:Rt"A{N C;�fiTlFi{�ATE UF
CUy1Ni.1P.NCE �4VA1VF.�: ��' PARCFC tSA.fiP P M.VJ. OL'-t9}, F?�CC7fZDEC
nC;I C)I3ER 2t3,2Q00.AS lNS7RUhtEPtT NG.2000-4149r10,TUGETHER 1!�[?t�t �
� Tl-lAT �'t7R7It�K OF Pl+RCE[. 3 GF PARCEC 13#AP NO. 27213,AS Sti0Y4?J �
1 BY MAP ON FILE (T1 BOOK 1r,iST PliGES ? AIYb 2, dF i'ARCEI.f�AAPS,
i ��.�. �r ��co�us or r�ni�r�srdc caunrr�r, /�iLS� £3EING !N THE ;
� SQUTNWE57 QUAR7EK OF SEC-ft^iV 24.'TOWNStitP 4 S�'iiJ7I�, �2AlJ(iE fi
! EF,ST,S.B:N,.;L�ESCRSHf_�'1 A5 A tNH�LE A:i FI)i.Li?W5;
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} Ci3MM�NCiNG 1',T 7F��;V�JRTHE�;ST CGR�EEFt OF SFii�t'AR�E.L"k":
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j THEhtC:k SUUTH 89°55'14"WEST A O{STANCF Of'i 1.49 F�E?Ai_f'NG THE.
j NO�C'TN�RLY �INt u!� �/13D FnRGEL 'Y!" TC1 THr TRU� POINT OF
BEGiNN{N't'i; i
?'HF_NGE L�AVlI�iG SAILI NC?�CTIiE{;tY.LiNE SOUTH 06°04'A6" Ef?5T it `
' �1STAN.:E OF 38A0�fir'T l'O A LINl=:'THI�?.�5 PARl�4�t F..t �Nlrk-t F+ND 3A tY0 `
F�ET SOUTHERLY AF'SAIE}NOfi7HF;fct.Y i_ENE L1F PAf2CFl;"!�'f1NCa TNE !
NORTHERi.'Y t.lNE UT SA1D PARCGI 3';
THENCE ;�LCNG SAIU �'AFtALLEL LIt�E 5UU7'�i 89°55'94" WEST A
D{STANCE OF��i�.74 F�ET; i
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P6401-1033\955067 v l.doc
Description of Facilities Estimated Cost
Water main improvements $ 59,286.00
Street improvements $193,894.87
Sewer improvements $ 91,173.41
Construction Management and Incidentals $ 34,450.00
There are no land acquisition costs
Total Estimated Costs of Facilities $378,804.28
A-9
P6401-103 3\95 5067 v l.doc
ACQUISITION AGREEMENT
EXHIBIT B
FORM OF PAYMENT REQUEST
PAYMENT REQUEST NO.
The undersigned (the "Owner"), hereby requests payment in the total amount of
$ for the Facilities (as defined in the Acquisition Agreement, dated as of
, 2007, by and between the City of Palm Desert (the "City") and the Owner, as more
fully described in Attachment I hereto. In connection with this Payment Request, the
undersigned hereby represents and warrants to the City as follows:
1. The Undersigned is a duly authorized officer of the Owner, qualified to execute
this Payment Request for payment on behalf of the Owner and is knowledgeable as to the matters
set forth herein.
2. The Owner has submitted or submits herewith to the City as-built drawings or
similar plans and specifications for the items to be paid for as listed in Attachment 1 hereto with
respect to any completed Facility, and such drawings or plans and specifications, as applicable,
are true, correct and complete. All costs of the Facilities for which payment is requested hereby
are Actual Costs (as defined in the Agreement referenced above) and have not been inflated in
any respect. The items for which payment is requested have not been the subject of any prior
payment request submitted to the City.
3. Supporting documentation (such as third party invoices) is attached with respect
to each cost for which payment is requested.
4. There has been compliance with applicable laws relating to prevailing wages for
the work to construct the Facilities for which payment is requested.
5. The Facilities for which payment is requested were constructed in accordance
with all applicable City or other governmental standards, and in accordance with the as-built
drawings or plans and specifications, as applicable, referenced in paragraph 2 above.
6. The Owner is in compliance with the terms and provisions of the Acquisition
Agreement and no portion of the amount being requested to be paid was previously paid.
7. The Purchase Price for each Facility (a detailed calculation of which is shown in
an Attachment 2 hereto for each such Facility), has been calculated in conformance with the
terms of Article V of the Acquisition Agreement.
8. Neither the Owner nor any Affiliate (as defined in the Acquisition Agreement) is
in default in the payment of ad valorem real property taxes, special taxes, or special assessments
levied in the Assessment District (as defined in the Acquisition Agreement), except as follows:
B-1
PG401-1033\955067 v l.doc
I hereby declare under penalty of perjury that the above representations and warranties
are true and correct.
OWNER: CITY:
Payment Request Approved for Submission
to the Finance Director of the City
By: By:
Name: Public Works Director
Its:
Date: Date:
B-2
P6401-1033\955067v1.doc
ATTACHMENT 1
EXHIBIT B
(list here all Facilities for which payment is requested, and attach support documentation)
1
P6401-1033\955067 v l.doc
ATTACHMENT 2
EXHIBIT B
CALCULATION OF PURCHASE PRICE.
[Use a separate sheet for each Facility
for which payment is being requested]
1. Description (by reference to Exhibit B to the Acquisition Agreement) of the Facility
2. Actual Cost (list here total of supporting
invoices and/or other documentation
supporting determination of Actual Cost): $
3. Subtractions from Purchase Price:
A. Holdback for Lien releases (see
Section 5.05(B) of the Acquisition
Agreement) $
B. Retention (see Section 5.05(C) of
the Acquisition Agreement) $
4. Total disbursement requested (amount listed
in 2, less amounts, if any, listed in 3) $
2
P6401-1033\955067v l.doc
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "Agreement") is dated as of March
_, 2007 (the "Effective Date"), and is entered into by and between the CITY OF PALM
DESERT, a California municipal corporation (the "Purchaser"), and MAC LEOD COUCH
LAND CO., LLC a California Limited Liability Company, and MC PROPERTIES, LLC, a
California Limited Liability Company (collectively, the "Seller").
RECITALS
A. Seller is the owner of the unimproved land in the City of Palm Desert,
County of Riverside, State of California that is more particularly described on Exhibit "A" (as
may be modified to exclude property which has been dedicated by the Palm Springs Unified
School District) attached hereto and made a part hereof, together with all improvements thereon
(if any), and all rights and appurtenances pertaining to such land, including all right, title and
interest of Seller in and to adjacent streets, alleys or rights-of-way and appurtenant easements
(collectively, the "Property").
B. Purchaser has established the City of Palm Desert Section 29 Assessment
District in the City of Palm Desert (the "Assessment District") pursuant to the provisions of the
Municipal Improvement Act of 1913 (California Streets and Highways Code Section 10000, et
se�c.), which Assessment District includes the Property.
C. Purchaser intends to authorize the issuance and sale of not to exceed
$40,000,000 principal amount of City of Palm Desert, Section 29 Assessment District (No. 2004-
02), Limited Obligation Bonds, Series 2007 pursuant to the Improvement Bond Act of 1915
(California Streets and Highways Code Section 8500, et se�c.) (the `Bonds") to represent
assessments levied against properties in the Assessment District which remain unpaid at the end
of a thirty-day cash collection period for the purpose of financing certain acquisitions and
improvements, including the acquisition of the Property.
D. Purchaser desires to purchase the Property from Seller using proceeds of
the Bonds, and Seller desires to sell the Property to Purchaser.
NOW, THEREFORE, in consideration of the foregoing recitals, the terms and conditions
of this Agreement and other valuable consideration, the sufficiency of which is hereby
acknowledged, Purchaser and Seller hereby agree as follows:
1. Purchase and Sale. Subject to and in accordance with the terms and conditions
hereinafter set forth, Seller agrees to sell the Property to Purchaser, and Purchaser agrees to
purchase the Property from Seller.
2. Purchase Price. The purchase price for the Property to be paid by Purchaser is the
sum of$3,954,908.12 (Three Million Nine Hundred Fifty Four Thousand Nine Hundred Eight
Dollars and Twelve Cents) (the "Purchase Price").
P640 l-1033\954993 v l.doc
3. Closin . The date upon which a grant deed for the Property in favor of Purchaser
is recorded in the Official Records of the Riverside County Recorder's Office, and the Title
Company (defined herein) shall have committed to issue the Title Policy (defined herein) to
Seller, is referred to herein as the"Closing." The Closing shall occur as soon as reasonably
possible after the issuance of the Bonds, but in no event later than June 30, 2007.
4. Delivery of Deed, Title and Possession.
(a) On the Closing, Seller shall cause to be delivered to Purchaser a duly
executed and acknowledged Grant Deed in the form of Exhibit "B" attached hereto (the "Grant
Deed").
(b) The Closing is hereby conditioned upon Title Company
(the "Title Company") committing to Purchaser that it will issue to the Purchaser a title policy
that is acceptable to Purchaser and that insures in Purchaser fee simple title to the Property, free
and clear of all liens and encumbrances other than the Permitted Title Exceptions (hereinafter
defined).
(c) On the Closing, Seller shall deliver possession of the Property to Purchaser
free and clear of all leases and any other possessory interests in the Property that are not
Permitted Title Exceptions.
5. Title and Title Insurance.
(a) Within ten (10) days after the Effective Date, Seller shall deliver to
Purchaser a title report for the Property issued by the Title Company together with copies of the
title exception documents (the "Title Report"), as well as any surveys of the Property in Seller's
possession or under Seller's control, if any (the "Existing Surveys"). Purchaser shall have the
right in its sole and absolute discretion to update the Existing Surveys, or prepare a new ALTA
survey, at Purchaser's cost (such updated or new survey is hereinafter referred to as the
"Survey"), provided that Purchaser's and its contractors' entry onto the Property shall be subject
to Section 9.
(b) As used herein, the term "Due Diligence Period" means the period from
the date hereof until the date that is ninety (90) days thereafter.
(c) Prior to Closing, Seller shall remove all liens (other than liens for taxes not
yet due) (collectively, the "Liens"), and if Seller does not do so, Purchaser may terminate this
Agreement by written notice to Seller. Purchaser shall also have the right to object in writing
prior to the end of the Due Diligence Period to any other matters disclosed by the Title Report,
the Existing Surveys or any new ALTA survey performed or obtained by Purchaser (the
"Objectionable Matters"), and if Seller does not irrevocably agree in writing within ten (10) days
after written notice from Purchaser objecting to any such matter to cure the matter on or before
the Closing, then Purchaser may terminate this Agreement by written notice to Seller. The Liens
and the Objectionable Matters are hereinafter collectively referred to as the "Disapproved
Exceptions."
P6401-I 033\954993 v l.doc 2
(d) Purchaser's fee title to the Property shall be insured at the Closing by a
CLTA (or if elected by Purchaser, ALTA) Coverage Owner's Policy of Title Insurance in the
amount of the Purchase Price, issued by Title Company together with all endorsements requested
by Purchaser, provided the Purchaser pays the premiums for the Title Policy. The Title Policy
shall insure Purchaser's fee interest in the Property (i) free and clear of all Disapproved
Exceptions, and (ii) subject only to real property taxes for the then current tax fiscal year which
are a lien not yet due and payable, and any other title exceptions to which Purchaser does not
timely object. However, Purchaser shall not be obligated to take title subject to any matter which
attaches to the Property after the execution of this Agreement.
Seller shall not improve, alter, encumber, lease or sell or transfer(or otherwise agree to
sell or transfer) the Property or any portion thereof or interest therein to any other party during
the period from the Effective Date to the Closing or the date of the termination of this
Agreement, as applicable.
6. Deposit of Documents and Funds.
(a) Seller and Purchaser, as applicable, hereby covenant and agree to deliver
at least one (1) business day prior to the Closing the following instruments, documents, and
funds, the delivery of each of which shall be a condition of the Closing.
(b) Seller shall deliver to the Purchaser:
(i) The Grant Deed,duly executed and acknowledged and acknowledged
by the Seller;
(ii) A Withholding Exemption Certificate Form 593 as contemplated
by California Revenue and Taxation Code §18662 (the"Withholding Affidavit") duly executed
by Seller;
(iii) A Certification of Non-Foreign Status in accordance with Internal
Revenue Code Section 1445 duly executed by Seller;
(iv) Such proof of Seller's authority and authorization to enter into this
transaction as the Title Company may reasonably require in order to issue the Title Policy.
(c) Purchaser shall deliver to the Seller:
(i) The Purchase Price together with such funds as are required to pay
for costs and expenses payable by Purchaser hereunder;
(ii} A Certificate of Acceptance for the Grant Deed;
(iii) Such proof of Purchaser's authority and authorization to enter into
this transaction as the Title Company may reasonably require in
order to issue the Title Policy.
P6401-]033\954993v1.doc 3
7. Authorization to Record Grant Deed. Seller is hereby authorized to record the
Grant Deed in the Official Records of Riverside County, California.
S. Prorations.
(a} Seller shall pay: (i) Seller's share of the charges prorated under this
Agreement; and (iii) all costs of Seller's legal counsel and consultants, if any.
(b) Purchaser shall pay (ii)the cost of the premium for the Owner's Title
Policy; (iii) the cost of all endorsements to the Title Policy; (iv) Purchaser's share of the charges
prorated under this Agreement; (v) the cost of an ALTA survey, if required by Purchaser; and
(vi) all costs of Purchaser's legal counsel and consultants.
(c) The following shall be apportioned with respect to the Property as of 12:01
a.m., on the day of the Closing, as if Purchaser were vested with title to the Property during the
entire day upon which the Closing occurs:
(i) taxes and assessments levied against the Property;
(ii) any operating expenses or other items pertaining to the Property.
(d) Notwithstanding anything contained in Section 8(c), any installment of
taxes or assessments for the current year paid at or prior to the Closing shall be prorated based
upon the amounts actually paid. If taxes and assessments for the current year have not been paid
before the Closing, Seller shall be charged at the Closing an amount equal to that portion of such
taxes and assessments which relates to the period before the Closing and Purchaser shall pay the
taxes and assessments prior to their becoming delinquent. Any such apportionment made with
respect to a tax year for which the tax rate or assessed valuation, or both, have not yet been fixed
shall be based upon the tax rate andJor assessed valuation last fixed. To the extent that the actual
taxes and assessments for the current year differ from the amount apportioned at the Closing, the
parties shall make all necessary adjustments by appropriate payments between themselves
following the Closing. All delinquent taxes and assessments (and any penalties therein) for
periods prior to the Closing, if any, affecting the Property shall he paid by Seller.
All prorations shall be determined on the basis of a 360-day year. The provisions of this
Section 8 shall survive the Closing.
9. Documents and Reports; Due Diligence Date and Due Diligence Period; Access.
Within ten (10} days after the Effective Date, Seller shall deliver to Purchaser copies of any and
all material written notices, reports and other documents in Seller's possession relating to the
Property, including without limitation, all surveys and, all environmental site assessments
(collectively, "Documents and Reports").
Until the end of the Due Diligence Period, Purchaser may inspect the Documents and
Reports and Purchaser and its contractors shall have the right to enter upon the Property during
the Due Diligence Period to make inspections and other examinations of the Property, including
Pfi40 l-l 033\454943v 1.doc 4
without limitation, the right to perform surveys, soil and geological tests of the Property and the
right to perform environmental site assessments and studies of the Property; however, Purchaser
shall give Seller at least five (5) business days' prior written notice of any invasive tests. In the
event that Purchaser elects not to purchase the Property due to a matter disclosed by the
Documents and Reports or due to the condition of the Property, Purchaser shall so notify Seller
within ten (10) days after the end of the Due Diligence Period whereupon this Agreement shall
automatically terminate.
Seller hereby grants to Purchaser and its employees, representatives, agents, affiliates and
independent contractors (Purchaser, such parties and any other person or entity purporting to act
with the authorization or at the direction of any of Purchaser or and such parties being
collectively referred to herein as the "Purchaser's Parties") the right to enter upon the Property
during the Due Diligence Period for the purpose of conducting feasibility studies, physical
examinations, surveys and test of the Property during normal business hours. In the event that
the Closing does not occur, to the extent Purchaser's Parties alter the physical condition of the
Property, Purchaser shall promptly at its sole cost and expense, return the Property to
substantially the same physical condition that the Property was in as of the date hereof, as
modified by Seller in connection with any work performed by Seller on the Property on or after
the date hereof, and Purchaser shall immediately repair any damage resulting from Purchaser's
Parties' activities thereon.
10. Warranties, Representations and Covenants of Seller Re a� rdinQ the Propertv.
Seller hereby represents, warrants and covenants to Purchaser the following, it being expressly
understood and agreed that all such representations, warranties and covenants shall survive the
Closing and delivery of the Grant Deed:
(a) Hazardous Substances.
(i) Except as disclosed in the Documents and Reports, to Seller's
actual knowledge, the Property is free and has always been free from Hazardous Substances (as
defined in Exhibit "C") and is not and has never been in violation of any Environmental Laws
(as defined in Exhibit"C").
(ii) To Seller's actual knowledge, there are no buried or partially
buried storage tanks located on the Property.
(iii) Seller has received no written notice, warning, notice of violation>
administrative complaint,judicial complaint, or other formal or informal notice alleging that
conditions on the Property are or have been in violation of any Environmental Law, or informing
Seller that the Property is subject to investigation or inquiry regarding Hazardous Substances on
ihe Property or the potential violation of any Environmental Law.
(iv) To Seller's actual knowledge there is no monitoring program
required by the Environmental Protection Agency or any similar state agency concerning the
Property.
P6401-1033\954993v1.doc $
(v) To Seller's actual knowledge, the Property has never been used as
a dump or landfill.
(vi) Seller shall provide Purchaser a Natural Hazards Disclosure
Statement in accordance with California Civil Code Section 1103.2.
(vii) Seller has received no written request, directive, administrative
order or judicial order to impose any type of land use restriction or institutional control relating to
Hazardous Substances on the Property.
(viii) Seller has received no outstanding written order, directive or
administrative complaint from any government agency, no outstanding judicial complaint or
order, and no cunent agreement with any government agency for any investigation or cleanup of
any Hazardous Substance that is on or was released from the Property.
(b) Seller has full right and power to execute, deliver and perform its
obligations under this Agreement, and when executed and delivered, Seller and all parties having
an interest in the Property shall be lawfully bound by the terms of this Agreement. Seller shall
not further transfer or encumber the Property or allow the Property to be further encurnbered
prior to the earlier of the Closing or termination of this Agreement.
(c) To the actual knowledge of Seller, there is no pending litigation or
litigation threatened in writing, which does or may adversely affect the Property.
(d) To the actual knowledge of Seller, there is no eminent domain or similar
condemnation proceeding affecting any portion of the Property now pending and none has been
threatened in writing. Further, to the actual knowledge of Seller, there are no actions or
proceedings pending or threatened against Seller or the Property, before any court or
administrative agency in any way connected with or relating to the Property, or affecting Seller's
ability to fulfill all of its obligations under this Agreement.
(e) To the actual knowledge of Seller, and except for the Permitted
Exceptions and the documents that are part of the Documents and Reports (copies of which will
be delivered to Purchaser), there are no written commitments to or written agreements with any
governmental authority or agency materially and adversely affecting the Property, or any part
thereof or any interest therein, which will survive the Closing. Seller has entered into no
undcrstanding or agreement with any taxing or assessing authority respecting the imposition or
deferment of any taxes or assessments respecting the Property.
(f) Neither this Agreement nor anything provided to be done hereunder
including the transfer of title to the Property to Purchaser, violates or shall violate, any contract,
instrument, partnership agreement, trust agreement, or any other agreement to which Seller is a
party, or which affects the Property or any part thereof, and the sale of the Property herein
contemplated does not require the consent of any party not a signatory hereto.
P6401-I 033\954993v l.doc 6
(g) To the actual knowledge of Seller, Seller is not in default of its obligations
under any contract, agreement or instrument to which Seller is a party which would adversely
affect the value of the Property or Seller's ability to perform its obligations hereunder.
(h) To the actual knowledge of Seller, there are no natural or artificial
conditions upon the Property or any part of the Property that could result in a material and
adverse change in the condition of the Property.
(i) To the actual knowledge of Seller, except for the Permitted Exceptions
and the documents that are part of the Documents and Reports (copies of which will be delivered
to Purchaser), Seller has not entered into any oral or written leases, contracts, agreements,
licenses, commitments, or undertakings respecting maintenance of the Property, or the
performance of services on the Property, or the use or occupancy of the Property or any part of it
by which Purchaser would become obligated or liable to any person after the Closing, and Seller
hereby covenants not to enter into any of the same after the date hereof.
(j) To the actual knowledge of Seller, and except for the Permitted
Exceptions, except for this Agreement, Seller has not entered into any unrecorded written or oral
leases or contractual rights or options to lease, purchase, or otherwise enjoy possession, or any
other unrecorded rights or interests of any nature in and to the Property or any part thereof.
(k) Seller is not a "foreign person" within the meaning of Section 1445(f�(3)
of the Internal Revenue Code.
Seller shall notify Purchaser of any facts that would cause any of the representations
contained in this Agreement to be untrue as of the Closing, whereupon Purchaser may terminate
this Agreement by written notice to Seller. The provisions of this Section shall survive the
Closing and delivery of the Grant Deed or the termination of this Agreement (as applicable);
however, if Purchaser learns prior to the Closing that any of the representations or warranties of
Seller are incorrect, but does not terminate this Agreement (by written notice to Seller), then
Seller shall not be liable for the applicable breach of representation or warranty.
Except for the representations, warranties and covenants of Seller as expressly stated
herein, Purchaser is relying solely upon its own inspection, investigation and analyses of the
Property in entering into this Agreement and is not relying in any way upon any representations,
statements, agreements, warranties, studies, reports, descriptions, guidelines or other information
or material furnished by Seller or its representatives, including without limitation the Documents
and Reports, whether oral or written, express or implied, of any nature whatsoever regarding any
such matters or otherwise pertaining to the Property. Seller does not make any representation or
warranties with respect to the truth, accuracy, or completeness of any environmental reports, any
geologic reports, or any plans and specifications, or any other type or be entitled to rely on such
reports or any information contained therein. Subject to the express representations, warranties
and covenants set forth in this Agreement, and except as otherwise expressly stated herein,
PURCHASER IS ACQLTIRING THE PROPERTY "AS IS," in its present state and condition as
of the Effective Date, without representation or warranty by Seller or its representatives as to any
matter.
P6401-1033\954993v1.doc 7
Except for claims relating to Seller's representations, warranties and covenants in this
Agreement and tort claims by third parties and breach of contract claims by third parties based on
events occurring prior to the Closing and not caused by Purchaser, Purchaser waives and
releases as of the Closing any and all claims it may have against Seller relating to the physical
condition of the Property. To the extent of such waiver and release, Purchaser expressly waives
its rights, if any, under California Civil Code Section 1542 which provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SU5PECT
TO EXIST IN HIS FAVOR AT THE TrME OF EXECUTING
THE RELEASE WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
Purchaser's Initials
11. Purchaser's Conditions. Purchaser's obligations under this Agreement are
expressly made subject to the following conditions precedent solely for the benefit of Purchaser.
(a) The Title Company's irrevocable and unconditional commitment to issue the
Title Policy in favor of Purchaser (subject to Purchaser's payment of premiums) with a liability
amount equal to the Purchase Price showing Purchaser's fee interest in the Property (and not
showing any Disapproved Exceptions).
(b) As of Closing,the representations and warranties of Seller contained in this
Agreement are true and correct in all material respects.
(c) Seller's delivery of all documents required to be delivered by Seller pursuant
to Section 6 hereof.
(d) Purchaser's approval, prior to the end of the Due Diligence Period, of the
physical condition of the Property, including without limitation, any and all inspections, tests,
Survey(s), and other studies to be conducted by Purchaser, in Purchaser's sole and absolute
discretion, including without limitation, any environmental site assessments, investigations,
studies and reports, and Purchaser's approval, prior to the end of the Due Diligence Period, of the
Documents and Reports, and the absence of any material adverse change in the condition of the
Property prior to the Close of Escrow. Purchaser's approval of any such inspections of the
Property shall not alter or diminish Seller's representations or warranties under this Agreement,
and Seller acknowledges and agrees that Purchaser is nonetheless relying on Seller's
representations and warranties made herein, unless such representation or warranty is specifically
waived in whole or in part by Purchaser in writing.
(e) The issuance and sale of the Bonds and the deposit in the improvement fund
established in connection with the Assessment District of an amount sufficient to pay the Purchase
Price and any closing costs (including title insurance costs) payable by Purchaser. The Purchaser
P6401-1033\954993v l.doc 8
shall be obligated to pay the Purchase Price and such costs solely from amounts on deposit in the
improvement fund on or after the closing date of the Bonds. The Purchaser makes no warranty,
express or implied,that the proceeds of the Bonds deposited and held in the acquisition account will
be sufficient for payment of the Purchase Price. Nothing herein shall be construed as requiring the
Purchaser to issue the Bonds or any portion thereof or even to use"good faith"efforts to do so. The
legal proceedings and the principal amount, interest rates, terms, conditions and timing of the
issuance and sale of the Bonds shall be in all respects subject to the absolute discretion and approval
of the City Council or such Purchaser officers to whom the City Council has delegated the authority
for such absolute discretion and approval.
(f� The Seller shall not have made any material misrepresentation or omission in
any written materials furnished in connection with any preliminary official statement or official
statement used in connection with the sale of the Bonds.
(g) The Seller shall not have at any time challenged the validity of City of Palm
Desert Benefit Assessment District No. 1, the Assessment District, any of the Bonds or the levy of
assessments in City of Palm Desert Benefit Assessment District No. 1 or the Assessment District.
(h) Seller shall not be in default under this Agreement.
If any of the foregoing conditions precedent has not been either met to Purchaser's sole
and absolute satisfaction (and has not been expressly waived in writing by Purchaser on or prior
to the Closing Date), then this Agreement shall, at the option of Purchaser, terminate, in which
event, except as expressly set forth in this Agreement, neither party shall have any further rights,
duties and obligations hereunder.
12. No Relocation Assistance. The total compensation to be paid by Purchaser for the
Property is the Purchase Price, which consideration covers all land and improvements (if any),
and relocation assistance, and is the full and complete acquisition cost of the Property. Purchaser
shall have no obligation to Seller under the California Relocation Assistance and Real Property
Acquisition statutes and guidelines. Seller waives and forever releases Purchaser, including its
successors, officers, employees, attorneys, agents, representatives and anyone else acting on
Purchaser's behalf, of and from any and all claims, demands, actions or causes of action,
obligations, liabilities, or claims for further compensation, known or unknown, for the payment
of providing of relocation assistance based upon or relating to the facts or allegations and
circumstances arising from Purchaser's acquisition of the Property. To the extent applicable to
such waiver and release, Seller expressly waives its rights, if any, under California Civil Code
Section 1542 which provides:
Pfi401-1033\954993v 1.doc 9
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS FAVOR AT THE TIlVIE OF EXECUTING
THE RELEASE WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
Seller's Initials
13. Notices. All notices and demands shall be given in writing by certified mail,
postage prepaid, and return receipt requested, or by personal delivery. Notices shall be
considered given upon the earlier of(a) personal delivery, (b) two (2) business days following
deposit in the United States mail, postage prepaid, certified or registered, return receipt
requested, or (c) 24 hours after deposit with a reputable overnight delivery service (such as
Federal Express). Notices shall be addressed as provided below for the respective party;
provided that if any party gives notice in writing of a change of name or address, notices to such
party shall thereafter be given as demanded in that notice:
Purchaser: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260
Attn: Finance Director
Phone: (760) 346-0611
Seller: Mac Leod Couch Land Co., LLC
P.O. Box 665
Solana Beach, California 92075
Attn: Myron Mac Leod
Phone:
MC Properties
P.O. Box 665
Solana Beach, California 92075
Attn: Myron Mac Leod
Phone:
14. Broker's Commissions. Purchaser represents and warrants to Seller that
Purchaser has used no broker, agent, finder or other person in connection with the transaction
contemplated hereby to whom a brokerage or other commission or fee may be payable. Seller
represents and warrants to Purchaser that Seller has used no broker, agent, finder or other person
in connection with the transaction contemplated hereby to whom a brokerage or other
commission or fee may be payable. Each paRy indemnifies and agrees to defend and hold the
other harmless from any claims resulting from its breach of the warranties, representations and
covenants made by it in this Section.
P640 I-]033\954993 v 1.doc 1�
15. Time is of the Essence. The parties hereto agree that time is of the essence with
respect to cach term, condition and covenant hereof.
16. Entire Ag�reement. This Agreement, together with all exhibits hereto, integrates
all of the terms and conditions mentioned herein or incidental hereto, and supersedes all
negotiations or previous agreements between the parties or their predecessors in interest with
respect to all or any part of the subject matter hereof.
17. Severabilitv. Invalidation of any of the terms, conditions, covenants, or other
provisions contained herein by judgment or court order shall in no way affect any of the other
terms, conditions, covenants, or provisions hereof, and the same shall remain in full force and
effect.
18. Amendments. Any amendments to this Agreement shall be effective only when
duly executed by Seller and Purchaser.
19. Attorneys' Fees. In the event that suit is brought for the enforcement of this
Agreement or as the result of any alleged breach thereof, the prevailing party or parties in such
suit shall be entitled to recover their reasonable attorneys' fees, costs, and expenses from the
losing party or parties, and any judgment or decree rendered in such proceedings shall include an
award thereof.
20. No Third Part,y,Beneficiaries. This Agreement is entered into for the sole benefit
of Seller and Purchaser, and no other parties are intended to be direct or incidental beneficiaries
of this Agreement and no third party shall have any right in, under or to this Agreement.
21. Governin�Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
22. Counterparts. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
23. Assi�nment of A�reement. Neither paRy may assign or transfer their respective
rights or obligations under this Agreement without the prior written consent of the other.
24. Construction of Document. This Agreement is the result of a negotiation and is not
the product of any one party. There shall be no presumption in the interpretation hereof that any
ambiguity is to be resolved against any party hereto. The parties hereto waive expressly each and all
provisions of California Civil Code Section 1654,which provides: "IN CASES OF UNCERTAINTY
NOT REMOVED BY THE PRECEDING RULES, THE LANGUAGE OF A CONTRACT
SHOULD BE INTERPRETED MOST STRONGLY AGAINST THE PARTY WHO CAUSED THE
UNCERTAINTY TO EXIST."
P6401-1033\954993v l.doc 1 1
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the
date first above written.
PURCHASER SELLER:
THE CITY OF PALM DESERT, MAC LEOD COUCH LAND CO., LLC
a California municipal corporation a California Limited Liability Company
By: By:
Print Name: Print Name:
Title: Title:
Attest: MC PROPERTIES, LLC,
a California Limited Liability Company
By:
Print Name:
Title: By:
Print Name:
Title:
Approved as to form by:
RICHARDS, WATSON & GERSHON,
Special Counsel
B y:
P6401-1033\954993v I.doc 12
EXHIBIT "A"
LEGAL DESCRIPTION OF THE LAND
, ......_..._..._
,
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;
(�.��a�a�sct�€aT�o�}
RfG1iT-d�F-WAY qEDICAT1pN
PARCEL"A"
I �� �}�{� �{7Y a= FALN'. L�ES�RT, C;OUN 1'Y OF RSVERS{DE. 5TA'TI: t�F
CAUFORNIA:
THAT PQRTION OF PARCEi. 2 OF THA7 GERTAfiV C£:f�Tlf`tCATE OF
COMPLEANCE(YVAIVEft OF PARCEL MP!P P.M.VJ. 9'-J-15), F2ECOFtDED OCTOBER
15,1998,Au!S'1STRUMEi�T iV(?.19�39-457541,ftECOftOS Of ftlVEf2SIDE COUN'tV,
NLSO BEIAIG IN 711E SbUTHWC-ST QUARTER OF SECTION 29, TOVi�NSF1iP 4
SUU7N,!tAlUGC 6[AST,S.Ii.M.,DESCfiIBEC�AS FC3LLt)WS:
BECaINNlNG AT T#iE SOU'1'#-IYVEST CORNER OF SAlL� F'AftGEL 2, SAIQ POINT
8E1NG ON A LiN�TFiA7 fS dARAILEL�Pi1TH AND 55.00 FE�T EASTERLY OF 7HF
CENTERLiNE OF MON7EREY P.VENU�,A5 sHDWN UN SAID P.M.W.59-15,SAIQ
CENTERUNE ALSO BE1NG 7HE WFS1 C:FZ{,Y L1NE OF SAlD St�UTFiWE�T
QUART�R;
THET�J�E ALOiJG SAID PARAILEL 1.1JVE NORTH Ot3"00'12"EAST f�t)1STANGE OF
997.47�EE7 TO THE 50UTFiWES7 CORNER OF TNAI CEFt rAlN R1GF3T-OF-WAY
QEDICATlON TO TI-tE CfTY OF PALM D�SEf2T RECORI3F:D MON7N DAY,.YEAR.
AS 1Us7ftuMENT iVo.2pos-??7�"t??: ..c�-,,ti-..._...�l.,c,"�'• �, %P�'?'�•c� I
. �
THENCE LEAVING SAID P.ARAlLEL LINE SO�J1'H 8�`59'48"EASTA AIST.INCE OF
2a.�.10 FEET 7n A IiNE THAT IS PARALLEI�NITti AfVb 75.00 F�[T EASTERLY QF
Si�,ID C�NTEF2LINE OF MON7EREY AV�NUE;
TNENCE ALONG SAIC AARALLEL i.iNE SpUTH 00"00'12"WEST A OISTRNCE OF
936.a3�EE T;
T'NENCE LEAVING uAl�PARA(_L[L LlNE SOUTH 25°97'2�i"EAST A OIST'AtJCE U�
25.5�i�FT;
THENCE SOU7ii 00°04'46" EAST A t�I�TANC� Ot� 38.OQ FEET TO THE
SOl?T#iERLY LINE OF SAtD PARCEL 2; �
THENC�ALONC SAID SOUTH�RLY LINC 50UTi�i £38'S5'1A"bVEST A D1S?ANCE
OF 31.09 PEET FO TIiE POINT OF SEGINNING.
{ suaa�cv'ro �x�s'rtr�G Eas�u�Es�rs, COVENAT47S, #?IGHTS Atd1� f21GHTS-t7=-
Y�P.Y O�ftECORD.
Gt7NTA1NING 2U,498 SQUAI�F FEE'f'
�
OR O.A79 A�RES,MORE OR IFSS.
P6401-I 033\954993v l.doc A-1
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P6401-1033\954993 v l.doc A_2
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CALIFORNiR;
TYIAT AQRTfON DF PARC�1. 2 OF TtiA7 CERTAIFJ CtRTIF`ICA7E OF
COMPL.IANCE{WAfVER OF PARCEL MA.P P.AA.W. 9'�J-15;, RECORDED OCTOBER
15,'f999,Au INSTRUMEI'J7 PJO.'1�J�9-+t57541,RFCORt3S OF RtVGitSIDE COUNTY,
ALSC3 BEfTiG 1N 7FiF� SAUTHWC-ST QUAR7ER OF SEC71pN 29, TOWNSHiP 4
5UU7N,1�AJVGE 6 EAST',S.t3.M.,DESCRIBEQ AS FC}LLUWS:
BEGfNNtidG AT `fNE SUtJ'1'}iW�ST CORNER OF SAIi? PAF2CLL 2, SAfO POINT
BEIIdG ON A LINE TMAT IS PAi7ALLEL U�iITH AND 55.�0 FEET EA3T£R�.Y aF THE
CENTERLiNE OF MONTEREY P.VENUE,AS SI-tOWN ON SA3D P,M.W. �9-15,SA)D
CEN�'ERLiAfE ALSO BEtN� THE VJF.S"l}::x24Y L1NE OF SAlD S�UTHWEST
QUARTER;
T:-3EN�E ALONG BAIU PAi2AlLEL LIiVE NORTH OD°00'12"EAST A iJISTANCE OF
�87.47 F£ET TO TNE 50UTHWES7 CORIIER QF THp'T CkFt iAli3 F2lG4iT-O�-W�iY
OEDICATlON TO TIiE CS7Y O�F'ALM DESERT RECORDED MONTH DAY,`YEAR,
AS l�U57RUMEN7 NO.2045-??�^???: .,c�-......_.. ,�',,�tl� ¢e> ��D•z'z.;,k.,�
.>• •-
TH�NCE LEP,VING SAID PAFtALLEL LtNE SOU 1 M 89`59'48"EAST A piSTANCE OF
23.00 FEET TO A i.iN�7NRT IS PAF'iRLLE�V+11Tt l AND 7b.00 FECT�ASTERLY 4F
SA!A CENTEt2L1N�OF MONT�REY AVF.t+IUE;
7HENCE ALONG SA1D PARALLEL I.�NE SUUTH 40"00'f2"WEST A 0}S7AN�E OF
93&.43 FEE'T;
7'rlENC�LYAVING;AIO PAf3At_LEL llNC SOUTH 25°37'2G"EAST A OiS7ANCE UF
25.57 FfFT;
7hi�NCE SOUTti a0"C4'48" EAST A DIuTANC!? (>t� 38.00 FEET TO THE
SOt!THERLY LlNE OF SAtD PAftCEt 2;
7HENCE ALONG SAID SOUTHERLY UNC 50U71�1 t13°5�14"LVEST A DfSTRNCE
UF 31.(l�!FEET�O THE POINT O�SEG{NNifi1G.
� SUBJECT TO EXiSTING EA5EIulEN"tS, COVENANTS, RIGH7S AND RIGH7'S-Q='- \
' YJP.Y C)1=iiECO£tD.
CONTAINING 2U,498 SpUAR�FE�'f
Oft 4.479 ACRES,MORE OR Lf�SS.
4
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P6401-]033\954993v l.doc A-3
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' RIGH7—Of—WAY DEDiCATfON
� SW 1/4 SEC. 29, 7. 4 S., R. 6 E., S.�.M. i
; A.P.N. 653-260—i?22/024
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pta�om�C r Civn.F.HaNaxst��Lu�o Sutvarwc� j
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i21GHTAP-WAY QE�1GATiON
PARCEL"A"
IN THE CITY GF PfiLM DESFRT, COUNTY UF RIVkRSIDE, STATF OF
CALIFORNIA;
7HA�1' POR7IUN OF PARCEL 2 OF THAT CEftTAiN CERT1FiCATE OF
C'JMPLIANC[(WA1V�R OF PARCEI MAP P.M.V�l.09-15), REGO#tDED(3CTOBEft
95, 1999,AS IfVSTf2UMEJ�fT NO. 1999 t57541,fiEGO#2QS C3F RIVEf2S1D�C011N7Y.
P,LSO EIEING IN '1�tiE SQUTHWFST QUARTER Of� SEC,TJON 29, TOWNS{ilf' 4
S�UTIi,F2ANGE S EAST,S.B.M., OESCRI9E0 AS FC}LLOWS
HEGINNING AT 7HE CENTfRiJNF iN7�RSF..C'i'l�N pF GATF.WAY DRlVE AN[7
35'"AVENUE,AS SHOWN UN i'AitCEL fvtAP Nd. 24255, ON Fll.f IN E�OOK 206,
PAGES 9+1 THF20UGH 99, iNC�IUSIVE. Q� PAFtCEL MAPS. ftFClJRL7S QF �
RIVERSIDE COUNTY;
7iiENCE SOU7ti 00°03'66" EAS7 A DIS7ANCE OF 72.34 FEET ALpNG THE
S�UTHEitLY PROLONGAT10td G�SA1D GATEWAY URIVE;
THEiJCE tEAV1NG SAIq PROLpNGA710N &OiJTH 89°S6'S4"WEST A DISTANCE
OF 54.00�EET;
TNENCE NOftTH 41°50'�G"W�ST A bIS7ANCE U{"25.48 FEEI'70 A LINE THAT fS
PARALLEL WITH AND 54.Q0 FEET SOUTHERLY�F SAiD CENTERLiNE QF 35T+' '
AVENUE,SAID LIfiIE ALSO 6EING THE NORTHERLY LiNE C�F SA#D PARCEL 2:
7MENCE ALONG SAED PARr1L�EL i.INE SOUTH f39°59'S9"WEST A DISTATJCk 0!�
543,84 FEET 70 THE SflUTHEAST CORNEit aF TNAT CERTAtN RIGhiT-OF WAY ;
DEDICA'fIUIV 70'1"HE C1TY OF PAl.kt DESEf2T RECORDED MONTH DAY, YEAfi, �
AS INSI'R1JM[NT NO.2005-?7????;
�
3
THEt�CE L�IVING 5A10 PAf2ALl.£L 4iNF NORTH 0�°OG'Ot"WEST A OISTANCE
OF 54.00 FEE3 TO TNE CENTFRt.ftJE OF SAID .3rJifj R`3E(VUE AND SA�� �
NORTHERLY LINE OF PARCEL 2, SAIU f'OIN7 ALSO B�ING '!'Ht NUR7tiEAS1 I
G9RNEF2 QF SAtO RiGN7-OF-WAY D[OICA'ftQN; �
THFNCF AI.ONG SAID CENTEP.LINE AND NORTHERLY LINE NpR7H 89"59'S9"
EAS7 A DISTANCE p�fi14.78 FEET TO THE POINT OF BEGINNING.
SU6JECT TO EXISTING EASENlE1JTS, COVENANTS, f2iGtiTS AND RIGH7S-OF-
WAY dF f2ECOiZU.
GbNTA1NING 34,3t34 SQUARE FEET
GR 0.78.�ACRFS,1v10RE OR LESS.
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RiGHT-flF-WAY DEDICA7lON
PARCEL•,A„
iN THE L`!lY QF PALM �3ES�Rl", CDUN'T'Y OF RIVE�tSIDE, STATE fJF
�hUFORNIA; �
TNA'� Pt�RI'iCJN Ct� P�'+RC�:L 2 OF 'r�iAT CEf27AlN CERTIFiC:A7G OF
CO�AI'LIANCE (WAIVER OF PARCEL MAf' F'.M.W. 99-15), f2ECURDED
O�TQBCFt 15, 1899, AS 1NST'ftifMENT NO. 19�J9-�57541, R�CL)RQS OF
RIVERSIDE CrJUNTY, At�SO BEING 1N THf SOUTHWEST QUARTER OF
SEt;TION 29, TOWNSHIP�i SOUTH, t;ANGE 6 EP,ST, S.B.M., t3ESCRIBEO
A,FULi.OV'dS:
CQMMENCING AT TFiE SOU71•iV'J�ST CORNER QF SAI�i�Af2CEL Z;
. �
THENC;E NbFZTii 89"55'1+3"F..AST 1�D{STAN�:E r3F 31.09 FEE7 AL�NG 7HE
SOt1"!"}•l�RLY L1t�E t�F SAlD J�AFtCF..L 2. 70 7H� TRUE POlNT OF
BEG1NNfNG;
TNF..NC� LEAVING SAID S(3UTH�RLY LINE NOF2l H 00°�4'q6" WES7 A
UISTANCE OF 38.OQ FEET'TQ A LfyE THA715 f'ARALLEL WIT1i/1ND 38.00 '
rEE7 NORTHERLY 0�SAtD SOUl"HERLY I.iNE; s
i
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T'ri[NCE. AL4NG SAIi� f'ARAt.l.FL LiNF.. NORT�-i 89°55'14" E:AST A
DlS7ANCE OF 1,34$.44 FEET;
THENCE 1.EAVING SAIp PARALLEL UNE 50UTN fl0'04'46" EAST la ;
DfS7FtNCE QF 38.00 FEET TO SAfD SOUT�HERLY LtNE OF PARCGL 2; �
THFt�iCE ALt�NG SAtQ SOLtTHEKLY Lf�1E 50U7Ft 89°'S;94" SNC5T A
OI5TAN�t�OF 1,349.44 PE�?TQ TNE 7RUF ApIN7 OF CiEGl1�lTi1NG.
SUHJEG� �O EX1S71NG E/�SEMENTS, GUVENAN7S, RIGHTS AND
RlGHTS-UF-WAY Of RECORD.
CONYAINING 51.278 SQUARE�GET QR 1.1771�C�2tS,MORE OR LESS. `
P6401-1033\954993v J.doc A_7
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KkGUi!E7kL1 C�G i C1��K 15. 3�}�, HS I�iS7 RE1MEt�T PlC�. 'k9�9.45`15�1,
�tE���Rt�S Gf P.1'V[RSIf3C: CQUt�l�Y; A1.5C1 R�=ii1^� II�t 71iF S4t3TfiNdESl'
GUAR�(EK O�SEGTION 29.70VVIvSNiP 4 SC3tlTH, RAhfC;F..fi F..AS7 S.�i.i,A.,
D�SGRtB�L?AS F,V�Ii�14L�F�S,�4L�C�VJS
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�iiV TNc PdOR'#"NERLY'tiF1E OF SfitO PARCEi.2; _
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ZiNE OF SAiD PAi�CLL'I;fi;URT?i 89"59'S9"E:AST 1',t�1S7ANCE 0�'!;31A:�8 �
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_ '.T'tiF t;cP1TE�t,�ilAf�'"ER L'UkN�'i?(?�SF1#€�SECTION 29; I
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i�l'aVif�G A f2ADtL3S UF.1.p54.0U F�F�T„A RAf.?l.�,t.:1,iNF PASSIN�3HiiDUG^!
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, ' R€6HT-L7F-i�YAY q�DIeA7iQN '
_ _ . _
Tti�fdL'� Y'J�STEKLY F1ONG THE A�C t?f`5�11� Gi�tZJE, Tt`IROUGH /a
��'�Tf?A�.ANCYI.E t3F I3°�0'43',AN!�};G DfS�'A.Nc:�4i'2Z�;33 FFEF Tn A ' :
LiNE'Tt1AT tS 4'AftA4.t.cl.: Wl�TH:!',t�tt) 54.£)t? £=E.��' SC)Ci�C4-tE#?L:Y £3F :,Aii1
` �iQR�i-lEFtIY LJNE 0��A,f'rPARf;�I_2; , ,
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PG401-]033\954993v I.doc A-16
EXHIBIT "B"
FORM OF GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260
Attn:
APN:
Exempt from recordin¢chanees under Government Code Section 6103
(SPACE ABOVE FOR RECORDEK'S USE ONLY]
GRANT DEED
THE UNDERSIGNED GRANTOR DECLARES AS FOLLOWS:
This transfer is exempt from documentary Transfer Tax pursuant to Revenue & Taxation
Code Section 11922.
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
MAC LEOD COUCH LAND CO., LLC, a California Limited Liability Company and
MC PROPERTIES, LLC, a California Limited Liability Company(collectively the "Grantor")
hereby grants to the C1TY OF PALM DESERT, a California municipal corporation, the real
property located in the City of Palm Desert, County of Riverside, State of California, that is
described on "Exhibit A" attached hereto and incorporated herein by reference.
IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of the date set forth
below.
Dated: , 2007
GRANTOR:
MAC LEOD COUCH LAND CO., LLC, a
California Limited Liability Company
By:
Print Name:
Title:
P6401-1033\95A993 v 1.doc B-1
MC PROPERTIES, LLC, a California
Limited Liability Company
By:
Print Name:
Title:
P6AO l-1033\454993 v 1.doc B-2
STATE OF CALIFORNIA )
)ss.
COUNTY OF RIVERSIDE )
On the day of ,2007,before me, ,personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that by his signature on
the instrument the person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
SEAL:
STATE OF CALIFORNIA )
)ss.
COUNTY OF RIVERSIDE )
On the day of ,2007,before me, ,personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that by his signature on
the instrument the person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
SEAL:
P6401-1033\954993v l.doc B-3
EXHIBIT A TO GRANT DEED
LEGAL DESCRIPTION
P6401-1033\954993v Ldoc B-4
CERTIFICATE OF ACCEPTANCE FOR GRANT DEED
This is to certify that the interest in real property conveyed by the deed dated ,
2007, from is hereby accepted by the undersigned officer or agent
on behalf of the City of Palm Desert pursuant to authority conferred by resolution of the City
Council of the City of Palm Desert, adopted on , 2007, and the grantee consents to
recordation thereof by its duly authorized officer.
CITY OF PALM DESERT
By:
Name:
Title:
DATED: , 2007
P6401-!033\954993 v 1.doc B-J`
STATE OF CALIFORNIA )
)ss.
COUNTY OF RIVERSIDE )
On the day of ,2007,before me, ,personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that by his signature on
the instrument the person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
SEAL:
STATE OF CALIFORNIA )
) ss.
COUNTY OF RIVERSIDE )
On the day of ,2007,before me, ,personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that by his signature on
the instrument the person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
SEAL:
P6401-1033\954993 v l.doc B-6
EXHIBIT `�C"
CERTAIN DEFINITIONS
Environmental Laws means all federal, state, local, or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, or requirements of any government authority
regulating, relating to, or imposing liability or standards of conduct concerning any Hazardous
Substance (as later defined}, or pertaining to occupational health or industrial hygiene (and only to
the extent that the occupational health or industrial hygiene laws,ordinances,or regulations relate to
Hazardous Substances on, under, or about the Property), occupational or environmental conditions
on, under, or about the Property, as now or may at any later time be in effect, including without
limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980
(CERCLA) (42 USCS �� 9601 et seq.J; the Resource Conservation and Recovery Act of 1976
(RCRA) [42 USCS �� 6901 et seq.J; the Clean Water Act, also known as the Federal Water
Pollution Control Act (FWPCA) [33 USCS §� 1251 et seq.); the Toxic Substances Control Act
(TSCA)(1 S USCS��2601 et seq.j;the Hazardous Materials Transportation Act(HMTA)[49 USCS
�§ 1801 et seq.J; the Insecticide,Fungicide,Rodenticide Act[7 USCS��136 et seq.J;the Superfund
Amendments and Reauthorization Act[42 USCS��6901 et seq.J; the Clean Air Act[42 USCS��
7401 et seq.J;the Safe Drinking Water Act(42 USCS�§300f et seq.j;the Solid Waste Disposal Act
[42 USCS��6901 et seq.�; the Surface Mining Control and Reclamation Act(30 USCS�¢ 1201 et
.seq.J; the Emergency Planning and Community Right to Know Act(42 USCS§�11001 et seq.J;the
Occupational Safety and Health Act[29 USCS§�655 and 657);the California Underground Storage
of Hazardous Substances Act [H & S C §§ 25280 et seq.J; the California Hazardous Substances
Account Act[H�S C§�25300 et seq.J;the California Hazardous Waste Control Act(H&S C��
25100 et seq.);the California Safe Drinking Water and Toxic Enforcement Act(H&S C��24249.5
et seq.J; the Porter-Cologne Water Quality Act [Wat C §§ 13000 et seq.J together with any
amendments of or regulations promulgated under the statutes cited above and any other federal,state,
or local law, statute, ordinance, or regulation now in effect or later enacted that pertains to
occupational health or industrial hygiene, and only to the extent that the occupational health or
industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or
about the Property, or the regulation or protection of the environment, including ambient air, soil,
soil vapor, groundwater, surface water, or land use.
Hazardous Substances includes without limitation:
(a) Those substances included within the definitions of hazardous substance, hazardous
waste, hazardous material, toxic substance, solid waste, or pollutant or contaminant in CERCLA,
RCRA, TSCA, HMTA, or under any other Environmental Law;
(b)Those substances listed in the United States Department of Transportation(DOT)Table
(49 CFR 172.101 J, or by the Environmental Protection Agency(EPA), or any successor agency, as
hazardous substances [40 CFK Part 302);
(c) Other substances, materials, and wastes that are or become regulated or classified as
hazardous or toxic under federal, state, or local laws or regulations; and
P640 l-1033\954993 v l.doc C-1
(d) Any material, waste, or substance that is
(i) a petroleum or refined petroleum product,
(ii) asbestos,
(iii) polychlorinated biphenyl,
(iv) designated as a hazardous substance pursuant to 33 USCS § 1321 or listed
pursuant to 33 USCS § 1317,
(v) a flammable explosive, or
(vi) a radioactive material.
P6401-1 Q33\954993 v l.doc C-2
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "Agreement") is dated as of March
_, 2007 (the "Effective Date"), and is entered into by and between the CITY OF PALM
DESERT, a California municipal corporation (the "Purchaser"), and SUMMIT-MONTEREY
PROPERTIES, LLC, a California Limited Liability Company ( the "Seller").
RECITALS
A. Seller is the owner of the unimproved land in the City of Palm Desert,
County of Riverside, State of California that is more particularly described on Exhibit "A"
attached hereto and made a part hereof, together with all improvements thereon (if any), and all
rights and appurtenances pertaining to such land, including all right, title and interest of Seller in
and to adjacent streets, alleys or rights-of-way and appurtenant easements (collectively, the
"Property„).
B. Purchaser has established the City of Palm Desert Section 29 Assessment
District in the City of Palm Desert (the "Assessment District") pursuant to the provisions of thc
Municipal Improvement Act of 1913 (California Streets and Highways Code Section 10000, et
seg.), which Assessment District includes the Property.
C. Purchaser intends to authorize the issuance and sale of not to exceed
$40,000,000 principal amount of City of Palm Desert, Section 29 Assessment District (No. 2004-
02), Limited Obligation Bonds, Series 2007 pursuant to the Improvement Bond Act of 1915
(California Streets and Highways Code Section 8500, et se�c .) (the "Bonds") to represent
assessments levied against properties in the Assessment District which remain unpaid at the end
of a thirty-day cash collection period for the purpose of financing certain acquisitions and
improvements, including the acquisition of the Property.
D. Purchaser desires to purchase the Property from Seller using proceeds of
the Bonds, and Seller desires to sell the Property to Purchaser.
NOW, THEREFORE, in consideration of the foregoing recitals, the terms and conditions
of this Agreement and other valuable consideration, the sufficiency of which is hereby
acknowledged, Purchaser and Seller hereby agree as follows:
1. Purchase and Sale. Subject to and in accordance with the terms and conditions
hereinafter set forth, Seller agrees to sell the Property to Purchaser, and Purchaser agrees to
purchasc thc Property from Seller.
2. Purchase Price. The purchase price for the Property to be paid by Purchaser is the
sum of$702,521.82 (Seven Hundred Two Thousand Five Hundred Twenty One Dollars and
Eighty Two Cents) (the "Purchase Price").
P6401-1033\954774v3.doc
3. Closin . The date upon which a grant deed for the Property in favor of Purchaser
is recorded in the Official Records of the Riverside County Recorder's Office, and the Title
Company (defined herein) shall have committed to issue the Title Policy (defined herein) to
Seller, is referred to herein as the "Closing." The Closing shall occur as soon as reasonably
possible after the issuance of the Bonds, but in no event later than June 30, 2007.
4. Delivery of Deed, Title and Possession.
(a) On the Closing, Seller shall cause to be delivered to Purchaser a duly
executed and acknowledged Grant Deed in the form of Exhibit "B" attached hereto (the "Grant
Deed").
(b) The Closing is hereby conditioned upon Title Company
(the "Title Company") committing to Purchaser that it will issue to the Purchaser a title policy
that is acceptable to Purchaser and that insures in Purchaser fee simple title to the Property, free
and clear of all liens and encumbrances other than the Permitted Title Exceptions (hereinafter
defined).
(c) On the Closing, Seller shall deliver possession of the Property to Purchaser
free and clear of all leases and any other possessory interests in the Property that are not
Permitted Title Exceptions.
5. Title and Title Insurance.
(a) Within ten (10) days after the Effective Date, Seller shall deliver to
Purchaser a title report for the Property issued by the Title Company together with copies of the
title exception documents (the "Title Report"), as well as any surveys of the Property in Seller's
possession or under Seller's control, if any (the "Existing Surveys"). Purchaser shall have the
right in its sole and absolute discretion to update the Existing Surveys, or prepare a new ALTA
survey, at Purchaser's cost (such updated or new survey is hereinafter referred to as the
"Survey"), provided that Purchaser's and its contractors' entry onto the Property shall be subject
to Section 9.
(b) As used herein, the term "Due Diligence Period" means the period from
the date hereof until the date that is ninety (90) days thereafter.
(c) Prior to Closing, Seller shall remove all liens (other than liens for taxes not
yet due) (collectively, the "Liens"), and if Seller does not do so, Purchaser may terminate this
Agreement by written notice to Seller. Purchaser shall also have the right to object in writing
prior to the end of the Due Diligence Period to any other matters disclosed by the Title Report,
the Existing Surveys or any new ALTA survey performed or obtained by Purchaser (the
"Objectionable Matters"), and if Seller does not irrevocably agree in writing within ten (10) days
after written notice from Purchaser objecting to any such matter to cure the matter on or before
the Closing, then Purchaser may terminate this Agreement by written notice to Seller. The Liens
and the Objectionable Matters are hereinafter collectively referred to as the "Disapproved
Exceptions."
P6401-1033\954774v3.doc 2
(d) Purchaser's fee title to the Property shall be insured at the Closing by a
CLTA (or if elected by Purchaser, ALTA) Coverage Owner's Policy of Title Insurance in the
amount of the Purchase Price, issued by Title Company together with all endorsements requested
by Purchaser, provided the Purchaser pays the premiums for the Title Policy. The Title Policy
shall insure Purchaser's fee interest in the Property (i) free and clear of all Disapproved
Exceptions, and (ii) subject only to real property taxes for the then current tax fiscal year which
are a lien not yet due and payable, and any other title exceptions to which Purchaser does not
timely object. However, Purchaser shall not be obligated to take title subject to any matter which
attaches to the Property after the execution of this Agreement.
Seller shall not improve, alter, encumber, lease or sell or transfer (or otherwise agree to
sell or transfer) the Property or any portion thereof or interest therein to any other party during
the period from the Effective Date to the Closing or the date of the termination of this
Agreement, as applicable.
6. Deposit of Documents and Funds.
(a) Seller and Purchaser, as applicable, hereby covenant and agree to deliver
at least one (1) business day prior to the Closing the following instruments, documents, and
funds, the delivery of each of which shall be a condition of the Closing.
(b) Seller shall deliver to the Purchaser:
(i) The Grant Deed,duly executed and acknowledged and acknowledged
by the Sellcr;
(ii) A Withholding Exemption Certificate Form 593 as contemplated
by California Revenue and Taxation Code §18662 (the "Withholding Affidavit") duly executed
by Seller;
(iii) A Certification of Non-Foreign Status in accordance with Internal
Revenue Code Section 1445 duly executed by Seller;
(iv) Such proof of Seller's authority and authorization to enter into this
transaction as the Title Company may reasonably require in order to issue the Title Policy.
(c) Purchaser shall deliver to the Seller:
(i) The Purchase Price together with such funds as are required to pay
for costs and expenses payable by Purchaser hereunder;
(ii) A Certificate of Acceptance for the Grant Deed;
(iii) Such proof of Purchaser's authority and authorization to enter into
this transaction as the Title Company may reasonably require in
order to issue the Title Policy.
P6401-]033\954774v3.doc 3
7. Authorization to Record Grant Deed. Seller is hereby authorized to record the
Grant Deed in the Official Records of Riverside County, California.
8. Prorations.
(a) Seller shall pay: (i) Seller's share of the charges prorated under this
Agreement; and (iii) all costs of Seller's legal counsel and consultants, if any.
(b) Purchaser shall pay (ii) the cost of the premium for the Owner's Title
Policy; (iii) the cost of all endorsements to the Title Policy; (iv) Purchaser's share of the charges
prorated under this Agreement; (v) the cost of an ALTA survey, if required by Purchaser; and
(vi) all costs of Purchaser's legal counsel and consultants.
(c) The following shall be apportioned with respect to the Property as of 12:01
a.m., on the day of the Closing, as if Purchaser were vested with title to the Property during the
entire day upon which the Closing occurs:
(i) taxes and assessments levied against the Property;
(ii) any operating expenses or other items pertaining to the Property.
(d) Notwithstanding anything contained in Section 8(c), any installment of
taxes or assessments for the current year paid at or prior to the Closing shall be prorated based
upon the amounts actually paid. If taxes and assessments for the current year have not been paid
before the Closing, Seller shall be charged at the Closing an amount equal to that portion of such
taxes and assessments which relates to the period before the Closing and Purchaser shall pay the
taxes and assessments prior to their becoming delinquent. Any such apportionment made with
respect to a tax year for which the tax rate or assessed valuation, or both, have not yet been fixed
shall be based upon the tax rate and/or assessed valuation last fixed. To the extent that the actual
taxes and assessments for the current year differ from the amount apportioned at the Closing, the
parties shall make all necessary adjustments by appropriate payments between themselves
following the Closing. All delinquent taxes and assessments (and any penalties therein) for
periods prior to the Closing, if any, affecting the Property shall be paid by Seller.
All prorations shall be determined on the basis of a 360-day year. The provisions of this
Section 8 shall survive the Closing.
9. Documents and Reports; Due Dili�ence Date and Due Dili�ence Period; Access.
Within ten (10) days after the Effective Date, Seller shall deliver to Purchaser copies of any and
all material written notices, reports and other documents in Seller's possession relating to the
Property, including without limitation, all surveys and, all environmental site assessments
(collectively, "Documents and Reports").
Until the end of the Due Diligence Period, Purchaser may inspect the Documents and
Reports and Purchaser and its contractors shall have the right to enter upon the Property during
the Due Diligence Period to make inspections and other examinations of the Property, including
P6401-1033\954774v3.doc 4
without limitation, the right to perform surveys, soil and geological tests of the Property and the
right to perform environmental site assessments and studies of the Property; however, Purchaser
shall give Seller at least five (5) business days' prior written notice of any invasive tests. In the
event that Purchaser elects not to purchase the Property due to a matter disclosed by the
Documents and Reports or due to the condition of the Property, Purchaser shall so notify Seller
within ten (10) days after the end of the Due Diligence Period whereupon this Agreement shall
automatically terminate.
Seller hereby grants to Purchaser and its employees, representatives, agents, affiliates and
independent contractors (Purchaser, such parties and any other person or entity purporting to act
with the authorization or at the direction of any of Purchaser or and such parties being
collectively referred to herein as the "Purchaser's Parties") the right to enter upon the Property
during the Due Diligence Period for the purpose of conducting feasibility studies, physical
examinations, surveys and test of the Property during normal business hours. In the event that
the Closing does not occur, to the extent Purchaser's Parties alter the physical condition of the
Property, Purchaser shall promptly at its sole cost and expense, return the Property to
substantially the same physical condition that the Property was in as of the date hereof, as
modified by Seller in connection with any work performed by Seller on the Property on or after
the date hereof, and Purchaser shall immediately repair any damage resulting from Purchaser's
Parties' activities thereon.
10. Warranties, Representations and Covenants of Seller Re ardin�the PropertY.
Seller hereby represents, warrants and covenants to Purchaser the following, it being expressly
understood and agreed that all such representations, warranties and covenants shall survive the
Closing and delivery of the Grant Deed:
(a) Hazardous Substances.
(i) Except as disclosed in the Documents and Reports, to Seller's
actual knowledge, the Property is free and has always been free from Hazardous Substances (as
defined in Exhibit "C") and is not and has never been in violation of any Environmental Laws
(as defined in Exhibit "C").
(ii) To Seller's actual knowledge, there are no buried or partially
buried storage tanks located on the Property.
(iii) Seller has received no written notice, warning, notice of violation,
administrative complaint,judicial complaint, or other formal or informal notice alleging that
conditions on the Property are or have been in violation of any Environmental Law, or informing
Seller that the Property is subject to investigation or inquiry regarding Hazardous Substances on
the Property or the potential violation of any Environmental Law.
(iv) To Seller's actual knowledge there is no monitoring program
required by the Environmental Protection Agency or any similar state agency concerning the
Property.
P6401-1033\954774v3.doc 5
(v) To Seller's actual knowledge, the Property has never been used as
a dump or landfill.
(vi) Seller shall provide Purchaser a Natural Hazards Disclosure
Statement in accordance with California Civil Code Section 1103.2.
(vii) Seller has received no written request, directive, administrative
order or judicial order to impose any type of land use restriction or institutional control relating to
Hazardous Substances on the Property.
(viii) Seller has received no outstanding written order, directive or
administrative complaint from any government agency, no outstanding judicial complaint or
order, and no current agreement with any government agency for any investigation or cleanup of
any Hazardous Substance that is on or was released from the Property.
(b) Seller has full right and power to execute, deliver and perform its
obligations under this Agreement, and when executed and delivered, Seller and all parties having
an interest in the Property shall be lawfully bound by the terms of this Agreement. Seller shall
not further transfer or encumber the Property or allow the Property to be further encumbered
prior to the earlier of the Closing or termination of this Agreement.
(c) To the actual knowledge of Seller, there is no pending litigation or
litigation threatened in writing, which does or may adversely affect the Property.
(d) To the actual knowledge of Seller, there is no eminent domain or similar
condemnation proceeding affecting any portion of the Property now pending and none has been
threatened in writing. Further, to the actual knowledge of Seller, there are no actions or
proceedings pending or threatened against Seller or the Property, before any court or
administrative agency in any way connected with or relating to the Property, or affecting Seller's
ability to fulfill all of its obligations under this Agreement.
(e) To the actual knowledge of Seller, and except for the Permitted
Exceptions and the documents that are part of the Documents and Reports (copies of which will
be delivered to Purchaser), there are no written commitments to or written agreements with any
governmental authority or agency materially and adversely affecting the Property, or any part
thereof or any interest therein, which will survive the Closing. Seller has entered into no
understanding or agreement with any taxing or assessing authority respecting the imposition or
deferment of any taxes or assessments respecting the Property.
(f) Neither this Agreement nor anything provided to be done hereunder
including the transfer of title to the Property to Purchaser, violates or shall violate, any contract,
instrument, partnership agreement, trust agreement, or any other agreement to which Seller is a
party, or which affects the Property or any part thereof, and the sale of the Property herein
contemplated does not require the consent of any party not a signatory hereto.
P6401-1033\954774v3.doc 6
(g) To the actual knowledge of Seller, Seller is not in default of its obligations
under any contract, agreement or instrument to which Seller is a party which would adversely
affect the value of the Property or Seller's ability to perform its obligations hereunder.
(h) To the actual knowledge of Seller, there are no natural or artificial
conditions upon the Property or any part of the Property that could result in a material and
adverse change in the condition of the Property.
(i) To the actual knowledge of Seller, except for the Permitted Exceptions
and the documents that are part of the Documents and Reports (copies of which will be delivered
to Purchaser), Seller has not entered into any oral or written leases, contracts, agreements,
licenses, commitments, or undertakings respecting maintenance of the Property, or the
performance of services on the Property, or the use or occupancy of the Property or any part of it
by which Purchaser would become obligated or liable to any person after the Closing, and Seller
hcreby covenants not to enter into any of the same after the date hereof.
(j) To the actual knowledge of Seller, and except for the Permitted
Exceptions, except for this Agreement, Seller has not entered into any unrecorded written or oral
leases or contractual rights or options to lease, purchase, or otherwise enjoy possession, or any
other unrecorded rights or interests of any nature in and to the Property or any part thereof.
(k) Seller is not a "foreign person" within the meaning of Section 1445(f�(3)
of the Internal Revenue Code.
Seller shall notify Purchaser of any facts that would cause any of the representations
contained in this Agreement to be untrue as of the Closing, whereupon Purchaser may terminate
this Agreement by written notice to Seller. The provisions of this Section shall survive the
Closing and delivery of the Grant Deed or the termination of this Agreement (as applicable);
however, if Purchaser learns prior to the Closing that any of the representations or warranties of
Seller are incorrect, but does not terminate this Agreement (by written notice to Seller), then
Seller shall not be liable for the applicable breach of representation or warranty.
Except for the representations, warranties and covenants of Seller as expressly stated
herein, Purchaser is relying solely upon its own inspection, investigation and analyses of the
Property in entering into this Agreement and is not relying in any way upon any representations,
statements, agreements, warranties, studies, reports, descriptions, guidelines or other information
or material furnished by Seller or its representatives, including without limitation the Documents
and Reports, whether oral or written, express or implied, of any nature whatsoever regarding any
such matters or otherwise pertaining to the Property. Seller does not make any representation or
wairanties with respect to the truth, accuracy, or completeness of any environmental reports, any
geologic reports, or any plans and specifications, or any other type or be entitled to rely on such
reports or any information contained therein. Subject to the express representations, warranties
and covenants set forth in this Agreement, and except as otherwise expressly stated herein,
PURCHASER IS ACQUIRING THE PROPERTY "AS IS," in its present state and condition as
of the Effective Date, without representation or warranty by Seller or its representatives as to any
matter.
P6401-1033\954774v3.doc 7
Except for claims relating to Seller's representations, warranties and covenants in this
Agreement and tort claims by third parties and breach of contract claims by third parties based on
events occurring prior to the Closing and not caused by Purchaser, Purchaser waives and
releases as of the Closing any and all claims it may have against Seller relating to the physical
condition of the Property. To the extent of such waiver and release, Purchaser expressly waives
its rights, if any, under California Civil Code Section 1542 which provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIM5
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
Purchaser's Initials
1 l. Purchaser's Conditions. Purchaser's obligations under this Agreement are
expressly made subject to the following conditions precedent solely for the benefit of Purchaser.
(a) The Title Company's irrevocable and unconditional commitment to issue the
Title Policy in favor of Purchaser (subject to Purchaser's payment of premiums) with a liability
amount equal to the Purchase Price showing Purchaser's fee interest in the Property (and not
showing any Disapproved Exceptions).
(b) As of Closing,the representations and warranties of Seller contained in this
Agreement are true and correct in all material respects.
(c) Seller's delivery of all documents required to be delivered by Seller pursuant
to Scction 6 hereof.
(d) Purchaser's approval, prior to the end of the Due Diligence Period, of the
physical condition of the Property, including without limitation, any and all inspections, tests,
Survey(s), and other studies to be conducted by Purchaser, in Purchaser's sole and absolute
discretion, including without limitation, any environmental site assessments, investigations,
studies and reports, and Purchaser's approval, prior to the end of the Due Diligence Period, of the
Documenls and Reports, and the absence of any material adverse change in the condition of the
Property prior to the Close of Escrow. Purchaser's approval of any such inspections of the
Property shall not alter or diminish Seller's representations or warranties under this Agreement,
and Seller acknowledges and agrees that Purchaser is nonetheless relying on Seller's
representations and warranties made herein, unless such representation or wananty is specitiically
waived in whole or in part by Purchaser in writing.
(e) The issuance and sale of the Bonds and the deposit in the improvement fund
established in connection with the Assessment District of an amount sufficient to pay the Purchase
Price and any closing costs (including title insurance costs) payable by Purchaser. The Purchaser
P6401-1033\954774v3.doc g
shall be obligated to pay the Purchase Price and such costs solely from amounts on deposit in the
improvement fund on or after the closing date of the Bonds. The Purchaser makes no warranty,
express or implied,that the proceeds of the Bonds deposited and held in the acquisition account will
be sufficient for payment of the Purchase Price. Nothing herein shall be construed as requiring the
Purchaser to issue the Bonds or any portion thereof or even to use"good faith"efforts to do so. The
legal proceedings and the principal amount, interest rates, terms, conditions and timing of the
issuance and sale of the Bonds shall be in all respects subject to the absolute discretion and approva]
of the City Council or such Purchaser officers to whom the City Council has delegated the authority
for such absolute discretion and approval.
(f� The Seller shall not have made any material misrepresentation or omission in
any written materials furnished in connection with any preliminary official statement or official
statement used in connection with the sale of the Bonds.
(g) The Seller shall not have at any time challenged the validity of City of Palm
Desert Benefit Assessment District No. 1, the Assessment District, any of the Bonds or the levy of
assessments in City of Palm Desert Benefit Assessment District No. 1 or the Assessment District.
(h) Seller shall not be in default under this Agreement.
If any of the foregoing conditions precedent has not been either met to Purchaser's sole
and absolute satisfaction (and has not been expressly waived in writing by Purchaser on or prior
to the Closing Date), then this Agreement shall, at the option of Purchaser, terminate, in which
event, except as expressly set forth in this Agreement, neither pariy shall have any further rights,
duties and obligations hereunder.
12. No Relocation Assistance. The total compensation to be paid by Purchaser for the
Property is the Purchase Price, which consideration covers all land and improvements (if any),
and relocation assistance, and is the full and complete acquisition cost of the Property. Purchaser
shall have no obligation to Seller under the California Relocation Assistance and Real Property
Acquisition statutes and guidelines. Seller waives and forever releases Purchaser, including its
successors, officers, employees, attorneys, agents, representatives and anyone else acting on
Purchaser's behalf, of and from any and all claims, demands, actions or causes of action,
obligations, liabilities, or claims for further compensation, known or unknown, for the payment
of providing of relocation assistance based upon or relating to the facts or allegations and
circumstances arising from Purchaser's acquisition of the Property. To the extent applicable to
such waiver and release, Seller expressly waives its rights, if any, under California Civil Code
Section 1542 which provides:
P6401-1033\954774v3.doc 9
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
Seller's Initials
13. Notices. All notices and demands shall be given in writing by certified mail,
postage prepaid, and return receipt requested, or by personal delivery. Notices shall be
considered given upon the earlier of(a) personal delivery, (b) two (2) business days following
deposit in the United States mail, postage prepaid, certified or registered, return receipt
requested, or(c) 24 hours after deposit with a reputable overnight delivery service (such as
Federal Express). Notices shall be addressed as provided below for the respective party;
provided that if any party gives notice in writing of a change of name or address, notices to such
party shall thereafter be given as demanded in that notice:
Purchaser: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260
Attn: Finance Director
Phone: (760) 346-0611
Seller: Summit-Monterey Properties, LLC
2082 Michelson Drive
Suite 100
Irvine, California 92612
Attn: Steven H. L.evenson
Phone:
14. Broker's Commissions. Purchaser represents and warrants to Seller that
Purchaser has used no broker, agent, finder or other person in connection with the transaction
contemplated hereby to whom a brokerage or other commission or fee may be payable. Seller
represents and warrants to Purchaser that Seller has used no broker, agent, finder or other person
in connection with the transaction contemplated hereby to whom a brokerage or other
commission or fee may be payable. Each party indemnifies and agrees to defend and hold the
othcr harmless from any claims resulting from its breach of the warranties, representations and
covenants made by it in this Section.
15. Time is of the Essence. The parties hereto agree that time is of the essence with
respect to each term, condition and covenant hereof.
16. Entire A�reement. This Agreement, together with all exhibits hereto, integrates
all of the terms and conditions mentioned herein or incidental hereto, and supersedes all
P6401-1033\954774v3.doc 1�
negotiations or previous agreements between the parties or their predecessors in interest with
respect to all or any part of the subject matter hereof.
17. Severabilitv. Invalidation of any of the terms, conditions, covenants, or other
provisions contained herein by judgment or court order shall in no way affect any of the other
terms, conditions, covenants, or provisions hereof, and the same shall remain in full force and
effect.
18. Amendments. Any amendments to this Agreement shall be effective only when
duly executed by Seller and Purchaser.
19. Attornevs' Fees. In the event that suit is brought for the enforcement of this
Agreement or as the result of any alleged breach thereof, the prevailing party or parties in such
suit shall be entitled to recover their reasonable attorneys' fees, costs, and expenses from the
losing party or parties, and any judgment or decree rendered in such proceedings shall include an
award thereof.
20. No Third Party Beneficiaries. This Agreement is entered into for the sole benefit
of Seller and Purchaser, and no other parties are intended to be direct or incidental beneficiaries
of this Agreement and no third party shall have any right in, under or to this Agreement.
21. Governin�Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
22. Counterparts. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
23. Assi�Lment of Agreement. Neither party may assign or transfer their respective
righls or obligations under this Agreement without the prior written consent of the other.
24. Construction of Document. This Agreement is the result of a negotiation and is not
the product of any one party. There shall be no presumption in the interpretation hereof that any
ambiguity is to be resolved against any party hereto. The parties hereto waive expressly each and all
provisions of California Civil Code Section 1654,which provides: "IN CASES OF UNCERTAINTY
NOT REMOVED BY THE PRECEDING RULES, THE LANGUAGE OF A CONTRACT
SHOULD BE INTERPRETED MOST STRONGLY AGAINST THE PARTY WHO CAUSED THE
UNCERTAINTY TO EXIST."
P6401-1033\954774v3.doc 11
IN WITNESS WHEREOF,the parties have caused this Agreement to be executed as of the
date first above written.
PURCHASER SELLER:
THE CITY OF PALM DESERT, SUMMIT-MONTEREY PROPERTIES, LLC,
a California municipal corporation a California Limited Liability Company
By: By:
Print Name: Print Name:
Title: Title:
Attest:
By:
Print Name:
Title:
Approved as to form by:
RICHARDS, WATSON & GERSHON,
Special Counsel
By:
YG401-1033\954774v3.doc IZ
EXHIBIT "A"
LEGAL DESCRIPTION OF THE LAND
(LEGAI AESCFtIPTIQN)
RiGHT-0E-WAY DEDIGAT�OIV
PARCEL"A•.
IN �tHE Cl'IY C3� PALM DESER7, COUNTY OF RIVERSIDE, STP,TE OF
CALlFORN1A;
7�if1T PORTION OF 1't•!£ �Nt] UCSCF2tF3ED �N A GRANT DEET3
REG�RbEO MAY 't2, 1999,AS INSTRUMFNT NO. 1999-206209,RECOR05
QF RiVERS1DE COUNTY,ALSO BElNG IN THE SOUTHEAST QUARTER OF
THE NORTHW�ST QUARTER OF SECTION 29, TOWNSHIP 4 SOtiTH,
12A►dCik $ EAST, S.B.M„ MtJRE PARTICULARLY DESCRIBED AS ;
FOLLOWS:
COMMENCtNG AT THE CEN7ERLINE INTERSECTION �F GATF..WAY
DRIVE AND 357„AVENUE, AS SHOWN ON PARCEL MAP NO. �4255, OiV �
Fi�E 1N BOOK 208, PAGES 94 7HRtJUGH 99, INCLUSlVE, OF PAF2CEL
MAPS,RECORDS 4F RIVERSip�COUP�TY; :
i
�
�l'HENCE NOF�Tt�t 89°59'S9"EAST A DISTANCE OF fi6.94 F�ET Ai.ONG TFtE �
SOUT�•I£RlY LINE OF SAID GRANT DEE� TQ 7NE TRUE POiN7 OF ;
BEGINN#NG;
TH�NCE LEAVING SAI� SOUTt�ERLY L€NE NORTH UO`UO'4i" WEST A
DtS7ANC�OF 54.00 wEE7 l'U A LINE 1 HA�T IS PARALL�L Wl'TH ANU 54.00
FEET NQRTHFRt.Y OF SAIQ SOUTHF.RL.Y i_lNE;
'{'HENCE ALONG SAID Pf+RA1.LFl. L1NE NORTH 89°59'59" EAST A
CISTANCE 0�786.16 FEET TQ TNE BEGI3�itJlNG OF A TANG�NT CUFtV£,
CONCAVE S�UT}•iERLY,FtAV1NG A RADIUS OF i,054.04 t'EC7;
THcNCE �ASl�ERLY ALONG THE AR(: Qf� SA{D CURVE, TI-{ROUGH P. �
CEN7RAL ANGI�E OF 'i3°2U'40", AN ARC OIS7'ANCE OF 245.48 FE£T TO
TI�iF.. BEGINNiFiG QF A REVEf2SE CURVE, GONCAV-L• NORTI•iERLY,
HAVING A RADIUS OF 846.00 FEET, A l�ADIAL L1NE PASSIiVG TNROUGii
SAID POINT 8Et1R5 NORTti 13°20'39"F."ASl': -
TiiENCE E�,STERLY ALONG THF.. ARC OF SA1Q CURVE. THROUGH A
CENTRAL ANGI.E OF 13°2A'�5", AN ARC 04STANCE OF 220.40 FF�T ?O
TH� SOU7FtERST CORNER OF SAIQ GRANT DEED, AI.50 BEING THE
CL-NTEft QUARTER CORN�R t3F SA1D S�GTION �9, A RADIAL tiNE
PASSING THROUGH SAID 3'OINT BEAR5 NOR7N 00°00'16"WEST;
P6401-1033\954774v3.doc A-1
(LEGAL DESCRiF'T!L?N)
RIGHT-0�-WAY DEI�t�ATiON
� THGNCE NON-7ANG�NT TO LAST MENTiONED GUf�VE SOUTt�t 89°59'S9"
bVLST A DISTANC�OF' 1,247.84 FEE"�ALONG Tt�E SQUThi�RLY LfNE �F
SAiQ GRANT DLED TO TNF POINT QF BEGiNNlNG. �
SU�JEG7 Tq EXISTING EASEMENTS, CO`JENANTS. f21GtiT5 AND
FtIGHTS-OF-I�IAY OF RECL?RT.7.
CONTAlN1NG 55,1A3 SQUARE FEET OR 1.2&6 ACRES,MOF2E OR LE55
P6401-103:i\954774v3.doc !�-2
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P6401-1033\954774v3.doc A-3
EXHIBIT "B"
FORM OF GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260
Attn:
APN:
Exemut from recordin¢chanies under Government Code Section 6103
[SPACE ABOVE FOR RECORDER'S USE ONLY]
GRANT DEED
THE UNDERSIGNED GRANTOR DECLARES AS FOLLOWS:
This transfer is exempt from documentary Transfer Tax pursuant to Revenue & Taxation
Code Section 11922.
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
SLTMMIT-MONTEREY PROPERTIES, LLC, a California Limited Liability Company (the
"Grantor") hereby grants to the CITY OF PALM DESERT, a California municipal corporation,
the real property located in the City of Palm Desert, County of Riverside, State of California, that
is described on "Exhibit A" attached hereto and incorporated herein by reference.
IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of the date set forth
below.
Dated: , 2007
GRANTOR:
SUMMIT-MONTEREY PROPERTIES, LLC
a California Limited Liability Company
By:
Print Name:
Title:
P6401-1033\954774v3.doc B-1
STATE OF CALIFORNIA )
)ss.
COUNTY OF RIVERSIDE )
On the day of ,2007,before me, ,personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that by his signature on
the instrument the person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
SEAL:
STATE OF CALIFORNIA )
) ss.
COUNTY OF RIVERSIDE )
On the day of ,2007,before me, ,personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that by his signature on
the instrument the person or the entity upon behalf of which the person acted, executed the
instrument.
WTTNESS my hand and official seal.
Notary Public
SEAI,:
P6401-I 033\954774v3.doc B-2
EXHIBIT A TO GRANT DEED
LEGAL DESCRIPTIOI�1
P6401-1033\454774v3.doc B-3
CERTIFICATE OF ACCEPTANCE FOR GRANT DEED
This is to certify that the interest in real property conveyed by the deed dated ,
2007, from is hereby accepted by the undersigned officer or agent
on behalf of the City of Palm Desert pursuant to authority conferred by resolution of the City
Council of the City of Palm Desert, adopted on , 2007, and the grantee consents to
recordation thereof by its duly authorized officer.
CITY OF PALM DESERT
By:
Name:
Title:
DATED: , 2007
PG40 l-1033\954774v3.doc B-4
STATE OF CAI.IFORNIA )
)ss.
COUN1'Y OF RIVERSIDE )
On the day of ,2007, before me, ,personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that by his signature on
the instrument the person or the entity upon behalf of which the person acted, executed the
instrument.
WTTNESS my hand and official seal.
Notary Public
SEAL:
STATE OF CALIFORNIA )
)ss.
COUNTY OF RIVERSIDE )
On the day of ,2007,before me, ,personally
appeared , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that by his signature on
the instrument the person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
SEAL:
P6401-1033\954774v3.doc B-$
EXHIBIT "C"
CERTAIN DEFINITIONS
Environmental Laws means all federal, state, local, or municipal laws, rules, orders,
rcgulations, statutes, ordinances, codes, decrees, or requirements of any government authority
regulating, relating to, or imposing liability or standards of conduct concerning any Hazardous
Substance (as later defined), or pertaining to occupational health or industrial hygiene (and only to
the extent that the occupational health or industrial hygiene laws,ordinances,or regulations relate to
Hazardous Substances on, under, or about the Property), occupational or environmental conditions
on, under, or about the Property, as now or may at any later time be in effect, including without
limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980
(CERCLA) (42 USCS �� 9601 et seq.J; the Resource Conservation and Recovery Act of 1976
(RCRA) (42 USCS �� 6901 et seq.J; the Clean Water Act, also known as the Federal Water
Pollution Control Act (FWPCA) �33 USCS §� 1251 et seq.J; the Toxic Substances Control Act
(TSCA)[I S USCS§�2601 et seq.J;the Hazardous Materials Transportation Act(HMTA)[49 USCS
§� 1801 et sey.J;the Insecticide,Fungicide,Rodenticide Act(7 USCS��136 et sey.J;the Superfund
Amendments and Reauthorization Act(42 USCS��6901 et seq.J; the Clean Air Act[42 USCS¢¢
7401 et seq.j;the Safe Drinking Water Act[42 USCS§§300f et seq.);the Solid Waste Disposal Act
[42 USCS��6901 et seq.J; the Surface Mining Control and Reclamation Act(30 USCS¢¢ 1201 et
sey.J;the Emergency Planning and Community Right to Know Act[42 USCS�§11001 et seq.J;the
Occupational Safety and Health Act[29 USCS��655 and 657);the California Underground Storage
of Hazardous Substances Act [H & S C §� 25280 et seq.J; the California Hazardous Substances
Account Act[H c�S C§�25300 et sey.J;the California Hazardous Waste Control Act[H&S C��
25100 et seq.J;the California Safe Drinking Water and Toxic Enforcement Act jH&S C§�24249.5
et sey.); the Porter-Cologne Water Quality Act [Wat C �� 13000 et seq.J together with any
amendments of or regulations promulgated under the statutes cited above and any other federal,state,
or local law, statute, ordinance, or regulation now in effect or later enacted that pertains to
occupational health or industrial hygiene, and only to the extent that the occupational health or
industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or
about the Property, or the regulation or protection of the environment, including ambient air, soil,
soil vapor, groundwater, surface water, or land use.
Harardous Substances includes without limitation:
(a) Those substances included within the definitions of hazardous substance, hazardous
waste, hazardous material, toxic substance, solid waste, or pollutant or contaminant in CERCLA,
RCRA, TSCA, HMTA, or under any other Environmental Law;
(b)Those substances listed in the United States Department of Transportation (DOT)Table
[49 CFR 172.101), or by the Environmental Protection Agency(EPA),or any successor agency,as
hazardous substances [40 CFR Part 302J;
(c) Other substances, materials, and wastes that are or become regulated or classified as
hazardous or toxic under federal, state, or local laws or regulations; and
P6401-1033\9 54774v3.doc C-1
(d) Any material, waste, or substance that is
(i) a petroleum or refined petroleum product,
(ii) asbestos,
(iii) polychlorinated biphenyl,
(iv) designated as a hazardous substance pursuant to 33 USCS § 1321 or listed
pursuant to 33 USCS § 1317,
(v) a flammable explosive, or
(vi) a radioactive material.
P6401-1033\954774v3.doc C-2