HomeMy WebLinkAboutResolution 2012-54 - Community Facilities District 2005-1 University ParkCITY OF PALM DESERT
STAFF REPORT
FINANCE DEPARTMENT
g
REQUEST: ADOPT RESOLUTION NO2. 012-5OF THE CITY COUNCIL, ACTING
FOR ITSELF AND AS THE LEGISLATIVE BODY OF CITY OF PALM
DESERT COMMUNITY FACILITIES DISTRICT 2005-1 (UNIVERSITY
PARK), APPROVING AND AUTHORIZING THE EXECUTION AND
DELIVERY OF A SECOND SUPPLEMENTAL INDENTURE WITH
RESPECT TO THE DISTRICT'S SPECIAL TAX BONDS
SUBMITTED BY: PAUL S. GIBSON, FINANCE DIRECTOR
DATE: JULY 12, 2012
CONTENTS: RESOLUTION NO. 2012-54
FORM OF SECOND SUPPLEMENTAL INDENTURE
Recommendation
That the City Council adopt a resolution of the City Council of the City of Palm
Desert, Acting for Itself and as the Legislative Body of City of Palm Desert
Community Facilities District No. 2005-1 (University Park), Approving and
Authorizing the Execution and Delivery of a Second Supplemental Indenture With
Respect to the District's Special Tax Bonds.
Executive Summary
Pursuant to proceedings undertaken by the City Council to form the City of Palm Desert
Community Facilities District No. 2005-1 (University Park) (the "District") and an election held on
January 12, 2006, of the qualified voters within the District, the District has previously issued
$67,915,000 in initial aggregate principal amount of its special tax bonds (the "Bonds") to
finance certain public capital facilities serving the properties within the District.
Approval of the attached Resolution and execution of the proposed Second Supplemental
Indenture would amend the foreclosure covenant applicable to the Bonds to provide the District
with flexibility to elect not to commence, or to defer commencing, a judicial foreclosure
proceeding against a delinquent property in the District when the District and its special taxes
are included in the County's Teeter Plan (i.e., Alternative Method of Distribution of Tax Levies
and Collections and of Tax Sale Proceeds). When the District and its special taxes are included
in the County's Teeter Plan, the County pays to the District 100% of its special tax levy for the
subject fiscal year, without regard to actual delinquencies in property owner payments of such
taxes. Adoption of the Resolution and Second Supplemental Indenture would avert the
incurrence by the District of unnecessary expenses and does not have any adverse impact on
bondowners.
Staff Report
Adoption of Resolution No. 2012- 54
July 12, 2012
Page 2 of 3
Background
Pursuant to the bond indenture governing the Bonds (the "Indenture"), the principal and interest
payments on the Bonds are payable by the District from, and secured by, special taxes levied
by the District, which are collected by the County of Riverside for the District through property
tax bills.
Taxes and assessments included on the County's property tax bill may be included, at the
option of the County, in a Teeter Plan. A Teeter Plan, also known as an Alternative Method of
Distribution of Tax Levies and Collections and of Tax Sale Proceeds, may be adopted by the
County pursuant to the California Revenue and Taxation Code.
When the County makes a Teeter Plan applicable to special taxes and assessments, the
Revenue and Taxation Code provides that the County will pay to the taxing entity 100% of the.
special tax or assessment levy, without regard to actual delinquencies. In return, the County will
receive the benefit of any interest and penalties that accrue on the delinquent special tax or
assessment at the time the County takes the property to a tax sale (typically after 5 years).
When the Bonds were issued in 2006 and 2007, the District was advised that the County would
not include in its Teeter Plan the special taxes levied by a community facilities district (such as
the District), and accordingly, neither the District nor its special taxes were included in the
Teeter Plan.
Subsequent to the issuance of the Bonds, the County has determined to include the special
taxes levied by the District in the County's Teeter Plan, and the Teeter Plan currently is
applicable to the District and the special taxes levied by the District.
The Indenture includes a covenant by the District to commence judicial foreclosure proceedings
by October 1 of a year (i) against a parcel with delinquent special taxes in excess of $10,000, or
(ii) against all delinquent parcels if less than 95% of the total special taxes levied in the
preceding fiscal year have been collected. There is a reserve fund held by the Trustee for the
Bonds, which holds monies sufficient to pay for one year of principal and interest payments on
the Bonds, in the event there is a shortfall in special tax collections. The foreclosure covenant is
designed to allow the District to recover delinquencies in tax payments through judicial
foreclosure proceedings within approximately one year.
If a Teeter Plan is in place, the District receives 100% of the special tax levy for the fiscal years
in which the Teeter Plan is applicable to the District and its special taxes. Staff has confirmed
that the District has in fact received 100% of the special tax levy for the recent years in which
the County has included the District in its Teeter Plan, notwithstanding the fact that there were a
few properties that were delinquent and continue to be delinquent in the payment of their
property tax bills.
In other words, when a Teeter Plan is applicable to the District and its special taxes, the
payment by the County to the District of 100% of the special tax levy means that the District will
not have any shortfall in funds available to pay bondowners for such years. If the District is
required to commence foreclosure proceedings while a Teeter Plan is applicable to the District,
the District would incur expenses that it need not incur.
Staff Report
Adoption of Resolution No. 2012-
July 12, 2012
Page 3 of 3
Therefore, to conserve and provide efficient use of District resources, staff recommends, and
the Trustee for the Bonds is willing, to amend and supplement the foreclosure covenant
included in the Indenture by a Second Supplemental Indenture to provide that, if at any time, the
County's Teeter Plan is in effect and is made applicable to the District and its special tax levies,
the District may, in its discretion, elect not to commence any judicial foreclosure proceeding
pursuant to the foreclosure covenant included in the Indenture or to defer the commencement of
such proceedings until such time as the District deems appropriate.
Fiscal Impact
There is no fiscal impact associated with this action.
Submitted by: Approval:
Paul S. Gibson qo�hnn. WohlmuthCity Treasurer / Director of Finance Manager
CITY COUNCILAMON
APPROVED I)EN"
RIICJEIVEDn OTHER IZ
MEETING DATE o�L
AYES: % 7
NOES:
ABSENT: AWL
ABSTAIN:
VERIFIED BY. -
Original on File with City Cklk's Office
RESOLUTION NO. 2012- 54
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT, ACTING FOR ITSELF AND AS THE LEGISLATIVE BODY OF
CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO.
2005-1 (UNIVERSITY PARK), APPROVING AND AUTHORIZING THE
EXECUTION AND DELIVERY OF A SECOND SUPPLEMENTAL
INDENTURE WITH RESPECT TO THE DISTRICT'S SPECIAL TAX
BONDS
RECITALS:
WHEREAS, the City of Palm Desert Community Facilities District No. 2005-1
(University Park) (the "District") is a community facilities district established under the
Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1,
Division 2, Title 5, of the Government Code of the State of California (the "Act"), duly
created, established and authorized to finance certain capital facilities and exercise its
powers, all under and pursuant to the Act (as defined in the Master Indenture
hereinafter described), and the powers of the District include the power to issue bonds
for the financing of authorized capital facilities; and
WHEREAS, the City Council of the City of Palm Desert (the "legislative body of
the District" or the "City Council") has heretofore undertaken proceedings and declared
the necessity to issue bonds on behalf of the District pursuant to the terms and
provisions of the Act; and
WHEREAS, based upon Resolution Nos.06-6 and 06-7 adopted by the
legislative body of the District on January 12, 2006 and an election held January 12,
2006 authorizing the levy of a special tax (the "Special Tax" or "Special Taxes") and the
issuance of bonds by the District, the District is authorized to issue bonds for one or
more series, pursuant to the Act, in an aggregate principal amount not to exceed
$70,000,000, for the purpose of financing the certain public facilities serving the
properties within the District; and
WHEREAS, pursuant to a Bond Indenture, dated as of May 1, 2006 (the "Master
Indenture"), and a First Supplemental Indenture, dated as of May 1, 2007 (the "First
Supplemental Indenture"), each by and between the District and Wells Fargo Bank,
National Association, as trustee (the "Trustee"), the District has heretofore issued its
Special Tax Bonds, Series 2006A (the "Series 2006A Bonds") in the initial aggregate
principal amount of $50,000,000, and its Special Tax Bonds, Series 2007 (the "Series
2007 Bonds"; and together with the Series 2006A Bonds, the "Bonds") in the aggregate
principal amount of $17,915,000, all pursuant to the Master Indenture, as amended and
supplemented by the First Supplemental Indenture (together, the "Indenture"); and
WHEREAS, pursuant to the Indenture, the principal and interest payments on the
Bonds are payable by the District from, and secured by, Special Taxes levied by the
District; and
Page 2 of 3 Resolution No. 2012- 54
WHEREAS, when the Bonds were issued, the District was advised that the
County of Riverside (the "County") would not include in the Teeter Plan (the "Teeter
Plan") of the County, adopted pursuant to Sections 4701 through 4717 of the California
Revenue and Taxation Code, the special taxes levied by a community facilities district
established under the Act, and accordingly, neither the District nor the Special Taxes
were included in the Teeter Plan; and
WHEREAS, subsequent to the issuance of the Bonds, the County has
determined to include the Special Taxes levied by the District in the Teeter Plan of the
County, and the Teeter Plan currently is applicable to the District and the Special Taxes;
and
WHEREAS, pursuant to Sections 4701 through 4717 of the California Revenue
and Taxation Code, including without limitation Section 4713.5, during such fiscal years
that the Special Taxes of the District are included in the Teeter Plan, the County shall
pay to the District 100 percent of the Special Tax levy, without regard to actual
delinquencies in property owner payments of Special Taxes for the applicable fiscal
years; and
WHEREAS, the Indenture provides that the District may from time to time, and at
any time, without notice to or consent of any of the Bondowners, adopt a supplemental
indenture to modify, alter, amend or supplement the Indenture in any respect which is
not materially adverse to the Bondowners; and
WHEREAS, in view of the District's receipt of 100% of the Special Taxes levied
in any fiscal year in which the Teeter Plan is applicable, there is no adverse
consequence to Bondowners if the District does not commence judicial foreclosure
proceedings against parcels delinquent in the payment of Special Taxes in any such
fiscal year; and
WHEREAS, as permitted by the Indenture and to conserve and provide efficient
use of District resources, the District desires, and the Trustee is willing, to amend and
supplement the foreclosure covenant included in the Indenture by a Second
Supplemental Indenture (the "Second Supplemental Indenture") to provide that, if at any
time, the County's Teeter Plan is in effect and is made applicable to the District and the
Special Taxes being levied in connection with the Bonds, the District may, in its
discretion, elect not to commence any judicial foreclosure proceeding pursuant to the
foreclosure covenant included in the Indenture or to defer the commencement of such
proceedings until such time as the District deems appropriate.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT,
ACTING FOR ITSELF AND AS THE LEGISLATIVE BODY OF CITY OF PALM
DESERT COMMUNITY FACILITIES DISTRICT NO. 2005-1 (UNIVERSITY PARK),
DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. Recitals; Findings. The above recitals, and each of them, are true
and correct.
Page 3 of 3 Resolution No. 2012- 54
Section 2. Second Supplemental Indenture. The Second Supplemental
Indenture, proposed to be entered into by and between the District and the Trustee, in
the form presented and on file in the office of the City Clerk of the City, is hereby
approved. Each of the Mayor of the City (or in his absence, the Mayor Pro Tem of the
City) and the City Manager of the City (each an "Authorized Officer"), acting singly, is
hereby authorized and directed, for and in the name and on behalf of the District, to
execute and deliver the Second Supplemental Indenture in substantially said form, with
such changes therein as the Authorized Officer executing the same may approve (such
approval to be conclusively evidenced by such Authorized Officer's execution and
delivery thereof).
Section 3. Other Acts. The Authorized Officers and all other officers of the
City and the District are hereby authorized and directed, jointly and severally, to do any
and all things, to execute and deliver any and all documents that they may deem
necessary or advisable in order to consummate the Second Supplemental Indenture, or
otherwise to effectuate the purposes of this Resolution and the Second Supplemental
Indenture, and any such actions previously taken by such officers, are hereby ratified
and confirmed.
Section 4. Effective Date. This Resolution shall take effect immediately upon
adoption.
PASSED AND ADOPTED at a meeting held on the 12th day of July, 2012, by
the following vote to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
ROBERT A. SPIEGEL, MAYOR
ATTEST:
RACHELLE D. KLASSEN, CITY CLERK
CITY OF PALM DESERT, CALIFORNIA
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Trustee
SECOND SUPPLEMENTAL INDENTURE
Dated as of July 1, 2012
Relating to
$50,000,000 (initial principal amount) $17,915,000 (initial principal amount)
City of Palm Desert City of Palm Desert
Community Facilities District No. 2005-1 Community Facilities District No. 2005-1
(University Park) (University Park)
Special Tax Bonds Special Tax Bonds
Series 2006A
1469984.1
Series 2007
TABLE OF CONTENTS
PAGE
ARTICLE I AUTHORITY AND DEFINITIONS.......................................................................2
SECTION 1.01. SUPPLEMENTAL INDENTURE....................................................................2
SECTION 1.02. AUTHORITY FOR SECOND SUPPLEMENTAL INDENTURE ...........................2
SECTION 1.03. DEFINITIONS............................................................................................2
ARTICLE II AMENDMENT....................................................................................................... 3
SECTION 2.01. AMENDMENT TO THE INDENTURE............................................................ 3
ARTICLE III MISCELLANEOUS..............................................................................................3
SECTION 3.01. EXECUTIONS IN COUNTERPARTS............................................................. 3
1469984.1 1
Second Supplemental Indenture
This Second Supplemental Indenture, dated as of July 1, 2012, is entered into by
and between City of Palm Desert Community Facilities District No. 2005-1 (University Park), a
community facilities district established under the Mello -Roos Community Facilities Act of 1982
(the "District"), and Wells Fargo Bank, National Association, a national banking association
duly organized and existing under laws of the United States of America and authorized to accept
and execute trusts of the character herein set forth, as trustee (the "Trustee").
Recitals
A. The District is a community facilities district established under the Mello -
Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title
5, of the Government Code of the State of California (the "Act"), duly created, established and
authorized to finance certain capital facilities and services and exercise its powers, all under and
pursuant to the Act (as defined in the Master Indenture hereinafter described), and the powers of
the District include the power to issue bonds for the financing of authorized capital facilities.
B. The City Council of the City of Palm Desert, located in Riverside County,
California (hereinafter sometimes referred to as the "legislative body of the District" or the
"City"), has heretofore undertaken proceedings and declared the necessity to issue bonds on
behalf of the District pursuant to the terms and provisions of the Act.
C. Based upon Resolution Nos. 06-6 and 06-7 adopted by the legislative body
of the District on January 12, 2006 and an election held January 12, 2006 authorizing the levy of
a special tax (the "Special Tax" or "Special Taxes") and the issuance of bonds by the District, the
District is authorized to issue bonds for one or more series, pursuant to the Act, in an aggregate
principal amount not to exceed $70,000,000, for the purpose of financing the Project (as defined
in the Master Indenture hereinafter described).
D. Pursuant to a Bond Indenture, dated as of May 1, 2006 (the "Master
Indenture"), and a First Supplemental Indenture, dated as of May 1, 2007 (the "First
Supplemental Indenture"), each by and between the District and Wells Fargo Bank, National
Association, as trustee, the District has heretofore issued its Special Tax Bonds, Series 2006A
(the "Series 2006A Bonds") in the initial aggregate principal amount of $50,000,000, and its
Special Tax Bonds, Series 2007 (the "Series 2007 Bonds"; and together with the Series 2006A
Bonds, the "Bonds") in the aggregate principal amount of $17,915,000, all pursuant to and
secured by the Master Indenture, as amended and supplemented by the First Supplemental
Indenture (together, the "Indenture"), in the manner provided therein.
E. When the Bonds were issued, the District was advised that the County of
Riverside (the "County") would not include in the Teeter Plan (the "Teeter Plan") of the County,
adopted pursuant to Sections 4701 through 4717 of the California Revenue and Taxation Code,
the special taxes levied by a community facilities district established under the Act, and
accordingly, neither the District nor the Special Taxes were included in the Teeter Plan.
1469984.1
F. Subsequent to the issuance of the Bonds, the County has determined to
include the Special Taxes levied by the District in the Teeter Plan of the County, and the Teeter
Plan currently is applicable to the District and the Special Taxes.
G. Section 6.1 of the Master Indenture provides that the District may from
time to time, and at any time, without notice to or consent of any of the Bondowners, adopt a
supplemental indenture to modify, alter, amend or supplement the Indenture in any respect which
is not materially adverse to the Bondowners.
H. Pursuant to Sections 4701 through 4717 of the California Revenue and
Taxation Code, including without limitation Section 4713.5, during such fiscal years that the
Special Taxes of the District are included in the Teeter Plan, the County shall pay to the District
100 percent of the Special Tax levy, without regard to actual delinquencies in the payment and
collection of Special Taxes for the applicable fiscal years.
I. To conserve and provide efficient use of District resources, the District
desires, and the Trustee is willing, to amend and supplement Section 5.2(c) of the Master
Indenture to provide that, if at any time, the County's Teeter Plan is in effect and is made
applicable to the District and the Special Taxes being levied in connection with the Bonds, the
District may, in its discretion, elect not to commence any judicial foreclosure proceeding
pursuant to Section 5.2(c) or to defer the commencement of such proceedings until such time as
the District deems appropriate.
NOW THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE
WITNESSETH, that in consideration of the premises and of the mutual covenants herein
contained and for other valuable consideration, the receipt whereof is hereby acknowledged, the
District does hereby covenant and agree with the Trustee, for the benefit of the respective holders
from time to time of the Bonds, as follows:
ARTICLE I
AUTHORITY AND DEFINITIONS
SECTION 1.01. Supplemental Indenture. This Second Supplemental Indenture
is supplemental to the Indenture. Save and except as amended and supplemented by this Second
Supplemental Indenture, the Indenture shall remain in full force and effect.
SECTION 1.02. Authority for Second Supplemental Indenture. This Second
Supplemental Indenture is adopted (i) pursuant to the provisions of the Act and (ii) in accordance
with Section 6.1 of the Master Indenture.
SECTION 1.03. Definitions. Except as provided by this Second Supplemental
Indenture, all terms which are defined in the Indenture shall have the same meanings,
respectively, in this Second Supplemental Indenture. The following additional terms shall, for
all purposes of the Indenture, have the following respective meanings:
"County" means the County of Riverside, California.
2
1469984.1
"Teeter Plan" means the Teeter Plan of the County, adopted pursuant to Sections
4701 through 4717 of the California Revenue and Taxation Code.
ARTICLE II
AMENDMENT
SECTION 2.01. Amendment to the Indenture. Section 5.2(c) of the Master
Indenture is hereby amended by adding the following paragraph as the last paragraph of such
section:
"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 District and the Special
Taxes being levied in connection with the Bonds, the District may, in its
discretion, elect not to commence any judicial foreclosure proceeding pursuant to
this Section 5.2(c) or defer the commencement of such proceedings until such
time as the District deems appropriate."
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Executions in Counterparts. This Second Supplemental
Indenture may be executed in any number of counterparts, each of such counterparts shall for all
purposes be deemed to be an original; and all such counterparts, as many of them as the District
and the Trustee shall preserve undestroyed, shall together constitute but one and the same
instrument.
[The remainder of this page is intentionally left blank.]
1469984.1
IN WITNESS WHEREOF, CITY OF PALM DESERT COMMUNITY FACILITIES
DISTRICT NO. 2005-1 (UNIVERSITY PARK) has caused this Second Supplemental Indenture
to be signed by the Mayor of the City of Palm Desert, acting as the legislative body of the
District and attested thereto by the City Clerk of the City of Palm Desert, and Wells Fargo Bank,
National Association, in token of its acceptance of the trust created hereunder, has caused this
Second Supplemental Indenture to be signed in its corporate name by its officer identified below,
all as of the day and year first above written.
ATTEST:
City Clerk of the City of Palm Desert,
California
CITY OF PALM DESERT COMMUNITY
FACILITIES DISTRICT NO. 2005-1
(UNIVERSITY PARK)
LOW
Mayor of the City of Palm Desert, California
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By:
Its: Authorized Officer
4
1469984.1