HomeMy WebLinkAboutSR - REFUNDING REVENUE BONDS SERIES 2007/RES 06-155/RES 536/RES FA-60/TRUST/BOND AGMNT/ESCROWCity of Palm Desert
Palm Desert Financing Authority
Palm Desert Redevelopment Agency
STAFF REPORT
REQUEST: APPROVAL OF RESOLUTION NO.06-155 OF THE CITY COUNCIL
OF THE CITY OF PALM DESERT MAKING A FINDING OF
SIGNIFICANT PUBLIC BENEFIT AND OTHER FINDINGS IN
CONNECTION WITH THE ISSUANCE AND SALE BY THE PALM
DESERT FINANCING AUTHORITY OF ITS TAX ALLOCATION
(HOUSING SET -ASIDE) REFUNDING REVENUE BONDS, SERIES
2007
APPROVAL OF RESOLUTION NO.536 OF THE PALM DESERT
REDEVELOPMENT AGENCY APPROVING AS TO FORM AND
AUTHORIZING THE EXECUTION AND DELIVERY OF CERTAIN
DOCUMENTS IN CONNECTION WITH THE SALE AND ISSUANCE BY
THE PALM DESERT FINANCING AUTHORITY OF ITS TAX
ALLOCATION (HOUSING SET -ASIDE) REFUNDING REVENUE
BONDS, SERIES 2007, AND AUTHORIZING CERTAIN OTHER
MATTERS RELATING THERETO
APPROVAL OF RESOLUTION NO. FA - 60 OF THE PALM
DESERT FINANCING AUTHORITY ACKNOWLEDGING A FINDING OF
SIGNIFICANT BENEFIT AND APPROVING AS TO FORM AND
AUTHORIZING THE EXECUTION AND DELIVERY OF CERTAIN
DOCUMENTS IN CONNECTION WITH THE ISSUANCE, SALE AND
DELIVERY OF THE AUTHORITY'S TAX ALLOCATION (HOUSING SET -
ASIDE) REFUNDING REVENUE BONDS, SERIES 2007, AND
AUTHORIZING CERTAIN OTHER MATTERS RELATING THERETO
SUBMITTED BY: DAVID YRIGOYEN, DIRECTOR OF REDEVELOPMENT/HOUSING
DATE: DECEMBER 14, 2006
CONTENTS: 1.
CITY COUNCIL RESOLUTION NO. 06-155
2.
PALM DESERT FINANCING AUTHORITY RESOLUTION NO. FA-60
3.
PALM DESERT REDEVELOPMENT AGENCY RESOLUTION NO.536
4.
INDENTURE OF TRUST
5.
2007 HOUSING PROJECT LOAN AGREEMENT
6.
ESCROW AGREEMENT
7.
PRELIMINARY OFFICIAL STATEMENT
8.
BOND PURCHASE AGREEMENT
9.
CONTINUING DISCLOSURE AGREEMENT
Recommendation:
By Minute Motion:
That the City Council approve Resolution No. 06155, making a finding of significant public
benefit and other findings in connection with the issuance and sale of the Palm Desert
Staff Report
Approval of City, Agency and Authority Resolutions
Tax Allocation (Housing Set -Aside) Revenue Bonds, Series 2007
Page 2 of 4
December 14, 2007
Financing Authority Tax Allocation (Housing Set -Aside) Refunding Revenue Bonds, Series
2007 (the "Bonds");
2. That the Palm Desert Financing Authority approve Resolution No. FASO , acknowledging
finding of significant public benefit in connection with the issuance and sale of the Bonds,
approving of the issuance, sale and delivery of the Bonds and authorizing the execution
and delivery of documents relating to the Bonds; and
3. That the Palm Desert Redevelopment Agency approve Resolution No.536 , approving and
authorizing the execution and delivery of documents relating to the Bonds.
Executive Summary
Adoption of the attached resolutions will allow Staff to proceed with the issuance of the Bonds and the
use of proceeds from the Bonds to pay for the costs of the identified low- and moderate -income
housing projects.
Background and discussion:
Staff recommends the issuance of the Bonds. The Bonds will consist of two components: a
"refunding" component and a "new money' component. A portion of the proceeds of the Bonds will be
used to effect the refunding of a portion of the Authority's Tax Allocation (Housing Set -Aside) Revenue
Bonds, Series 1998 (the "1998 Bonds"). The aggregate principal amount of the Bonds will be
approximately $96 million, of which approximately $47.75 million may be considered the "refunding"
component and approximately $48.25 million may be considered the "new money' component. The
"refunding component" should generate a savings of approximately $1.9 million. The "refunding"
component will be amortized from October 1, 2007 to October 1, 2027. The "new money' component
will be amortized from October 1, 2007 to October 1, 2019.
The Bonds will be issued as tax-exempt current interest bonds. It is currently expected that the
refunding will include all of the 1998 Bonds maturing between October 1, 2009 and October 2027
(totaling $43,125,000 in principal). A portion of the proceeds of the Bonds will be used to provide "new
money' financing for various low- and moderate income housing related projects (the "Housing
Projects"), including (i) the acquisition and/or rehabilitation of several multi -family housing units; (ii) the
acquisition of land for the purposes of expanding existing Agency -owned multi -family housing units and
constructing new multi -family low/moderate income housing units; and (iii) the provision of subsidies to
facilitate the development of low/moderate income housing units. The proposed Housing Projects are
outlined in the attached City Council resolution and are also described in a Summary Report, which
was made available to the public for inspection in connection with the City Council public hearing.
The intent is to keep the term and debt service of the refunding -component of the Bonds approximately
the same as those for the refunded 1998 Bonds and use the refunding savings (approximately $1.9
million) to be combined with the new money component for a total amount of $49 million for the
financing of the Housing Projects. The net present value savings of the refunding, based on current
estimates, is approximately 4.04 percent of the Bonds par amount and 4.46 percent of the refunded
1998 Bonds par amount. According to the Financial Advisor, a net present value savings of greater
than 3.00 percent is considered significant and is the municipal bond industry threshold for moving
forward in a refunding.
The repayment of the Bonds will be primarily secured by housing set -aside portion of tax increments
generated with respect to all four Project Areas ("Housing Tax Revenues"). With respect to the lien on
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Staff Report
Approval of City, Agency and Authority Resolutions
Tax Allocation (Housing Set -Aside) Revenue Bonds, Series 2007
Page 3 of 4
December 14, 2007
the Housing Tax Revenues, the Bonds will rank subordinate to the Agency's outstanding Project Area
No. 1, As Amended (Added Territory Only) Tax Allocation (Housing Set -Aside) Refunding Bonds,
Series 1995 (the 1995 Bonds"), and on a parity with the outstanding bonds previously issued in 1998
and 2002 to finance low and moderate income housing purposes.
Adoption of the attached resolutions will allow Staff to proceed with the issuance of the Bonds and the
use of proceeds to pay for the costs of the identified Housing Projects.
Staff is utilizing the following financing team:
Del Rio Advisors, LLC, Modesto, CA — Financial Advisor
Richards, Watson & Gershon, A Professional Corporation, Los Angeles, CA — Bond Counsel
Lofton & Jennings, San Francisco, CA — Disclosure Counsel
Wells Fargo Bank, National Association, Los Angeles, CA — Trustee and Escrow Agent
Hutchinson, Shockey, Erley & Co., San Francisco, CA — Underwriter
Rosenow Spevacek Group, Inc., Santa Ana, CA — Fiscal Consultant
MuniFinancial, Inc., Temecula, CA — Dissemination Agent
SUMMARY OF DOCUMENTS TO BE APPROVED:
Indenture of Trust
The Indenture sets forth all of the terms and conditions of the Bonds (e.g., principal amounts, maturity
and redemption schedules, payment, registration and transfer provisions and the form of the Bonds),
the covenants and other obligations of the Authority to the bondholders, and the role and the duties of
the Trustee. As presented, the Indenture is in substantially final form, except that final dollar amounts
and interest rates will be added after the Bonds have been priced and sold and that provisions may be
added, deleted or otherwise modified to accommodate the bond insurer requirements.
Loan Aqreement
Pursuant to the Loan Agreement, the Authority agrees to lend the Agency funds that would be used by
the Agency to refund a portion of the 1998 Bonds and to finance projects for low and moderate income
housing purposes. The Agency agrees to pay Housing Tax Revenues, after payment on the 1995
Bonds, semiannually to the Trustee, as the Authority's assignee, in sufficient amounts to pay debt
service on the Bonds.
Escrow Aqreement
The Escrow Agreement is an agreement among the Agency, the Authority and the Trustee.
Redemption and final payment of the refunded 1998 Bonds will not occur until some time after the
issuance of the Bonds. During this interim period, money derived from the proceeds of the Bonds to be
used for the payment and redemption of the 1998 Bonds will be held by the Escrow Agent in an escrow
fund. The Escrow Agreement provides for the establishment and maintenance of such escrow fund
and the release of money on the appropriate payment and redemption dates.
Bond Purchase Aqreement
This is an agreement between the Authority, the Agency and the Underwriterfor the purchase and sale
of the bonds. Pursuant to the Bond Purchase Agreement, the Underwriter agrees to purchase the
Authority bonds at specified prices and interest rates, subject to the receipt of certain opinions,
certificates and other conditions. The Bond Purchase Agreement will be presented to the appropriate
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Staff Report
Approval of City, Agency and Authority Resolutions
Tax Allocation (Housing Set -Aside) Revenue Bonds, Series 2007
Page 4 of 4
December 14, 2007
officers of the Authority and Agency for approval and execution as soon as the Underwriter has
completed the process of offering and then pricing the Bonds in the market.
Preliminary Official Statement
A Preliminary Official Statement relating to the Bonds, in substantially final form, has been prepared by
Disclosure Counsel. The Preliminary Official Statement is designed to provide material information to
investors with respect to the terms and the security of the Bonds. It includes a full description of the
legal and financial aspects, as well as the various legal documents in regard to the Bonds, except for
certain information which will be determined upon the pricing of the Bonds (such as the final principal
amounts, the interest rates and the redemption dates). The Preliminary Official Statement also includes
information regarding the Authority, the Agency, and the Project Areas. The Preliminary Official
Statement will be utilized by the Underwriter in its effort to market the bonds to the public. Once the
Bonds have been priced and the Bond Purchase Agreement has been signed, Disclosure Counsel will
insert the final pricing information into the Preliminary Official Statement, thereby converting it to the
Official Statement. The Underwriter will then distribute the Official Statement to the individuals and
institutions that purchased the Bonds.
Continuinq Disclosure Aqreement
The Continuing Disclosure Agreement is an agreement among the Agency, the Trustee and the
Dissemination Agent. This agreement directs the Agency to provide an annual report to the
Dissemination Agent. The Annual Report contains the Agency's audited financial statements and other
pertinent information relating to Housing Tax Revenues and the project areas. The Annual Report is
sent to state and national repositories so that this information is available to the bondholders. This
mechanism is used to keep bondholders informed on an annual basis of the financial status of the
Agency.
CONCLUSION
The resolutions permit Staff to make the necessary changes to all of the documents in order to finalize
and execute the documents. Staff is recommending that the City Council, the Authority and the Agency
adopt their respective resolutions approving and authorizing the sale and issuance of the Bonds, and
the execution and delivery of the related documents.
Submitted By:
' 5'avid Yrigoye
Director of development/Housing
Approval:
M
�1
Carlos L. Ortega
City Manager/CA /Executive Director
Paul S. Gibson, Director of Finance/Treasurer
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PUBLIC HEARINGS
A. REQUEST FOR APPROVAL OF ACTIONS, INCLUDING MAKING FINDINGS, APPROVING AS TO FORM AND
AUTHORIZING THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS, AND ACKNOWLEDGING A FINDING OF
SIGNIFICANT BENEFIT IN CONNECTION WITH THE ISSUANCE, SALE, AND DELIVERY OF THE PALM DESERT
FINANCING AUTHORITY'S TAX ALLOCATION (HOUSING SET -ASIDE) REFUNDING ALvrrur, BONDS,
SERIES 2007, AND AUTHORIZING CERTAIN OTHER MATTERS RELATING THERETO (JOINT CONSIDERATION
WITH THE PALM DESERT CITY COUNCIL AND THE PALM DESERT FINANCING AUTHORITY).
"-ITY COUNCIL YfiION:
APPROVED ✓ DENIED
REC IV ? _ OTHER.a� 0
MUTIN DATE (l;14 ` { u ` to
AYES: G
NOES:
ABSENT:
ABSTAIN: iy"
VMIFIED BY:
Original on File h City Clerk's Office
.,44.�-Md BY RDA
ON %,:�Z -/41- 6 (P
VERIFIED BY
Original on file with City Clerk's Office
I+Pl6Xd BY FIN AUTH
ON.
VERIFIED BY: IeOf
Original on file with City Clerk's Office
RESOLUTION NO. 06-155
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM DESERT MAKING A FINDING OF SIGNIFICANT
PUBLIC BENEFIT AND OTHER FINDINGS IN
CONNECTION WITH THE ISSUANCE AND SALE BY THE
PALM DESERT FINANCING AUTHORITY OF ITS TAX
ALLOCATION (HOUSING SET -ASIDE) REFUNDING
REVENUE BONDS, SERIES 2007
RECITALS:
WHEREAS, the Palm Desert Financing Authority (the "Authority") has
proposed to sell and issue its Tax Allocation (Housing Set -Aside) Refunding Revenue
Bonds, Series 2007 (the "Bonds"); and
WHEREAS, the proceeds of the Bonds will be applied to make a loan (the
"Loan") to the Palm Desert Redevelopment Agency (the "Agency") pursuant to a loan
agreement between the Authority and the Agency; and
WHEREAS, a portion of the proceeds of the Loan, together with other
available funds, will be used to effect the refunding of a portion of the Authority's Tax
Allocation (Housing Set -Aside) Revenue Bonds, Series 1998; and
WHEREAS, a portion of the proceeds of the Loan will be used by the
Agency to provide financing for certain public capital improvements (collectively, the
"Projects") of benefit to the Agency's Project Area No. 1, As Amended, Project Area No.
2, Project Area No. 3 and Project Area No. 4 (collectively, the "Project Areas"),
including: (i) the acquisition and/or rehabilitation of several multi -family housing units; (ii)
the acquisition of land for the purposes of expanding existing Agency -owned multi-
family housing units and constructing new multi -family low/moderate income housing
units; and (iii) the provision of subsidies to facilitate the development of low/moderate
income housing units; and
WHEREAS, pursuant to Section 6586.5 of the California Government
Code and Section 33679 of the California Health and Safety Code, after notice duly
published in accordance with law, this City Council held a public hearing on this date
with respect to the issuance of the proposed Bonds and received evidence concerning
the public benefits therefrom; and
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM
DESERT DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. Recitals. The above recitals, and each of them, are true and
correct.
G:\RDA\Beth Longman\Staff Reports\Scott\2007 Hsg City Reso 121406.doc
the issuance by the Authority of the Bonds will result in significant public benefits to the
constituents of the Agency and the City of Palm Desert, including demonstrable savings
in effective interest rate and more efficient delivery of Agency and City services to
residential and commercial development. The City Council hereby approves the
issuance of the Bonds by the Authority.
Section 3. Further Findings. The City Council hereby finds and determines
that based upon the "Summary Report Regarding Payment by the Palm Desert
Redevelopment Agency for All or a Portion of the Cost of the Acquisition of Land to
Build Low and Moderate Income Multi -Family Housing Units, and the Acquisition or
Renovation of Existing Low and Moderate Income Multi -Family Housing Units of Benefit
to Project Areas No. 1, As Amended, 2, 3 And 4," which Report was made available at
the office of the City Clerk in connection with the public hearing described in the
Recitals hereof, and other information presented to the City Council: (i) the above -
described Projects are of benefit to the Project Areas and to the immediate
neighborhood in which the Projects are located; (ii) the payment of funds for the cost of
the Projects will assist in the provisions of housing for low- or moderate -income
persons; (iii) the payment of funds for the cost of the Projects is consistent with the
Agency's implementation plan adopted pursuant to Health and Safety Code Section
33490; and (iv) no other reasonable means of financing the Projects is available to the
City.
Section 4. Approval of Pavment by Aaencv. The City Council hereby
approves payment by the Agency for the cost of the Projects from tax increment
revenues, including the portion of the tax revenues set aside for low- or moderate
income housing purposes pursuant to California Health and Safety Code Section
33334.2 of the Agency from the Project Areas.
Section 5.Other Acts. The officers of the City of Palm Desert are hereby
authorized and directed, jointly and severally, to do any and all things and to execute
and deliver any and all documents which they may deem necessary or advisable in
order to effectuate the purposes of this Resolution and any such actions previously
taken by such officers are hereby ratified and confirmed.
G:\RDA\Beth Longman\Staff Reports\Scott\2007 Hsg City Reso 121406.doc 2
Section 6.Effective Date. This Resolution shall take effect immediately
upon adoption.
APPROVED and ADOPTED this 14th day of December, 2006.
AYES:
NOES:
ABSENT:
ABSTAIN:
Jim Ferguson, Mayor
ATTEST:
Rachelle D. Klassen, City Clerk
G:\RDA\Beth Longman\Staff Reports\Scott\2007 Hsg City Reso 121406.doc 3
RESOLUTION NO. 536
A RESOLUTION OF THE PALM DESERT
REDEVELOPMENT AGENCY APPROVING AS TO FORM
AND AUTHORIZING THE EXECUTION AND DELIVERY
OF CERTAIN DOCUMENTS IN CONNECTION WITH THE
SALE AND ISSUANCE BY THE PALM DESERT
FINANCING AUTHORITY OF ITS TAX ALLOCATION
(HOUSING SET -ASIDE) REFUNDING REVENUE
BONDS, SERIES 2007, AND AUTHORIZING CERTAIN
OTHER MATTERS RELATING THERETO
RECITALS:
WHEREAS, the Palm Desert Financing Authority (the "Authority")
proposes to sell and issue its Tax Allocation (Housing Set -Aside) Refunding Revenue
Bonds, Series 2007 (the "Bonds"); and
WHEREAS, the proceeds of the Bonds will be applied to make a loan (the
"Loan") to the Palm Desert Redevelopment Agency (the "Agency") pursuant to a certain
Loan Agreement (as defined below); and
WHEREAS, a portion of the proceeds of the Loan will be used to effect the
refunding of a portion of the Authority's Tax Allocation (Housing Set -Aside) Revenue
Bonds, Series 1998; and
WHEREAS, a portion of the proceeds of the Loan will be used to provide
financing for certain public capital improvements, including: (i) the acquisition and/or
rehabilitation of several multi -family housing units; (ii) the acquisition of land for the
purposes of expanding existing Agency -owned multi -family housing units and
constructing new multi -family low/moderate income housing units; and (iii) the provision
of subsidies to facilitate the development of low/moderate income housing units;
NOW, THEREFORE, THE PALM DESERT REDEVELOPMENT AGENCY
DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. Recitals. The above recitals, and each of them, are true and
correct.
Section 2. Loan Agreement. The 2007 Housing Pro
(the "Loan Agreement'), proposed to be entered into by and amo
Agency and Wells Fargo Bank, National Association, as trustee
form on file with the Secretary of the Agency (the "Secretary")
Each of the Chairman and the Executive Director, or their
"Authorized Officer"), is hereby authorized and directed, for and
behalf of the Agency, to execute and deliver the Loan Agreement
form, with such changes therein as the Authorized Officer exec
ject Loan Agreement
ng the Authority, the
the "Trustee"), in the
is hereby approved.
designee (each, an
in the name and on
in substantially said
uting the same may
G:\RDA\Beth Longman\Staff Reports\Scott\2007 Hsg Agency Reso 121406.doc
approve (such approval to be conclusively evidenced by such Authorized Officer's
execution and delivery thereof).
Section 3. Escrow Agreement. The Escrow Agreement (the "Escrow
Agreement"), proposed to be entered into by and among the Agency, the Authority and
Wells Fargo Bank, National Association, as escrow agent, in the form on file in the office
of the Secretary, is hereby approved. Each Authorized Officer, acting singly, is hereby
authorized and directed, for and in the name and on behalf of the Agency, to execute
and deliver the Escrow Agreement in substantially said form, with such changes therein
as the Authorized Officer executing the same may approve (such approval to be
conclusively evidenced by such Authorized Officer's execution and delivery thereof).
Section 4. Continuinq Disclosure Agreement. The Continuing Disclosure
Agreement (the "Continuing Disclosure Agreement"), proposed to be entered into by
and among the Agency, the Trustee and MuniFinancial, Inc., as Dissemination Agent, in
the form on file in the office of the Secretary, is hereby approved. Each Authorized
Officer, acting singly, is hereby authorized and directed, for and in the name and on
behalf of the Agency, to execute and deliver the Continuing Disclosure Agreement in
substantially said form, with such changes therein as the Authorized Officer executing
the same may approve (such approval to be conclusively evidenced by such Authorized
Officer's execution and delivery thereof).
Section 5. Purchase Agreement. The Bond Purchase Agreement (the
"Purchase Agreement") proposed to be entered into by the Authority, the Agency and
Hutchinson, Shockey, Erley & Co. (the "Underwriter"), in the form on file with the
Secretary, and the sale of the Bonds pursuant thereto upon the terms and conditions
set forth therein, are hereby approved. Subject to the limitations imposed by the
Authority by its Resolution relating to the issuance and sale of the Bonds, each
Authorized Officer, acting singly, is authorized and directed, for and in the name and on
behalf of the Agency, to execute and deliver the Purchase Agreement in substantially
said form, with such changes therein as the Authorized Officer executing the same may
require or approve (such approval to be conclusively evidenced by such Authorized
Officer's execution and delivery thereof).
Section 6. Other Acts. The Authorized Officers and all other officers of
the Agency are hereby authorized and directed, jointly and severally, to do any and all
things and to execute and deliver any and all documents which they may deem
necessary or advisable in order to effectuate the purposes of this Resolution, the Loan
Agreement, the Escrow Agreement, the Continuing Disclosure Agreement and the
Purchase Agreement, and any such actions previously taken by such officers are
hereby ratified and confirmed.
2
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Section 7. Effective Date. This Resolution shall take effect immediately
upon adoption.
APPROVED and ADOPTED this 14th day of December, 2006.
AYES:
NOES:
ABSENT:
ABSTAIN:
Jim Ferguson, Chairman
ATTEST:
Rachelle D. Klassen, Secretary
3
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RESOLUTION NO. FA- 60
A RESOLUTION OF THE PALM DESERT FINANCING
AUTHORITY ACKNOWLEDGING A FINDING OF
SIGNIFICANT BENEFIT AND APPROVING AS TO
FORM AND AUTHORIZING THE EXECUTION AND
DELIVERY OF CERTAIN DOCUMENTS IN
CONNECTION WITH THE ISSUANCE, SALE AND
DELIVERY OF THE AUTHORITY'S TAX ALLOCATION
(HOUSING SET -ASIDE) REFUNDING REVENUE
BONDS, SERIES 2007, AND AUTHORIZING CERTAIN
OTHER MATTERS RELATING THERETO
RECITALS:
WHEREAS, the Palm Desert Financing Authority (the "Authority") is a joint
powers authority duly organized and existing under and pursuant to Articles 1 through 4
(commencing with Section 6500), Chapter 5, Division 7, Title 1 of the California
Government Code (the "Act") and that certain Joint Exercise of Powers Agreement
dated as of January 26, 1989, by and between the City of Palm Desert and the Palm
Desert Redevelopment Agency (the "Agency"), and is authorized pursuant to Article 4 of
the Act to issue bonds for the purpose of making loans to the Agency to provide
financing and refinancing for public capital improvements; and
WHEREAS, the Authority desires to issue and sell its Tax Allocation
(Housing Set -Aside) Refunding Revenue Bonds, Series 2007 (the "Bonds"); and
WHEREAS, the Bonds will be issued and secured pursuant to a certain
Indenture (defined below); and
WHEREAS, the proceeds of the Bonds will be applied to make a loan (the
"Loan") to the Agency, pursuant to a certain Loan Agreement (defined below); and
WHEREAS, a portion of the proceeds of the Loan, together with other
available funds, will be used to effect a refunding of a portion of the Authority's Tax
Allocation (Housing Set -Aside) Revenue Bonds, Series 1998; and
WHEREAS, a portion of the proceeds of the Loan will be used by the
Agency to provide financing for certain public capital improvements (collectively, the
"Projects") of benefit to the Agency's Project Area No. 1, As Amended, Project Area No.
2, Project Area No. 3 and Project Area No. 4 (collectively, the "Project Areas"),
including: (i) the acquisition and/or rehabilitation of several multi -family housing units; (ii)
the acquisition of land for the purposes of expanding existing Agency -owned multi-
family housing units and constructing new multi -family low/moderate income housing
G:\RDA\Beth Longman\Staff Reports\Scott\2007 Hsg Fin Auth Reso 121406.doc
units; and (iii) the provision of subsidies to facilitate the development of low/moderate
income housing units; and
WHEREAS, the City Council of the City of Palm Desert (the "City Council")
has made a finding, after a duly noticed public hearing pursuant to Section 6586.5 of the
California Government Code, that the issuance of the Bonds will result in significant
public benefit;
NOW, THEREFORE, THE PALM DESERT FINANCING AUTHORITY
DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. Recitals. The above recitals, and each of them, are true and
correct.
Section 2. Acknowledgment of Citv Council Findings. The Authority
hereby acknowledges and concurs with the City Council's finding of significant public
benefit and hereby approves and authorizes the issuance and sale of the Bonds.
Section 3. Issuance of Bonds; Indenture. The Indenture of Trust (the
"Indenture"), proposed to be entered into by and between the Authority and the Trustee
(appointed in Section 4 below), in the form on file in the office of the Secretary of the
Authority (the "Secretary"), is hereby approved. The issuance of the Bonds, in an
aggregate principal amount not exceeding $99,000,000, pursuant to the Indenture is
hereby approved. Subject to Section 10 below, each of the President, the Chief
Administrative Officer and the Treasurer of the Authority, any deputy of such officers,
and any member of the Authority Commission (each, an "Authorized Officer"), acting
singly, is hereby authorized and directed, for and in the name and on behalf of the
Authority, to execute and deliver the Indenture in substantially said form, with such
additions or changes as the Authorized Officer executing the same may approve (such
approval to be conclusively evidenced by such Authorized Officer's execution and
delivery thereof).
Section 4. Appointment of Trustee and Escrow Agent. The
appointment of Wells Fargo Bank, National Association, as trustee (the "Trustee") under
the Indenture and as escrow agent (the "Escrow Agent") under the Escrow Agreement
described in Section 6 is hereby approved.
Section 5. Loan Agreement. The 2007 Housing Project Loan
Agreement (the "Loan Agreement"), proposed to be entered into by and among the
Agency, the Authority and the Trustee, in the form on file in the office of the Secretary,
is hereby approved. Each Authorized Officer, acting singly, is hereby authorized and
directed, for and in the name and on behalf of the Authority, to execute and deliver the
Loan Agreement in substantially said form, with such changes therein as the Authorized
Officer executing the same may approve (such approval to be conclusively evidenced
by such Authorized Officer's execution and delivery thereof).
2
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Section 6. Escrow Aqreement. The Escrow Agreement (the "Escrow
Agreement"), proposed to be entered into by and among the Agency, the Authority and
the Escrow Agent, in the form on file in the office of the Secretary, is hereby approved.
Each Authorized Officer, acting singly, is hereby authorized and directed, for and in the
name and on behalf of the Authority, to execute and deliver the Escrow Agreement in
substantially said form, with such changes therein as the Authorized Officer executing
the same may approve (such approval to be conclusively evidenced by such Authorized
Officer's execution and delivery thereof).
Section 7. Preliminary Official Statement. The Preliminary Official
Statement relating to the Bonds (the "Preliminary Official Statement"), in the form on file
with the Secretary, is hereby approved. Each Authorized Officer, acting singly, is
hereby authorized and directed, for and in the name and on behalf of the Authority, to
cause the Preliminary Official Statement in substantially said form, with such changes
therein as such Authorized Officer may approve, to be deemed final for the purposes of
Rule 15c2-12 promulgated under the Securities and Exchange Act of 1934. The
distribution by Hutchinson, Shockey, Erly & Co. (the "Underwriter') of copies of the
Preliminary Official Statement to potential purchasers of the Bonds is hereby approved.
Section 8. Official Statement. Each Authorized Officer, acting singly, is
hereby authorized and directed to cause the Preliminary Official Statement to be
brought into the form of a final Official Statement (the "Official Statement"), and to
execute the same for and in the name and on behalf of the Authority, with such changes
therein as such Authorized Officer may approve (such approval to be conclusively
evidenced by such Authorized Officer's execution and delivery thereof). The distribution
and use of the Official Statement by the Underwriter in connection with the sale of the
Bonds are hereby approved.
Section 9. Bond Purchase Aqreement. The Bond Purchase Agreement
(the "Purchase Agreement"), proposed to be entered into by and among the Agency,
the Authority and the Underwriter, in the form on file in the office of the Secretary and
the sale of the Bonds pursuant thereto upon the terms and conditions set forth therein
are hereby approved. Subject to the provisions of Section 10 below, each Authorized
Officer, acting singly, is authorized and directed, for and in the name and on behalf of
the Authority, to execute and deliver the Purchase Agreement in substantially said form,
with such changes therein as the officer executing the same may require or approve,
including such matters as are authorized by Section 10 hereof (such approval to be
conclusively evidenced by such Authorized Officer's execution and delivery thereof).
Section 10. Terms of Sale of Bonds. Each Authorized Officer, acting
singly, is hereby authorized and directed to act on behalf of the Authority to establish
and determine (i) the aggregate principal amount of the Bonds, which amount shall not
exceed $99,000,000; (ii) the interest rates on the Bonds, provided that the true interest
cost shall not exceed 5.5 percent; (ii) the Underwriter's compensation (i.e., underwriter's
discount) with respect to the Bonds, which shall not exceed one percent of the
aggregate principal amount of the Bonds; and (iv) such provisions as may be required
by the terms of any bond insurance . policy or debt service reserve surety bond
3
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purchased in connection with the issuance of the Bonds. The authorization and powers
delegated to such officer by this Section 9 shall be valid for a period of 120 days from
the date of adoption of this Resolution.
Section 11. Other Acts. The Authorized Officers and all other officers of
the Authority 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 Indenture, the Loan
Agreement, the Escrow Agreement, the Purchase Agreement and the Official
Statement, and any such actions previously taken by such officers are hereby ratified
and confirmed.
Section 12. Effective Date. This Resolution shall take effect immediately
upon adoption.
APPROVED AND ADOPTED this 14th day of December, 2006.
AYES:
NOES:
ABSENT:
ABSTAIN:
Jim Ferguson, President
ATTEST:
Rachelle D. Klassen, Secretary
4
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Indenture of Trust
with reference to
$
Palm Desert Financing Authority
Tax Allocation (Housing Set-Aside)
Refunding Revenue Bonds
Series2007
PG402-105�\925674v4.doc RWG DRAFI': 1 I/22l2006
INDENTURE OF TRUST
This Indenture of Trust (this "Indenture") is made and entered into as of February 1,
2007, by and between the Palm Desert Financing Authority, a joint powers authority duly
organized and validly existing under the laws of the State of California (the "Authority") and
Wells Fargo Bank, National Association, a national banking association duly organized and
validly existing under the laws of the United States of America, having a corporate trust office in
Los Angeles, California, and being qualified to accept and administer the trusts hereby created
(the "Trustee").
Recitals:
A. The Palm Desert Redevelopment Agency is a redevelopment agency, a
public body, corporate and politic, duly created, established and authorized to transact business
and exercise its powers, all under and pursuant to the Redevelopment Law, and the pawers of the
Agency include the power to borrow money for any of its corporate purposes.
B. The Authority is authorized to borrow money for the purpose of making
loans to the Agency to provide financing and refinancing for public capital improvements, as
defined in Sections 6546 and 65$5 of the California Government Code.
C. For the purposes of assisting the Agency in (i) effecting the refunding of a
portion of the Authority's Tax Allocation (Housing Set-Aside) Revenue Bonds, Series 1998, and
(ii) the financing of certain public capital improvements, including: (a) the acquisition and/or
rehabilitation of several multi-family housing units; (b) the acquisition of land for the purposes
of expanding existing Agency-owned multi-family housing units and constructing new multi-
family low/moderate income housing units; and (c) the provision of subsidies to facilitate the
development of low/moderate income housing units (the "Project"), the Authority has made a
loan (the "Loan") to the Agency under and pursuant to the 2007 Housing Project Loan
Agreement, dated as of February 1, 2007 (the "Loan Agreement"), by and among the Authority,
the Agency and the Trustee.
D. To provide the moneys required to make the Loan under the Loan
Agreement, the ,Authority has determined to issue its Palm Desert Financing Authority, Tax
Allocation (Housing Set-Aside) Refunding Revenue Bonds, Series 2007, in the aggregate
principal amount of $ (the "Bonds"} pursuant to and secured by this Indenture in the
manner provided herein.
E. To provide for the authentication and delivery of the Bonds, to establish
and declare the terms and conditions upon which the Bonds are to be issued and to secure the
payment of the principal thereof, premium, if any, and interest thereon, the Authority has
authorized the execution and delivery of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to
secure the payment of the principal of, premium, if any, and interest on the Bonds at any time
issued and Outstanding under this Indenture, according to their tenor, and to secure the
performance and observance of all the covenants and conditions therein and herein set forth, and
to declare the terms and conditions upon and subject to which the Bonds are to be issued and
4
P6402-1059\925G74v4.doc
received, and in consideration of the premises and of the mutual covenants herein contained and
of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable
considerations, the receipt whereof is hereby acknowledged, the Authority hereby covenants and
agrees with the Trustee, for the benefit of the Owners of the Bonds, as follows:
ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE
OF BONDS; EQUAL SECURITY
Section 1.01 Definitions. The following terms shall for all purposes of this
Indenture and any Supplemental Indenture, the Bonds and any certificate, opinion, request or
other documents herein mentioned have the meanings ascribed thereby. In addition, the terms
defined in Section 1.01 of the Loan Agreement and not otherwise defined in this Section 1.01
shall have the meanings ascribed thereby in the Loan Agreement.
"Act" means Articles 1 through 4(commencing with Section 6500) of Chapter 5,
Division 7, Title 1 of the Government Code of the State, as in existence on the Closing Date or
as thereafter amended from time to time.
"A�encv" means the Palm Desert Redevelopment Agency, a redevelopment
agency, a public body corporate and politic, duly created, established and authorized to transact
business and exercise its powers all under and pursuant to the Redevelopment Law, and any
successor to its duties and functions.
"Authoritv" means the Palm Desert Financing Authority, a joint powers authority
duly organized and existing under the Joint Exercise of Powers Agreement, dated January 26,
1989, by and between the City and the Agency, and under the laws of the State.
"Authority Commission" means the governing body of the Authority.
"Bond Counsel" means Richards, Watson & Gershon, A Professional
Corporation, Los Angeles, California, or a firm of attorneys of favorable reputation in the field of
municipal bond law.
"Bond Law" means the Marks-Roos Local Bond Pooling Act of 1985, being
Article 4 of the Act (commencing with Section 6584), as in existence on the Closing Date or as
thereafter amended from time to time.
"Bond Year" means each twelve-month period extending from October 2 in one
calendar year to October 1 of the succeeding calendar year, both dates inclusive except that lhe
first Bond Year shall begin on the Closing Date and extend to and include October l, 2007.
"Bonds" means the Palm Desert Financing Authority, Tax Allocation (Housing
Set-Aside) Refunding Revenue Bonds, Series 2007.
"Business Day" means any day other than a Saturday, Sunday or other day on
which the New York Stock Exchange or banks are authorized or obligated by law or executive
5
order to close in New York, New York, San Francisco, California, Los Angeles, California or
any city in which the Trust Office is located.
"Certificate" means a certificate in writing signed by any officer of the designated
public entity, duly authorized by its legislative body for that purpose.
"Citv" means the City of Palm Desert, a charter law city and municipal
corporation duly organized and validly existing under the laws of the State.
"Closin� Date" means the date of delivery of the Bonds to the Underwriter as the
original purchaser.
"Code" means the Internal Revenue Code of 1986, as amended.
"Count " means the County of Riverside.
"Depositorv" means The Depository Trust Company, New York, New York, and
its successors and assigns as securities depository for the Bonds, or any other securities
depository acting as Depository under Article X.
"Event of Default" means any of the events described in Section 8.01.
"Federal Securities" means any obligations described in paragraph A or B of the
dcfinition of "Permitted Investments" set forth in this Section.
"Fiscal Year" means any twelve-month period extending from July 1 in one
calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any other
twelve-month period selected and designated by the Authority as its official fiscal year period.
"Fitch" means Fitch Ratings, its successors and assigns.
"Indenture" means this Indenture of Trust, as originally executed or as it may
from time to time be supplemented, modified or amended by any Supplemental Indenture
pursuant to the provisions hereof.
"Independent Accountant" means any certified public accountant or firm of
certified public accountants appointed and paid by the Authority, and who, or each of whom (i)
is in fact independent and not under domination of the Authority, the City or the Agency; (ii)
does not have any substantial interest, direct or indirect, in the Authority, the City or the Agency;
and (iii) is not connected with the Authority, the City or the Agency as an officer or employee of
the Authority, the City or the Agency but whom may be regularly retained to make annual or
other audits of the books of or reports to the Authority, the City or the Agency.
"Information Services" means Financial Information, Inc.'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, North
Carolina 28217, Attention: Called Bond Department; and Xcitek, 5 Hanover Square, New York,
New York 10004; or, in accordance with then-current guidelines of the Securities and Exchange
�
Commission, such other addresses and/or such other services providing information with respect
to called bonds as the Agency may designate to the Trustee in writing.
"Insurance Pavin� Agent" means , or its successors
under the Insurance Policy.
"Insurance Policy" means the policy issued by the Insurer insuring the payment
when due of thc principal of and interest on the Bonds.
"Insurer" means
"Interest Account" means the account by that name established and held by the
Trustee pursuant to Section 4.02(b)(1).
"Interest Pavment Date" means April 1 and October 1 of each year, commencing
on April 1, 2007.
"Loan" means the loan made by the Authority to the Agency pursuant to the Loan
Agreement.
"Loan A�reement" means the 2007 Housing Project Loan Agreement dated as of
February 1, 2007, by and among the Authority, the Agency and the Trustee relating to the Loan,
as originally executed or as it may from time to time be supplemented, modified or amended.
"Moodv's" means Moody's Investors Service, its successors and assigns.
"Nominee" means the nominee of the Depository, which may be Cede & Co., as
determined from time to time pursuant to Article X.
"Outstandin�", when used as of any particular time with reference to Bonds,
means (subject to the provisions of Section 11.07) all Bonds theretofore executed, issued and
delivered by the Authority under this Indenture except (i) Bonds theretofore cancelled by the
Trustee or surrendered to the Trustee for cancellation, (ii) Bonds paid or deemed to have been
paid within the meaning of Section 11.03, and (iii) Bonds in lieu of or in substitution for which
other Bonds shall have been executed, issued and delivered pursuant to this lndenture.
"Owner", means the person in whose name the ownership of any Bond or Bonds
shall be registered on the Registration Books.
"Participants" 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 which at the time of
investment are legal investments under the laws of the State for the moneys proposed to be
invested therein:
A. Direct 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,
7
and CATS and TIGR5) or obligations the principal of and interest on which are unconditionally
guaranteed by the United States of America. For purposes of this paragraph A, "obligations the
principal of and interest on which are unconditionally guaranteed by the United States of
Amcrica" include without limitation tax exempt obligations of a state or a political subdivision
thereof which have been defeased under irrevocable escrow instructions with non-callable
obligations for which the full faith and credit of the United States of America are pledged for the
payment of principal and interest and which are rated "Aaa" by Moody's and "AAA" by S&P.
B. Bonds, debentures, notes or other evidence of indebtedness issued
or guaranteed by any of the following federal agencies, provided such obligations are backed by
the full faith and credit of the United States of America (provided that stripped securities are only
permitted if they have been stripped by the agency itseli�:
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)
General Services Administration Participation certificates
6. Government National Mortgage Association (GNMA or
"Ginnie Mae") GNMA - guaranteed mortgage-backed
bonds GNMA - guaranteed pass-through obligations
7. U.S. Maritime Administration Guaranteed Title XI
financing
8. U.S. Department of Housing and Urban Development
(HUD) Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government
guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S. government
guaranteed public housing notes and bonds
C. Bonds, debentures, notes or other evidence of indebtedness issued
or guaranteed by any of the following non-full faith and credit U.S. government agencies
(provided that stripped securities are only permitted if they have been stripped by the agency
itself�:
Federal Home Loan Bank System Senior debt obligations
:
2. Federal Home Loan Mortgage Corporation (FHLMC or
"Freddie Mac") Participation Certificates Senior debt
obligations
3. Federal National Mortgage Association (FNMA or "Fannie
Mae") Mortgage-backed securities and senior debt
obligations
4. Resolution Funding Corp. (REFCORP) obligations
D. Money market funds, including funds for which the Trustee or its
affiliates provide investment advisory or other management services, registered under the
Federal Investment Company Acl 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.
E. Certificates of deposit secured at all times by collateral described
in paragraph A andior paragraph B above; provided that such certificates must be issued by
commercial banks (including the Trustee and its affiliates), savings and loan associations or
mutual savings banks and provided further that the collateral must be held by a third party and
the Trustee on behalf of the Owners must have a perfected first security interest in the collateral.
F. Certificates of deposit, savings accounts, deposit accounts or
money market deposits which are fully insured by the Federal Deposit Insurance Corporation,
including BIF and SAIF, and including those of the Trustee and its affiliates.
G. Investment agreements, including guaranteed investment contracts,
forward purchase agreements and reserved fund put agreements acceptable to the Insurer.
H. Commercial paper rated, at the time of purchase, "Prime - 1" by
Moody's and "A-1" or better by S&P.
I. Bonds or notes issued by any state or municipality which are rated
by Moody's and S&P in one of the two highest rating categories assigned by such agencies.
J. Federal funds or bankers acceptances with a maximum term of one
year of any bank (including the Trustee 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
fotlowing criteria. Repurchase Agreements which exceed 30 days must be acceptable to the
Insurer.
Purchase agreements 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
E
dcaler bank or securities firm will repay the cash plus a yield to the municipal entity in exchange
for the securities at a specified date.
L. The Local Agency Investment Fund in the State Treasury or any
similar pooled investment fund administered by the State, to the extent such investment is held in
the name and to the credit of the Trustee.
M. Shares of beneficial interest issued by the California Asset
Management Trust, a common law trust established under the laws of the State.
"Principal Account" means the account by that name established and held by the
Trustee pursuant to Section 4.02(b)(2).
"Record Date" means, with respect to any Interest Payment Date, the 15th
calendar day of the month immediately preceding such Interest Payment Date, whether or not
such day is a Business Day.
"Redemption Account" means the account by that name established and held by
the Trustee pursuant to Section 4.02(b)(3).
"Redevelopment Law" means the Community Redevelopment Law, being
California Health and Safety Code Section 33000, et seq., and all future acts supplemental
thereto or amendatory thereof.
"Re�istration Books" means the records maintained by the Trustee pursuant to
Section 2.09 for the registration and transfer of ownership of the Bonds.
"Report" means a document in writing signed by an Independent Redevelopment
Consultant and including: (i) a statement that the person or firm making or giving such Report
has read the pertinent provisions of the document or documents to which such Report relates; (ii)
a brief statement as to the nature and scope of the examination or investigation upon which the
Report is based; and (iii) a statement that, in the opinion of such person or firm, sufficient
examination or investiga[ion was made as is necessary to enable said consultant to express an
informed opinion with respect to the subject matter referred to in the Report.
"Representation Letter" means the Blanket Issuer Letter of Representations, dated
July l, 1997, from the Authority to the Depository, qualifying bonds issued by the Authority for
the Depository's book-entry system.
"Request" means a request in writing signed by any officer of the designated
public entity duly authorized by its legislative body for that purpose.
"Revenue Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.02(a).
"Revenues" means (i) all amounts payable by the Agency pursuant to Section
2.03 or Section 2.04 of the Loan Agreement; (ii) any proceeds of the Bonds originally deposited
with the Trustee and all moneys deposited and held from time to time by the Trustee in the funds
10
and accounts established hereunder; and (iii) income and gains with respect to the investment of
amounts on deposit in the funds and accounts established hereunder, other than amounts payable
to the United States of America pursuant to Section 5.07.
"S&P" means Standard & Poor's Ratings Services and its successors and assigns.
"Securities Depositories" means The Depository Trust Company, 55 Water Strcet,
SOth Floor, New York, New York, 10041, Attn: Call Notification Department, Fax (212) 855-
7232; and, in accordance with then current guidelines of the Securities and Exchange
Commission, such other addresses or such other securities depositories as the Authority may
designatc in a Certificate of the Authority delivered to the Trustee.
"State" means the State of California.
"Suvplemental Indenture" means any indenture, agreement or other instrument
hereafter duly executed by the Authority and the Trustee in accordance with the provisions of
Section 7.01.
"Tax ReQulations" means temporary and permanent regulations promulgated
under or with respect to Section 103 and Sections 141 through 150, inclusive, of the Code.
"Term Bonds" means the Bonds maturing on October 1, 20_.
"Trust Office" means the corporate trust office of the Trustee at the address set
forth in Section 11.13 or such other offices as may be specified to the Authority by the Trustee in
writing. With respect to presentation of Bonds for payment or for registration of transfer and
exchange such term shall mean the office or agency of the Trustee at which, at any particular
time, its corporate trust business shall be conducted.
"Trustee" means Wells Fargo Bank, National Association and its successors and
assigns, and any other corporation or association which may at any time be substituted in its
place as provided in Article VI.
"Underwriter" means Hutchinson, Shockey, Erley & Co.
Section 1.02 Rules of Construction. All references in this Indenture to
"Articles," "Sections," and other subdivisions, unless indicated otherwise, are to the
corresponding Articles, Sections or subdivisions of this Indenture; and the words "herein,"
"hereof," "hereunder," and other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or subdivision hereof.
Section 1.03 Authorization and Purnose of Bonds. The Authority has reviewed
all proceedings heretofore taken relative to the authorization of the Bonds and has found, as a
result of such review, and hereby finds and determines that all things, conditions, and acts
required by law to exist, happen and be performed precedent to and in the issuance of the Bonds
do exist, have happened and have been performed in due time, form and manner as required by
law, and the Authority is now authorized under the Bond Law and each and every requirement of
law, to issue the Bonds in the manner and form provided in this Indenture. The Authority hereby
11
authorizes the issuance of the Bonds pursuant to the Bond Law and this Indenture for the purpose
of providing funds to make the Loan to the Agency pursuant to the Loan Agreement.
Section 1.04 Eaual Securitv. In consideration of the acceptance of the Bonds by
the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among
the Authority, the Trustee and the Owners of the Bonds; and the covenants and agreements
herein set forth to be performed on behalf of the Authority shall be for the equal and
proportionate benefit, security and protection of all Owners of the Bonds without preference,
priority or distinction as to security or otherwise of any of the Bonds over any of the others by
reason of the number or date thereof or the time of sale, execution or delivery thereof, or
otherwise for any cause whatsoever, except as expressly provided therein or herein.
ARTICLE II
ISSUANCE OF BONDS
Section 2.01 Desi�nation. The Bonds shall be designated the "Palm Desert
Financing Authority, Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds, Series
2007"> and shall be issued in the original aggregate principal amount of $ .
Section 2.02 Terms of Bonds. The Bonds shall be issued in fully registered
form without coupons in denominations of $5,000 or any integral multiple thereof, so long as no
Bond shall have more than one maturity. The Bonds shall be dated the Closing Date, shall
mature on October 1 in each of the years and in the amounts, and shall bear interest (calculated
on the basis of a 360-day year of twelve 30-day months) at the rates, as follows:
Maturity Date Principal Interest Maturity Date
(October 1) Amount Rate (October 1)
Principal Interest
Amount Rate
12
Interest on the Bonds shall be payable on each Interest Payment Date to the
pe�'son whose name appears on the Registration Books as the Owner thereof as of the close of
business on the Record Date, such interest to be paid by check or draft of the Trustee mailed by
first class mail, postage prepaid, on each Interest Payment Date to the Owner at the address of
such Owner as it appears on the Registration Books on such Record Date; provided, however,
that at the written request of the Owner of at least $1,000,000 in aggregate principal amount of
Outstanding Bonds filed with the Trustee prior to any Record Date, interest on such Bonds shall
be paid to such Owner on each succeeding Interest Payment Date by wire transfer of
immediately available funds to an account in the United States designated in such written request
(unless and until such request has been revoked in writing). Payments of defaulted interest with
respect to the Bonds shall be paid by check or draft to the Owners as of a special record date to
be fixed by the Trustee, notice of which special record date shall be given to the Owners not less
than ten days prior thereto. Principal of and premium, if any, on any Bond shall be paid upon
presentation and surrender thereof, at maturity or the prior redemption thereof, at the Trust
Office. The principal of and interest and premium, if any, on the Bonds shall be payable in
lawful money of the United States of America.
Each Bond shall bear interest from the Interest Payment Date next preceding the
date of authentication thereof, unless (i) it is authenticated during the period from the day after
the Record Date for an Interest Payment Date to and including such Interest Payment Date, in
which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated on or
prior to the Record Date for 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 any Bond
interest with respect to such Bond is in default, such Bond shall bear interest from the Interest
Payment Date to which interest has been paid or made available for payment with respect to such
Bond.
Section 2.03 Redemption of Bonds.
(a) Noncallable Bonds. The Bonds maturing on or before October 1, 20_ are
not subject to redemption prior to their maturity.
(b) Redemption from Ontional Loan Prepavments. In the event that the
Agency shall exercise its option to prepay principal installments of the Loan pursuant to Section
2.4 of the Loan Agreement, the Revenues derived from such prepayment shall be applied to the
redemption of the Bonds maturing after October 1, 20_, as a whole, or in part among maturities
as may be designated in writing by the Authority and by lot within a maturity, in integral
multiples of Five Thousand Dollars ($5,000) principal amount, on any Interest Payment Date on
or after October 1, 20_, at the following respective redemption prices (expressed as percentages
of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of
redemption:
Redemption Date Redemption Price
October 1, 20_ and April 1, 20_ %
October 1, 20_ and April 1, 20_
October l, 20_ and thereafter
13
The Authority shall provide written notice to the Trustee of any redemption
pursuant to this Section 2.03(b) at least 45 but not more than 90 days prior to the date fixed for
such redcmption.
(c) Mandatory Sinkin� Fund Redemotion. The Term Bonds shall also be
subject to mandatory redemption by lot, on October 1 in each year commencing as set forth
below, from sinking fund payments made by the Authority into the Principal Account pursuant
to Section 4.02(b)(2), at a redemption price equal to the principal amount thereof to be redeemed,
without premium, plus accrued interest to the date of redemption, in the aggregate respective
principal amounts and on October 1 in the respective years as set forth in the following table;
provided, however, that (i) in lieu of redemption thereof on October 1 in any year, the Term
Bonds may be purchased by the Agency pursuant to Section 2.03 of the Loan Agreement and
tendered to the Trustee for cancellation not later than the preceding July 15, and (ii) if some but
not all of the Term Bonds have been redeemed pursuant to Paragraph (b) above, the total amount
of all future sinking fund payments shall be reduced by the aggregate principal amount of the
Term Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis.
Sinking Fund Principal Amount to
Redemption Date be Redeemed
(October 1) or Purchased
*
*Maturity
(d) Notice of Redemption. The Trustee on behalf and at the expense of the
Authority shall send by first class mail (or such other means acceptable to such Owners or
institutions) notice of any redemption to the respective Owners of any Bonds designated for
redemption at their respective addresses appearing on the Registration Books, and to the
Securities Depositories and to one or more Information Services, at least 30 but not more than 60
days prior lo the date fixed for redemption; provided, however, that neither failure to receive any
such notice so mailed nor any defect therein shall affect the validity of the proceedings for the
redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall
state the date of the notice, the redemption date, the redemption place and the redemption price
and shall designate the CUSIP numbers, the Bond numbers (but only if less than all of the
Outstanding Bonds are to be redeemed) and the maturity or maturities (in the event of
redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be
14
redeemed, and shall require that such Bonds be then surrendered at the Trust Office of the
Trustec for redemption at the redemption price, giving notice also that further interest on such
Bonds will not accrue from and after the redemption date.
(e) Selection of Bonds for Redemntion. Whenever provision is made in this
Indenture for the redemption of less than all of the Bonds of any maturity, the Trustee shall select
the Bonds to be redeemed from all Bonds of such maturity not previously called for redemption,
by lot in any manner which the Trustee in its sole discretion shall deem appropriate under the
circumstances. For purposes of such selection, all Bonds shall be deemed to be comprised of
separate $5,000 portions and such portions shall be treated as separate bonds which may be
separately redeemed.
(f� Partial Redemption of Bonds. In the event only a portion of any Bond is
called for redemption, then upon surrender of such Bond the Authority shall execute and the
Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a
new Bond or Bonds of the same tenor and maturity date, of authorized denominations in
aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed.
(g) Effect of Redemption. From and after the date fixed for redemption, if
funds available for the payment of the principal of, interest on and premium, if any, on the Bonds
so called for redemption shall have been duly provided, such Bonds so called shall cease to be
entitled to any benefit under this Indenture other than the right to receive payment of the
redemption price, and no interest shall accrue thereon from and after the redemption date
specified in such notice. All Bonds redeemed pursuant to this Section shall be destroyed.
Section 2.04 Form of Bonds. The Bonds, the Trustee's certificate of
authentication, and the assignment shall be substantially in the respective forms 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 Indenture.
Section 2.05 Execution of Bonds. The Bonds shall be signed in the name and
on behalf of the Authority with the manual or facsimile signatures of its President and attested
with the manual or facsimile signature of its Secretary or any deputy duly appointed by the
Authority Commission, and shall be delivered to the Trustee for authentication by it. In case any
officer of the Authority who shall have signed any of the Bonds shall cease to be such officer
before the Bonds so signed shall have been authenticated or delivered by the Trustee or issued by
the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon
such authentication, delivery and issue, shall be as binding upon the Authority as though the
individual who signed the same had continued to be such officer of the Authority. Also, any
Bond may be signed on behalf of the Authority by any individual who on the actual date of the
execution of such Bond shall be the proper officer although on the nominal date of such Bond
such individual shall not have been such officer.
Only such of the Bonds as shall bear thereon a certificate of authentication in
substantially the form set forth in Exhibit A, manually executed by the Trustee, shall be valid or
obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the
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Trustee shall be conclusive evidence that the Bonds so authenticated have been duly
authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
Section 2.06 Transfer of Bonds. Any Bond may, in accordance with its terms,
bc transferred, upon the Registration Books, by the person in whose name it is registered, in
person or by such Owner's duly authorized attorney, upon surrender of such Bond for
cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to
the Trustee, duly executed. Whenever any Bond shall be surrendered for transfer, the Authority
shall execute and the Trustee shall thereupon authenticate and deliver to the transferee a new
Bond or Bonds of like tenor, maturity and aggregate principal amount. The cost of printing any
Bonds and any services rendered or expenses incurred by the Trustee in connection with any
such transfer shall be paid by the Authority, except that the Trustee shall require the payment by
the Owner requesting such transfer of any tax or other governmental charge required to be paid
with respect to such transfer. The Trustee shall not be required to transfer, pursuant to this
Section 2.06, either (i) any Bond during the period established by the Trustee for the selection of
Bonds for redemption, or (ii) any Bond selected for redemption pursuant to Section 2.03.
Section 2.07 Exchan�e of Bonds. Bonds may be exchanged at the Trust Office
for the same aggregate principal amount of Bonds of the same tenor and maturity and of other
authorized denominations. The cost of printing any Bonds and any services rendered or
expenses incurred by the Trustee in connection with any such exchange shall be paid by the
Authority, except that the Trustee shall require the payment by the Owner requesting such
exchange of any tax or other governmental charge required to be paid with respect to such
exchange. The Trustee shall not be required to exchange, pursuant to this Section 2.07, either (i)
any Bond during the period established by the Trustee for the selection of Bonds for redemption,
or (ii) any Bond selected for redemption pursuant to Section 2.03.
Section 2.08 Temporary Bonds. The Bonds may be issued initially 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 Authority and may contain such reference to any of the provisions of this
Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and
be registered and authenticated by the Trustee upon the same conditions and in substantially the
same manner as the definitive Bonds; provided that any temporary Bond need only be signed in
the name and on behalf of the Authority with the manual or facsimile signature of the Secretary,
or any deputy duly appointed by the Authority Commission, and need not be attested. If the
Authority issues temporary Bonds, it will execute and furnish definitive Bonds without delay,
and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange therefor
at the Trust Office and the Trustee shall authenticate and deliver in exchange for such temporary
Bonds definitive Bonds of like tenor, maturity and aggregate principal amount in authorized
denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits
under this Indenture as definitive Bonds authenticated and delivered hereunder.
Section 2.09 ReQistration Books. The Trustee will keep or cause to be kept at
its Trust Office sufficient records for the registration and transfer of the Bonds, which shall at all
times during regular business hours be open to inspection by the Authority with reasonable prior
notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable
16
regulations as it may prescribe, register or transfer or cause to be registered or transferred, on
such records, Bonds as hereinbefore provided.
Section 2.10 Bonds Mutilated, Lost, Destroved or Stolen. If any Bond shall
become mutilated, the Authority, at the expense of the Owner of such Bond, shall execute, and
the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor, maturity and
aggregate principal amount in authorized denominations in exchange and substitution for the
Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every
mutilated Bond so surrendered to the Trustee shall be cancelled by it and destroyed. If any Bond
issued hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may
be submitted to the Trustee and, if such evidence be satisfactory to the Trustee and indemnity
satisfactory to the Trustee shall be given, the Authority, at the expense of the Owner, shall
execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in
lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall
havc matured or shall have been called for redemption, instead of issuing a substitute Bond the
Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to the
Trustee). The Trustee may require payment of a reasonable fee for each new Bond issued under
this Section 2.10 and of the expenses which may be incurred by the Authority and the Trustee.
Any Bond issued under the provisions of this Section 2.10 in lieu of any Bond alleged to be lost,
destroyed or stolen shall constitute an original contractual obligation on the part of the Authority
whether or not the Bond alleged to be lost, destroyed or stolen be at any time enforceable by
anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all
other Bonds secured by this Indenture.
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS OF
BONDS; ISSUANCE OF BONDS
Section 3.01 Issuance of Bonds. Upon the execution and delivery of this
Indenture, the Authority shall execute and deliver Bonds in the aggregate principal amount set
forth herein and shall deliver the Bonds to the Trustee for authentication and delivery to the
original purchaser thereof upon the Request of the Authority.
Section 3.02 Apvlication of Proceeds of Sale of Bonds. The proceeds from the
sale of the Bonds shall be applied in accordance with Section 2.2 of the Loan Agreement.
Section 3.03 Validitv of Bonds. The validity of the authorization and issuance
of the Bonds shall not be affected in any way by any proceedings taken by the Agency with
respect to the application of the proceeds of the Loan, and the recital contained in the Bonds that
the same are issued pursuant to the Bond Law shall be conclusive evidence of their validity and
of the regularity of their issuance.
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ARTICLE IV
REVENUES; FLOW OF FUNDS
Section 4.01 Pled�e of Revenues; Assignment of Ri�hts. Subject to the
provisions of Section 6.03, the Bonds shall be secured by a first lien on and pledge (which shall
bc effected in the manner and to the extent hereinafter provided) of all of the Revenues. The
Bonds shall be equally secured by a pledge, charge and lien upon the Revenues without priority
for number, date of Bonds, date of execution or date of delivery; and the payment of the interest
on and principal of the Bonds and any premiums upon the redemption of any thereof shall be and
are secured by an exclusive pledge, charge and lien upon the Revenues. So long as any of the
Bonds are Outstanding, the Revenues shall not be used for any other purpose; except that out of
the Revenues there may be apportioned such sums, for such purposes, as are expressly permitted
by Section 4.02.
The Authority hereby transfers in trust and assigns to the Trustee, for the benefit
of the Owners from time to time of the Bonds, all of the Revenues and all of the right, title and
interest of the Authority in the Loan Agreement (other than the rights of the Authority under
Section 5.04 thereof�. The Trustee shall be entitled to and shall receive all of the Revenues, and
any Revenues collected or received by the Authority shall be deemed to be held, and to have
been collected or received, by the Authority as the agent of the Trustee and shall forthwith be
paid by the Authority to the Trustee. The Trustee also shall be entitled to and, subject to the
provisions hereof, shall take all steps, actions and proceedings reasonably necessary in its
judgment to enforce, either jointly with the Authority or separately, all of the rights of the
Authority and all of the obligations of the Agency under the Loan Agreement.
Section 4.02 Receipt, Deposit and Anplication of Revenues.
(a) Deposit of Revenues, Revenue Fund. All Revenues described in clause (i)
of the definition thereof in Section 1.01 shall be promptly deposited by the Trustee upon receipt
thereof in a special fund designated as the "Revenue Fund" which the Trustee shall establish,
maintain and hold in trust hereunder.
(b) Application of Revenues; Accounts. On or before each Interest Payment
Date, the Trustee shall transfer from the Revenue Fund and deposit into the following respective
accounts (each of which the Trustee shall establish and maintain within the Revenue Fund), the
following amounts in the following order of priority, the requirements of each such account
(including the making up of any deficiencies in any such account resulting from lack of
Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied
before any transfer is made to any account subsequent in priority:
(1) Interest Account. On or before each Interest Payment Date, the
Trustee shall deposit in the Interest Account an amount required to cause the aggregate amount
on deposit in the lnterest Account to equal the amount of interest coming due and payable on
such Interest Payment Date on all Outstanding Bonds. No deposit need be made into the Interest
Account if the amount contained therein is at least equal to the interest coming due and payable
upon all Outstanding Bonds on the next succeeding Interest Payment Date. All moneys in the
m
Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the
interest on the Bonds as it shall become due and payable (including accrued interest on any
Bonds redeemed prior to maturity). All amounts on deposit in the Interest Account on the first
day of any Bond Year, to the extent not required to pay any interest then having come due and
payable on the Outstanding Bonds, shall be withdrawn therefrom by the Trustee and transferred
to the Agency to be used for any lawful purposes of the Agency.
(2) Principal Account. On or before each date on which the principal
of the Bonds shall be payable, the Trustee shall deposit in the Principal Account an amount
required to cause the aggregate amount on deposit in the Principal Account to equal (i) the
principal amount of the Bonds coming due and payable on such date pursuant to Section 2.02
and (ii) the redemption price of the Bonds (consisting of the principal amount thereof� required
to be redcemed on such date pursuant to Section 2.03(c). All moneys in the Principal Account
shall be used and withdrawn by the Trustee solely for the purpose of (i) paying the principal of
the Bonds at the maturity thereof or (ii) paying the principal of the Term Bonds upon the
mandatory sinking fund redemption thereof pursuant to Section 2.03(c). All amounts on deposit
in the Principal Account on the first day of any Bond Year, to the extent not required to pay the
principal of any Outstanding Bonds then having come due and payable, shall be withdrawn
therefrom and transferred to the Agency to be used for any lawful purposes of the Agency.
(3) Redemption Account. The Trustee, at any time that the Agency
shall exercise its option to prepay principal installments of the Loan pursuant to Section 2.04 of
the Loan Agreement, shall deposit the Revenues derived from such prepayment in the
Redemption Account (which the Trustee shall also establish and maintain within the Revenue
Fund), to be used and withdrawn by the Trustee solely for the purpose of paying the principal
and redemption premiums, if any, on the Bonds to be redeemed on their respective redemption
dates, as directed by the Authority.
Section 4.03 Investments. All moneys in any of the funds or accounts
established with the Trustee pursuant to this Indenture or pursuant to the Loan Agreement shall
be invested by the Trustee solely in Permitted Investments pursuant to the written direction of
the Authority given to the Trustee two Business Days in advance of the making of such
investments; provided that moneys in the Reserve Fund established pursuant to the Loan
Agreement shall be invested in Permitted Investments which mature not more than five years
from the date of such investment. In the absence of any such direction from the Authority, the
Trustee shall invest any such moneys in Permitted Investments described in Paragraph D of the
definition thereof. Obligations purchased as an investment of moneys in any fund shall be
deemed to be part of such fund or account.
All interest or gain derived from the investment of amounts in any of the funds or
accounts established hereunder shall be deposited in the fund or account from which such
investment was made. For purposes of acquiring any investments hereunder, the Trustee may
commingle funds held by it hereunder. The Trustee may (but shall not be obligated to) act as
principal or agent in the acquisition or disposition of any investment. The Trustee shall incur no
liability for losses arising from any investments made at the direction of the Authority, or
otherwise made pursuant to this Section.
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The Trustee shall be entitled to rely conclusivefy upon the written instructions of
the Authority 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 set forth in the definition of
Permitted Investments set forth in Section 1.01 which embody legal conclusions (e.g., the
existence, validity and perfection of security interests in collateral), the Trustee shall be entitled
to rely conclusively on an opinion of counsel or upon a representation of the provider of such
Permitted Investment obtained at the Authority's or the Agency's expense.
Except as specifically provided in this Indenture, the Trustee shall not be liable to
pay interest on any moneys received by it, but shall be liable only to account to the Authority and
the Agency for earnings derived from funds that have been invested.
The Authority acknowledges that to the extent regulations of the Comptroller of the Currency or
other applicable regulatory entity grant the Authority the right to receive brokerage
confirmations of security transactions as they occur, the Authority specifically waives receipt of
such confirmations to the extent permitted by law. The Trustee will furnish the Authority
periodic cash transaction statements which include detail for all investment transactions made by
the Trustee hereunder.
The Trustee or any of its affiliates may act as sponsor, advisor or manager in
connection with any investments made by the Trustee hereunder.
Section 4.04 Valuation and Disposition of Investments. For the purpose of
determining the amount in any fund or account established hereunder or under the Loan
Agreement, any investments credited to such fund or account shall be valued at least annually,
on or before July 1, at the market value thereof. In making any valuations hereunder the Trustee
may utilize computerized securities pricing services that may be available to it, including those
available through its regular accounting system.
ARTICLE V
COVENANTS OF THE AUTHORITY
Section 5.01 Punctual Pavment. The Authority shall punctually pay or cause to
be paid the principal, interest and premium, if any, to become due in respect of all the Bonds, in
strict conformity with the terms of the Bonds and of this Indenture, according to the true intent
and meaning thereof, but only out of Revenues and other assets pledged for such payment as
provided in this Indenture.
Section 5.02 Extension of Pavment of Bonds. The Authority shall not directly
or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement,
and in case the maturity of any of the Bonds or the time of payment of any such claims for
interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any
default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of
the principal of all of the Bonds then Outstanding and of all claims for interest thereon which
20
shall not have been so extended. Nothing in this Section 5.02 shall be deemed to limit the right
oi� the Authority to issue bonds or other obligations for the purpose of refunding any Outstanding
Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the
Bonds.
Section 5.03 A�ainst Encumbrances. The Authority shall not create, or permit
the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other
assets pledged or assigned under this Indenture while any of the Bonds are Outstanding, except
the pledge and assignment created by this Indenture. Subject to this limitation, the Authority
expressly reserves the right to enter into one or more other indentures for any of its corporate
purposes, including other programs under the Bond Law, and reserves the right to issue other
obligations for such purposes.
Section 5.04 Power to Issue Bonds and Make Pled�e and Assi�nment. The
Authority is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture
and to pledge and assign the Revenues, the Loan Agreement and other assets purported to be
pledged and assigned, respectively, under this Indenture in the manner and to the extent provided
in this Indenture. The Bonds and the provisions of this Indenture are and will be the legal, valid
and binding special obligations of the Authority in accordance with their terms, and the
Authority shall at all times, to the extent permitted by law, defend, preserve and protect said
pledge and assignment of Revenues and other assets and all the rights of the Owners under this
Indenture against all claims and demands of all persons whomsoever.
Section 5.05 AccountinQ Records and Financial Statements. The Trustee shall
at all times keep, or cause to be kept, proper books of record and account, prepared in accordance
with corporate trust industry standards, in which complete and accurate entries shall be made of
all �ransactions made by the Trustee relating to the proceeds of Bonds, the Revenues, the Loan
Agreement and all funds and accounts established pursuant to this Indenture. Such books of
record and account shall be available for inspection by the Authority and the Agency, during
regular business hours with reasonable prior notice.
Section 5.06 No Additional Indebtedness. Except for the Bonds, the Authority
shall not incur any indebtedness payable out of the Revenues. (For clarification, this provision
does not prohibit the Agency from incurring additional debt secured by Pledged Tax Revenues,
so long as the incurrence of such debt is in compliance with the Loan Agreement.)
Section 5.07 Tax Covenants.
(a) The Authority covenants that, in order to maintain the exclusion from
gross income for Federal income tax purposes of the interest on the Bonds, and for no other
purpose, the Authority will satisfy, or take such actions as are necessary to cause to be satisfied,
each provision of the Code necessary to maintain such exclusion. In furtherance of this covenant
the Authority agrees to comply with such written instructions as may be provided by Bond
Counsel.
(b) The Authority covenants that no part of the proceeds of the Bonds shall be
used, directly or indirectly, to acquire any Investment Property which would cause the Bonds to
21
become arbitrage bonds, as that term is defined in Section 148 of the Code, or under applicable
Tax Regulations. In order to assure compliance with the rebate requirements of Section 148 of
the Code, the Authority further covenants that it will pay or cause to be paid to the United States
the amounts necessary to satisfy the requirements of Section 148(f� of the Code, and that it will
establish such accounting procedures as are necessary to adequately determine, account for and
pay over any such amount required to be paid thereunder in a manner consistent with the
requirements of Section 148 of the Code, such covenants to survive the defeasance of the Bonds.
(c) The Authority covenants that it will not take any action or omit to take any
action, which action or omission, if reasonably expected on the date of initia] execution and
delivery of the Bonds, would result in a loss of exclusion from gross income for purposes of
Federal income taxation, under Section 103 of the Code, of interest on the Bonds.
(d) The Authority covenants that it will not use or permit the use of any
property financed with the proceeds of the Bonds by any person (other than a state or local
governmental unit) in such manner or to such extent as would result in a loss of exclusion of the
interest on the Bonds from gross income for Federal income tax purposes under Section 103 of
the Code.
(e) Notwithstanding any provision of this Indenture, and except as provided
below, the Authority covenants that none of the moneys contained in any of the funds or
accounts created pursuant to this Indenture with respect to the Bonds shall be: (i) used in making
loans guaranteed by the United States (or any agency or instrumentality thereof�, (ii) invested
directly or indirectly in a deposit or account insured by the Federal Deposit Insurance
Corporation, National Credit Union Administration or any other similar Federally chartered
corporation, or (iii) otherwise invested directly or indirectly in obligations guaranteed (in whole
or in part) by the United States (or any agency or instrumentality thereo�; provided, however,
that the above restrictions do not apply to: (a) the investment on moneys held in the Revenue
Fund or any other "bona fide debt service fund" as defined for purposes of Section 148 of the
Code, (b) investment in direct obligations of the United States Treasury, (c) investment in
obligations guaranteed by the Federal National Mortgage Association, Government National
Mortgage Association, or the Federal Home Loan Mortgage Corporation, (d) investment in
obligations issued pursuant to Section 21B(d)(3) of the Federal Home Loan Bank Act, as
amended by Section 511(a) of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989, (e) investments permitted under regulations issued pursuant to Section 149(b)(3)(B) of
the Code, or (f� such other investments permitted under this Indenture as, in the opinion of Bond
Counsel, do not jeopardize the exclusion from gross income for Federal income tax purposes of
interest on the Bonds.
Section 5.08 Loan A�reement. The Trustee, as assignee of the Authority's
rights pursuant to Section 4.01, shall receive all amounts due from the Agency pursuant to the
Loan Agreement and, upon an Event of Default, shall diligently enforce, and take all steps,
actions and proceedings reasonably necessary for the enforcement of all of the rights of the
Authority thereunder and for the enforcement of all of the obligations of the Agency thereunder.
The Loan Agreement may be amended or modified pursuant to the applicable
provisions thereof, but only with the written consent of the Insurer (as long as the Insurance
22
Policy is in full force and effect) and only: (i) if the Authority, the Agency or the Trustee first
obtains the written consent of the Owners of a majority in aggregate principal amount of the
Bonds then Outstanding to such amendment or modification, provided, however, that no such
amendment or modification shall (a) extend the maturity of or reduce the amount of interest or
principal payments on the Loan, or otherwise alter or impair the obligation of the Agency to pay
the principal, interest or prepayment premiums on the Loan at the time and place and at the rate
and in the currency provided therein, without the express written consent of the Owner of each
affected Bond, (b) reduce the percentage of the Bonds required for the written consent to any
such modification or amendment thereof or hereof, or (c) without its written consent thereto,
modify any of the rights or obligations of the Trustee; or (ii) without the consent of any of the
Owners, if such amendment or modification does not modify the rights or obligations of the
Trustee without its prior written consent, and is for any one or more of the following purposes -
(a) to add to the covenants and agreements of the Agency contained in the
Loan Agreement other covenants and agreements thereafter to be observed, or to limit or
surrender any rights or power therein reserved to or conferred upon the Agency so long as such
limitation or surrender of such rights or powers shall not materially adversely affect the Owners
of the Bonds;
(b) to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained in the Loan Agreement, or
in any other respect whatsoever as the Agency and the Authority may deem necessary or
desirable, provided under any circumstances that such modifications or amendments shall not
materially adversely affect the interests of the Owners of the Bonds;
(c) to amend any provision thereof relating to the Code, to any extent
whatsoever but only if and to the extent such amendment will not adversely affect the exclusion
from gross income for federal income tax purposes of interest on any of the Bonds under the
Code, in the opinion of Bond Counsel; or
(d) to provide for the issuance of Parity Debt under and in accordance with
�he provisions of the Loan Agreement.
Nothing in this Section 5.08 shall prevent the Agency and the Authority, with the
written consent of the Insurer (as long as the Insurance Policy is in full force and effect), from
entering into any amendment or modification of the Loan Agreement which solely affects a
particular Bond or Bonds all of the Owners of which shall have consented to such amendment or
modification; provided, however, no such amendment or modification shall affect the rights or
obligations of the Trustee without its prior written consent. The Trustee shall be entitled to rely
upon the opinion of Bond Counsel stating that the requirements of this Section 5.08 have been
met with respect to any amendment or modification of the Loan Agreement.
Section 5.09 Further Assurances. The Authority will adopt, make, execute and
deliver any and all such further resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this Indenture,
and for thc better assuring and confirming unto the Owners of the Bonds the rights and benefits
provided in this Indenture.
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ARTICLE VI
THE TRUSTEE
Section 6.01 Appointment of Trustee. Wells Fargo Bank, National Association,
a national banking association organized and existing under and by virtue of the laws of the
United States of America, with a corporate trust office in Los Angeles, California, is hereby
appointed Trustee by the Authority for the purpose of receiving all moneys required to be
deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this
Indenture. The Authority agrees that it will maintain a Trustee which shal] be a financial
institution having a corporate trust office in the State, with a combined capital and surplus of at
least $75,000,000, and subject to supervision or examination by federal or State authority, so
long as any Bonds are Outstanding. 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 purpose of this Section 6.01 the combined capital and surplus of
such financial institution shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
The Trustee is hereby authorized to pay the principal of and interest and
redemption premium, if any, on the Bonds when duly presented for payment at maturity, or on
redemption or purchase prior to maturity, and to cancel all Bonds upon payment thereof. The
Trustee shall keep accurate records of all funds administered by it and of all Bonds paid and
discharged.
Section 6.02 Acceptance of Trusts. The Trustee hereby accepts the trusts
imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to
the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and after
curing of all Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no implied covenants, duties or
obligations shall be read into this Indenture against the Trustee. In case an Event of Default
hereunder has occurred (which has not been cured or waived), the Trustee may exercise such of
the rights and powers vested in it by this Indenture, and shall use the same degree of care and
skill and diligence in their exercise, as a prudent person would use in the conduct of its own
affairs.
(b) The Trustee may execute any of the trusts or powers hereof and perform
the duties required of it hereunder by or through attorneys, agents, or receivers, and shall be
entitled to advice of counsel concerning all matters of trust and its duty hereunder. The Trustee
may conclusively rely on such advice or an opinion of counsel as full and complete protection
for any action taken or suffered by it hereunder.
(c) The Trustee shal] not be responsible for any recital herein, in the Loan
Agreement or in the Bonds, or for any of the supplements hereto or thereto or instruments of
further assurance, or for the validity of this Indenture or the Loan Agreement, or for the
sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, or
24
the tax status of the interest on the Bonds, and the Trustee shall not be bound to ascertain or
inquire as to the observance or performance of any covenants, conditions or agreements on the
part of the Authority hereunder.
(d) The Trustee (including its officers and employees) may become the Owner
of Bonds secured hereby with the same rights which it would have if not the Trustee; may
acquire and dispose of other bonds or evidences of indebtedness of the Authority with the same
rights it would have if it were not the Trustee; and may act as a depositary for and permit any of
its officers or directors to act as a member of, or in any other capacity with respect to, any
committee formed to protect the rights of Owners of Bonds, whether or not such committee shall
represent the Owners of the majority in aggregate principal amount of the Bonds then
Outstanding. The Trustee, either as principal or agent, may engage in or be interested in any
financial or other transaction with the Authority.
(e) The Trustee shall be protected in acting upon any report, notice, request,
consent, certificate, order, affidavit, letter, direction, facsimile, e-mail, telegram or other paper or
document believed by it to be genuine and correct and to have been signed or sent by the proper
person or persons and need not make any investigation into the facts or matters contained
therein. Any action taken or omitted to be taken by the Trustee pursuant to this Indenture upon
the request or authority or consent of any person who at the time of making such request or
giving such authority or consent is the Owner of any Bond, shall be conclusive and binding upon
all future Owners of the same Bond and upon Bonds issued in exchange therefor or in place
thereof. The Trustee shall not be bound to recognize any person as an Owner of any Bond or to
take any action at his request unless the ownership of such Bond by such person shall be
reflected on the Registration Books.
(f� As to the existence or non-existence of any fact or as to the sufficiency or
validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a
Certificate of the Authority as sufficient evidence of the facts therein contained and prior to the
occurrence of an Event of Default hereunder of which the Trustee has been given notice or is
deemed to have notice, as provided in Section 6.02(h), shall also be at libeRy to accept a
Certificate of the Authority to the effect that any particular dealing, transaction or action is
necessary or expedient, but may at its discretion secure such further evidence deemed by it to be
necessary or advisable, but shall in no case be bound to secure the same.
(g) The permissive right of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty and it shall not be answerable for other than its
negligence or willful misconduct. The immunities and exceptions from liability of the Trustee
shall extend to its officers, directors, employees and agents. In the absence of negligence or
willful misconduct, the Trustee shall not be liable for any error of judgment.
(h) The Trustee shall not be required to take notice or be deemed to have
notice of any Event of Default hereunder except failure by the Authority to make any of the
payments to the Trustee required to be made by the Authority pursuant hereto, unless the Trustee
shall be specifically notified in writing of such default by the Authority, the Insurer, or by the
Owners of at least 25 percent in aggregate principal amount of the Bonds then Outstanding and
all notices or other instruments required by this Indenture to be delivered to the Trustee must, in
25
order to be effective, be delivered at the Trust Office of the Trustee in Los Angeles, California,
and in the absence of such notice so delivered the Trustee may conclusively assume there is no
Event of Default hereunder except as aforesaid.
(i) At any and all reasonable times the Trustee, and its duly authorized agents,
attorneys, experts, accountants and representatives, shall have the right, but not the obligation,
fully to inspect all books, papers and records of the Authority pertaining to the Bonds, and to
make copies of any of such books, papers and records such as may be desired but which is not
privileged by statute or by law.
(j) The Trustee shall not be required to give any bond or surety in respect of
the execution of the said trusts and powers or otherwise in respect of the premises hereof.
(k) Notwithstanding anything elsewhere in this Indenture with respect to the
execution of any Bonds, the withdrawal of any cash, the release of any property, or any action
whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be
required, to demand any showings, certificates, opinions, appraisals or other information, or
corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing
the right of the Authority to the execution of any Bonds, the withdrawal of any cash, or the
taking of any other action by the Trustee.
(1) Before taking the action referred to in Section 6.05, Section 8.02 or first
paragraph of Section 5.08, the Trustee may require that a satisfactory indemnity bond be
furnished for the reimbursement of all expenses to which it may be put and to protect it against
all liability, except liability which is adjudicated to have resulted from its negligence or willful
misconduct in connection with any such action.
(m) All moneys received by the Trustee shall, until used or applied or invested
as herein provided, be held in trust for the purposes for which they were received but need not be
segregated from other funds except to the extent required by law.
(n) The Trustee shall have no liability or obligation to the Bond Owners with
respect to the payment of debt service by the Authority or with respect to the observance or
performance by the Authority of the other conditions, covenants and terms contained in this
Indenture, or with respect to the investment of any moneys in any fund or account established,
held or maintained by the Authority pursuant to this Indenture or otherwise.
(o) The Trustee makes no covenant, representation or warranty concerning the
cu►rent or future tax status of interest on the Bonds. The Trustee need only keep accurate records
of all investments and funds, and send rebate payments to the United States in accordance with
explicit instructions from the Authority.
(p) The Trustee in its capacity as Trustee is authorized and directed to execute
the Loan Agreement.
(q) The Trustee shall have no responsibility with respect to any information,
statement, or recital in any official statement, offering memorandum or any other disclosure
material prepared or distributed with respect to the issuance of the Bonds.
26
(r) The Trustee 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 of
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 Trustee; provided that, in the event of any such unavoidable delay under this paragraph
6.02(r), the Trustee notify the Authority and the Agency in writing within five business days
after (i) the occurrence of the event giving rise to the unavoidable delay, (ii) the Trustee's actual
knowledge of the impending unavoidable delay, or (iii) the Trustee's knowledge of sufficient
facts under which a reasonable person would conclude the unavoidable delay will occur.
(s) The Trustee agrees to accept and act upon facsimile transmission of
written instructions or directions pursuant to this Indenture, provided, however, that:
(i) subsequent to such facsimile transmission of written instructions or directions the Trustee
shall forthwith receive the originally executed instructions or directions, (ii) such originally
executed instructions or directions shall be signed by a person as may be designated and
authorized to sign for the party signing such instructions or directions, and (iii) the Trustee shall
have received a current incumbency certificate containing the specimen signature of such
designated person.
Section 6.03 Fees, Char�es and Expenses of Trustee. The Trustee shall be
entitled to payment and reimbursement for reasonable fees for its services rendered hereunder
and al] advances (with interest on such advances at the maximum rate allowed by law), counsel
fees and expenses (including those of in-house counsel to the extent they are for services not
duplicative of other counsels' work) and other expenses reasonably and necessarily made or
incuired by the Trustee in connection with such services, which payment and reimbursement
shall not be limited by any provision of law in regard to the compensation of a trustee of an
express trust. Upon the occurrence of an Event of Default hereunder, but only upon an Event of
Default, the Trustee shall have a first lien with right of payment prior to payment of any Bond
upon the amounts held hereunder for the foregoing fees, charges and expenses incurred by it
respectively, which right to payment shall survive the resignation or removal of the Trustee.
Section 6.04 Notice to Owners of Default. If an Event of Default hereunder
occurs with respect to any Bonds of which the Trustee has been given or is deemed to have
notice, as provided in Section 6.02(h), then the Trustee shall promptly given written notice
thereof by first-class mail to the Owner of each such Bond, unless such Event of Default shall
have been cured before the giving of such notice; provided, however, that unless such Event of
Default consists of the failure by the Authority to make any payment when due, the Trustee may
elect not to give such notice if and so long as the Trustee in good faith determines that such
Event of Default does not materially adversely affect the interests of the Owners or that it is
otherwise not in the best interests of the Owners to give such notice.
27
Section 6.05 Intervention bv Trustee. In any judicial proceeding to which the
Authority is a party which, in the opinion of the Trustee, has a substantial bearing on the interests
of Owners of any of the Bonds, the Trustee may intervene on behalf of such Owners, and subject
to Section 6.02(I), shall do so if requested in writing by the Owners of a majority in aggregate
principal amount of such Bonds then Outstanding.
Section 6.06 Removal of Trustee. The Owners of a majority in aggregate
principal amount of the Outstanding Bonds may at any time, and the Authority may (and at the
request of the Agency shall) so long as no Event of Default shall have occurred and then be
continuing, remove the Trustee initially appointed, and any successor thereto, by an instrument
or concurrent instruments in writing delivered to the Trustee, whereupon the Authority or such
Owners, as the case may be, shall appoint a successor or successors thereto; provided that any
such successor shall be a financial institution meeting the requirements set forth in Section 6.01.
Section 6.07 ResiQnation bv Trustee. The Trustee and any successor Trustee
may at any time give written notice of its intention to resign as Trustee hereunder, such notice to
be given to the Authority and the Agency by registered or certified mail. Upon receiving such
notice of resignation, the Authority shall promptly appoint a successor Trustee. Any resignation
or removal of the Trustee and appointment of a successor Trustee shall become effective upon
acceptance of appointment by the successor Trustee. Upon such acceptance, the Authority shall
cause notice thereof to be given by first ctass mail, postage prepaid, to the Bond Owners at their
respective addresses set forth on the Registration Books.
Section 6.08 Anpointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 6.06 or 6.07, respectively, with the prior written
consent of Agency, the Authority shall promptly appoint a successor Trustee. In the event the
Authority shall for any reason whatsoever fail to appoint a successor Trustee within 60 days
following the delivery to the Trustee of the instrument described in Section 6.06 or within 60
days following the receipt of notice by the Authority pursuant to Section 6.07, the Trustee may,
at the expense of the Authority, apply to a court of competent jurisdiction for the appointment of
a successor Trustee meeting the requirements of Section 6.01. Any such successor Trustee
appointed by such court shall become the successor Trustee hereunder notwithstanding any
action by the Authority purporting to appoint a successor Trustee following the expiration of
such sixty-day period.
Section 6.09 Mer�er or Consolidation. Any bank or trust company into which
the Trustee may be merged or converted or with which either of them may be consolidated or
any bank or trust company resulting from any merger, conversion or consolidation to which it
shall be a party or any bank or trust company to which the Trustee may sell or transfer all or
substantially all of its corporate trust business, provided such bank or trust company shall be
eligible under Section 6.01, shall be the successor to such Trustee without the execution or filing
of any paper or further act, except as provided in Section 6.10.
Section 6.10 Concernin� anv Successor Trustee. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the
Authority an instrument in writing accepting such appointment hereunder and thereupon such
successor, without any further act, deed or conveyance, shall become fully vested with all the
:
estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such
predecessor shall, nevertheless, on the Request of the Authority, or of the Trustee's successor,
execute and deliver an instrument transferring to such successor all the estates, properties, rights,
powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all
securities and moneys held by it as the Trustee hereunder to its successor. Should any
instrument in writing from the Authority be required by any successor Trustee for more fully and
certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended
to be vested in the predecessor Trustee, any and all such instruments in writing shall, on request,
be executed, acknowledged and delivered by the Authority.
Section 6.11 Annointment of Co-Trustee. It is the purpose of this Indenture that
there shall be no violation of any law of any jurisdiction (including particularly the law of the
State) denying or restricting the right of banking corporations or associations to transact business
as Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture,
and in particular in case of the enforcement of the rights of the Trustee on default, or in the case
the Trustee or the Authority deems that by reason of any present or future law of any jurisdiction
it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold
title to the properties, in trust, as herein granted, or take any other action which may be desirable
or necessary in connection therewith, it may be necessary that the Trustee or the Authority
appoint an additional individual or institution as a separate co-trustee. The following provisions
of this Section 6.11 are adopted to these ends.
In the event that the Trustee or the Authority appoints an additional individual or
institution as a separate or co-trustee, each and every remedy, power, right, claim, demand, cause
of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be
exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by
and vest in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in
such separate or co-trustee but only to the extent necessary to enable such separate or co-trustee
to exercise such powers, rights and remedies, and every covenant and obligation necessary to the
exercise thereof by such separate or co-trustee shall run to and be enforceable by either of them.
The Trustee shall not be liable for the acts or omissions of any separate or co-trustee appointed
hereunder.
Should any instrument in writing from the Authority be required by the separate
trustee or co-trustee so appointed by the Trustee for more fully and certainly vesting in and
conforming to it such properties, rights, powers, trusts, duties and obligations, any and all such
instruments in writing shall, on request, be executed, acknowledged and delivered by the
Authority. In case any separate trustee or co-trustee, or a successor to either, shall become
incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties
and obligations of such separate trustee or co-trustee, so far as permitted by law, shall vest in and
be exercised by the Trustee until the appointment of a new trustee or successor to such separate
trustee or co-trustee.
Section 6.12 Indemnification; Limited Liability of Trustee. The Authority
further covenants and agrees to indemnify, defend and save the Trustee and its officers, directors,
agents and employees, harmless against any loss, expense and liabilities which it may incur
arising out of or in the exercise and performance of its powers and duties hereunder, including
29
the costs of expenses of defending against any claim of liability, but excluding any and all losses,
expenses and liabilities which are due to the negligence or intentional misconduct of the Trustee,
its officers, directors or employees. No provision in this Indenture shall require the Trustee to
risk or expend its own funds or otherwise incur any financial liability hereunder if it shall have
reasonable grounds for believing repayment of such funds or adequate indemnity against such
liability or risk is not assured to it. The Trustee shall not be liable for any action taken or omitted
to be taken by it in accordance with the direction of the Insurer or the Owners of at least 25
percent in aggregate principal amount of Bonds Outstanding relating to the time, method and
place of conducting any proceeding or remedy available to the Trustee under this Indenture in
exercising any trust or power conferred on the Trustee by this Indenture. The obligations of the
Authority under this Section shall survive the payment and discharge of the Bonds or the
resignation or removal of the Trustee under this Indenture.
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE
INDENTURE
Section 7.01 Amendment Hereof. This Indenture and the rights and obligations
of the Authority and of the Owners of the Bonds may be modified or amended at any time by a
Supplemental Indenture which shall become binding upon adoption, with the written consent of
the Insurer (as long as the Insurance Policy is in full force and effect) but without consent of any
Bond Owners, to the extent permitted by law but only for any one or more of the following
purposes:
(a) To add to the covenants and agreements of the Authority in this Indenture
contained, other covenants and agreements thereafter to be observed, or to limit or surrender any
rights or powers herein reserved to or conferred upon the Authority so long as such limitation or
surrender of such rights or powers shall not materially adversely affect the Owners of the Bonds;
or
(b) To make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained in this Indenture, or in any
other respect whatsoever as the Authority may deem necessary or desirable, provided under any
circumstances that such modifications or amendments shall either (i) conform to the original
intention of the Authority, or (ii) not materially adversely affect the interests of the Owners of
the Bonds in the reasonable judgment of the Authority; or
(c) To amend any provision hereof relating to the Code, to any extent
whatsoever but only if and to the extent such amendment will not adversely affect the exclusion
from gross income of interest on any of the Bonds under the Code, in the opinion of Bond
Counsel.
Except as set forth in the preceding paragraphs of this Section 7.01, this Indenture
and the rights and obligations of the Authority and of the Owners of the Bonds may only be
modified or amended at any time by a Supplemental Indenture which shall become binding when
the written consent of the Insurer (as long as the Insurance Policy is in full force and effect) and
30
of the Owners of a majority in aggregate principal amount of the affected Bonds then
Outstanding are filed with the Trustee. No such modification or amendment shall (i) extend the
maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of
the Authority to pay the principal, interest or premiums, if any, at the time and place and at the
rate and in the currency provided therein of any Bond without the express written consent of the
Owner of such Bond or (ii) reduce the percentage of Bonds required for the written consent to
any such amendment or modification. In no event shall any Supplemental Indenture modify any
of the rights or obligations of the Trustee without its prior written consent.
Section 7.02 Effect of Supplemental Indenture. From and after the time any
Supplemental Indenture becomes effective pursuant to this Article VII, this Indenture shall be
deemed to be modified and amended in accordance therewith, the respective rights, duties and
obligations of the parties hereto or thereto and all Owners of Outstanding Bonds, as the case may
be, shal] thereafter be determined, exercised and enforced hereunder subject in all respects to
such modification and amendment, and all the terms and conditions of any Supplemental
Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
Section 7.03 Endorsement or Renlacement of Bonds After Amendment. After
the effective date of any action taken as hereinabove provided, the Authority may determine that
the Bonds shall bear a notation, by endorsement in form approved by the Authority, as to such
action, and in that case upon demand of the Owner of any Bond Outstanding at such effective
date and presentation of his bond for that purpose at the Trust Office of the Trustee, a suitable
notation as to such action shall be made on such Bond at the expense of the Authority. If the
Authority shall so determine, new Bonds so modified as, in the opinion of the Authority, shall be
necessary to conform to such Bond Owners' action shall be prepared and executed, and in that
case upon demand of the Owner of any Bond Outstanding at such effective date such new Bonds
shall be exchanged at the Trust Office of the Trustee at the expense of the Authority, for Bonds
then Outstanding, upon surrender of such Outstanding Bonds.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, SO LONG AS THE
INSURANCE POLICY REMAINS IN EFFECT AND THE INSURER HAS NOT
DEFAULTED WITH RESPECT TO ITS PAYMENT OBLIGATIONS UNDER THE
INSURANCE POLICY, ALL PROVISIONS OF THIS ARTICLE VIII SHALL BE SUBJECT
TO, AND QUALIFIED BY, THE PROVISIONS SET FORTH IN ARTICLE IX, INCLUDING,
WITHOUT LIMITATION, THE INSURER'S RIGHT TO CONSENT TO ACCELERATION
OF THE BONDS, AND THE INSURER'S RIGHT TO CONSENT TO OR DIRECT CERTAIN
AUTHORITY, TRUSTEE OR OWNER ACTIONS.
31
Section 8.01 Events of Default. The following events shall be Evcnts of Default
hereunder:
(a) Default in the due and punctual payment of the principal of any Bond
when and as the same shall become due and payable, whether at maturity as therein expressed,
by proceedings for redemption, by declaration or otherwise.
(b) Default in the due and punctual payment of any installment of interest on
any Bond when and as such interest installment shall become due and payable.
(c) Failure by the Authority to observe and perform any of the covenants,
agreements or conditions on its part in this Indenture or in the Bonds contained, other than as
referred to in the preceding Paragraphs (a) and (b), for a period of 60 days after written notice,
specifying such a failure and requesting that it be remedied has been given to the Authority by
the Trustee, or to the Authority and the Trustee by the Owners of a majority in aggregate
principal amount of the Outstanding Bonds; provided, however, that if in the reasonable opinion
of the Authority the failure stated in such notice can be corrected, but not within such 60 day
period, such failure shall not constitute an Event of Default if corrective action is instituted by
the Authority within such 60 day period and diligently pursued until such failure is corrected.
(d) The filing by the Authority of a petition or answer seeking reorganization
or arrangement under the federal bankruptcy laws or any other applicable law of the United
States of America, or if a court of competent jurisdiction shall approve a petition, filed with or
without the consent of the Authority, seeking reorganization under the federal bankruptcy laws
or any other applicable law of the United States of America, or if, under the provisions of any
other law for the relief or aid of debtors, any court of competent jurisdiction shall assume
custody or control of the Authority or of the whole or any substantial part of its property.
(e) The occurrence of any Event of Default under, and as that term is defined
in, the Loan Agreement.
Section 8.02 Remedies Upon Event of Default. Subject to the provisions of
Article IX, if any Event of Default shall occur, then, and in each and every such case during the
continuance of such Event of Default, the Trustee may, and at the written direction of the
Owners of a majority in aggregate principal amount of the Bonds at the time Outstanding shall,
upon notice in writing to the Authority and the Agency, declare the principal of all of the Bonds
then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon
any such declaration the same shall become and shall be immediately due and payable, anything
in this Indenture or in the Bonds contained to the contrary notwithstanding.
Any such declaration is subject to the condition that if, at any time after such
declaration and before any judgment or decree for the payment of the moneys due shall have
been obtained or entered, the Authority or the Agency shall deposit with the Trustee a sum
sufficient to pay all the principal of and installments of interest on the Bonds payment of which
is overdue, with interest on such overdue principal at the rate borne by the respective Bonds to
the extent permitted by law, and the charges and expenses of the Trustee and its counsel
(including the allocated costs and disbursements of in-house counsel to the extent the services of
32
such counsel are not duplicative of services provided by outside counsel), and any and all other
Events of Default known to the Trustee (other than in the payment of princlpal of and interest on
the Bonds due and payable solely by reason of such declaration) shall have been made good or
cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall
have been made therefor, then, and in every such case, the Owners of not less than a majority in
aggregate principal amount of the Bonds then Outstanding, by written notice to the Authority,
the Agency and the Trustee, or the Trustee if such declaration was made by the Trustee, may, on
behalf of the Owners of all of the Bonds, rescind and annul such declaration and its
consequences and waive such Event of Default; but no such rescission and annulment shall
cxtend to or shall affect any subsequent Event of Default, or shall impair or exhaust any right or
power consequent thereon.
In addition, upon the occurrence and during the continuance of an Event of
Default, the Trustee may pursue any available remedy at law or in equity to enforce the payment
of the principal of and interest and premium, if any, on the Bonds, and to enforce any rights of
the Trustee under or with respect to the Loan Agreement and this Indenture.
If an Event of Default shall have occurred and be continuing and if requested so
to do by the Owners of a majority in aggregate principal amount of Outstanding Bonds and
indemnified as provided in Section 6.02(1), the Trustee shall be obligated to exercise such one or
more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by
counsel, shall deem most expedient in the interest of the Bond Owners.
No remedy by the terms of this Indenture conferred upon or reserved to the
Trustee (or to the Owners) is intended to be exclusive of any other remedy, but each and every
such remedy shall be cumulative and shall be in addition to any other remedy given to the
Trustee or to the Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of
Default shall impair any such right or power or shall be construed to be a waiver of any such
Event of Default or acquiescence therein; such right or power may be exercised from time to
time as often as may be deemed expedient.
Section 8.03 Anplication of Revenues and Other Funds After Default. All
amounts received by the Trustee pursuant to any right given or action taken by the Trustee under
the provisions of this Indenture shall be applied by the Trustee in the following order upon
presentation of the several Bonds, and the stamping thereon of the amount of the payment if only
partially paid, or upon the surrender thereof if fully paid -
First, to the payment of the fees, costs and expenses of the Trustee, including
reasonable compensation to its agents, attorneys and counsel (including the allocated costs and
disbursements of in-house counsel to the extent the services of such counsel are not duplicative
of services provided by outside counsel); and
Second, to the payment of the whole amount of interest on and principal of the
Bonds then due and unpaid, with interest on overdue installments of principal and interest to the
extent permitted by law at the net effective rate of interest then borne by the Outstanding Bonds;
33
provided, however, that in the event such amounts shall be insufficient to pay in full the full
amount of such interest and principal, then such amounts shall be applied in the following order
of priority:
(i) first, to the payment of all installments of interest on the Bonds then due
and unpaid, on a pro rata basis in the event that the available amounts are insufficient to pay all
such interest in full,
(ii) second, to the payment of principal of all installments of the Bonds then
due and payable, on a pro rata basis in the event that the available amounts are insufficient to pay
all such principal in full, and
(iii) third, to the payment of interest on overdue installments of principal and
interest, on a pro rata basis in the event that the available amounts are insufficient to pay all such
interest in full.
Section 8.04 Power oi Trustee to Control Proceedin�s. Subject to the
provisions of Article IX, in the event that the Trustee, upon the happening of an Event of
Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties
hereunder, whether upon its own discretion or upon the request of the Owners of at least a
majority in aggregate principal amount of the Bonds then Outstanding, it shall have full power,
in the exercise of its discretion for the best interests of the Owners, with respect to the
continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such
action; provided, however, that the Trustee shall not, unless there no longer continues an Event
of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation
pending at law or in equity, if at the time there has been filed with it a written request signed by
che Owners of a majority in aggregate principal amount of the Outstanding Bonds hereunder
opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such
litigation. Any suit, action or proceeding which any Owner shall have the right to bring to
enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and
protection of all Owners similarly situated and the Trustee is hereby appointed (and the
successive respective Owners, by taking and holding the same, shall be conclusively deemed so
to have appointed it) the true and lawful attorney-in-fact of the respective Owners for the
purpose of bringing any such suit, action or proceeding and to do and perform any and all acts
and things for an on behalf of the respective Owners as a class or classes, as may be necessary or
advisable in the opinion of the Trustee as such attorney-in-fact.
Section 8.05 Appointment of Receivers. Upon the occurrence of an Event of
Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings
to enforce the rights of the Trustee and of the Owners under this Indenture, the Trustee shall be
entitled, as a matter or right, to the appointment of a receiver or receivers of the Revenues and
other amounts pledged hereunder, pending such proceedings, with such powers as the court
making such appointment shall confer.
Section 8.06 Non-Waiver. Nothing in this Article VIII or in any other provision
of this Indenture, or in the Bonds, shall affect or impair the obligation of the Authority, which is
absolute and unconditional, to pay the interest on and principal of the Bonds to the respective
�
Owners of the Bonds at the respective dates of maturity, as herein provided, out of the Revenues
and other moneys herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Owners shall
not affect any subscquent default or breach of duty or contract, or impair any rights or remedies
on any such subsequent default or breach. No delay or omission of the Trustee or any Owner to
exercise any right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver of any such default or any acquiescence therein; and every
power and remedy conferred upon the Trustee or Owners by the Bond Law or by this Article
VIII may be enforced and exercised, upon an Event of Default, from time to time and as often as
shall be deemed expedient by the Trustee or the Owners, as the case may be.
Section 8.07 Limitation on Riehts and Remedies of Owners. No Owner shall
havc the right to institute any suit, action or proceeding at law or in equity, for any remedy under
or upon this Indenture, unless (i) such Owner shall have previously given to the Trustee written
notice of the occurrcnce of an Event of Default; (ii) the Owners of a majority in aggregate
principal amount of all the Bonds then Outstanding shall have made written request upon the
Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding
in its own name; (iii) said Owners shall have tendered to the Trustee indemnity reasonably
acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance
with such request; and (iv) the Trustee shall have refused or omitted to comply with such request
for a period of 60 days after such written request shall have been received by, and said tender of
indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy
hereunder; it being understood and intended that no one or more Owners shall have any right in
any manner whatever by such Owner's or Owners' action to enforce any right under this
Indenture, except in the manner herein provided, and that all proceedings at law or in equity to
enforce any provision of this Indenture shall be instituted, had and maintained in the manner
herein provided and for the equal benefit of all Owners.
The right of any Owner of any Bond to receive payment of the principal of and
interest and premium, if any, on such Bond as herein provided or to institute suit for the
enforcement of any such payment, shall not be impaired or affected without the written consent
of such Owner, notwithstanding the foregoing provisions of this Section or any other provision
of this Indenture.
Section 8.08 Termination of Proceedin�s. In case the Trustee shall have
proceeded to enforce any right under this Indenture by the appointment of a receiver or
otherwise, and such proceedings shall have been discontinued or abandoned for any reason> or
shall have been determined adversely, then and in every such case, the Authority, the Trustee and
the Owners shall be restored to their former positions and rights hereunder, respectively, with
regard to the property subject to this Indenture, and all rights, remedies and powers of the
Trustee shall continue as if no such proceedings had been taken.
35
ARTICLE IX
BOND INSURANCE
Section 9.01 Pavments Under the Insurance Policv. As long as the Insurance
Policy is in full force and effect, the Authority and the Trustee agree to comply with the
following provisions:
(a) [to come]
Section 9.02 Notices. As long as the Insurance Policy is in full force and effect,
the Trustee shall provide the Insurer a copy of any notice that is required to be given to an Owner
pursuant to this Indenture. All notices required to be given to the Insurer under this Indenture
shall be in writing and shall be sent by registered or certified mail addressed to , Attention:
Section 9.03 Control of Remedies upon Default. Notwithstanding the
provisions of Sections 8.02 and 8.04, as long as the Insurance Policy is in full force and effect,
upon the occurrence and continuance of an Event of Default, the Insurer shall be entitled to
control and direct the enforcement of all rights and remedies granted to the Owners or the
Trustee for the benefit of the Owners under this Indenture; provided, however, the Trustee shall
not be liable for any action or inaction taken at the direction of the Insurer. Any acceleration of
the Bonds or annulment thereof pursuant to Section 8.02 shall be subject to the prior written
consent of the Insurer. No waiver of a default shall be effective without the written consent of
the Insurer.
Section 9.04 Suspension or Termination of RiQhts of Insurer. All rights of the
Insurer to direct or consent to actions of the Authority, the Agency, the Trustee or the Owners
under this Indenture or under the Loan Agreement shall be suspended during any period in which
the Insurer is in default in its payment obligations under the Insurance Policy (except to the
extent of amounts previously paid by the Insurer and due and owing to the Insurer) and shall be
of no force or effect in the event the Insurance Policy is no longer in effect or the Insurer asserts
that the Insurance Policy is not in effect.
ARTICLE X
BOOK-ENTRY SYSTEM
Section 10.01 Book-Entry Svstem; Limited ObliQation of Authoritv. The Bonds
shall be initially delivered in the form of a separate single fully registered Bond (which may be
typewritten) for each of the maturities of the Bonds. Upon initial delivery, the ownership of each
such Bond shall be registered in the registration books kept by the Trustee in the name of the
Nominee as nominee of the Depository. Except as provided in Section 10.03, all of the
Outstanding Bonds shall be registered in the registration books kept by the Trustee in the name
of the Nominee.
With respect to Bonds registered in the registration books kept by the Trustee in
the name of the Nominee, the Authority and the Trustee shall have no responsibility or obligation
36
to any Participant or to any person on behalf of which such a Participant holds an interest in the
Bonds. Without limiting the immediately preceding sentence, the Authority and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of the records of the
Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds,
(ii) the delivery to any Participant or any other person, other than an Owner as shown in the
registration books kept by the Trustee, of any notice with respect to the Bonds, including any
notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial
interests in thc 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 Authority and the Trustee may treat and consider the
person in whose name each Bond is registered in the registration books kept by the Trustee as the
holder and absolute owner of such Bond for the purpose of payment of principal, premium, if
any, and interest with respect to such Bond, for the purpose of giving notices of redemption and
other matters with respect to such Bond, for the purpose of registering transfers with respect to
such Bond, and for all other purposes whatsoever. The Trustee shall pay all principal of,
premium, if any, and interest due with respect to the Bonds only to or upon the order of the
respective Owners, as shown in the registration books kept by the Trustee, or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy
and discharge fully the Authority's obligations with respect to payment of the principal,
premium, if any, and interest due with respect to the Bonds to the extent of the sum or sums so
paid. No person other than an Owner, as shown in the registration books kept by the Trustee,
shall receive a Bond evidencing the obligation of the Authority to make payments of principal,
premium, if any, and interest pursuant to this Indenture. Upon delivery by the Depository to the
Trustee and the Authority of written notice to the effect that the Depository has determincd to
substitute a new nominee in place of the Nominee, and subject to the provisions herein with
respect to Record Dates, the word Nominee in this Indenture shall refer to such new nominee of
the Depository.
Section 10.02 Representation Letter. In order to qualify the Bonds for the
Depository's book entry system, the Authority has previously executed and delivered to such
Depository the Representation Letter. The execution and delivery of a Representation Letter
shall not in any way impose upon the Authority or the Trustee any obligation whatsoever with
respect to persons having interests in the Bonds other than the Owners, as shown on the
registration books kept by the Trustee. The Trustee agrees to take all action necessary to
continuously comply with the Representation Letter to the extent that such action is not
inconsistent with this Indenture. In addition to the execution and delivery of the Representation
Letter, the officers of the Authority are hereby authorized to take any other actions, not
inconsistent with this Indenture, to qualify the Bonds for the Depository's book entry program
Section 10.03 Transfers Outside Book-Entry Svstem. In the event (a) the
Depository determines not to continue to act as securities depository for the Bonds, or (b) the
Authority determines that the Depository shall no longer so act, then the Authority will
discontinue the book-entry system with the Depository. If the Authority fails to identify another
qualified securities depository to replace the Depository, then the Bonds so designated shall no
longer be restricted to being registered in the registration books kept by the Trustee in the name
37
of the Nominee, but shall be registered in whatever name or names persons transferring or
exchanging Bonds shall designate, in accordance with the provisions of Section 2.09.
Section 10.Q4 Pavments to the Nominee. Notwithstanding any other provisions
of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee,
all payments with respect to principal, premium, if any, and interest due with respect to such
Bond and all notices with respect to such Bond shall be made and given, respectively, as
provided in the Representation L.etter or as otherwise instructed by the Depository.
Section 10.05 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 XI
MISCELLANEOUS
Section 11.01 Limited Liabilitv of Authoritv. Notwithstanding anything in this
Indenture contained, the Authority shall not be required to advance any moneys derived from
any source of income other than the Revenues for the payment of the principal of or interest on
the Bonds, or any premiums upon the redemption thereof, or for the performance of any
covenants herein contained (except to the extent any such covenants are expressly payable
hereunder from the Revenues or otherwise from amounts payable under the Loan Agreement).
The Authority may, however, advance funds for any such purpose, provided that such funds are
derived from a source legally available for such purpose and may be used by the Authority for
such purpose without incurring indebtedness.
The Bonds shall be revenue bonds, payabie exclusively from the Revenues and
other funds as in this Indenture provided. The general fund of the Authority is not liable, and the
credit of the Authority is not pledged, for the payment of the interest and premium, if any, on or
principal of the Bonds. The Owners of the Bonds shall never have the right to compel the
forfeiture of any property of the Authority. The principal of and interest on the Bonds, and any
premiums upon the redemption of any thereof, shall not be a legal or equitable pledge, charge,
lien or encumbrance upon any property of the Authority or upon any of its income, receipts or
revenues except the Revenues and other funds pledged to the payment thereof as in this
Indenture provided.
Section 11.02 Benefits of Indenture Limited to Parties. Nothing in this Indenture,
expressed or implied, is intended to give to any person other than the Authority, the Trustee, the
Agency, the Insurer, and the Owners of the Bonds, any right, remedy or claim under or by reason
of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture
contained by and on behalf of the Authority shall be for the sole and exclusive benefit of the
Trustee, the Agency, the Insurer, and the Owners of the Bonds.
Section 11.03 Dischar�e of Indenture. If the Authority shall pay and discharge
any or all of the Outstanding 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 premium, if any, on such Bonds, as and when the same hecome due and payable;
(b) By irrevocably depositing with the Trustee, in trust, at or before maturity,
money which, together with the available amounts then on deposit in the funds and accounts
established with the Trustee pursuant to this Indenture and the Loan Agreement, is fully
sufficient to pay such Bonds, including all principal, interest and premiums, if any; or
(c) (c) By irrevocably depositing with the Trustee or any other fiduciary,
in trust, non-callable Federal Securities in such amount as an Independent Accountant shall
determine will, together with the interest to accrue thereon and available moneys then on deposit
in the funds and accounts established with the Trustee pursuant to this Indenture and the Loan
Agreement, be fully sufficient to pay and discharge the indebtedness on such 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 sent pursuant to Section 2.03 or provision satisfactory to the Trustee shall have been
made for the sending of such notice, then, at the Request of the Authority, and notwithstanding
that any of such Bonds shall not have been surrendered for payment, the pledge of the Revenues
and other funds provided for in this Indenture with respect to such Bonds, and all other pecuniary
obligations of the Authority under this Indenture with respect to all such Bonds, shall cease and
terminate, except only the obligation of the Authority to pay or cause to be paid to the Owners of
such Bonds not so surrendered and paid all sums due thereon from amounts set aside for such
purpose as aforesaid, and all expenses and costs of the Trustee. Any funds held by the Trustee,
following any payment or discharge of the Outstanding Bonds pursuant to this Section 11.03 and
the payment of the Trustee's and the Insurer's expenses and costs, shall be paid over to the
Authority.
Section 11.04 Successor Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture the Authority is named or referred to,
such reference shall be deemed to include the successor to the powers, duties and functions, with
respect to the management, administration and control of the affairs of the Authority, that are
presently vested in the Authority, and all the covenants, agreements and provisions contained in
this Indenture by or on behalf of the Authority shall bind and inure to the benefit of its successors
whether so expressed or not.
Section 11.05 Content of Certificates. Every Certificate of the Authority with
respect to compliance with a condition or covenant provided for in this Indenture shall include (i)
a statement that the person or persons making or giving such Certificate have read such covenant
or condition and the definitions herein relating thereto; (ii) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions contained in
such Certificate are based; (iii) a statement that, in the opinion of the signers, they have made or
caused to be made such examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of the signers, such condition or covenant has been
complied with.
39
Any such certificate made or given by an officer of the Authority may be based,
insofar as it relates to legal matters, upon a certificate or opinion of or representations by
counsel, unless such officer knows that the certificate or opinion or representations with respect
to the matters upon which his certificate may be based, as aforesaid, are enoneous, or in the
exercise of reasonable care should have known that the same were erroneous. Any such
certificate or opinion or representation made or given by counsel may be based, insofar as it
rclates to factual matters, on information with respect to which is in the possession of the
Authority, or upon the certificate or opinion of or representations by an officer or officers of the
Authoricy, unless such counsel knows that the certificate or opinion or representations with
respect to the matters upon which his certificate, opinion or representation may be based, as
aforesaid, are erroneous.
Section 11.06 Execution of Documents bv Owners. Any request, consent or
other instrument required by this Indenture to be signed and executed by Bond Owners may be in
any number of concurrent writings of substantially similar tenor and may be signed or executed
by such Bond Owners in person or by their agent or agents duly appointed in writing. Proof of
the execution of any such request, consent or other instrument or of a writing appointing any
such agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor
of the Trustee and of the Authority if made in the manner provided in this Section 11.06.
The fact and date of the execution by any person of any such request, consent or
other instrument or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer of any jurisdiction, authorized by the laws
thereof to take acknowledgments of deeds, certifying that the person signing such request,
consent or other instrument or writing acknowledged to him the execution thereof.
The ownership of Bonds shall be proved by the Registration Books. Any request,
consent or vote of the Owner of any Bond shall bind every future Owner of the same Bond and
the Owner of any Bond issued in exchange therefor or in lieu thereof, in respect of anything done
or suffered to be done by the Trustee or the Authority in pursuance of such request, consent or
vote. In lieu of obtaining any demand, request, direction, consent or waiver in writing, the
Trustee may call and hold a meeting of the Bond Owners upon such notice and in accordance
with such rules and obligations as the Trustee considers fair and reasonable for the purpose of
obtaining any such action.
Section 11.07 Disaualified Bonds. In determining whether the Owners of the
requisite aggregate principal amount of Bonds have concurred in any demand, request, direction,
consent or waiver under this Indenture, Bonds which are owned or held by or for the account of
the Agency or the Authority (but excluding Bonds held in any employees' retirement fund) shall
be disregarded and deemed not to be Outstanding for the purpose of any such determination,
provided, however, only Bonds which a responsible officer of the Trustee actually knows to be
so owned or held shall be disregarded.
Section 11.08 Waiver of Personal Liabilitv. No officer, agent or employee of the
Authority shall be individually or personally liable for the payment of the interest on or principal
of the Bonds; but nothing herein contained shall relieve any such officer, agent or employee ft•om
the performance of any official duty provided by law.
.�
Section 11.09 Partial Invaliditv. If any one or more of the covenants or
agreements, or portions thereof, provided in this Indenture on the part of the Authority (or of the
Trustee) to be performed should be contrary to law, then such covenant or covenants, such
agreement or agreements, or such portions thereof, shall be null and void and shall be deemed
separable from the remaining covenants and agreements or portions thereof and shall in no way
affect the validity of this Indenture or of the Bonds; but the Bond Owners shall retain all rights
and benefits accorded to them under the Bond Law or any other applicable provisions of law.
The Authority hereby declares that it would have entered into this Indenture and each and every
other section, paragraph, subdivision, sentence, clause and phrase hereof and would have
authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more
sections, paragraphs, subdivisions, sentences, clauses or phrases of this Indenture or the
application thereof to any person or circumstance may be held to be unconstitutional,
unenforceable or invalid.
Section 11.10 Destruction of Cancelled Bonds. Whenever in this Indenture
provision is made for the surrender to the Trustee of any Bonds which have been paid or
cancelled pursuant to the provisions of this Indenture, the Trustee shall, as permitted by law,
destroy such cancelled Bonds and, upon Request of the Authority, provide to the Authority a
certificate of destruction duly executed by the Trustee, and the Authority shall be entitled to rely
upon any statement of fact contained in such certificate with respect to the destruction of any
such Bonds therein referred to; provided, however, that the Authority shall reimburse the Trustee
for the Trustee's costs incuned in connection with the microfilming or the required permanent
recording, if any, related thereto.
Section 11.11 Funds and Accounts. Any fund or account required by this
Indenture to be established and maintained by the Authority or the Trustee may be established
and maintained in the accounting records of the Authority or the Trustee, as the case may be,
either as a fund or an account, and may, for the purpose of such records, any audits thereof and
any reports or statements with respect thereto, be treated either as a fund or as an account. All
such records with respect to all such funds and accounts held by the Authority shall at all times
be maintained in accordance with generally accepted accounting principles and all such records
with respect to all such funds and accounts held by the Trustee shall be at all times maintained in
accordance with corporate trust industry practices. Any fund or account required by this
Indenture to be established and maintained by the Authority or the Trustee may be established
and maintained in the form of multiple funds, accounts or sub-accounts therein.
Section 11.12 Pavment on Business Days. Whenever in this Indenture any
amount is required to be paid on a day which is not a Business Day, such payment shall be
required to be made on the Business Day immediately following such day, provided that interest
shall not accrue from and after such day.
Section 11.13 Notices. Any notice, request, demand or other communication
under this Indenture 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 (i) upon
transmission by telecopy or other form of telecommunication, (ii) upon receipt after deposit in
41
the United States mail, postage prepaid, or (iii) in the case of personal delivery to any person,
upon actual receipt.
If to the Authority: Palm Desert Financing Authority
73-510 Fred Waring Drive
Palm Desert, California 92260
Attention: Chief Administrative Officer
Facsimile: (760) 340-0574
If to the Agency: Palm Desert Redevelopment Agency
73-510 Fred Waring Drive
Palm Desert, California 92260
Attention: Executive Director
Facsimile: (760) 340-0574
If to the Trustee: Wells Fargo Bank, National Association
707 Wilshire Boulevard, 17th Floor
Los Angeles, California 90017
Attention: Corporate Trust Department
Facsimile: (213) 614-3355
[If to the lnsurer:]
The Authority, the Agency, the Trustee and the Insurer may designate any further
or different addresses to which subsequent notices, certificates or other communications shall be
sent. Notices to the Insurer shall be also governed by Section 9.02.
Section 11.14 Unclaimed Monevs. Anything in this Indenture to the contrary
notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of
the Bonds or the interest thereon which remain unclaimed for two years after the date when such
Bonds or the interest thereon have become due and payable, either at their stated maturity dates
or by call for earlier redemption, if such moneys were held by the Trustee at such date, or for two
years after the date of deposit of such moneys if deposited with the Trustee after said date when
such Bonds or the interest thereon become due and payable, shall, at the Request of the
Authority, be repaid by the Trustee to the Authority, as its absolute property and free from trust,
and the Trustee shall thereupon be released and discharged with respect thereto and the Owners
shall look only to the Authority for the payment of such Bonds; provided, however, that before
making any such payment to the Authority, the Trustee shall, at the Request and at the expense
of the Authority, cause to be mailed to the Owners of all such Bonds, at their respective
addresses appearing on the Registration Books, a notice that said moneys remain unclaimed and
that, after a date named in said notice, which date shall not be less than 30 days after the date of
mailing of such notice, the balance of such moneys then unclaimed will be returned to the
Authority.
Section 11.15 Governin� Law. This Agreement shall be construed and governed
in accordance with the laws of the State of California.
42
1N WITNESS WHEREOF, the PALM DESERT FINANCING AUTHORITY has
caused this Indenture to be signed in its name by its duly authorized officer and WELLS FARGO
BANK, NATIONAL ASSOCIATION, in token of its acceptance of the trust created hereunder,
has caused this Indenlure to be signed in its corporate name by its officer identified below, all as
of the day and year first above written.
PALM DESERT FINANCING AUTHORITY
:
Chief Administrative Officer
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
:
Authorized Officer
43
EXHIBIT A
[FORM OF BOND]
Unless this certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the Authority or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the name of Cede &
Co. or in such other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALLTE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
No.
$
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION (HOUSING SET-ASIDE)
REFUNDING REVENUE BOND
SERIES 2007
$
RATE OF INTEREST: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP:
October 1, 20_
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
The PALM DESERT FINANCING AUTHORITY, a joint powers authority
organized and existing under the laws of the State of California (the "Authority"), for value
received, hereby promises to pay (but only out of the Revenues, as defined in the Indenture
hereinafter referred to, and certain other moneys) to the Registered Owner identified above or
registered assigns (the "Registered Owner"), on the Maturity Date identified above or any earlier
redemption date, the Principal Amount identified above in lawful money of the United States of
America; and to pay interest thereon at the Rate of Interest identified above in like money from
the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of
this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the
fifteenth calendar day of the month preceding such Interest Payment Date, in which event it shall
bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to
March 15, 2007, in which event it shall bear interest from the Original Issue Date iden�ified
above; provided, however, that if, at the time of authentication of this Bond, interest is in default
on this Bond, this Bond shall bear interest from the Interest Payment Date to which interest
hereon has previously been paid or made available for payment), payable semiannually on April
1 and October 1 in each year, commencing April l, 2007 (the "Interest Payment Dates") until
payment of such Principal Amount in full. The Principal Amount hereof is payable upon
presentation hereof upon maturity or earlier redemption at the corporate trusl office of Wells
Fargo Bank, National Association (the "Trustee") in Los Angeles, California, or such other
Exhibit A-1
P6402-1059\)25674v4.doc
location as the Trustee shall designate (the "Trust Office"). Interest hereon is payable by check
or draft of the Trustee mailed by first class mail on each Interest Payment Date to the Registered
Owner hereof at the address of the Registered Owner as it appears on the registration books of
the Trustee as of the fifteenth calendar day of the month preceding such Interest Payment Date
(except in the case of a Registered Owner of at least $1,000,000 in aggregate principal amount,
such payment may, at such Registered Owner's option, be made by wire transfer of immediately
available funds in accordance with written instructions provided by such Registered Owner prior
to the fifteenth calendar day of the month preceding such Interest Payment Date).
This Bond is one of a duly authorized issue of bonds of the Authority designated
the "Palm Desert Financing Authority, Tax Allocation (Housing Set-Aside) Refunding Revenue
Bonds, Series 2007" (the "Bonds"), limited in principal amount to $ secured by an
Indenture of Trust, dated as of February 1, 2007 (the "Indenture"), by and between the Authority
and the Trustee. Unless the context clearly requires otherwise, capitalized terms used but not
defined herein have the meanings ascribed to them in the Indenture. Reference is hereby made
to the Indenture and all indentures supplemental thereto for a description of the rights thereunder
of the owners of the Bonds, of the nature and extent of the Revenues, of the rights, duties and
immunities of the Trustee and of the rights and obligations of the Authority thereunder; and all of
the terms of the Indenture are hereby incorporated herein and constitute a contract between the
Authority and the Registered Owner hereof, and to all of the provisions of which Indenture the
Registered Owner hereof, by acceptance hereof, assents and agrees.
The Bonds are authorized to be issued pursuant to the provisions of the Marks-
Roos L,ocal Bond Pooling Act of 1985, constituting Article 4, Chapter 5, Division 7, Title 1 of
the Government Code of the State of California (the "Act"). The Bonds are special obligations
of the Authority and, as and to the extent set forth in the Indenture, are payable solely from and
secured by a first ]ien on and pledge of the Revenues and certain other moneys and securities
held by the Trustee as provided in the Indenture. All of the Bonds are equally secured by a
pledge of, and charge and lien upon, all of the Revenues and such other moneys and securities,
and the Revenues and such other moneys and securities constitute a trust fund for the security
and payment of the principal of and interest on the Bonds. The full faith and credit of the
Authority is not pledged for the payment of the principal of or interest or premium (if any) on the
Bonds. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or
encumbrance upon, any of the property of the Authority or any of its income or receipts, except
the Revenues and such other moneys and securities as provided in the Indenture.
The Bonds have been issued for the purpose of making a loan (the "Loan") to the
Palm Desert Redevelopment Agency (the "Agency") to (i) effect the refunding of a portion of
the Authority's Tax Allocation (Housing Set-Aside) Revenue Bonds, Series 1998, and
(ii) finance certain public capital improvements, including: (A) the acquisition and/or
rehabilitation of several multi-family housing units; (B) the acquisition of land for the purposes
of expanding existing Agency-owned multi-family housing units and constructing new multi-
family low/moderate income housing units; and (C) the provision of subsidies to facilitate the
development of low/moderate income housing units. The Loan has been made by the Authority
to the Agency pursuant to a 2007 Housing Project Loan Agreement dated as of February 1, 2007
(the "Loan Agreement"), by and among the Agency, the Authority and the Trustee.
Exhibit A-2
The Bonds maturing after October 1, 20_, are subject to redemption prior to their
respective maturity dates as a whole, or in part among maturities on such basis as may be
designated by the Authority and by lot within a maturity, from prepayments of the Loan made at
the option of the Agency pursuant to the Loan Agreement, on any Interest Payment Date on or
after October 1, 20_, at the following respective redemption prices (expressed as percentages of
the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of
redemption:
Redemption Date Redemption Price
October 1, 20_ or April 1, 20_ %
October 1, 20_ or April 1, 20_
October 1, 20_ or Thereafter
The Bonds maturing on October 1, 20_, are subject to mandatory sinking fund
redemption by lot, at a redemption price equal to the principal amount thereof to be redeemed,
without premium, on October 1 of each year commencing October 1, 20_, in the aggregate
principal amounts set forth in the Indenture; provided, however, that in lieu of redemption
thereof such Bonds may be purchased by the Agency pursuant to the Loan Agreement.
The Trustee on behalf and at the expense of the Authority shall send by first class
mail (or such other means acceptable to such registered owners or institutions) notice of any
redemption to the respective owners of any Bonds designated for redemption, at their respective
addresses appearing on the registration books maintained by the Trustee, to the Securities
Depositories and to one or more Information Services, at least 30 but not more than 60 days prior
to the redemption date; provided, however, that neither failure to receive any such notice so sent
nor any defect therein shall affect the validity of the proceedings for the redemption of such
Bonds or the cessation of the accrual of interest thereon. Such notice shall state the date of the
notice, the redemption date, the redemption place and the redemption price and shall designate
the CUSIP numbers, the serial numbers of each maturity or maturities (except that if the event of
redemption is of all of the Bonds of such maturity or maturities in whole, the Trustee shall
designate such maturities or the maturity in whole without referencing each individual number)
of the Bonds to be redeemed, and shall require that such Bonds be then surrendered at the Trust
Office for redemption at the redemption price, giving notice also that further interest on such
Bonds will not accrue from and after the redemption date.
Subject to the limitations and upon payment of the charges, if any, provided in the
Indenture, this Bond may be exchanged at the Trust Office for a like aggregate principal amount
and maturity of fully registered Bonds of other authorized denominations.
This Bond is transferable by the Registered Owner hereof, in person or by such
Owner's attorney duly authorized in writing, at the Trust Office, but only in the manner, subject
to the limitations and upon payment of the charges provided in the Indenture, and upon surrender
and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of
authorized denomination or denominations, for the same aggregate principal amount and of the
same maturity will be issued to the transferee in exchange therefor. The Trustee shall not be
required to register the transfer or exchange of any Bond during the 15-day period preceding the
Exhibit A-3
selection of Bonds for redemption or any Bond selected for redemption. The Authority and the
Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and
the Authority and the Trustee shall not be affected by any notice to the contrary.
The Indenture and the rights and obligations of the Authority and of the owners of
the Bonds and of the Trustee may be modified or amended from time to time and at any time in
the manner, to the extent, and upon the terms provided in the Indenture; provided that no such
modification or amendment shall (a) extend the maturity of or reduce the interest rate on any
Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or
premiums at the time and place and at the rate and in the currency provided therein of any Bond
without the express written consent of the Owner of such Bond, (b) reduce the percentage of
Bonds required for the written consent to any such amendment or modification, or (c) without its
written consent thereto, modify any of the rights or obligations of the Trustee, all as more fully
set forth in the Indenture.
It is hereby certified that all things, conditions and acts required to exist, to have
happened and to have been performed precedent to and in the issuance of this Bond do exist,
have happened and have been performed in due time, form and manner as required by the
Constitution and statutes of the State of California and by the Act and the amount of this Bond,
together with all other indebtedness of the Authority, does not exceed any limit prescribed by the
Constitution or statutes of the State of California or by the Act.
This Bond shall not be entitled to any benefit under the Indenture, or become
valid or obligatory for any purpose, until the certificate of authentication hereon shall have been
signed by the Trustee.
IN WITNESS WHEREOF, the Authority has caused this Bond to be executed in
its name and on its behalf by the facsimile signatures of its President and Secretary all as of the
Original Issue Date identified above.
PALM DESERT FINANCING AUTHORITY
B ��
President
Auest:
Secretary
Exhibit A-4
STATEMENT OF INSURANCE
[to come]
Exhibit A-5
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Indenture and
registered on the Bond Registration Books.
Date:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
:
Authorized Signatory
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto
whose tax identification number is , the within-mentioned registered Bond and
hereby irrevocably constitute(s) and appoint(s) attorney to transfer the same on the books of the
Trustee with full power of substitution in the premises.
Dated:
Signature guaranteed:
NOTE: The signature(s) on this Assignment
must correspond with the name(s) as written
on the face of the within Bond in every
particular without alteration or enlargement
or any change whatsoever.
NOTE: Signature(s) must be guaranteed
by a member of an institution which is a
participant in the Securities Transfer
Agent Medallion Program (STAMP) or
other similar program.
Exhibit A-6
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PF2N:Ll1(IVARY OFFI('I:�L ti"I':1"fF:�1F:\'f D:�"I'EI),IAVI':V21 . 2006
NEW ISSUE—BOOK-ENTRY ONLY
L&1 DRAFT #3
11 /30/06
RATINGS:
/n /he opinion of Richurds, Watson & Gershon, A Professional Corporation, Los Angeles, Califr�rnia, Bond Counsel, hased on exisling
luti,� und ussuming cor»pliance winc �ertain cnvenunts set forth in the documenls pertuining to �he Series 20�7 Bonds a�7d requrrement.s of rhe
/nterno! Revenue Code of /986, us amended (!he "Code ), us described herern, interest on the Series 2007 Bonds is no� included in gro.ss lncome
q(the o�+�ners [hereof'forJederul income tax purposes. Jn Ihe opinion of Bund Counsel, rnteresl on the Series 2007 Bonds is no� trea�ed as un i�em
o{ �czx ��reference in calculuting �he federul alternative minimtrm laxable rncome ojindrviduals and corporutions. /n�eresr on �he Serres 2007 Bonds
nruy� be subject lo cerlurn federu! �ares imposed on corporutions, including �he cnrporate niternotrve minimum �ux on a portion of thur inlerest. !n
�he Jiirther opinron �jBond CounseJ, rnterest on the Bvndr is exempt from personul income tccres imposed by the Stute ojCuliforniu. See "T.a.r
h�fA� �t�Rs " herein.
$ *
PALM DESERT FINANCING AUTHORITY
'CAX ALLOCATION (HOUSING SET-ASIDE) REFUNDING REVENUE BONDS
SERIES 2007
Dated: Date of Issuance
Duc: Octobcr 1, as shown on thc insidc coven c�rcof
The Palm Desert Financing Authoriry (the "Financing Authority") is issuing $ * principal amount of Tax Allocation (Housing
Set-Aside) Refunding Revcnue Bonds, Scries 2007 (the "Serics 2007 Bonds") to make a loan (the "2007 Loan") to the Palm Desert Redcvelopment
Agency (the `Redevelopment Agency") pursuant to a 200G Housing Project Loan Agreement dated as of February I, 2007 (the "2007 Loan
Agreement") by and among the Authority, the Agency and Wells Fargo Bank, National Association (the "Trustee"). The Redevelopment Agency
will use the proceeds of the 2007 Loan to (i) finance the development of low and moderate income housing by the Redevelopment Agency; (ii)
refinance a portion of the outstanding obligations of the Redevelopment Agency under a loan agreement dated as of January 1, 1998; and (iii) pay
certain costs associated with the issuance of the Series 2007 Bonds. The Series 2007 Bonds will be issued by the Financing Authority under an
Indcnture of Trust, dated as of February 1, 2007, by and between the Financing Authority and the Trustec (the "2007 Indcnturc").
The Series 2007 Bonds will be issued as fully registered instruments without coupons, in thc denomination of �5,000 or any integral
multiplc thercof, in book-entry form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York,
Ncw York ("DTC"). Purchascrs will not reccive physical certificaies represeniing iheir interest in thc Series 2007 Bonds. For so long as the Series
2007 Bonds are registered in the name of Ccde & Co., the Trustee will makc all payments of principal and intcrest on the Series 2007 Bonds to
DTC, which, in turn, is obligated to remit such principal and interest to DTC Pariicipants (deiined herein) for subseyuent disbursement to the
Beneficial Owners (defined herein) of the Series 2007 Bonds. See AP��eu�ix G—"DTC AND THE BOOK-EN'TRY ONLY SYSTEM." Interest on Ihe
Series 2007 Bonds will be payable on April 1 and October 1 of each year (each an "Interest Payment Date"), commencing October I, 2007, by
check or draft, mailed on the Interest Payment Date ro each Owner of the Series 2007 Bonds as of the Record Date preceding such interest
Payment Date. See "THe S�K�es 2007 BoNos—Description."
The Series 2007 Bonds are subject to optional redemption and mandatory sinking fund redemption as described hercin. See
"THF, SERIES ZOOi BONDS."
The Series 2007 Bonds are special obligations of the Authority payable from and secured by Revenues (as defined herein), consisting
primarily of amounts payable by the Rcdevelopment Agency under the 2007 Loan Agreement. The 2007 Loan Agrcemcnt is secured by and
payablc from Pledgcd Tax Revenues, as defined herein. The Redevelopment Agency may, pursuant to the terms of the 2007 Loan Agrecment and
the Indenture, issuc additional obligations secured by Pledged Tax Revenues on a parity with the lien of the 2007 Loan Agreement (the "Parity
Debt") or may issue additional obligations secured by a lien on the Pledged Tax Revenues which is subordinate to the lien of the 2007 Loan
Agreement. The Redevelopment Agency currently has outstanding obligations that have a lien on certain Housing Set-Aside Revenues (as defined
herein) senior to and on a parity with that of ihe 2007 Loan Agreement. See "SECURITY FOR THE SLRIES 2007 BOVUS—SEVIOR DF.D"I', PARI'TY DL'Il"1'
n�D SUBORDI�A"I'E D�BT."
Payment of the principal of and interest on the Series 2007 Bonds when due will be insured by a financial guaranty insurance policy to be
issued by simultaneously with the delivery of the Series 2007 Bonds. See "FIVAt�C[AL GUAItAVTY {\SUftANCE.'�
[Insurer Logo]
THE SGRIES 2007 BONDS ARE NOT A DEBT OF THG CITY, THE STATE OR ANY OF ITS POLITICAL SIJBDIVISIONS,
OTHER THAN THE FINANCING AUTHORITY, AND NONE OF THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS,
OTH�R THAN THG FINANCING AUTHORITY, IS LIABLE THER�FOR. THE 2007 LOAN IS NOT A DEBT OF THE PINANCING
AUTHORITY OR THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NONE OF THE FINANCING AUTHORITY OR THE
STATr OR ANY OF ITS POLITICAL SUBDIVISIONS, IS LIABLE THEREFOR. NONE OF THE MEMBERS OF THE FINANCING
AUTHORITY, TI1E CITY COUNCIL, THE REDEVELOPMENT AGENCY OR ANY PERSONS EXECUTING THE SERIES 2007 BONDS
OR THE 2007 LOAN AGREEMENT ARE LIABLE PERSONALLY WITH RESPECT TO THE SERIES 2007 BONDS OR THE 2007 LOAN.
TIiE OBLIGATIONS OF THE REDGVELOPMENT AGENCY WITH RESPGCT TO THE 2007 LOAN IS PAYABLE SOLELY FROM THE
PLT;DGEll TAX R�VGNUES (AS DEFINED HEREIN). NEITHER THE F[NANCING AUTHORITY NOR THE REDEVELOPMENT
AGENCY HAS TAXTNG POWER.
The Serre.s 1007 Bnxd.s are offered when, as nnd rf i.ssued and nccepted by 1he Undern�riter, subjecl to the approvul us �o lega/ity by
Richards, Wutson & Gershon, A Profes.siona! Cnrparulion, Los Angeles, Califnrnia, Bond Counsel. Certarn /egu! mu�ters will fie pussed on jor the
Aurhurrty hl' Loflon & Jenning.r, San Francisco, Culifornia, Dise/osure Counsel, and for the Authority and the Redevelopmen! Agency by Rrchurds,
Watson & Gershon. 11 is unticipated �hat the Series 2007 Bonds will be avai/uble jor delrvery on or ahout February _, 2007.
li3tC(�: , ?�U%,
' Prcl�minary, subjcct to change.
HUTCHINSON, SHOCKEY, ERLEY & CO.
234-06035\pos-3
S *
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION (HOUSING SET-ASIDE) REFUNDING REVENUE BONDS
SERIES 2007
MATURITY SCHEDULE
Basc CUSIP No.:
Maturity Datc
(Octobcr 11
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
Principal Intcrest
Amount Rate Yield CUSIPt
t Copyright, American Bankers Association. CUSIP data herein is provided by Standard and Poor's, CUSIP Service Bureau,
a division orThe McGraw-Hill Companies, Inc. This data is not intended to create a databasc and does not serve in any way
as a substitute for the CUSIP Service. CUSIP numbers are provided ror convenience of reference only. None of the
Financing Authority, the Redevelopment Agency or the Underwriter takc any responsibility for the accuracy of such CUSIP
numbers. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Series 2007 Bonds
as a result of various subseyuent actions including, but not limited to, a refunding in whole or in part of such maturity.
234-06035\pos-3
�
PALM DESERT FINANCING AUTHORITY
PALM DESERT REDEVELOPMENT AGENCY
CITY OF PALM DESERT
FINANCINC AUTHORITY COMMISSION
Jim Ferguson, President���
Richard S. Kelly, Vice President
Jean M. Benson, Commissioner���
Robert A. Spiegel, Commissioner
Vacant, Commissioner�Z�
REDEVELOPMENT AGENCY BOARD AND CITY COUNCIL
Jim Ferguson, Chairman/Mayor���
Richard S. Kelly, Vice Chairman/Mayor Pro Tem
Jean M. Benson, Member/Councilmember���
Robert A. Spiegel, Member/Councilmember
Vacant, Member/Councitmemher�z�
FI:�IANCING AUTHORITY, REDEVELOPMENT AGENCY AND CITY STAFF
Carlos L. Ortega, ChiefAdministrative Officer/Executive Director/Ciry Manager
Pau1S. Gibson, Treasurer/Treasurer/Finance Director
Rachelle D. Klassen, Secretary/Secretary/City Clerk
Justin McCar[hy, Assistant City Manager/Redevelopment
Sheila R. Gilligan, Assistant City Manager Community Services
David L. Yrigoyen, Director of Redevelopment and Housing
Lauri Aylaian, Redevelopment Manager
Janet M. Moore, Hoz�sing Authority Administrator
David J. Erwin, City Attorney
Arla K. Scott, Senior Financial Analyst
Veronica Tapia, Redevelopment Accountant
SPECIAI, SERVICES
Richards, Watson & Gershon,
A Professional Corporation
Los Angles, California
Bond Counsel
Wells Fargo Bank, National Association
Los Angeles, California
Trustee
Rosenow Spevacek Group Inc.
Santa Ana, California
Fiscal Consultant
Grant Thornton LLP
Minneapolis, Minnesota
Veriftcation Agent
Lofton & Jennings
San Francisco, California
Disclosure Counsel
Del Rio Advisors, LLC
Modesto, California
Financial Advisor
MuniFinancial
Temecula, California
Dissemination Agent
(1) Thc terms of this mcmber of the Financing Authority and Ciry Council expired in No�ember 200G. Thc person elected at the November
2006 Statewide (ieneral Electiun to filV this position will be swom in and take office December 14, 20U6.
(2) This vacancy will be fillcd at the November 2006 Statewide General Election. The person elected to fill this position will be sworn in and
take office on December 14, 2006.
234-0C035\pos-3
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENI'
Use of Of'ficial Statemen� The information sct forth herein has been furnished by the Financing
Authority, the Redevelopment Agency and the City and includes information which has been obtained
from other sources which are believed to be reliable. The information and expressions of opinion
contained herein are subject to change without notice and neither the delivery of this Official Statement
nor any sale made hereunder shall under any circumstances create any implication that there has been no
changc in the affairs of the Financing Authority and the Redevelopment Agency since the date hereof.
Estimates and Forecasts. Any statement made in this Official Statement involving any forecast or
matter of estimatcs or opinion, whether or not expressly so stated, is intended solely as such and not as a
representation of fact. Certain statements included or incorporated by reference in this Official Statement
constitute "forward-looking statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995, Section 21 E of the United States Securities Exchange Act of 1934, as
amended, and Section 27A of the United States Securities Act of 1933, as amended (the "Securities Act").
Such statements are generally identifiable by the terminology used, such as "plan," "expect," "estimate,"
"budget" or other similar words. Such forward-looking statements include, but are not limited to, certain
statements contained in the information under the caption "THe PROJECT AREAS" and contained in
APPGNDIX A—"REPORT OF THB FISCAL CONSULTANT."
The achievement of certain results or other expectations contained in such forward-looking
statements involves known and unknown risks, uncertainties and other factors which may cause actual
results, performance or achievements described to be materially different from any future results,
perfonnancc or achievements expresscd or implied by such forward-looking statements. Thc Financing
Authority and the Redevelopment Agency does not plan to issue any updatcs or revisions to those
f'orward-looking statements if or when their expectations, or events, conditions or circumstances on which
such statements are based occur.
Limit of Offering. No dealer, broker, salcsperson or other person has been authorizcd to give any
information or to make any representations in connection with the offer or sale of the Series 2007 Bonds by
the Financing Authority, the Redevelopment Agency or the Underwriter, other than those contained in this
Official Statcment, and, if given or made, such other information or representations must not bc relicd upon
as having becn authorized by the Financing Authority and the Redevelopment Agency. This Official
Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any salc
of the Series 2007 Bonds by any person in any jurisdiction in which it is unlawful for such person to make
such an offer, solicitation or sale.
Involvement of Underwriter. The Underwriter has provided the following sentence for inclusion
in this Official Statement: The Underwriter has reviewed the information in this Official Statement in
accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied
to the facts and circumstances of this transaction, but the Underwriter does not guaranty the accuracy or
complctencss of such information.
In conncction with the offering of the Series 2007 Bonds, the Undenvriter may overallot or effcct
transactions that stabilizc or maintain the markct price of the Series 2007 Bonds at a lcvel abovc that
which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinucd
at any time. The Underwriter may offer and sell the Scries 2007 Bonds to certain dealers and others at
prices lower than the public offering prices set forth on the inside cover page hereof and said public
offering prices may be changed from time to time by the Undcrwriter.
"Che Series 2007 Bonds have not bcen registered under the Securities Act of 1933, as amended, in
reliance upon an exemption from the registration requirements contained in such Act. The Series 2007
Bonds have not been registered or qualified under the securities laws of any state.
234-0G035\pos-3
TABLE OF CONTENTS
INI�RODUCTION .....................................................1
General; Authority for Issuance .........................1
Purpose...............................................................1
TheCity ..............................................................2
The Financing Authority ....................................2
The Redevelopment Agency ..............................2
The Project Areas ...............................................2
Security for the Series 2007 Bonds ....................3
Bond[nsurance ...................................................5
Report of the Fiscal Consultant ..........................5
Certain Risks to Bondholders .............................5
Continuing Disclosure ........................................5
Additional Information ....................................... 6
PLAN OF FINANCE ................................................6
Development of Low and Moderate
Income Housing ..........................................6
Refunding of Prior Bonds ...................................6
Estimated Sources and Uses of Funds ................8
Debt Service Schedules ......................................8
TIiE SERIES 2007 BONDS ......................................9
Description of the Series 2007 Bonds ................9
Redemption Procedures ....................................10
SECURITY AND SOURCES OF PAYMENT
FOR THE SERIES 2007 BONDS .............12
Revenues and Loan Agreement ........................12
Tax Allocation Financing .................................12
Allocation of 1'axes; Housing Set-Aside
Amounts....................................................12
I lousinb Set-Aside ............................................13
Pledged "I'ax Revenues .....................................14
Redevelopment Plan Limitations ......................16
Reserve Fund ....................................................18
Senior Debt, Parity Debt and Subordinate
Debt...........................................................18
Invcstment of Funds .........................................19
FINANCIAL GUARANTY INSURANCE .............19
LIMITATIONS ON TAX REVENUES ..................20
Article XIII A of the State Constitution ...........20
Article XIII B of the State Constitution;
Appropriation Limitations .........................22
Articles XIII C and XIII D of the State
Constitution ...............................................22
Taxation of Unitary Property ............................22
Property Tax Collection Procedures .................23
Property �'ax Administrative Costs ..................24
Pass-Through Agreements and Tax
Sharing Payments ......................................25
Limitation of Tax Revenues from Certain
Increased Tax Rates ..................................26
Ballot Initiatives and Legislative Matters.........27
CERTAIN RISKS TO BONDHOLDERS ...............27
Added Territory Projected to Reach Limit
in Fiscal Year 2021-22 ..............................27
Accuracy of Assumptions ................................. 27
Reduction of Tax Revenues ..............................28
Appeals to Assessed Values .............................28
Reduction in Inflation Rate ...............................29
Bankruptcy and Foreclosure .............................29
Delinquencies ...................................................29
StateBudget .....................................................30
Natural Disasters ..............................................31
Hazardous Substances ...................................... 32
Loss of Tax Exemption ....................................32
Risk of Tax Audit .............................................32
Secondary Market .............................................32
TIIE PROJECT AREAS .........................................33
Overview..........................................................33
Project Area No. 1 ............................................40
Project Area No. 2 ............................................50
Project Area No. 3 ............................................55
Project Area No. 4 ............................................60
THE FINANCING AUTHORITY ..........................66
THE REDEVELOPMENT AGENCY ....................66
Authority, Members and Personnel ..................66
Powers.............................................................. 68
Redevelopment Agency Finances ....................69
TAX MATTERS .....................................................71
APPROVAL OF LEGAL PROCEEDINGS............73
ABSENCE OF MATERIAL LITIGATION............74
General ............................................................. 74
Other Matters ....................................................74
F[NANCIAL ADV[SOR .........................................74
CONTINUING DISCLOSURE ...............................74
VERIFICAT[ON OF MATHEMAT[CAL
COMPUTATIONS .................................... 75
UNDERWRITING ..................................................75
RAT[NGS ................................................................ 75
FINANCIAL STATEMENTS .................................76
MISCELLANEOUS ................................................ 76
234-06035\pos-3
111
APPENDICES
APPENDIX A- REPORT OF THE FISCAL CONSULTANT .......................................................................A-1
APPENDIX B- REDEVELOPMENT AGENCY AUDITED FINANCIAL STATEMENTS FOR
FISCAL YEAR ENDED JUNE 30, 2006 .............................................................................. B-1
APPENDIX C- GENERAL INFORMATION CONCERNING THE CITY OF PALM DESERT ................C-1
APPENDIX D- SUMMARY OF PRINCIPAL LEGAL DOCUMENTS .......................................................D-1
APPENDIX E- FORM OF OPINION OF BOND COUNSEL ....................................................................... E-1
AI'PENDIX F- FORM OF CONTINUING DISCLOSURE AGREEMENT ................................................. F-1
APPENDIX G- DTC AND TIIE BOOK-ENTRY ONLY SYSTEM ..............................................................G-1
APPENDIX I I- SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY .........................................I I-1
MAPS AND TABLES
CityLimit and Project Area Maps ................................................................................................................................. v
"I'able A All Project Areas — Summary of Redevelopment Plan Limits .........................................................34
Table B All Project Areas — Summary of Land Use Categories ....................................................................35
Table C All Project Areas — Summary of Principal Taxpayers .....................................................................36
Table D All Project Areas — Breakdown of Tax Rate ....................................................................................37
Table E All Project Areas — Summary of Ilousing Set-Aside Revenue Projections .....................................39
Table 1 A-1 Project Area No. 1— Original Area — Summary of Redevelopment Plan Limits ..............................41
Table 1 A-2 Project Area No. 1— Added Territory — Summary of Redevelopment Plan Limits ..........................42
7'able 1 B Project Area No. 1— Combined — Land Uses by Category ...............................................................43
Tablc 1 C Project Area No. 1— Combined — Principal Taxpayers .....................................................................44
Table 1C-1 Project Area No. 1— Original Area — Principal Taxpayers ................................................................45
Table 1 C-2 Project Area No. 1— Added Territory — Principal Taxpayers ............................................................45
Table 1 D-1 Project Area No. 1— Original Area — I listorical Taxable Values and Tax Increment
Verification............................................................................................................ 46
Table 1 D-2 Project Area No. 1— Added Territory — I Iistorical Taxable Values and Tax Increment
Verification............................................................................................................ 47
Table 1 E-1 Project Area No. 1— Original Area — Projection of Incremental Taxable Value and
Ilousing Set-Aside Revenues ................................................................................ 48
Table 1 E-2 Project Area No. 1— Added Territory — Projection of Incremental Taxable Value
and Housing Set-Aside Revenues ........................................................................ 49
"l�able 1 F-1 Project Area No. 1— Original Area — Assessment Appeals ...............................................................50
Table 1 F-2 Project Area No. 1— Added Territory — Assessment Appeals ............................................................... 50
Table 2A Project Area No. 2— Summary of Redevelopment Plan Limits ......................................................... 51
Table 2B Project Area No. 2— Land Uses by Category ..................................................................................... 51
"I'able 2C Project Area No. 2— Principal Taxpayers .......................................................................................... 52
Table 2D Project Area No. 2— Historical Taxable Values and Tax Increment Verification ............................. 53
Table 2E Project Area No. 2— Projection of Incremental Taxable Value and Housing
Set-Aside Revenues ............................................................................................... 54
Table 2F Project Area No. 2— Assessment Appeals ............................................................................................. 55
Table 3A Project Area No. 3— Summary of Redevelopment Plan Limits .........................................................56
Table 36 Project Area No. 3— Land Uses by Category .....................................................................................56
Table 3C Project Area No. 3— Principal Taxpayers .......................................................................................... 57
Table 3D Project Area No. 3— Historical Taxable Values and Tax 3ncrement Verification .............................58
Table 3E Project Area No. 3— Projection of [ncremental Taxable Value and IIousing Set-Aside
Revenues................................................................................................................ 59
Table 3F Yroject Area No. 3— Assessment Appeals .........................................................................................60
Table 4A Pro,}ect Area No. 4— Summary of Redevelopment Plan Limits ........................................................61
"I'able 4B Project Area No. 4— Land Uses by Category .....................................................................................62
1'able 4C Project Area No. 4— Principal Taxpayers .......................................................................................... 63
Table 4D Project Area No. 4— 1 listorical Taxable Values and Tax Increment Verification ................................. 64
Table 4E Project Area No. 4— Projection of Incremental Taxable Value and Housing Set-Aside
Revenues................................................................................................................ 65
Table 4F Project Area No. 4— Assessment Appeals ........................................................................................66
234-06035\pos-3
1V
MAPS
234-06035\pos-3
OFFICIAL STATEMENT
� *
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION (HOUSING SET-ASIDE) REFUNDING REVENUE BONDS
SERIES 2007
INTRODUCTION
Thi.c introduction contains only a brief summary of certain of the terms of the Series 2007 Bonds
heing offerec% and a jull review should he made of the entire Officia! Statement including the cover page,
the table of contents und the appendices for a more complete description of the terms of the Series 2007
Bonds. All statements contained in this iniroduction are quultfted in their entirery by reference to the
entire Official Statement. References to, and summaries of provisions of, any other documents referred to
herein do not purport to be complete und such references are gualiJied in their entirety by reference to the
a�mplete provisions of such documents.
General; Authority for Issuance
The purpose of this Official Statement, including the cover page, the inside cover page and the
appendices is to furnish information in connection with the sale and delivery by the Palm Descrt
Financing Authority (thc "Financing Authority") of S * aggrcgate principal amount of Palm
Desert Financing Authority Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds Serics 2007
(the "Series 2007 Bonds").
The Serics 2007 Bonds are issued pursuant to the provisions of the Mark-Roos Local Bond
Pooling Act of 1985, consisting of Article 4 of Chapter 5 of Division 7 of Title 1(commencing with
Section 6584) of the Califomia Government Code (the "Bond Law") and pursuant to an Indenture of
Trust, dated as of February 1, 2007 (the "2007 Indenture"), by and between the Financing Authority and
Wclls Pargo Bank, National Association (the "Trustee").
Purposc
The proceeds of the Series 2007 Bonds will be used by the Financing Authority to make a loan,
(the "2007 Loan") to the Palm Desert Rcdevelopment Agency (the "Redevelopment Agency") pursuant to
a 2006 Housing Project Loan Agreement made and entered into as of February 1, 2007 by and among the
Financing Authority, the Redevclopment Agency and the Trustee (the "2007 Loan Agreement"). The
Redevelopment Agency will apply the proceeds of the 2007 Loan to: (i) finance the development of low
and moderate income housing by the Redevelopment Agency; (ii) refinance a portion of the outstanding
obligations of the Redcvelopmcnt Agency undcr a loan agrcement dated as of January l, 1998 (the "1998
Loan Agrecment"); and (iii) pay certain costs associated with the issuance of the Series 2007 Bonds. Sec
also "PLAN OF FiNANCE," "EST(MATED SOURCES AND USES OF FLTNDS" and "THE PROJECT AREAS." The
Serics 2007 Bonds will mature in the ycars and amounts and bear interest at the rates set forth on the
inside cover page.
* Prcliminary, subjcct to change.
234-0G035\pos-3
Thc City
The City of Palm Desert (the "City") is located in the Coachella Valley and is approximately mid-
way between the cities of Indio and Palm Springs, 117 miles east of Los Angeles, 118 miles northeast of
San Dicgo and 515 miles southeast of San Francisco. According to the State Departmcnt of Financc, the
City population as of January 1, 2006 was approximately 49,539. The Series 2007 Bonds are not an
obligation of the City. For certain information regarding the City, see APPENDIX C—"GENERAL
INFORMATIOh' CONCERNING THE CITY OF PALM DBSERT."
Thc Financing Authority
The Financing Authority is a joint exercise of powers agency organized under the laws of the
State of California (the "Statc") and composed of thc City and the Redevelopment Agency. The
Financing Authority was formed pursuant to a Joint Exercisc of Powers Agreement, dated January 26,
1989 by and between the City and the Redevelopment Agency to assist in the financing of public capital
improvements. See "THE FINANCING AUTHORITY."
The Redevelopment Agency
The Redevelopment Agency was activated by the City in 1974 and is authorized to exercise the
powers grantcd by the Community Redevelopmcnt Law of the State of California (constituting Part 1 of
Division 24 of the Health and Safety Code of the State of Calif'omia, commencing with Section 33000)
(the "Redevelopment Law") and, by an ordinance, the City Council of the City (the "City Council")
declared itself to be the Redevclopment Agency. Although the Redevelopment Agency is an entity
distinct from the City, certain City personncl provide staff support for the Redevelopment Agency. Sec
"T}IG RBDI:V�LOPMENT AGGI�CY."
'I'hc Project Arcas
The Project Areas consist of four separate areas, numbered 1 through 4. Project Areas No. 1
through 4 arc referred to collcctively as the "Project Areas." The Project Areas comprise an aggregate of
approximatcly 11,771 acres representing 33, 399 parcels See "THE PROJECT AREAS."
Each Project Area has a Base Year Valuc that was established based on the assessed value for thc
last Fiscal Year prior to the effective date of the ordinance approving the redevelopment plan and any
amendments thereto with respect to such Project Area. Sce "SECURITY AND SOURCES OF PAYMENT FOR
THE SGRIES 2007 BONDS—Redevelopment Plan Limitations" and "THE PROJECT AREAS."
Project Area No. 1. Project Area No. 1 was formally established with the adoption by the City
Council of a redevelopment for approximately 580 acres (the "Original Area") pursuant to Ordinancc No.
80, adoptcd on July 16, 1975, which redevelopment plan was subsequently amended (collectively, thc
"Project Area No. 1 Redevelopment Plan") to add approximately 5,820 acres (the "Added Territory" and
togcthcr with the Original Area, "Project Area No. 1").
Project Areu No. 1. Projcct Area No. 2 was formally established with the adoption by the City
Council of a redevelopment for approximately 2,927 acres (the "Project Area No. 2") pursuant to
Ordinance No. 509 adopted on July 15, 1987 (the "Project Area No. 2 Redevelopment Plan").
Project Areu No. 3. Project Area No. 3 was formally established with the adoption by the City
Council of a redevelopment plan for approximately 764 acres ("Project Area No. 3") by Ordinance
No. 652, adopted on July 17, 1991, as amended (the "Project Area No. 3 Redevelopment Plan").
o�,oaz��<,5-3
Project Area No. 4. Projcct Area No. 4 was formally established with the adoption by thc City
Council of a rcdevelopment plan for approximately 2,260 acres ("Project Area No. 4") by Ordinance
No. 724, adopted on July 19, 1993, as amendcd (thc "Project Area No. 4 Redevelopment Plan").
Security for the Series 2007 Bonds
Tax Allocation Financing. The Redevelopment Law provides a means for financing
redcvclopment projects based upon an allocation of property taxes collected within a projcct area.
Subject to the more detailed discussion contained under the caption "S�CURITY AND SoUrtCEs OF
PAYML•NT FOR THE SERILS 2007 BONDS," the taxable valuation of a project area last equalized prior to
adoption of the redevelopment plan, or base roll, is established and, except for any period during which
the taxable valuation drops below the base ycar level, or as may otherwise be agreed to among taxing
agencies, the taxing agencies thereafter receive the taxes produced by the levy of the then current tax rate
upon the base roll. Taxes collected upon any increase in taxable valuation over the base roll (except such
portion generatcd by rates levied to pay voter-approved bonded indebtedness after January 1, 1989 for the
acquisition or improvement of real property), generally referred to as tax increment revenues, arc
allocated to a redevelopment agency and may be pledged by a redevelopment agency to the repayment of
any indcbtedness incurred in financing or reiinancing a redevelopment project. See "SECURITY AND
SOURCGS OF PAYM[NT FOR THE SERIES 2007 BONDS." Redevelopment agencies themselves have no
authority to levy property taxes and must look specifically to the allocation of taxes described above.
Any future decrease in the taxable valuation in the Project Areas or in the applicable tax rates will
reduce the Pledged Tax Revenues allocated to the Redevelopment Agency from the Project Arcas and
consequently may have an adverse impact on thc abiliry of the Rcdevelopment Agcncy to pay debt
service on the Series 2007 Bonds. See "CERTAIN RISKS TO BONDHOLDGRS."
Pledged Tax Revenues. The Scries 2007 Bonds are special obligations of the Financing
Authority payable solely from and securcd by a first licn on a and pledge of Revenucs consisting
primarily of amounts paid by the Redevelopment Agcncy to the Financing Authority pursuant to the 2007
Loan Agrccmcnt and ceRain other funds held by thc Trustee pursuant to the 2007 Indenture. The
Rcdcvelopmcnt Agency is obligated under the 1998 Loan Agrecment and a loan agreement made and
cntcred into as of August 1, 2002 (the "2002 Loan Agreement") to pay from Pledged Tax Revcnues
(defined below) the amounts set forth in thc 1998 Loan Agreement and the 2002 Loan Agrcement,
respcctively, on a parity with the obligations undcr the 2007 Loan Agreement. The 2007 Loan
Agreement, the 1998 Loan Agreement and the 2002 Loan Agreement are referred to collectively as the
"Parity Loan Agreements." See "SECURITY AND SOURCES OF PAYMENT FOR THE SGRIGS 2007 BONDS."
Under the 2007 Loan Agreement, the Redevelopment Agency is obligated to pay from that
portion of the taxes levied upon taxable property in the Project Areas, allocated and paid into the Low and
Moderate Income Housing Fund held by the Redevelopment Agency (the "Housing Fund") and required
to be set-aside and deposited into such Housing Fund pursuant to Sections 33334.2, 33334.3 and 33334.6
of thc Rcdevclopment Law (the "Housing Set-Aside Revenues") and which is not required for payment of
the Scnior Debt, defined below (the "Pledged Tax Revenues"), amounts set forth in the 2007 Loan
Agreement which are to be sufficient to pay in full when due the principal of and interest and premium (if
any) on the Series 2007 Bonds. The obligations of the Redevelopment Agency under the 2007 Loan
Agrecment arc on a parity with the loan obligation that will remain outstanding under the 1998 Loan
Agrecment and the loan obligations under the 2002 Loan Agreement (collectively with the 2007 Loan
Agreement, the "Parity Loan Agreements") as described below. The loans incurred by the
Redevelopment Agcncy are referred to as the "2007 Loan," the "1998 Loan" and the "2002 Loan,"
respectively, and collectively as the "Parity Loans."
�G035\pos-3
Thc Rcdcvclopment Agency may, pursuant to thc tcrms of the 2007 Loan Agrecment and thc
2007 Indenture, issue additional obligations secured by Pledged Tax Rcvcnues on a parity with thc licn of
the 2007 Loan Agrccmcnt (thc "Parity Debt") or may issuc additional obligations securcd by a lien on thc
Plcdged Tax Revenues which is subordinate to the lien of the 2007 Loan Agreement (the "Subordinate
Debt"). See "SECURITY AND SOURCES OF PAYMGNT FOR THE SERIES 2007 BONDS—Senior Debt, Parity
Dcbt and Subordinatc Debt—Parity Debt."
OutstandinQ Scnior Debt. The Redcvclopment Agency has outstanding $3,395,000
principal amount of Palm Desert Redevelopment Agency, Projcct Area No. 1, As Amended
(Added Territory Only) (Housing Set-Aside) Refunding Bonds, Series 1995 (the "Senior Debt")
that is payablc from Pledged Tax Revenues dcrived solely from the Added Territory senior and
prior to the payment of obligations under the 2007 Loan Agreement, the 1998 Loan Agrecment
and the 2002 Loan Agreement. The Senior Debt secures repayment of the Palm Desert Financing
Authority Tax Allocation Revenue Refunding Bonds, Project Area No. l, As Amended (Added
Territory Only) 1995 Series A(the "Senior 1995 Bonds"). The Senior 1995 Bonds mature on
Scptcmbcr 1, 2008.
Outstandin� Paritv Debt. The obligations of the Redevelopment Agency under the 2007
Loan Agrecment are on a parity with the obligations undcr the 1998 Loan Agrcement and the
2002 Loan Agreement and subordinate to the Senior Debt.
The Redevelopment Agency has a loan outstanding in the principal amount of
S44,465,000 pursuant to the 1998 Loan Agreement which secures repayment of the Palm Desert
Financing Authority Tax Allocation (Housing Set-Aside) Revenue Bonds, Series 1998 (the "1998
Bonds"), which were issued pursuant to an Indenture of Trust dated as of January 1, 1998 (the
"1998 Indenture") by and between the Financing Authority and the Trustee. Following the
issuancc of the Series 2007 Bonds $4,190,000* principal amount of 1998 Bonds will remain
outstanding (the "Remaining 1998 Bonds").
The Redevelopment Agency has a loan outstanding in the principal amount of
S 1 1,130,000 (the "2002 Loan") pursuant to the 2002 Loan Agreement which secures repayment
of thc Palm Desert Financing Authority Tax Allocation (Housing Sct-Aside) Revenuc Bonds,
Series 2002 (the "2002 Bonds"), which were issued pursuant to an Indenture of Trust dated as of
August 1, 2002 (the "2002 Indenture") by and betwccn the Financing Authority and thc Trustec.
No funds or properties of thc Redevelopment Agency, other than the Pledgcd Tax Revenues
secure payment obligations under the Parity Loan Agrecments See "SECURITY AND SOL'RCGS OF
PAYM�;NT FOR THE SGRIGS 200% BONDS."
Reserve Fund. As additional sccurity for thc payment of the Parity Debt, a reservc fund (thc
"Reservc Fund") was established. The Reservc Fund is required to be maintained in an amount cqual to
thc Rcserve Requirement (as defined in the 2007 Loan Agreement). Amounts on deposit in the Reservc
Fund will bc used for the payment of debt service on the Scries 2007 Bonds in the event that amounts on
deposit in the Interest Account or the Principal Account held under the 2007 Indcnture are insuffcient
thcrcfor. See "SECURITY AND SOURCCS OF PAYMENT FOR THE SERIES 2007 BONDS—Reserve Fund."
Following the issuance of the Series 2007 Bonds, thc Reserve Requirement for the Serics 2007
Bonds and the Parity Debt will be $ .
'" Preliminary, subject to �hange.
OG035\pos-3
THE SERIES 2007 BONDS ARE NOT A DEBT OF THE CITY, THE STATE OR ANY OF ITS
POLITICAL SUBDIVISIONS, OTHER THAN THE FINANCING AUTHORITY, AND NONE OF
THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS, OTHER THAN THE
FINANCING AUTHORITY, IS LIABLE THEREFOR. THE 2006 LOAN IS NOT A DEBT OF THE
FINANCING AUTHORITY OR THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS, AND
NONE OF 1'HE FINANCING AUTHORITY OR THE STATE OR ANY OF ITS POLITICAL
SUBDIVISIONS, IS LIABLE THEREFOR. NONE OF THE MEMBERS OF THE FINANCING
AUTHORITY, THE CITY COUNCIL, THE REDEVELOPMENT AGENCY OR ANY PERSONS
EXECUTING THE SERIES 2007 BONDS OR THE 2007 LOAN AGREEMENT ARE LIABLE
PERSONALLY WITH RESPECT TO THE SERIES 2007 BONDS OR THE 2007 LOAN. THE
OBLIGATIONS OF THE REDEVELOPMENT AGENCY WITH RESPECT TO THE 2007 LOAN IS
PAYABLE SOLELY FROM THE PLEDGED TAX REVENUES (AS DEFINED HEREIN). NEITHER
TH� I�INANCING AUTHORITY NOR THE REDEVELOPMENT AGENCY HAS TAXING POWER.
Bond Insurancc
Payment of the principal and interest on the Series 2007 Bonds when due will be insured by a
financial guaranty insurance policy (the "Insurance Policy") to be issued simultaneously with the
execution and delivery of the Series 2007 Bonds by MBIA Insurance Corporation (the "Bond Insurer").
Sce "FINANCIAL GUARANTY INSURANCG" and APPENDIX H—"SPECIMEN FINANCIAL GUARANTY
INSURANCE POLICY."
Report of the Fiscal Consultant
Included as Appendix A to this Official Statement is a report (the "Report of the Fiscal
Consultant"} prcpared by Rosenow Spevacek Group Inc. (the "Fiscal Consultant") which, among other
things, analyzes the Pledged Tax Revenues generated from taxable property within the Project Areas and
pledged to the repayment of the Bonds. The findings and projections in the Report of thc Fiscal
Consultant are subject to a number of assumptions that should be reviewed and considcred by prospective
invcstors. No assurances can be given that the projections and expectations discussed in the Report of the
Fiscal Consultant will be achieved. Actual results may differ materially from the projections described
thcrein. See APPBNDIX A—"REPORT OF THB FISCAL CONSULTANT."
Ccrtain Risks to Bondholdcrs
Investment in the Series 2007 Bonds involves risk. For a discussion of certain considerations
rclevant to an investment in thc Series 2007 Bonds, see "C�RTAIN RISKS TO BONDHOLDERS."
Continuing Disclosure
The Redevelopment Agency has agreed to provide, or cause to be provided, to each nationally
recognized municipal securities information rcpository or the Municipal Securities Rulcmaking Board
and any public or private repository or entity designated by the State as a state repository for purposes of
Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission certain annual financial
information and operating data and, in a timely manner, notice of certain material events. "I'hese
covenants have been made in order to assist the Underwritcr in complying with the Securities and
Exchange Commission Rule 15c2-12(b)(5). See "CONTINUING DISCLOSURE" and APPENDIX F—"FORM
OF CONTINUING DISCLOSURE AGREEMENT" for a description of the specific nature of thc annual report
and noticcs of matcrial cvcnts and a summary dcscription of the tcrms of thc disclosure agreement
pursuant to which such reports are to be made.
06035\pos-3
"I'he Redevelopment Agency has never failed to comply in all material respects with any previous
undertakings with rcgard to said Rule to provide annual reports or notices of material events.
Additional Information
This Official Statement contains summaries of the Series 2007 Bonds, the security for the Series
2007 Bonds, the 2007 Indenture, the 2007 Loan Agreement, the Redevelopment Law, the Redevclopment
Agency, the Project Areas and certain other information relevant to the issuance of the Series 2007
Bonds. All refercnces herein to the 2007 Indenture and the 2007 Loan Agreement are qualified in their
entirety by reference to the complete text thereof and all references to the Series 2007 Bonds are further
qualified by reference to the form thereof contained in the 2007 Indenture. The audited financial
statements of thc Redevelopment Agcncy for the Fiscal Year ended June 30, 2006 arc included in
APPENDIx B. Thc proposed forms of legal opinions of Bond Counsel for the Series 2007 Bonds are set
foCth in APPENDIX B. SCC APPENDIX D—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS" for definitions
of certain words and terms used herein. All capitalized terms used in this Official Statement and not
otherwise defined herein have the same meanings as in the 2007 Indenture. The information set forth
hcrein and in thc Appendices hereto has been furnished by the Redevelopment Agency and the City and
includes information which has been obtained from other sources which are believed to be reliable but is
not guaranteed as to accuracy or completeness by the Financing Authority or the Underwriter and is not to
bc construed as a rcpresentation by the Undcrwritcr. Copies of documents rcferred to herein and
information conccrning the Series 2007 Bonds are available upon written request from the Senior
Financial Analyst of the Redevelopment Agency, 73-510 Fred Waring Drive, Palm Desert, California
92260-2578; tclephone: 760-346-0611. The Redevelopment Agency may impose a charge for copying,
mailing and handling.
PLAN OF FINANCE
Development of Low and Moderate Income Housing
A portion of the remaining proceeds of the 2007 Loan will be used by the Redevelopment
Agcncy to financc the development of certain low and moderate income housing activities of thc
Redevelopment Agency within the Project Areas, including but not limited to (i) acquiring and/or
rehabilitating multi-family housing units; (ii) acquiring land and constructing additional Redevelopment
Agency owned multi-family low and moderate income housing units; and (iii) providing subsidies to
facilitatc the development of low and moderate income housing units.
Refunding of Prior Bonds
Thc Financing Authority will loan the proceeds of the Series 2007 Bonds to the Redevclopmcnt
Agency. The Redevelopment Agency will use a portion of the proceeds of the 2007 Loan to prepay
certain amounts that remain due with respect to the 1998 Loan Agreement. The Financing Authority will
use those prepaid loan amounts to refund a portion of the Palm Desert Financing Authority Tax
Allocation (Housing Set-Aside) Revenue Bonds, Scries 1998 in ihe principal amount of �a40,275,000*
(the "Prior Bonds"). Such proceeds of the Series 2007 Bonds will be deposited in an escrow fund (the
"Escrow Fund") to be held by Wells Fargo Bank, National Association, as escrow bank (the "Escrow
Bank") pursuant to an Escrow Agreement dated as of February 1, 2007 (the "Escrow Agreement"), by
and among the Financing Authority, the Redevelopment Agency and thc Escrow Bank.
* Prcliminary, subjcct to changc.
06035\pos-3
Following the refunding of the Prior Bonds, thcrc will bc $4,190,000* principal amount of
Rcmaining 1998 Bonds.
The amounts deposited under the Escrow Agrcement will be hcld by the Escrow Bank and
invested in noncallable direct obligations of the United States of America, or bonds or other obligations
which are noncallable and for which the full faith and credit of the United States of America are pledged
for the payment of principal and interest, to mature or be withdrawable, as the case may be, not later than
thc timc whcn needed for the payment or redemption of the Prior Bonds in order to discharge the pledge
of thc lien securing the Prior Bonds (collectively, "Escrow Securities"). The principal of and interest on
such Escrow Securities, when received, will be sufficient to pay the principal or redemption price of,
including prcmium, and interest on the Prior Bonds upon redemption thereof. Upon delivery of the Series
2007 Bonds, the Prior Bonds will be irrevocably callcd for redemption on October 1, 2008 as specificd
below. Scc also "VERIFICATION OF MATHEMATICAL COMPUTATIONS."
The Prior Bonds to be refunded are expected to consist of all or a portion of the following:
$40,275,000*
Palm Descrt Financing Authority
Tax Allocation (Housing Set-Aside) Revenue Bonds
Scrics 1998
Dated Date: January 1, 1998
Maturity Datc
(October 1)
2011
2012
2013
2014
2015
2016
2017
2018
2027
Amount*
$1,535,000
1,6]5,000
1,700,000
1,785,000
1,875,000
1,975,000
2,075,000
2,180,000
25,535,000
Interest
Ratc
5.00%
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
CUSIP
(696617)t
Payment or
Redemption Date Redemption
(Octobcr 1) Price
2008
2008
2008
2008
2008
2008
2008
2008
2008
Preliminary, subject to change.
Copyright, American Bankers Association. CUSIP data herein is provided by Standard and Poor's, CUSIP Service Bureau,
a division of The McGraw-Hil] Companies, Inc. This data is not intended to create a database and does not serve in any
way as a substitute for the CUSIP Servicc. CUSIP numbcrs are provided for convenience of reference only. None of the
Authority, the City or the Undenvriter take any responsibility for the accuracy of such numbers.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
0(035\pos-3
Estimated Sources and Uses of Funds
The estimated sources and uses of funds, excluding accrued interest on the Series 2007 Bonds, is
summarized as follows:
Sources:
Principal amount of Scries 2007 Bonds ............... � *
Transfer from Prior Bonds Funds
TOTAL SOURCGS ........................................
Uses:
Project Fund��� ......................................................
Deposit to Escrow Fundtz�
Costs of [ssuancc .................................................
TOTAI, USES ..............................................
* Preliminary, subject to change.
{�� To be used to (inance the devclopment of housing activities in the Project Areas. See "TE�r PRo��cr ARr:ns."
''� Includes the Undcrwritcr's discount, fees and expenses of Bond Counsel and Disclosure Counsel, fees and expenses of thc
Trustee, the Financial Advisor, the Fiscal Consultant and the Verification Agent, printing costs, rating agency fees, bond
insurance and rescrve fund surety premiums, and other costs related to the issuance of the Series 2007 Bonds. For
information regarding the Underwriter's discount for the Serics 20U7 BonJs, see "U�DGRWRfl7NG."
Uebt Service Schedules
Series 2007 Bonds. Annual debt service for the Series 2007 Bonds is set forth below.
Bond Ycar
Ending
(October il Principal Interest Total
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
TOTAL
OfiO3 S\pos-3
g
Fiscal
Ycar
2007
2008
2009
2010
2011
2012
?013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
zo2x
2029
2030
2031
2032
To�rn�
Estimated Deht Service Coverage. Thc following table shows scheduled annual debt service on
the Parity Loan Agreements. See also "PROJECT AREAS-Overview-Table E-Summary Housing Set-
Aside Revenue Projections."
Estimated
Availablc
Plcdgcd 'Cax
Revenues
�15,218,571
16,387,176
17,133,301
18,041,9Q3
18,748,134
19,170,917
19,602,130
20,041,941
20,490,522
20,948,048
2 I ,414,698
2 I ,890,654
22,376,103
22,871,234
13,997,708
12,979,891
13,264,984
13,555,760
13,852,332
14,154,818
11,881,701
12,148,944
12,42 ] ,625
12,699,699
12,983,327
13,272,61 R
$431,548,789
Senior
1995 Bonds
$668,445
651,593
652,621
1998
Bondst
$2,866,804
2,879,816
� 2,881,341
3,537,035
3,535,785
3,535,910
3,537,160
3,539,285
3,537, I 60
3,535,660
3,539,410
3,538,160
3,536,785
3,538,763
3,538,658
3,537,305
3,534,450
3,534,? ] 0
3,537,575
3,537,663
3,539,590
3,537,975
$2,641,036 �78,704,409
Scrics
2002 Bonds 2007 Bonds
$765,144
763,449
765,573
766,454
766,298
765,201
763,349
765,849
762,849
764,004
7 fi4,019
763,029
765,891
767,407
767,588
766,445
763,888
764,750
764,125
767,125
763,750
764,000
767,625
764,625
765,000
763,625
$20,657,083
Total
Parity
Debt
Scrvicc
Estimated
Total Debt Debt
Service Service
CoveraQe Coveraee
t Uebt service shown for the 1998 Bonds does not reflect ihe refunding of the Prior Bonds. See "-Refunding of Prior Bonds."
Sources: Ro.senow Spevucek Group /nc .jor the Eslrmuled Avui/uble Pledged Tar Revenues Nutchinson, Shockey, Erlev & Co. and
Del Riu Advisors for a!! other informcr�ion.
'I'HE SERIES 2007 BONDS
Ucscription of the Series 2007 Bonds
The Serics 2007 Bonds will be issued only in fully registered form, without coupons, in the
denomination of 55,000 or any integral multiple thereof. The Series 2007 Bonds shall mature on thc
dates and in the principal amounts and bear interest at the rates as set forth on the inside covcr page of this
Official Statcment.
The Series 2007 Bonds will be dated the date of issuance and delivery, issued in fully registered
form, without coupons, and, when issued will be registered in the name of Cede & Co., as nominee for
Thc Dcpository Trust Company, New York, New York ("DTC"), as registered owner of all Series 2007
Bonds. Ownership interests in the Series 2007 Bonds may be purchased in book-entry form only.
Purchasers will noi receive certificates representing their interests in the Series 2007 Bonds purchased.
Paritv Debt
oc�o�s���s-s
Payments of principal of and interest on the Series 2007 Bonds, will be paid by the Trustee to DTC,
which is obligated in turn to remit such principal and interest to its DTC Participants for subsequent
disbursemcnt to the beneficial owners of the Series 2007 Bonds. See APPBNDIX G—"DTC AND 7'HG
BOOK-ENTRY ONLY SYSTEM." Ownership may be changed only upon the registration books maintained
by the Trustee as provided in the 2007 Indenture.
Interest on the Series 2007 Bonds will be payable on April 1 and October 1 of each year,
commencing October 1, 2007 (each an "lnterest Payment Date"). lnterest on the Series 2007 Bonds will
be computed on the basis of a 360-day year consisting of twelve 30-day months. Each Series 200? Bond
will bear interest from the Interest Payment Date next preceding the date of authentication thercof unless
(i) it is authenticated after a Record Date and on or prior to the following Interest Payment Date, in which
event it will bear interest from such Interest Payment Date, or (ii) it is authenticated on or prior to
, 2007, in which event it will bear interest from the date of issuance; provided, however, that
if, at the time of authentication of a Serics 2007 Bond, interest is in default thereon, such Serics 2007
Bond shall bcar interest from the Interest Paymcnt Date to which interest has previously been paid or
made available for payment thereon.
Redemption Procedures
Noncallable Series 2007 Bonds. The Series 2007 Bonds maturing on or before October 1, 20_
are not subject to redcmption prior to their maturity.
Redemption From Optional Loan Prepayments. In thc event that the Redevelopment Agcncy
exercises its option to prepay principal installments of the Loan pursuant to the Loan Agreement, the
Revcnues derived from such prepaymcnt will be applied to the redemption of the Series 2007 Bonds
►naturing aftcr October 1, 20_, as a whole, or in part among maturities as designated in writinb by the
Financing Authority and by lot within a cnaturity, in integral multiples of �5,000 principal amount, on any
Interest Payment Date on or after October 1, 20 , at the following respective redemption prices
(expressed as percentages of the principal amount of the Series 2007 Bonds to be redeemed), plus accrued
interest thercon to the date of redemption:
Rcdemption Dates Redemntion Prices
Octobcr 1, 20 and April 1, 20_ _%
October 1, 20 and April 1, 20� _
October 1, 20_ and thereafter _
Mandatory Sinking Fund Redemption. The Series 2007 Bonds due October 1, 20 shall be
subject to mandatory redemption by lot, on October 1 in each year commencing October 1, 20_, from
sinking fund payments made by the Financing Authority, at a redemption price equal to 100% of the
principal amount thereof to be redeemed, without premium, plus accrued interest to the date of
redemption as shown in the following tablc, provided, ho�vever, if some but not all of such Series 2007
Bonds have been redeemed as described above, the total amount of all future sinking fund payments shall
bc reduccd by thc aggregate principal amount of such Serics 2007 Bonds so redeemed, to be allocated
among such sinking fund paymcnts on a pro rata basis.
OG035\pos-3
10
Term Bonds Duc Octobcr l, 20_
Sinking Fund Principal Amount
Redemption Date to be Redeemed
(October 11 or Purchased
t Maturiry.
Purc/zase in Lieu of Redemption. In lieu of Mandatory Sinking Fund Redemption of thc Scrics
2007 Bonds on October 1 in any year, such Series 2007 Bonds may be purchased by the Redevelopment
Agency pursuant to the Loan Agreement and tendered to the Trustee for cancellation not later than the
preceding July 15.
Notice of Redemption. T'hc Trustee on bchalf and at the expense of the Authority will send (by
first-class mail or such other means accepted to such Owners or institutions) notice of any redemption to
thc respective Owners of any Series 2007 Bonds designated for redemption at their respective addresses
appearing on the Registration Books, and to the Securities Depositories and to one or more Information
Scrvices, at lcast 30 but not more than 60 days prior to the date fixed for redemption; provided, however,
that neithcr failure to receive any such notice so mailcd nor any defect thercin will affcct the validity of
the proceedings for the redemption of such Series 2007 Bonds or the cessation of the accrual of interest
thereon. Such notice will state the date of the notice, thc redemption date, the redemption place and the
redemption price and will designate the CUSIP numbcrs, the Serics 2007 Bond numbers (but only if' lcss
than all of the Outstanding Scries 2007 Bonds arc to bc redcemed) and the maturity or maturities (in the
event of redemption of all of the Series 2007 Bonds of such maturity or maturities in whole) of the Series
2007 Bonds to be redeemed, and will require that such Series 2007 Bonds be then surrendered at the trust
office of the Trustee for redemption at the redemption price, giving notice also that further interest on
such Series 2007 Bonds will not accrue from and after the redemption date.
Selection of Serres 2007 Bonds for Redemption. Whenever provision is made in the lndenturc
for less than all of the Series 2007 Bonds of any maturity to be redeemed, thc Trustec will select the
Series 2007 Bonds to be redeemed from all Series 2007 Bonds not previously called for redemption, by
lot in any manner which the Trustee in its sole discretion shall deem appropriate under the circumstances.
Por purposes of such selection, all Series 2007 Bonds will be deemed to be comprised of separate �,5,004
portions and such portions will be treated as separate bonds which may be separately redeemed.
Purtial Redemption of Series 2007 Bonds. In the event only a portion of any Scrics 2007 Bond
is called for redemption, then upon surrender of such Serics 2007 Bond the Financing Aulhority is
requircd to executc and the Trustee is required to authenticatc and deliver to the Owner thereof, at the
expense of the Financing Authority, a new Series 2007 Bond or Series 2007 Bonds of the same tenor and
maturity date, of authorized denominations in aggregate principal amount equal to the unredeemed
portion of the Series 2007 Bond to be redcemed.
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Effect of Redemption. From and after the date fixcd for redemption, if noticc of redemption shall
havc been duly mailed and funds available for the payment of the principal of and interest (and premium,
if any) on the Series 2007 Bonds so called for redemption shall have been duly provided, such Series
2007 Bonds so called shall ccase to be entitled to any bcnefit under the Indenture other than thc right to
receive payment of the redemption pricc, and no interest shall accrue thercon from and after the
redempti�n date specified in such notice.
SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2007 BONDS
Revenues and Loan Agrecment
The Series 2007 Bonds are secured by a first lien on and pledge of the Revenues, which are
dcfincd in the Indenturc to include (i) all amounts payable by the Redevelopmcnt Agency pursuant to thc
2007 Loan Agreement; (ii) any proceeds of thc Series 2007 Bonds originally deposited with the Trustee
and all moneys deposited and held from time to time in the funds and accounts established under the
Indenture; and (iii) income and gains with respect to the investment of amounts on deposit in the funds
and accounts established under the Indenture, other than amounts payable to the United States of America
pursuant to the tax covenants contained in the Indenture. The primary security for the Series 2007 Bonds,
thcrefore, consists of amounts payable by the Redcvelopment Agency under the 2007 Loan Agreement,
amounts hcld in the Reserve Fund and amounts held by the Trustee under the 2007 Indenture. The 2007
Loan is secured by a pledge of and lien on the Pledged Tax Revenues on a parity with the pledge of a licn
of thc 1998 Loan securing repayment of the Remaining Series 1998 Bonds, the 2002 Loan securing
repayment of the 2002 Bonds and any additional parity debt that may be incurrcd subject to thc 2007
Loan Agreement (collectively, thc "Parity Debt"), as more fully described under "—Pledged Tax
Revenues." The Redevelopment Agency may, pursuant to the terms of the 2007 Loan Agreement, the
1998 Loan Agreement and the 2002 Loan Agreement, issue additional obligations secured by Pledged
Tax Revcnues on a parity with the Parity Loans or subordinate to the lien of the Parity Loans. See
"—Senior Debt, Parity Debt and Subordinate Debt."
Tax Allocation Financing
Thc Redevelopment Law provides a means for financing redevelopment projects bascd upon an
allocation of taxes collected within a project area. The taxable valuation of a project area last equalizcd
prior to adoption of the redevelopment plan, or base roll, is established and, except for any period during
which the taxable valuation drops below the base year level and for certain exceptions described below,
the taxing agencies thereafter receive the taxes produced by the levy of the then current tax rate upon the
base roll. Taxes collected upon any increase in taxable valuation over the base roll (except such portion
generated by rates levied to pay bonded indebtedness approved by the voters on or after January 1, 1989,
for the acquisition or improvement of real property) are allocated to a redevelopment agency and may be
pledged by a redevelopmeni agency to the repayment of any indebtedness incurred in financing or
refinancing a redevelopment project. Tax Revenues consist of a portion of such taxes. Rcdevelopment
agencics thcroselves have no authority to levy property taxcs and must look specifically to thc allocation
of taxcs produced as described below.
Allocation of Taxes; Housing Set-Aside Amounts
As provided in the Redcvelopment Plans, and pursuant to Article 6 of Chapter 6 of the
Redevelopment Law and Section 16 of Article XVI of the Constitution of the State of California, taxes
levicd upon taxable property in each Project Area, each year by or for the benefit of the State of
California and any city, county, city and county, district or other public corporation (herein collectively
OGQ35\pos-3
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rcfcrred to as "taxing agencics") for fiscal years bcginning after the cffcctive date of the Projcct Arcas, are
divided as follows:
1. To other taxinQ a�encies: That portion of the taxes which would be produced by thc rate
upon which the tax is levied each ycar by or for each of said taxing agencies upon the total sum of the
assessed value of thc taxable property in thc Project Areas as shown upon the assessment roll used in
connection with the taxation of such property by such taxing agency last equalized prior to the effective
date of the applicable ordinance adopting the redevelopmcnt plan or amcnding the redevelopment plan to
add property into the Project Arcas, shall be allocated to, and when collccted shall be paid into the funds
of the respective taxing agencies as taxcs by or for said taxing agcncies on all other property arc paid; and
2. To the Redevelopment A�encv: Except for taxes which are attributable to a tax rate levy
by a taxing agency for the purpose of producing revenues to repay bonded indebtedness approved by the
votcrs of the taxing agency on or after January 1, 1989, which shall be allocated to and when collectcd
shall be paid to the respective taxing agency and except for statutory pass-through payments, that portion
of thc levied taxcs cach year in cxccss of the amounts provided for in paragraph (1) above, shall bc
allocated to, and when collected, shall be paid into a special fund of the Redevelopment Agency to pay
the principal of and interest on bonds, loans, moneys advanced to, or indebtedness (whether funded,
rcfunded, assumed, or othcrwise) incurred by the Redevelopment Agency to finance or rcfinancc, in
whole or in part, projects and programs for the Project Areas. When said bonds, loans, advances, and
indebtedness, if any, and interest thercon, have been paid, all moneys thereafter reccived from taxes upon
the taxable property in the Project Areas, shall be paid into the funds of the respective taxing agencies as
taxes on all other property are paid.
The Redcvelopment Agency is obligated under the Redevelopment Law to pledge that portion of
taxes divided and allocated to the Redevelopmcnt Agency as described in to paragraph (2) to repay
specific advances, loans and indebtedness as appropriate in carrying out the Redevelopment Plans.
In accordance with Section 33334.2 of the Redevelopment Law, not less than 20% of all taxes
which are allocated to the Redevelopment Agency shall be used by the Redevelopment Agency for
purposes of improving, incrcasing and preserving the City's supply of housing for persons and families of
low or modcrate income (including the payment of indebtedness issued or incurred for such purposes).
The Redevelopment Agency may not receive and shall not repay indebtedness with the proceeds
fi-om property taxes received pursuant to Section 33670 of the Redevelopment Law and the
Redevelopment Plans beyond the applicablc date for each Project Area, except to repay debt to be paid
f'rom the Housing Fund established pursuant to the Section 33334.3 of the Redevelopment Law and the
Rcdevelopment Plans, or debt established in ordcr to fulfill the Redevelopment Agency's obligations
under Section 33413 of the Redevelopment Law and thc Redcvelopment Plan.
Housing Set-Aside
Scctions 33334.2 and 33334.3 of the Redevelopment Law (addcd by Chapter 1337, Statutes of
1976) require redevelopment agencies to set aside 20% of all tax increment derived from redevelopment
project arcas established after December 31, 1976 in a low-income and moderate-income housing fund.
Section 33334.2 provides that this low-income and moderate-income housing requirement can be reduced
or eliminated if a redevelopment agency finds annually by resolution, consistent with the housing element
of the community's general plan, the following: (a) that no need exists in the community to improve,
increase, or preserve the supply of low-income and moderate-income housing, including its share of the
regional housing needs of very low income households and persons and families of low or moderatc
income; (b) that some stated percentage less than 20% of the tax increment is sufficient to mect the
housing needs of the community, including its share of the regional housing needs of persons and families
�
060:�5\pos-3
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of low or �noderate income and very low income households; or (c) that the community is making
substantial efforts, consisting of direct financial contributions of funds from state, local and federal
sources for low- and moderate-income housing of equivalent impact, to meet its existing and projected
housing needs (including its share of regional housing needs). Both the "no need" finding (described in
(a) above) and the "less than 20%" finding (described in (c) above) must apply to very-low-income as
well as low- and modcrate-income households, must bc consistent with the housing elemcnt of thc
community's general plan and the annual report of its planning agency, and do not become cffective until
aftcr ccrtain filings have becn made with the Statc Department of Housing and Community Development
("HCD"). Neither finding can be made unless the housing clement is in proper form and up-to-date and
has been filed with HCD.
The Rcdevelopment Agency currently dcposits the 20% of gross tax increment revenucs in its
Low and Moderate Income Housing Fund. Pursuant to thc Redevelopment Law, housing set-asidc funds
may be plcdged to the repaymcnt of bonds only to the extent procceds of such bonds are used (or are used
to refund bonds, the proceeds of which were used) to finance low and moderate income housing purposes.
See "—Allocation of Taxes; Housing Set-Aside Amounts."
As amended by AB 315 (Chapter 872, Statutes of 1991), Section 33334.2 has additional
restrictions on the ability to reduce or eliminate the low and moderate income housing requirement. A
community can claim that no need exists, or can claim that less than 20% of tax increment revenuc is
sufficient, only if that claim is consistent with the housing element of the community's general plan. The
authority for communities to claim an "equivalent effort" exemption was repealed as of June 30, 1993,
except for obligations incurred prior to May 1, 1991, which were entered into with the understanding that
the "equivalent effort" exemption would remain intact. The Redevelopment Agency has made no such
findings.
Punds available from the 20% requirement may be used outside the Project Areas on a finding by
the Redevelopmcnt Agency and the City Council that such use will be of benefit to the Project Areas. See
"—Plcdged Tax RevenueS." The Redevelopment Law also permits agencies with more than one project
area to set aside less than 20% of the taxes allocated to the agency from one project area if the difference
is made up from another project area in the same year and if the agency and the legislative body of the
community find that such use of funds will benefit such other project area.
Pledged Tax Revenues
Pledged Tax Revenues will be depositcd in the Special Fund, administered by the Redevelopment
Agency and applied to the payment of the principal of and interest on the Loan.
General. The revenues which the Redevelopment Agency has pledged to the payment of the
Parity Loans (thc "Pledged Tax Revenues") are defined in the Parity Loan Agreements as that portion of
the taxes levied upon taxable property in the Project Areas, allocated and paid into the Low and Moderate
Income Housing Fund (the "Housing Fund") of the Redevclopment Agency pursuant to Sections 33334.2,
33334.3 and 33334.6 of the Redevelopment Law (the "Housing Set-Aside Revenues"), excluding an
amount equal to the sum of all transfers of and payments from such Housing Set-Aside Revcnues required
for payment of the Senior Debt.
Pledged Tax Revenues received by the Redevelopment Agency in any Bond Ycar are required to
be deposited in the Housing Projects Special Fund held by the by the Redevelopment Agency (the
"Special Fund") in an amount which, when combined with other amounts then available in the Special
Fund, is equal to the amount required to be transferred to the funds and accounts established undcr the
Indcnturc during that Bond Ycar.
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The Redevelopment Agency's receipt of Tax Revenues with respect to the Project Areas is
subject to certain limitations (each a"Plan Limitation") contained in the Redevelopment Plan for each
Project Area on the dollar amount of taxes which may be divided and allocated to the Redevelopment
Agency pursuant to the respective Redevelopment Plan, as such limitations are prescribed by Section
33333.4 of the Rcdevclopment Law. See "—Redcvelopment Plan Limitations."
Pursuant to the 2007 Loan Agreement, the Redevelopment Agency covenants to comply with all
requirements of the Redevelopment Law to insure the allocation and payment to it of the Tax Revenues,
and further covenants not to enter into any agrcement with the County or any othcr govemmental unit
which would have the effect of reducing the amount of Pledged Tax Revenues available to the
Redevelopment Agency for payment of Parity Debt, unless the Redevelopment Agency certifies that
based on the assessed valuation of property in the Project Areas, as evidenced in the written records of the
County, the amount of Pledged Tax Revenues for the thcn current Fiscal Year, is at least equal to 120% of
Maximum Annual Debt Service[; and as long as the Insurance Policy is in full force and effect, the
written consent of the Bond Insurcr]. See also "—Scnior Debt, Parity Debt and Subordinate Dcbt,"
The Redevelopment Agency has no power to levy and collect property taxes, and any property
tax limitation, Legislative measure, voter initiative or provisions of additional sources of income to taxing
agencics having the effcct of reducing the property tax rate could reducc the amount of Pledged Tax
Revenues that would otherwise be available to pay the 2007 Loan and, consequently, the principal of, and
interest on, the Series 2007 Bonds. Likewise, broadened property tax exemptions could have a similar
effect. See "—Redevelopment Plan Limitations" and "CERTAIN RISKS TO BONDHOLDERS—Reduction of
Tax Revenues."
THE SERIES 2007 BONDS ARE NOT A DEBT OF THE CITY, THE STATE OR ANY OF I1'S
POLITICAL SUBDIVISIONS, OTHER THAN THE FINANCING AUTHORITY, AND NONE OF
THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS, OTHER THAN THE
FINANCING AUTHORITY, IS LIABLE THEREFOR. THE 2007 LOAN IS NOT A DEBT OF THE
FINANCING AUTHORITY OR THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS, AND
NONE OF 1'HE FINANCING AUTHORITY OR THE STATE OR ANY OF 1TS POLITICAL
SUBDIVISIONS, IS LIABLE THEREFOR. NONE OF THE MEMBERS OF THE FINANCING
AUTHORITY, THE CITY COUNCIL, THE REDEVELOPMENT AGENCY OR ANY PERSONS
EXECUTING THE SERIES 2007 BONDS OR THE 2007 LOAN AGREEMENT ARE LIABLE
PERSONALLY WITH RESPECT TO THE SERIES 2007 BONDS OR THE 2007 LOAN. THE
OBLIGATIONS OF THE REDEVELOPMENT AGENCY WITH RESPECT TO THE 2007 LOAN IS
PAYABLE SOLELY FROM THE PLEDGED TAX REVENUES (AS DEFINED HERE]N). NEITHER
THE FINANCING AUTHORITY NOR THE REDEVELOPMENT AGENCY HAS TAXING POWER.
City of Palm Springs v. All Persons Interested. On May 15, 1991, the Riverside County
Superior Court entered a final judgment incorporating a Stipulation for Entry of Judgment (the
"Stipulation") among the Redcvelopment Agency, the Westcrn Center on Law and Poverty, Inc. and
California Rural Legal Assistance in connection with litigation filed over the adoption of thc
Redevclopment Plan for Project Area No. 2(City of Palm Springs v. All Persons Interested, etc., Case
No. Indio 51143).
On June 18, 1997 and on Scptember 20, 2002, thc Riverside County Superior CouR cntered
arnendmcnts to its May 15, 1991 judgment, incorporating Stipulations Amending Stipulation for F,ntry of
Judgmcnt. Under the terms of thc Stipulation, as amended, the Redevelopment Agency generally agreed
to use its 20% housing set-aside funds, and other tax incremcnt revenues, if necessary, to dcvelop,
rehabilitate, or otherwise financially assist a certain number of affordable housing units and to meet
certain housing needs of the City. See "—Housing Set-Aside."
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Redevclopment Plan Limitations
Thc Statc Legislaturc has in the past enacted legislation altering spending limitations or
establishing minimum funding provisions for particular activities. The Redevelopment Agency cannot
predict whether the State Legislature will enact other legislation requiring additional or increased futurc
shifts of tax increment revenucs to the State ancUor to schools, whether through an arrangement similar to
the local County Education Revenue Augmentation Funds (the "ERAF") or by other arrangements, and, if
so, the effect of such legislation on future Tax Revenues. A dcscription of such legislation is summarized
below.
AB 1290. Pursuant to Section 33607.7 of the State Health and Safety Code added by Assembly
Bill (Statutes of 1993), Chapter 942) ("AB 1290") a redevelopment plan amendment for any
rcdevclopment plan adopted prior to January 1, 1994 that increases the limitation on the number of dollars
to bc allocated to the redevelopment agency or the time limit on the establishing of loans, advances and
indebtedness, must begin making statutory payments to affected taxing entities that do not have existing
prc-AB 1290 tax sharing agreements. These payments are to begin once any of thc original
redevelopmcnt plan limitations would have taken effect. The first limit encountered or to be encountered
in thc Projcct Arcas is thc dcbt cstablishmcnt limit.
The AB 1290 payments arc computed using the incrcase in revenue, if any, over the amount of
revenue generated by a project area in the year that the debt establishment limit would have been reached.
In effect, the year in which the debt establishment limit is met becomes a new "base year" for purposes of
calculating payments. AB 1290 payments are paid from revenues resulting from the growth in the ncw
tax base year.
Among other amendments to the Law, AB 1290 limits the time for: (i) establishing indebtedness
in a project arca to the later of 20 years from the date of adoption of the redevelopment plan or January 1,
2004; (ii) thc life of existing rcdcvelopment plans to thc later of 40 ycars from the date of adoption or
January 1, 2009; (iii) paying indebtedness with tax increment beyond 10 years after the expiration of the
redevelopment plan, except to fund deterred Low and Moderate Income Housing Fund (the "Housing Set-
Aside") requiremcnts and to rcpay indebtedness incurred prior to January 1, 1994. The time limits
imposed by AB 1290 apply individually to each plan as well as to specific territory added by amendments
to a rcdcvclopment plan.
On Dcccmber 12, 1994, the City Council adoptcd Ordinance No. 765 with respect to Project Area
No. 1, Ordinance No. 766 with respect to Project Area No. 2, Ordinance No. 767 with respect to Project
Arca No. 3 and Ordinance No. 768 with respect to Project Area No. 4 establishing time limits to incur
debt within the respectivc Project Arca. See "—SB lll" and "—SB 1096" for additional legislation
affecting plan limits and "LIMITATIONS ON TAX REVBTv'UES—Pass-Through Agreements and Tax Sharing
Payments—Statutory Tax Sharing Payments" and "THE PROJECT AREAS-0verview—Summary of
Redevelopment Plan Limits" for a summary of the plan amendment and limitations.
SB 211. Senate Bill 211 (Chapter 741, Statutes of 2001) ("SB 211") was adopted by the
California Legislature and became law on January 1, 2002. Among other things, SB 211 authorizes a
redevelopment agency that adopted a redcvelopment plan prior to January 1, 1994, to amend that plan in
accordance with specified procedures to extend its effectiveness and receive tax increment revenues with
respect to the plan for not more than 10 years if certain specified fndings are made. If a plan is so
amended, the requirement for allocating tax increment revenues to low and moderate income housing is
increased from 20% to 30%. However, such elimination also triggers statutory tax sharing with those
taxing entities that do not have tax sharing agreements for the period commencing in the year the
eliminated plan limit would have taken effect. Tax sharing will be calculated based on the increase in
assesscd valuation after the year in which the time limit would have otherwise become eff'ective. SB 21 1
OG03s\pos-3
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also allows rcdevelopment agencies to amend redevelopmcnt plans to climinate thc time limit for thc
cstablishment of loans, advanccs and indebtedness within project arcas. Howevcr, such an amendmcnt
would also require a redevelopment agency to begin making statutory tax sharing payments to affected
taxing entities. Scc " AB 1Z90."
On February 27, 2003, the City Council adopted Ordinance No. 1035 with respect to Projcct Area
No. 1, Ordinance No. 1036 with respect to Project Area No. 2, Ordinance No. 1062 with respect to
Projcct Area No. 3 and Ordinance No. 1063 with respect to Projcct Area No 4 to eliminate the timc limit
to rcpay dcbt in each Projcct Arca.
SB 1045. Senate Bill ] 045 (Chapter 260, Statutes of 2003) ("SB 1045") was enacted as part of
the State Fiscal Year 2003-04 budget legislation and required redevelopment agencies Statewide to
contributc $135 million to the ERAF in order to reduce the amount of State funding for schools. (See
also "CERTAITv RISKS TO BONDHOLUGRS—State Budget"). In accordance with SB 1045, the
Redevelopment Agency transferred $291,686 to the County by the May 10, 2004 deadline.
In addition, SB 1045 amended the Rcdcvclopcnent Law to permit redevclopment agcncics to use
a siinplified mcthodology to amend the redevelopment plans to extend by one ycar the effectivcncss of
thc plan and the timc during which a redevelopment agency may repay debt with tax increment revenucs,
and permitted a redevelopment agency to deduct the amount of ERAF payments in Fiscal Year 2003-04
and in prior years from the amount of the cumulative tax increment revenues for a project arca.
On December 19, 2004, the City Council adopted Ordinance No. 1082 with respect to Project
Area No. ] and Ordinance No. 1083 with respect to Project Area No. 2, and on March 11, 2004, the City
Council adopted Ordinance No. 1084 with respect to Project Area No. 3 and Ordinance No. 1085 with
respect to Project Area No. 4. Each Ordinance extended the time limit within the related Project Area by
onc year. Sce also "THE PRO]ECT AR�AS-0verview—Redevelopment Plan Limits—Tablc A."
SB 1096. Senatc Bill 1096 (Chapter 211, Statutes of 2004) ("SB 1096") permits a redevelopment
agency to extend the term of the redevelopment plans effectiveness and the periods within which a
redevelopment agency may repay indebtedncss by up to two additional years, provided the redevelopment
agency pays its ERAF obligations for Fiscal Years 2004-OS and 2005-06. SB 1096 authorizes the
f'ollowing extensions of redcvclopment plans: (i) for components of a project area that have 10 years or
Iess of plan effectiveness remaining after June 30, 2005, a two-year extension is authorized; and (ii) for
components of a project area that have more than 10 years and less than 20 years of plan effectiveness
remaining after June 30, 2005, a two-year extension is authorized if the legislative body of the
redevelopment agency makes certain findings. For those components of a project area with more than 20
years of plan effectivencss remaining after June 30, 2005, no cxtension of time is authorized under SB
1096.
The Redevelopment Agency paid its ERAF obligation for Fiscal Ycar 2004-OS in the amount of
$3,887,133 and for Fiscal Year 2005-06 in the amount of $3,995,041. The Redevelopment Agency has
not extended the rcpayment provisions within the Project Areas as permitted by SB 1096, but may do so
in the future. See "THE PROJECT ARGAS."
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Rescrve Fund
A Reserve Fund was establishcd as additional security for thc payment by the Redevclopmcnt
Agency of amounts due under the Parity Loan Agreements. The Reserve Fund is required to be
maintaincd by the Trustee in the amount of the "Reserve Requirement." The Reserve Requirement is
defined in the Parity Loan Agreements, as of any date of calculation, as the least of: (i) Maximum Annual
Debt Service; (ii) 125% of average annual debt service on the 2007 Loan and all outstanding Parity Dcbt;
and (iii) 10% of the proceeds of the applicable 2007 Loan (i.e. the original Principal Amount of the Series
2007 Bonds) and thc proceeds of any Parity Debt.
The Redevelopmcnt Agency pledges and grants a lien and security interest to the Trustee in thc
Reserve Fund to secure the payment obligations of the Redevclopmcnt Agency under thc Parity Loan
Agreements. Amounts on dcposit in a Reserve Fund may bc used for the purposc of making transfers to
the Intcrest Account, Principal Account, in such order, in the event of a deficiency at any time in any such
accounts with respect to the amounts due on the Series 2007 Bonds are insufficient therefor.
Following the issuance of the Serics 2007 Bonds, the Reserve Requirement with respect to the
Parity Dcbt will be � .
Senior Debt, Parity Debt and Subordinate Debt
Outstanding Senior Debt. The Senior Debt is secured by a lien upon the Nousing Sct-Aside
Rcvenucs. Such lien is limited to Housing Set-Aside Revcnues derived solely from the Added Territory.
The Senior Debt matures on September 1, 2008. Such Housing Set-Aside Revenues from the Added
Territory are first used to pay debt service on the Senior Debt. Only after payment of debt service on the
Scnior Debt when due will the rcmaindcr of such Housing Set-Aside Revenues (such remainder
constituting a portion of the Pledged Tax Revenues) be available for payment of the debt service on the
Series 2407 Bonds and any Parity Debt or Subordinate Debt. See also "PLAN OF FINANCE—Debt ServicC
Schedules—Estimated Debt Service Coverage."
Parity Deb� In addition to the 2007 Loan, thc Redevelopment Agency may, by supplemcntal
indenture, issue or incur other loans, advances or indebtedness payable from Pledged Tax Revenues, on a
parity with the Series 2007 Bonds and the Parity Debt and refunding bonds in such principal amount as
shall be determined by the Redevelopment Agency.
The Redevelopment Agency covenants in the 2007 Loan Agreement that it will not incur any
indebtedness which is payable from all or any part of the Pledged Tax Revcnues, othcr than (i) the 2007
Loan, (ii) Parity Debt, subject to the conditions described below, and (iii) Subordinate Debt. Subordinate
Dcbt is any loan, advance or indebtedness issued or incurred by the Redevelopment Agency in
accordance with the requiremcnts of the 2007 Loan Agreement, which is either: (i) payable from, but not
secured by a pledgc of or lien upon, the Pledged Tax Revcnues, or (ii) secured by a pledge of or licn upon
thc Pledged Tax Rcvenucs which is subordinate to the pledge of and lien upon the Pledged Tax Rcvcnues
under thc 2007 Loan Agreement for the security of the 2007 Loan and any Parity Debt.
Pursuant to the Loan Agreement, thc Rcdcvelopment Agency may issue or incur additional Parity
Debt subject to the following specific conditions:
(a) No Event of Default has occurred and is continuing under and as defined in the
2407 Loan Agreement, and the Redevelopment Agency is otherwise in compliance with all
covenants set forth in the 2007 Loan Agreement.
06035\pos-3
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(b) The amount of the Pledged Tax Revenues for the then current Fiscal Year, as set
forth in a Ccrtificatc of thc Rcdcvelopment Agency, based on assessed valuation of property in
the Project Areas, as evidenccd in thc written records of thc County at least equals 120% of
Maximum Annual Debt Service.
(c) The balance in thc Reserve Fund is incrcased to the Rescrve Requirement.
(d) The documents authorizing such Parity Dcbt shall provide that any Parity Debt
bearing current interest is payable on April 1 or October 1 of any year and the principal of such
Parity Debt is payable on the same date as thc principal of the 2007 Loan is payable.
(c) The issuance of such Parity Debt shall not cause the Redevelopment Agency to
exceed any applicable limitations contained in the Redevelopment Plans.
(� The Redevelopment Agency delivers to ihe Trustee a written certificate
certifying that the conditions precedent to the issuance of such Parity Debt set forth in
subparagraphs (a), through (e) above have becn satisfied.
Subordinate Debt. In addition to the 2007 Loan and any Parity Debt, the Redevelopmcnt
Agency may from time to time issue or incur Subordinate Debt (as defined in the 2007 Loan Agreement)
in such principal amount as determined by the Redevelopment Agency, provided that the issuance of such
Subordinatc Debt will not cause the Redevelopment Agency to exceed any applicable limitations
containcd in the Redevelopment Plan.
Investment of Funds
All f'unds hcld by the Trustee and the Special Fund held by the Agency under the 2007 Indenturc
are rcyuired to bc investcd in Permitted Investments. See APPENDIX D attached hcreto for the definition
of Pcrmittcd Investments. See the audited financial statements of the Redevelopment Agency f'or thc ycar
cndcd June 30, 2006 attached hereto as APP�ND►x B for a description of the Redevelopment Agency's
investment policy at June 30, 2006. All investments, including the Permitted Investments contain a
ccrtain degree of risk. Such risks include, but arc not limited to, a lower rate of return than expcctcd and
loss or delayed receipt of principal. The occurrence of these events with respect to amounts held under
the 2007 Indenture or thc Special Funds could have a material adverse affect on the security for the Scries
2007 Bonds.
FINANCIAL GUARANTY INSURANCE
The following informution has been furnished by the Bond Insurer for use in this O�cial
Statement. Reference is made to APPENDIX H for a specimen of the frnancial guaranry insurance policy to
be i.ssued hy the Bond Insurer. The Redevelopment Agency makes no representations a.s to the accuracy
or completeness of this information or as to the absence of material adverse changes in this information
sz�bsequent to the date hereof.
[TO COME]
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LIMI1'ATIONS ON TAX REVENUES
Article XIII A of the State Constitution
On June 6, 1978, California voters approved Proposition 13 ("Proposition 13"), which added
Article XIII A to the State Constitution ("Article XIII A"). Article XIII A, as amended, limits the amount
of any ad valorem tax on real property to one percent of the full cash valuc thereof, except that additional
ad valorem taxes may be Icvied to pay debt service on (i) indebtedness approved by the votcrs prior to
July 1, I 978, (ii) (as a result of an amendment to Article XIII A approved by State voters on June 3, 1986)
on bonded indebtcdness for the acquisition or improvement of real property which has been approved on
or after July 1, 1978 by two-thirds of the voters on such indebtedness, and (iii) bonded indebtedness
incurred by a school district or community college district for the construction, reconstruction,
rehabilitation or replacement of school facilitics or the acquisition or lease of real property for school
facilities, approved by 55% of the voters of the district, but only if certain accountability measures are
included in the proposition. Article XI11 A, among other things affects the valuation of real property for
the purpose of taxation in that it defines the full cash property value to mean "the Riversidc County
Asscssor's Office's valuation of real property as shown on the 1975-76 tax bill under `full cash valuc', or
thereafter, the appraised value of real property when purchased, newly constructed, or a change in
ownership has occurred after the 1975 assessment." The full cash value may be adjusted annually to
reflcct inflation at a rate not to exceed 2% per year, a reduction in the consumer price index or
comparable local data, or declining property value caused by damage, destruction or other factors
including a general economic downturn.
In the general elections of 1986, 1988 and 1990, California voters approved various measures
which further amendcd Article XIII A. One such amendment generally provides that the purchasc or
transfcr of (i) real proper[y betwcen spouses or (ii) the principal residencc and the first S 1,000,000 of the
full cash value of other real property between parents and children, do not constitute a"purchase" or
"change of ownership" triggering reasscssment under Article XIII A. This amendment reduces the
property tax revenues of the City and the tax increment of the Rcdevelopment Agency. Othcr
amendments permitted the Legislature to allow persons over 55 who sell their residence and on or after
Novcmber 5, 1986, buy or build another residcnce of equal or lesser value within two years in the same
county, to transfcr the old residcnce's assessed valuc to the new residence, and permitted the Legislature
to authorize each county under certain circumstances to adopt an ordinance making such transfcr or
assessed value applicable to situations in which the replacement dwelling purchased or constructed after
November 8, 1988, is located within that county and the original property is located in another county
within the State.
In the June 1990 election, the voters of the State approved additional amendments to Article
XIII A permitting thc California Legislature to extend the replacement dwelling provisions applicablc to
persons over 55 to severely disabled homeowners for replaccment dwellings purchased or ncwly
constructed on or after June 5, 1990, and to exclude from the definition of "new construction" triggering
reassessment improvements to certain dwellings for the purpose of making the dwelling more accessible
to severely disabled persons. In the November 1990 election, the voters approved the amendment to
Articic XIII A to permit the State Legislature to exclude from the definition of "new construction"
seismic rctrofitting improvcments or improvcmcnts utilizing earthquake hazard mitigation technologies
constructed or installed in existing buildings after November 6, 1990.
Both thc California Supreme Court and thc United States Supreme Court have upheld the
constitutionality of Article Xl1I A.
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Challenges to Article XIII A. On Scptcmbcr 22, 1978, thc California Supreme Court upheld the
amcndmcnt ovcr challcnges on several state and federal constitutional grounds (Amador Val/ey Joint
Union High School District v. State Bourd of Equulization). The Court reserved certain constitutional
issucs and the validity of legislation implementing the amendmcnt for future determination in proper
cases. Since 1978, several cases have been decided interpreting various provisions of Article XIII A;
howcver, none of them have questioned the ability of rcdcvelopment agencies to use tax allocation
financing. The Unitcd States Supreme Court uphcld the validity of the asscssment procedures of Article
XIII A in Nordlinger v. Hahn.
The Redevelopment Agency cannot prcdict whcther there will be any future challcnges to
California's present system of property tax assessment and cannot evaluate the ultimate effect on the
Redevelopment Agency's receipt of Tax Revenues should a future decision hold unconstitutional the
mcthod of asscssing property.
Implementing Legislation. Legislation enacted by the California Legislature to implement
Article XIII A provides that all taxable property is shown at full assessed value as described above. In
conf'onnity with this procedure, all taxable property value included in this Official Statement (except as
noted) is shown at 100% of assessed value and all gcncral tax rates reflect the S1 per 5100 of taxable
value. Tax rates for voter approved bonded indebtedness and pension liability are also applied to 100% of
assessed value.
Future assessed valuation growth allowed under Article XIII A(new construction, change of
ownership, 2% annual value growth) will be allocated on thc basis of "situs" among the jurisdictions that
scrvc the tax rate area within which the growth occurs, except for certain utility property assessed by the
State ]3oard of Equalization. Local agencies and school districts will share the growth of "base" revenue
f'rom thc tax rate area. Each year's growth allocation becomes part of each agency's allocation the
following ycar. The Rcdevelopment Agency is unable to predict the nature or magnitude of future
revcnue sources which may be provided by the State to replace lost property tax revenues. Article XIII A
effcctively prohibits the levying of any other ad valorem property tax above the 1% limit except for taxes
to support indebtedncss approved by thc voters as describcd above.
See "CERTAIN RISKS TO BONDHOLDGRS—Reduction in Inflation Rate" regarding certain litigation
relating to property assessments and the provision of Article XIII A limiting the annual inflation
adjustment to two percent when the assessor tried to "recapture" the tax value of the property by
increasing its assessed value by approximately four percent in a single year.
Litigation Regarding 2% Limitation. Section 5] of thc Revenue and Taxation Codc permits
Riverside County Assessor's Offices who have reduced the assessed valuation of a property as a result of
natural disasters, economic downturns or other factors, to subsequently "recapture" such value (up to the
pre-decline value of thc property) at an annual rate highcr than 2%, dcpending on the assessor's measurc
of thc restoration of value of the damaged property. The constitutionality of this procedure was
challengcd in a lawsuit brought in the Orange County Superior Court entitled County of O�-unge v.
Orunge County Assessment Appeals Board No. 3 and in similar lawsuits brought in other countics, on the
basis that the decrease in assessed value creates a ncw "base ycar value" for purposes of Proposition 13
and that subsequcnt increascs in thc assessed valuc of a property by more than 2% in a singlc year violatc
Article XIII A. In 2001, the Orange County Superior Court issued an order declaring the recapture
practice to be unconstitutional as applied to the plaintiff taxpayer. On March 26, 2004, the Court of
Appeal held that thc trial court erred in ruling that assessed value determinations are always limited to no
more than 2% of the previous year's assessed value and reverscd the judgment of the trial court. On
July 21, 2004, the California State Supreme Court denied a petition to rcview the decision of the Court of
Appeal.
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Article XIII B of the State Constitution; Appropriation Limitations
An initiative to amend the State Constitution was approved on Scptcmber 6, 1979 thcrcby adding
Article XIII B to the State Constitution ("Article XIII B"). Article XIII B limits the annual appropriations
from the proceeds of taxes of the State and any city, county, school district, authority or other political
subdivision of the State to the level of appropriations for the prior fiscal year, as adjustcd for changes in
the cost of living, population and services rendered by the governmental entity. Article XIII B includes a
requirement that if an cntity's revenues in any year exceed the amount permitted to be spent, the excess
would have to be returned by revising tax or fee schedules over the subsequent two years.
Effective September 30, 1980, the State Legislature added Section 33678 to the Redevelopment
Law which provides that the allocation of taxes to a redevelopment agency for the purpose of' paying
principal of, or interest on, loans, advances or indebtedness incurred for redevelopment activity shall not
be dccmed the reccipt by such agency of procecds of taxes within the meaning of Article XIII B, nor shall
such portion of taxes be deemed receipt of proceeds of taxes by, or any appropriation subject to the
limitation of, any other public body within thc meaning or the purpose of the Constitution and laws of the
Statc, including Section 33678 of the Redevelopment Law. Two State appellate court decisions have
upheid the constitutionality of Scction 33678, and in the one case in which a petition for review was filed
in the California Supreme Court, such petition was denied.
Articles XIII C and XIII D of the State Constitution
On November 5, 1996, California voters approved Proposition 218—Voter Approval for Local
Government Taxes—Initiative Constitutional Amendment. Proposition 218 added Articles XI11 C and
X111 D to the California Constitution, imposing certain vote requirements and other limitations on the
imposition of new or increased taxes, assessments and property-relatcd fees and charges. The Bonds are
secured by sources of revenues that are not subject to limitation by Proposition 218.
'Taxation of Unitary Property
AB 454 (Statutes of 1987, Chapter 921) provides a revised method of reporting and allocating
property tax revenues gcnerated from most Statc-assessed unitary properties commencing with Fiscal
Year 1988-89. Under AB 454, the State reports to each county auditor-controller on the county-wide
unitary taxablc value of each utility, without an indication of the distribution of the value among tax rate
areas. AB 454 provides two formulas for auditor-controllers to use in order to determine thc allocation of
unitary property taxes generated by the county-wide unitary value, which are: (i) for revenue generated
from the 1% tax rate, each jurisdiction is to receive up to 102% of its prior year unitary property tax
increment revenue, however, if county-wide revenues generated for unitary properties are greater than
102% of prior year revenues, each jurisdiction receives a percentage share of the excess unitary revenues
equal to the percentage of each jurisdiction's share of secured property tax revenucs; or (ii) for revenue
gencrated from thc application of the debt service tax rate to county-wide unitary taxable value, each
jurisdiction is to receive a perccntage share of revenue based on the jurisdiction's annual debt service
requireinents and the perccntage of property taxes received by each jurisdiction from unitary property
taxes.
Thc provisions of AB 454 apply to all Statc-assessed property, except railroads and non-unitary
properties the valuation of which will continue to be allocated to individual tax rate areas. The provisions
of AB 454 do not constitute an climination or reversion of the method of assessing utilitics by the Statc
Board of Equalization. AB 454 allows, generally, valuation growth or decline of State-assessed unitary
property to be sharcd by all jurisdictions within a county.
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Property Tax Collection Procedures
Classifications. In California, property which is subjcct to ad valorem taxes is classificd as
"sccured" or "unsecured." Secured and unsecured property are entered on separatc parts of the
assessment roll maintained by the county assessor. The sccured classification includes property on which
any property tax levied by the County becomes a lien on that property sufficient, in the opinion of the
county assessor, to secure payment of the taxes. Every tax which becomes a lien on secured property has
priority over all other liens on the secured property, regardless of the time of the creation of other liens. A
tax levied on unsccured property does not become a lien against the property, but may become a lien on
ccrtain other property owned by the taxpayer.
Collections. The method of collecting delinquent taxes is substantially different for the two
classitications of property. The taxing authority has four ways of collecting unsecured property taxes in
the absence of timely payment by the taxpayer: (1) a civil action against the taxpaycr; (2) filing a
certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on
certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder's
office, in order to obtain a lien on ccrtain property of the taxpayer; and (4) scizure and salc of the personal
property, improvements or possessory interests belonging or assessed to the assessee.
The exclusive means of enforcing the payment of delinquent taxes with respect to property on the
secured roll is thc sale of property securing the taxes to the State for the amount of taxes which are
delinquent.
Current tax payment practices by the County provide for payment to the Redevelopment Agency
of Tax Rcvenues monthly throughout the ftscal year, with the majority of Tax Revenues dcrived from
secured property paid to the Redevelopment Agency in mid-December and mid-April, and the majority of
Tax Revenues dcrived from unsecurcd properiy paid to the Redevelopment Agency by mid-Novcmber. A
final reconciliation is made after the close of the fiscal year to incorporate all adjustments to previously
reported current year taxable values. The difference between the final reconciliation and Tax Revenucs
previously allocated to the Redevelopment Agency is allocated mid-August.
Penalties. A 10% penalty is added to dclinquent taxes which have becn levied with respect to
property on the secured roll. In addition, property on the sccured roll on which taxes are dclinqucnt is
sold to the State on or about June 30 of the fiscal year. Such property may thereafter be redeemed by
payment of the dclinquent taxes and a delinquency penalty, plus a redcmption penalty of 1% per month to
thc time of redemption and a S15 Redemption Fee. lf taxcs are unpaid for a period of five years or more,
the property is deeded to the State and then is subjcct to sale by the county tax collector. A 10% penalty
also applics to the delinquent taxes on property on the unsecured roll, and further, an additional penalty of
1% per month accrues with respect to such taxes beginning the first day of the third month following the
delinquency date.
Delinquencies. The valuation of property is determined as of January 1 each year and equal
installments of taxes levied upon secured property become delinquent after the following Decembcr 10
and April 10. Taxes on unsecured property are due April 1. Unsecured taxes enrolled by July 31, if
unpaid, are delinquent August 31 at 5:00 p.m. and are subject to penalty; unsecured taxes added to thc roll
after July 31, if unpaid, are delinquent on the last day of the month succceding the month of enrollment.
Supplemental Assessments. A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498),
provides for the supplemental assessment and taxation of property as of the occurrence of a change in
ownership or completion of new construction. Previously, statutes enabled the assessment of such
changes only as of the next January 1 tax licn date following the change and thus delayed thc realization
of incrcased property taxes from the new assessments for up to 14 months. As enacted, Chapter 498
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provides increased revenuc to redevelopment agencies to the extent that supplemental assessments as a
result of new construction or changes of ownership occur within the boundaries of redevelopment projects
subsequent to thc January 1 lien date. To the extent such supplemental assessments occur within the
Project Areas, Tax Revenues may increase.
Property Tax Administrative Costs
Legislation enacted by the State Legislature authorizes county auditors to determine property tax
administrative costs proportionately attributablc to local jurisdictions and to submit invoices to the
jurisdictions for such costs. Subsequent legislation specifically includes rcdevelopment agencics among
thc cntities that are subject to such charges. Spccifically, in 1990 the Statc legislature enacted SB 2557
(Chapter 466, Statutes of 1990) authorizing counties to charge for the cost of assessing, collecting and
allocating property tax revenues to local governments jurisdictions in proportion to the tax derived
revenucs allocated to each. SB 1559 (Chapter 697, Statutes of 1992) explicitly includes redevelopmcnt
agencies among the jurisdictions which are subject to such charges. The County collects property tax
administration costs from the Redevelopment Agency by deducting such costs from tax revenues prior to
delivcring such amounts to the Redevelopment Agency.
Project Area No. 1.
Orieinal Area. For Fiscal Year 2005-06 the County's administrative fee in the Original
Area was 0.869% of the gross tax increment revenues from thc Original Area or $78,987, and for
Fiscal Year 2006-07 is estimated to be S77,466.
Added Territorv. For Fiscal Year 2005-06, the County's administrative fee in the Added
Territory was 0.101% of thc gross tax increment revenues paid to the Redevelopment Agency
from the Added Territory or $298,669, and for Fiscal Year 2006-07 is estimated to be S293,492.
Project Area No. 2. For Fiscal Ycar 2005-06 the County's administrativc fee was 0.104% of thc
gross tax incremcnt revenues from the Projcct Area No. 2 or S131,163, and for Fiscal Year 2006-07, the
County administrative fee is estimated to be S135,492.
Project Area No. 3. For Fiscal Year 2005-06 thc County's administrative fec was 0.165% of thc
gross tax increment revenucs from the Project Area No. 3 or $27,207, and for Fiscal Year 2006-07, the
County administrative fee is estimated to be S26,702.
Project Area No. 4. For Fiscal Year 2005-06 thc County's administrative fee was 0.786% of thc
gross tax incrcinent revenues from the Project Area No. 4 or �99,794, and for Fiscal Year 2006-07, the
County administrative fee is estimated to be $95,365.
The administrative fees are prorated to the Housing Fund and to taxing entitics (including the
County Capital Improvement Fund) who receivc a portion of the tax incremcnt revenue from a Projcct
Area pursuant to a tax sharing agreement. See also APPENDIX A—"REPORT OF THE FISCAI.
CONSUI_TANT."
Ccrtification of Redevclopment Agency Indebtedness
Under the Redevelopment Law, redcvelopment agencies must file with the county auditor a
statement of indebtedness for each project area not later than the first day of October of each year. As
dcscribed below, the statement of indebtcdncss controls the amount of tax increment revenue that will be
paid to the Redevelopment Agency in each fiscal year.
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Each statement of indebtedness is filed on a form prescribed by the State Controllcr and specifies,
among other things: (i) the total amount of principal and interest payable on all loans, advanccs or
indcbtedncss (the "Debt"), both over the life of the Debt and for the current fiscal year, and (ii) thc
amount of "available revenue" as of the end of the previous fiscal year. "Available revenue" is calculated
by subtracting the total payments on Debt during the previous fiscal ycar from the total revenues (both tax
increment revcnues and other revenues) received during the previous fiscal year, plus any carry forward
from the prior fiscal ycar. Available rcvenucs include amounts hcld by the Redevelopment Agency and
irrevocably pledged to the payment of Debt, but do not include amounts set aside for low and moderate
income housing.
Thc county auditor may only pay tax increment revenue to the redevelopment agency in any
fiscal year to the extent that the total remaining principal and interest on all Debt exceeds the amount of
available revenues as shown on the statement of indebtedncss.
The statement of indebtedness constitutes prima facie evidence of the indebtedness of the
redevelopment agency; however, the county auditor may dispute the statement of indebtedness in ccrtain
cases Section 33675 provides for certain time limits controlling any dispute of the statement of
indebtedness, and allows for Superior Court determination of such dispute in the event it cannot be
resolved by the redevelopment agency and the county. Any such action may only challenge the amount
of the Debt as shown on the statement, and not the validity of any Debt or related contract or the
expenditures related thereto. No challenge can be made to payments to a fiscal agent in connection with a
bond issue or payments to a public agency in connection with payments by that public agency with
respect to a lcase or bond issue.
Pass-Through Agreements and Tax Sharing Payments
Pass-Through Agreements. The Redevelopment Agency entcred into a pass-through agreemcnts
with certain local taxing agencies (collectively, the "Pass-Through Agreements"). Pursuant to each such
abrecment, the Redevelopment Agency is obligated to pay tax increment revenues to cach such taxing
entity, other than the City, that has territory located within the Project Areas in the amount which the
Redevelopment Agency determines is appropriate to alleviate any financial burden or detriment caused to
such taxing entity as a result of redevelopment activities within the Project Areas. Each Pass-Throubh
Agreement providcs for a pass-through of tax incrcment revenue dircctly to the related taxing entity. For
a dcscription of the Pass-Through Agrcements, see APPENDIX A—"REPORT OF THE FISCAL CONSLLTANT—
Payments to Affected Taxing Agencies."
Statutory Tax Sharing Payments. The Redevelopment Plan for the Project Areas was amended
after January 1, 1994 and therefore is subject to thc statutory tax-sharing payments mandated in the Law,
as amended by AB 1290, requiring that a portion of the tax increment revenues be shared with taxing
entities. See also "SECURITY AND SOURCGS OF PAYMBNT FOR THE SERIES 2007 BONDS—Redevelopment
Plan Limitations—AB 1290." These tax-sharing payments are set by statute and are not negotiated. Thc
County Auditor-Controller allocates all tax increment revenue to the Redevelopment Agency for payment
of tax-sharing payments. This defined tax sharing amount has three Tiers.
Tier 1: Commences with the first year that each of Expansion Areas, respectivcly,
receives tax increment revenue and continues for the life of each such Expansion Area. The
Tier 1 tax-sharing amount is equal to 25°l0 of the gross tax increment revenue allocated from the
respective Expansion Area net of the Housing Set-Aside Requirement. The City may chose to
forgo this Tier of taxing-sharing payments.
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Tier 2: Commenccs in the llth ycar aftcr thc Agency first reccives tax incrcmcnt
revcnue, and is in an amount equal to 21% of the tax incremcnt revenue net of thc Housing Sct-
Asidc Requirement, derived from thc growth in asscssed value that is in excess of the assesscd
value of the Project Areas in thc tenth year. The City may not receive any portion of the Tier 2
tax-sharing payments.
Tier 3: Commences in the 31 st year after the Redevelopment Agency first receives tax
incrcment revenues and is an amount equal to 14% of the tax increment revenue net of Housinb
Set-Aside derived from the growth in assessed value that is in excess of the assessed value of thc
Project Areas in the 30th year. Thc City may not rcceive any portion of the Tier 3 tax-sharing
paymcnts.
"1'hesc three tiers of tax sharing are calculated independent of one another and continue
from their inception through the life of the Project Areas.
SB 211 Tax Sharing Payments. On Fcbruary 27, 2003 and March 11, 2004, thc City Council
adopted separate Ordinances with respect to each Project Area eliminating the time limit to incur debt in
each Project Area. Pursuant to SB 211, the adoption of such an ordinance requires the Redevelopment
Agency to begin making statutory tax sharing payments in the Fiscal Year following the expiration of the
original time limit for the incurrence of new indebteciness. See also "SECURITY AND SOURCES OF
PAYMCN�' FOR TH� SERIES 2007 BONDS—Redevelopment Plan Limitations—SB 211."
In accordance with SB 1045, the limit for incurrence of new indebtedness for the Project Areas
were extcnded by one year. By extending thesc limits, the Redevelopment Agency caused statutory tax
sharing payments to commence in Fiscal Year 2004-OS with respect to the Original Area, in Fiscal Year
2008-Q9 with respect to Project Area No. 2, in Fiscal Year 2012-13 with respect to Project Area No. 3 and
in Fiscal Year 2013-14 with respect to Project Area No. 4. The assessed values in the last Fiscal Year
prior to initiation of the statutory tax sharing payments are used as the base value for calculation of the tax
sharing payments. The projcctions of the Fiscal Consultant assume that the City will elect to receive its
share of these payments, however, currently, if the City elects not to receive its share of these tax sharing
payments, that portion of the statutory tax sharing paymcnt will remain with the Redevelopment Agency
for its use. The County Auditor-Controller allocates all tax increment revenue to the Redevelopment
Agency and it is the responsibility of the Redevelopment Agency to make the required tax sharing
paymcnts.
The Redevelopment Agency has determincd at this time not to seek subordination of these
statutory tax sharing payments from the taxing agencies.
Limitation of Tax Revenues from Ccrtain Increased Tax Rates
An initiative to amend the California Constitution entitled "Property Tax Revenues—
Redevelopment Agencies" was approved by California voters at the November 8, 1988 general elcction.
This initiative amends the California Constitution to allow the Califomia Legislature to prohibit
redevelopment agencies from receiving any of the property tax revcnue raised by increased property tax
rates imposed by local governmcnts to make payments on their bonded indcbtedness. The initiativc
applies to tax rates levied to finance bonds approved by the voters on or after January 1, 1989. The
Redevelopment Agency does not currently project receiving any tax revenues as a result of general
obligation bonds which may have been approved on or after January 1, 1989.
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Ballot Initiatives and Legislative Matters
Articles XIIIA, XIIIB, XIIIC and X[IID were each adopted pursuant to a measure qualified for
the ballot pursuant to the State's constitutional initiative process; the State Legislature has in the past
enacted legislation which has altered the spending limitations or established minimum funding provisions
for particular activities under the Redevelopment Law. From time to time, othcr initiative measures could
bc adopted by voters of the State or legislation enacted by the Statc Legislature. The adoption of any such
initiative measures or legislation might place limitations on the ability of the State, the Redevelopmcnt
Agency or local districts to increase revenues, to increase appropriations or on the ability of a landowner
to complctc thc dcvclopment of property.
CERTAIN RISKS TO BONDHOLDERS
The following information should be considered by prospective investors in evaluating the Series
2007 Bonds. However, the follotiving does not purport to be an exhuustive listing of risks and other
c•onsiderations x�hich may be relevant to making an investment decisions with respect to the Series 2007
Bonds. In addition, the order in which the following information is presented is not intended to reflect the
f•c>lative inaportance of any such risks.
Added Territory Projected to Reach Limit in Fiscal Year 2021-22
In Fiscal Ycar 2005-06, Tax Revenues derived from property within the Added Territory of
Projcct Area No. 1 represented approximately 47% of total Tax Revenues for the Project Areas. Tax
Revcnues in the Added Territory are subject to a maximum of $500,000,000 (exclusive of certain
amounts). See "LIMlTATION ON TAX REVENUES." Accordingly, Pledged Tax Revenues available to pay
debt scrvice on thc 2007 Loan (and thcrcfore the Series 2007 Bonds) will be substantially rcduced after
the limit in the Added Territory is reached. The Redevelopment Agency expects this limitation will be
reached prior to the final maturity date of the Series 2007 Bonds. As stated in thc Report of thc Fiscal
Consultant, assuming growth in the annual assessed valuc at rate equal to 2%, the Added Territory will
rcach its $500,000,000 tax increment limit in Fiscal Year 2021-22. See APPENDIX A—"REPORT OF THE
FISCAL CONSULTANT." The Redevelopment Agency can give be no assurance as to when the gross tax
increment limit will for the Added Territory will be reached. The Report of the Fisca! Consultant
contains only a projection and if average growth exceeds 2% the Tax Revenue limit for the Added
Territory wil! be reached sooner. Furthermore, the gross tax increment limit may be changed by futurc
acts of the State Legislature or amendments to the Redevelopment Plan by the Redevelopment Agency.
Accuracy of Assumptions
To estimate the revenues available to pay debt service on the Bonds, the Redevelopment Agency
has made certain assumptions with regard to the assessed valuation of taxable property in the Project
Arcas, future tax rates, perccntage of taxes collected, the amount of funds available for investment and thc
intcrest rate at which those funds will be invcsted. The Rcdevelopmcnt Agency believes thcse
assumptions to be reasonable, but to thc extent that thc assessed valuation, the tax ratcs and the
percentagcs collected, are less than thc Kedevelopmcnt Agency's assumptions, the Tax Revenucs
available to makc the Loan Payments and the resulting debt service on the Bonds will, in all likelihood, be
less than those projected herein. See "PLAN OF FINANCG—DCbt Service Schedules—Estimated Debt
Service Coverage. "
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Reduction of Tax Rcvenucs
"1'ax Revenues allocated to the Redevelopment Agency, which constitute the primary security for
the Series 2007 Bonds, respectively, are determined by the incremental assessed value of taxable property
in the Project Areas, the currcnt rate or rates at which property in the Project Areas is taxed, and the
percentage of taxes collected in the Project Areas. Several types of events which are beyond the control
of the Redevelopment Agency could occur and cause a reduction in available Tax Revenues. A reduction
of taxable values of property in the Projcct Areas or a reduction of the rate of increase in taxable valucs of
property in thc Project Areas caused by economic or other factors bcyond the control of thc
Redevelopment Agency (such as a successful appeal by a property owner for a reduction in a property's
asscsscd valuc, a rcduction of thc gcncral inflationary ratc, a rcduction in value, or thc dcstruction of
property caused by natural or other disasters) could occur, thereby causing a reduction in the Tax
Revenues that secure the Series 2007 Bonds. Such a reduction in Tax Revenues could have an adverse
impact on the Redevelopment Agency's ability to make timely payment of principal of and intcrest on the
Scrics 2007 Bonds.
Morcovcr, in addition to the other limitations on Tax Rcvcnues described undcr "LIMITATIONS
ON TAX RGVENUGS," the State electorate or Legislature could adopt a constitutional or legislative
property tax decrease with the effect of reducing Tax Revenues payable to the Redevelopment Agency.
There is no assurance that the State electorate or Legislature will not at some future time approve
additional limitations that could reduce Tax Revenues and adversely affect the security of the Series 2007
Bonds.
Additionally, the Redevelopment Agency has no power to levy and collect property taxes. The
receipt of tax revenues by the Redevelopment Agency is dependent on the timely payment of property
taxes by landowners within the Project Areas. Substantial delinquencies or other reductions in the
payment of property taxes on real property in the Project Areas by a large number of landowners could
have an adverse cffect on the Redevelopment Agency's ability to make timely dcbt service paymcnts on
the Series 2007 Bonds secured by Tax Revenues derived from the Project Areas. Tax revenues allocated
to the Redevelopment Agency arc distributed throughout the fiscal year in installments, with a first
installment in December and the second installment in June of the same fiscal year. The payments are
adjustcd to rcflect actual collcctions.
Appeals to Assessed Values
There are two basic types of assessment appeals provided for under State law. The first type of
appeal, commonly rcferred to as a base year assessment appeal, involves a disputc on the valuation
assigned by the County assessor immcdiately subsequent to an instance of a change in ownership or
completion of new construction. If the base year value assigned by the County assessor is reduced, the
valuation of the property cannot increase in subsequent years more than two percent annually unless and
until another change in ownership and/or additional new construction activity occurs. The second type of
appcal, commonly referred to as a Proposition 8 appeal, can result if factors occur causing a decline in the
market value of thc property to a level below the property's then current taxable value (escalated base
year value). Pursuant to California law, a property owner may apply for a Proposition 8 reduction of thc
property tax assessment for such owner's property by filing a written application, in form prescribed by
the State Board of Equalization, with the appropriate county board of equalization or assessment appeals
board.
In the County, a property owner desiring a Proposition 8 reduction of the assessed value of such
owner's property in any one year must submit an application to the Riverside County Assessment
Appeals Board (thc "Appeals Board"). Applications for any tax year must be submitted by Scptember 15
of such tax year. Following a review of the application by the Riverside County Assessor's Office (the
06035\pos-3
2g
"Rivcrsidc County Asscssor's Office"), the Riverside County Assessor's Officc may offcr to the property
owner the opportunity to stipulatc to a rcduced assessment, or may confirm the assessmcnt. If no
stipulation is agreed to, and the applicant elccts to pursue the appeal, the matter is brought bcfore the
Appeals Board (or, in some cases, a hearing examiner) for a hearing and decision. The Appeals Board
generally is required to determine the outcome of appeals within two years of each appeal's filing date.
Any reduction in the assessment ultimately granted applies only to the year for which application is made
and during which the written application is filed. The assessed value increases to its pre-reduction level
(escalated to the inflation rate of no more than two percent) following the year for which the reduction
application is filed. However, the Riverside County Assessor's Office has the power to grant a reduction
not only for thc year for which application was originally made, but also for the then current year and any
intervening years as well. In practice, such a reduced assessment may and often does remain in effect
beyond thc ycar in which it is grantcd. Scc "LIMITATIONS ON TAX REVENiJES—Property Tax Collcction
Procedures" and "THE PRO.TECT AR�AS-0vcrview—Assessment Appeals."
An appeal may result in a reduction to thc Riverside County Assessor's Office original taxable
value and a tax refund to the applicant property owner. A reduction in taxable values within the Project
Areas and the refund of taxes which may arise out of successful appeals by these owners will affect the
amount of Tax Revenues available to pay debt service on the Series 2007 Bonds.
Reduction in Inflation Rate
As described in greater detail above, Article XIII A of the California Constitution provides that
thc full cash value base of real property used in determining taxable value may be adjusted from year to
year to reflect the inflation rate, not to exceed a two percent increase for any given year, or may be
reduced to reflect a reduction in the consumer price index, comparable local data or any reduction in the
event of dcclining property value caused by damage, destruction or other factors (as described abovc).
Such measure is computed on a calendar year basis. Any resulting reduction in the full cash value base
ovcr the term of the Series 2007 Bonds could reduce Tax Revenues. Sce "LIMITATIONS ON TAX
RrvENUES—Articic XIII A of the State Constitution."
Bankruptcy and Foreclosure
The rights of the Owners of the Scries 2007 Bonds and thc enforceability of the obligation to
makc payments on the Bonds may be subject to bankruptcy, insolvency, reorganization, moratorium and
othcr similar laws affecting creditors' rights under currently cxisting law or laws enacted in the future and
may also be subject to the exercise of judicial discretion under certain circumstances. The opinions of
Bond Counsel as to the enforceabiliry of thc obligation to make payments on the Serics 2007 Bonds will
be qualified as to bankruptcy and such other legal events. See APP�NDIx E—"FORM OF OPINION OF BOND
C�UNSBL."
Further, the payment of thc tax incremcnt revenues and the ability of the County to timely
foreclose thc lien of a dclinquent unpaid tax may be limited by bankruptcy, insolvency, or other laws
generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. Any delay
in prosecuting superior court foreclosure proceedings would increasc the likelihood of a delay or default
in payment of thc principal of and interest on the Series 2007 Bonds and the possibility of delinqucnt tax
installments not being paid in full.
Uelinquencies
If the Teeter Plan were discontinued, delinquencies in the payment of property taxes and the
impact of bankruptcy proceedings on the legal ability to collect property taxes could have an adverse
impact on the ability of the Redevclopment Agency to make timely payments under the 2007 Loan
o�o3s���,s-3
�
Agreement. The valuation of properry is determined as of the January 1 lien date as equalized in August
of cach year and equal installments of taxes levied upon secured property become delinquent on the
following December 10 and April 10. Taxes on unsecured property are due April 1 and become
dclinquent August 31. Sec "THE PROJECT AREAs-0verview—Tax Levies, Collections and
Delingarencie.s."
Statc Budget
The.following informalion concerning the State's 2005-06 and 1006-07 Fiscal Year Budgets have
been obtained from publicly uvailable information on the State Department of Finance, the State
Trea.surer and the California Legislative Analyst Offtce web.sites. The e.stimates und projection.r provided
belotiv ure based upon various assumptions as updated in the 20�6-07 Budget, which may be affected hy
nzimerous fuctors, including future economic conditions in the State and the nation, and there can be no
as.surunce that the estimates will be achieved. For further information and discussion of factors
underlying the State's projections, see the aforementioned websites. The Redevelopment Agency believes
such information to be reliuble, hox�ever, the Redevelopment Agency takes no respnnsibiliry as to the
acct�rucy or completeness thereof and has not independently verified such information.
In connection with its approval of the budget for Fiscal Years 1992-93, 1993-94, 1994-95,
2002-03, 2003-04, 2004-OS and 2005-06, the State Legislature enacted legislation which, among other
things, reallocated funds from redevelopment agencies to school districts by shitting a portion of each
redevelopment agency's tax incrcment, net of amounts due to other taxing agencies, to school districts for
such fiscal years f'or deposit in the Education Revenue Augmentation Fund ("ERAF"). The amount
rcquired to bc paid by a redevelopment agency under such legislation is apportioned among all of its
redevelopment project areas on a collective basis, and was not allocated separately to individual project
areas. In Fiscal Year 2002-03, the aggregate amount transferred by redevelopment agencies into EFtAF
was S1.3 billion, was $250 million for Fiscal Year 2004-OS and $250 million for Fiscal Year 2005-06.
Bascd on the tax incremcnt revenues shown in of the State Controller's Annual Report as being retained
by the Rcdevelopmcnt Agency, the Redevelopment Agency was required to pay $2,113,709 into ERAF in
Fiscal Ycar 2003-04, $3,887,133 in Fiscal Year 2004-05, and $3,995,041 in Fiscal Year 2005-06.
Fiscal Year 2005-06. The 2005-06 Budget Act (the "State 2005 Budget Act") was adopted by
the Legislature on July 7, 2005, along with a number of implementing measures, and signed by Governor
Schwarzenegger on July 11, 2005.
The Statc 2005 Budget Act reflected an improving State fiscal picture brought about by better-
than-expected growth in General Fund revenues. Thc State 2005 Budget Act funds the Proposition 42
transfer of general fund sales taxes to transportation special funds, and included significant increascs in
both K-12 and higher education. The State 2005 Budget Act did not usc any of the remaining $3.7 billion
in dcficit-financing bonds authorized by Proposition 57, and the State prepaid the S1.2 billion VLF "gap"
loan that was due to local governments in Fiscal Year 2006-07 in August 2005.
At thc same time, State 2005 Budget Act included approximately $6 billion in savings and related
budget solutions in order to maintain budgetary balance, including, among other solutions, the ERAF
transf'cr from redevelopment agencies in the aggregate amount of S250 million
After taking into account the higher rcvenues and other offsetting factors (including higher
Proposition 98 funding requirements under current law) the resulting operating shortfall for Fiscal Year
2005-06 was estimated at $4.9 billion.
Fiscul Year 2006-07. The 2006-07 Budget Act (the "State 2006 Budget Act") was adopted by
the Legislature on June 27, 2006 and signed by the Govcrnor on June 30, 2006. The Statc 2006 Budget
06035\pos-1
30
Act assumes Fiscal Year 2006-07 revenues of $94.4 billion and expenditures of S 101.3 billion, resulting
in an operating short-fall of $7 billion, which partly rcflccts the prepayment of S2.8 billion in budgetary
debt obligations, leaving the State General Fund with a year-end reserve of $2 billion, compared to the 59
billion year-end reserve in Fiscal Year 2005-06.
The State 2006 Budget Act, among other things, (i) allocates new revenues to K-12 and community
college education, increases funding for higher education, and prepays approximately $2.8 billion in
budgetary debt, which is roughly consistent with thc Governor's budgct rcvision released on May 13, 2006;
(ii) makes partial repayments of debt; (ii) funds a budgct stabilization account; (iv) makes augmentations to
hcalth, resources, corrections and local governments (including increases in funding for county block grants
for Califomia Work Opportunity and Responsibility Kids, Child Welfare Services, and foster care; additional
f'unding for local law enforcement and local flood control; and largely one-time funding to hospitals to
increase patient capacity to mcet public health emergencies, such as an avian flu pandemic); and (v) makes
the first payment of a proposed settlement in the amount of $2.9 billion, which will be paid over six years
commcncing in Fiscal Year 2007-08, rclatcd to a lawsuit involving school funding.
The Statc 2006 Budget Act does not include any ERAF transfers from redevelopment agencies.
The Redevelopment Agency cannot predict whether the State Legislature will enact future
lcgislation requiring additional or increased future shifts of tax increment revenues to the Sate and/or to
schools, whether through an arrangement similar to ERAF or by other arrangemcnts, and, if so, the effcct
on futurc Tax Rcvcnucs.
Naturai Disastcrs
Wildfires. The City is locatcd in area where wildfires are a common occunence. While there
have not becn any wildfires within the City, the occurrence of any natural disaster or physical calamity,
including wildfires, floods, landslides and earthquakes could result in damage within the Project Areas.
The occurrence of such events could adversely impact the value of real property in the Project Areas and
resulting Tax Revenues, the economy of the City, and, accordingly, the ability of the Redcvelopment
Agency to inake payments under thc Loan Agreemcnts when duc.
Flooding. Flood zones are identified by the Federal Emergcncy Management Agency
("FEMA"). FEMA designatcs land located in a low- to moderate-risk flood zone (i.e. not in a floodplain)
as bcing within a Non-Special Flood Hazard Arca (a "NSFHA"). FEMA defines an NSFHA as an arca
that is in a low- to moderate-risk flood zone (i.e. not in a floodplain) and has less than a 1% chancc of
flooding each year. The City is located within a NSFHA and severe, concentrated rainfall could result in
localized flooding and rivcr overflows. The City has adopted a Drainageway, Floodway, and
Watercourse Ordinance that regulates development in flood prone areas by preventing construction in
such areas. Development is permitted in these areas once floodflow hazards are eliminated. Areas in the
City that have reccivcd flood control improvements are those subject to potentially destructive floods.
Signiticant capital investments havc been made in the community where these thrcats occur. The City
can make no representation that future maps will not be revised to include the City within an area deemed
subjcct to flooding. The occurrence of flooding in the Project Areas could result in a reduction in Tax
Revenues. Such a reduction of Tax Revenues could have an adverse effect on the ability of the
Redevelopment Agency ability to make timely payments of principal and interest on the 2007 Loan.
Seismic Factors. Generally, scismic activity occurs on a regular basis in the State. Periodically,
the magnitude of a single seismic event can cause significant ground shaking and potential damage to
property located at or near the center of such seismic activity. The occurrence of severe seismic activity
in the City could result in damage to roads, infrastructure and other property within the Project Areas.
The occurrence of such a severe seismic could have a negative impact on assessed values of taxable
06035\pos-3
31
�
valucs of property in the Projcct Arcas and could result in a reduction in Tax Revenucs. Such a rcduction
of Tax Revenucs could have an adverse effect on the ability of the Redevelopment Agency ability to
make timely payments of principal and interest on the 2007 Loan.
Hazardous Substances
An additional environmental condition that may result in the reduction in the assessed value of
property would be the discovcry of a hazardous substance that would limit the beneficial use of taxablc
property within the Projcct Arcas. in general, the owners and operators of a property may be required by
law to remedy conditions of the property relating to releases or threatened releascs of hazardous
substances. The owner or operator may be requircd 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, thercfore, should any of the property within thc Project Areas be affected by a
hazardous substance, could be to reduce the marketability and value of the property by the costs of
remedying the condition.
Loss of Tax Exemption
In order to maintain the exclusion from gross income for federal income tax purposes of the
interest on the Bonds, the Redevelopment Agency has covenanted in the Indenture to comply with thc
applicable rcquircments of thc Internal Revenue Code of 1986, as amendcd. The interest on the Series
2007 Bonds could become includable in gross income for purposes of federal income taxation retroactive
to the date of issuance of such Series 2007 Bonds as a result of acts or omissions of the Redcvelopmcnt
Agency in violation of this or other covenants in the Indenture applicable to the Series 2007 Bonds. The
Scries 2007 Bonds are not subject to redemption or any increase in interest rates should an event of
taxability occur and will remain outstanding until maturity or prior redemption in accordance with the
provisions contained in the Indenture. See "TAX MATTERS."
Risk of Tax Audit
In December 1999, as a part of a largcr reorganization of the Intcrnal Rcvenue Service (the
"IRS"), the IRS commenced operation of its Tax Exempt and Government Entities Division (the "TE/GE
Division"), as the successor to its Employee Plans and Exempt Organizations division. The new TE/GE
Division has a subdivision that is specifically devoted to tax-exempt bond compliance. Public statements
by IRS officials indicate that the number of tax-exempt bond examinations (which would include the
issuance of securities such as the Scries 2007 Bonds) is expected to increase significantly under the new
T�/GE Division. There is no assurance that if an IRS examination of the Scries 2007 Bonds was
undertaken that it would not adversely affect the market value of the Series 2007 Bonds. See "TAx
MATTERS."
The Redevelopment Agency has not been contacted by the IRS regarding the examination of any
of its bond transactions.
Secondary Market
There can be no guarantee that there will be a secondary market for the Series 2007 Bonds or, if a
sccondary market exists, that the Series 2007 Bonds can be sold for any particular price. Occasionally,
because of general market conditions or because of adverse history or economic prospects connected with
a particular issue, secondary marketing practices are suspended or terminated. Additionally, prices of
issues for which a market is being made will depend upon then prcvailing circumstances. Such prices
could be substantially different from the original purchase price.
06035\pos-3
32
THE PROJECT AREAS
Overvicw
The Project Areas are located in the City, comprise an aggregate of approximately 1 1,771 acres,
representing 43,399 parcels zoned for residential, office, commercial, industrial, public and open space
uses. For a map of the Project Areas, see page v. For certain information regarding the City, see
APPGNDiX C-"GENLRAL INFORMATION CONCERNRv`G THG CITY OF PALM DESERT."
Pursuant to the Redevclopment Law, the City and the Redevelopment Agency adopted
ordinances placing limitations for each Project Area on: specific bonded indebtedness and total gross and,
in the case of Project Area No. 3 and Project Area No. 4, the net tax increment, that may be allocated to
the Redevelopment Agency from the Project Areas. The Redevelopmcnt Agency also adopted ordinances
as required by AB 1290 for each Project Area (i) setting forth the term of effcctivencss of thc related
Redevelopment Plan and (ii) establishing the time limit for the Redevelopment Agency to receive tax
incrcment generated from the Projcct Areas. See APPENDIx A—"REPORT OF THE FISCAL CONSULTANT-
Introduction and Background."
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
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06035�Pos-3
Land Use and Building Restrictions. The Redcvelopment Plan for each Project Arca sets forth
the principal permitted land uses and building restrictions imposed on development with such Project
Area. Each Redevelopment Plan also assigns responsibilitics to the Redevelopment Agency and thc Ciry
in carrying out the goals of such Redevelopment Plan.
Thc information in Table B is based on land use designations as provided by Riverside County
Office of the Auditor-Controller through tax roll data, however, County land use designations do not
necessarily parallel City land use and zoning designations. Unsecured and SBE non-unitary values are
connected with parcels that are already accounted for in other categories.
Table B
Palm Desert Redevelopment Agency
All Project Areas
Summary of Land Uses by Category
Land Usc
Rcsidential
Vacant
Recreational
Commcrcial/Profcssional
Unknown
Institutional
Miscellaneous
Industrial
TOTAL
Numbcr
Parccls
39,187
1,965
1,186
762
190
96
11
2
43,399
2006-07 Total Secured Assessed Value
Amount %
$6,780,692,510 75.41 %
398,104,767
146,747,911
1,493,001,096
143,361,295
9,539,737
1,453,578
18,590,927
S8,991,491,821
4.43
1.63
16.60
1.59
0.11
0.02
0.21
100.00%
(1) Column does not total due to indcpendent rounding.
(2) Secured assessed value was provided by the Riverside County Asscssor's Office and varies fortn the information provided
by the Riversidc Counry Office of the Auditor-Controller.
Source: Riverside County Office oj�he Audiror-Controller.
(RLMAINDER OF TH1S PAGE INTENTIONALLY LEFT BLANK)
06042\pos-3
35
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06035\pos-3 3 6
Tax Rates. Within the State tax ratcs vary from area to area, as well as within a community and a
project area. Thc tax rate for any particular parcel is based upon thc jurisdictions levying the tax rate for
the area (a "Tax Rate Area") in which thc parccl is located. The tax rate applied to incremental taxablc
values consist of two components: (i) the general levy rate which may not exceed $1.00 per $] 00 of
taxable values in accordance with Article XIII A of the State Constitution and (ii) the over-ride tax rate
that is levied to pay voter approved indebtcdness or contractual obligations that existed prior to the
enactment of Proposition XIII. See "LIMI1'ATION ON TAX REVENUES" and "CERTAIN RISKS TO
BONDOwN�RS-Appeals to Asscssed Values." The over-ride tax rates can decline each year as increasing
property valucs reduce the over-ride rate needed to be levied by the taxing entities to satisfy voter
approved dcbt scrvicc obligations and as the voter approved debts is retired over time.
Thc taxing entities within a Tax Rate Area each receive a prorated share of the gencral levy and
the revenues resulting from any voter approved over-ride tax rates. The components that make up the tax
rate applicablc to each Project Area are set forth in Table D below:
Table D
Palm Desert Redevelopment Agency
All Project Areas
Brcakdown of Tax Ratc
Fiscal Ycar 2006-07
General Puraose Levv
County General
County Library
County Firc
City of Palm Desert
llesert Sands Unified School
Palm Springs Unified School
Desert Community College
County Superintendent of Schools
Riverside County Regional Park and Open Space
Coachella Valley Public Cemetery
Palm Springs Public Cemetery
Desert Hospital
Coachella Valley Mosquito Abatement
Coachella Valley Recreation and Park
Coachella Valley Water District
Coachella Valley Water District 80
Coachella Valley Resource Conservation
Coachella Valley Water District Improvement District 80
Coachella Valley Water District Storm Water Unit
Coachella Valley Water Improvement District 1 Debt Service
Supervisor Road District 4
Rancho Miragc Library
Rancho Mirage Fire Assessment
City of Indian Wells Anncx
County Services Area 26
�I�UTAL
Source: Rosenow Spevucek Group /nc.
Original
Area
0.28396%
0.02749
0.05919
0.00000
0.36502
O.00OOU
0.07585
0.04127
0.00429
0.00343
0.00000
0.02012
0.01380
0.02088
0.02758
0.00000
0.00000
0.02221
0.03491
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
1.0000%
Added
Tcrritory
0.2836%
0.02885
0.06211
0.02171
0.3 6904
0.00000
0.08038
0.04373
0.00430
0.00302
O.OU028
0.01322
0.01463
0.01840
0.02921
0.00000
0.00021
0.00976
0.01730
0.00000
0.00000
0.00016
0.00035
O.U0000
0.00000
1.0000%
Project
Area No. 2
0.26959%
0.02911
0.06266
0.03882
0.27016
0.08465
0.08030
0.04369
0.00408
0.00254
0.00050
0.0173 3
0.01461
0.01545
0.00037
0.00000
0.02920
0.00000
0.03696
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
1.0000%
Project
Arca No. 3
0.25602%
0.02817
0.06065
0.04237
0.37406
0.00000
0.07773
0.04229
0.00387
0.00351
0.00000
0.01068
0.01414
0.02139
0.02826
0.00074
0.00032
0.00000
0.03578
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
1.0000%
Projcct
Arca No. 4
0.21921 %
0.02830
0.06092
0.08657
037571
0.00000
0.07807
0.04247
0.00442
0.00353
0.00000
0.00000
0.01421
0.02149
0.02879
0.00000
U.U0036
0.00000
0.03593
0.00003
0.00000
0.00000
0.00000
0.00000
0.00000
1.0000%
0G042\pos-3
37
Projected Housing-Set Aside Revenues. The Redevelopment Agency's primary sourcc of funds
to makc payments with respect to the 2007 Loan is the 20% Housing Set-Aside of the Redevelopment
Agency's share of ad valorem property tax revenues which generally result from increases in the assessed
values (whethcr due to annual inflation, the completion of new real estate developments, or general
reasscssment of property) within Project Areas.
Thc purpose of redevelopment is to revitalize deteriorated or underdevelopcd areas within a
community. As new construction progresses, property values normally increase and the ultimate result is
a proportionate increase in ad valorem property tax revenues.
The total taxable value of all properties within a given project area on the property assessment
roll last equalized prior to the effective date of the ordinance adopting the redevelopment plan for such
project area and related amendment areas, if any, establishes a base from which increases in taxable valuc
are computed. Under the Redevelopment Law, property taxes levied based upon the amount shown on
the base year assessment rolls continue to be paid to and retained by all taxing agencies levying property
taxes in Project Area No. 1. Taxes levied by the respective taxing agencies on any incrcases in taxable
valuc rcalizcd in Project Arca No. 1 arc allocatcd to the Redevelopment Agency.
lt should be understood that this procedure does not involve the levy of any additional taxes, but
provides that revenues produced by the tax rates in effcct from year to year are apportioned to the taxing
agencies levying the taxes and to the Redevelopment Agency on the basis described above. After all
loans, advances and othcr indcbtedness, including interest, incurred by the Redevclopment Agency in
conncction with a Project Area havc been paid, the tax revenues will be paid to and retained by the
respective taxing agencies in the normal manner. See also "CERTAIN RISKS TO BONDHOLDERS—
Rcduction of Tax Rcvcnucs."
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
06035�pos-3
38
Tablc E summarizcs thc cstimated total amounts of annual tax increment rcvenues expectcd to be
allocated to the Housing Fund from the Project Areas.
Tabte E
Palm Descrt Redevelopment Agency
All Project Areas
Summary of Housing Set-Aside Revenue Projections
Fiscal Year 2006-07 through 2026-27
Fiscal
Ycar
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-]4
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27
Original
Area
S1,768,400
1,836,224
1,868,883
1,903,176
1,937,154
1,971,802
2,007,133
2,043,160
2,079,898
2,117,361
2, I 55,563
2,194,518
2,234,243
2,274,752
2,316,061
2,358,186
2,401,144
2,444,950
2,489,622
2,535,177
Added
Tcrritory
$7,222,870
7,800,534
8,104,031
8,325,916
8,559,520
8,752,835
8,950,007
9,151,115
9,356,237
9,565,453
9,778,845
9,996,497
10,218,494
10,444,922
1,297,338
Source: Rosenoiv Spevacek Group Inc.
Project
Area No. 2
53,144,116
3,364,618
3,597,406
4,024,346
4,360,409
4,450,599
4,542,590
4,636,419
4,732,122
4,829,737
4,929,302
5,030,855
5,134,438
5,240,090
5,347,853
5,457,768
5,569,880
5,684,231
5,800,868
5,919,834
6,041,178
Project
Area No. 3
5675,749
740,808
759,542
823,411
843,786
864, 5 64
885,753
907,360
929,394
951,864
974,779
998,146
1,021,976
1,046,277
1,071,058
1,096,331
1,122,104
1,148,386
1,175,190
1,202,524
1,230,400
Project
Area No. 4
$2,407,436
2,644,994
2,803,439
2,965,053
3,047,264
3,131,117
3,216,647
3,303,887
3,392,870
3,483,633
3,576,210
3,670,637
3,766,952
3,865,193
3,965,398
4,067,605
4,171,857
4,278,192
4,386,653
4,497,283
4,610,124
Total All
Project Areas
Housin� Funds
$15,218,571
16,387,176
17,133,301
18,041,903
18,748,134
19,170,917
19,602,130
20,041,941
20,490,522
20,948,Q48
21,414,698
21,890,654
22,376,103
22,871,234
13,997,708
12,979,891
13,264,984
13,555,760
13,852,332
14,154,818
11,881,701
Tax Levies, Collections and Delinquencies. The County does not track secured tax charges and
delinquencies by Project Area.
The County has adopted the Alternativc Method of Distribution of Tax Levies and Collections
and of Tax Sale Procccds (the "Teeter Plan"), as provided for in Section 4701 et. seq. of thc Statc
Revenue and Taxation Code. Under the Teeter Plan, each participating local agency, including cities,
levying property taxes in its county may receive the amount of uncollected taxes credited to its fund in thc
same manner as if the amount creditcd had been collected. In return, the county would receive and retain
delinquent payments, penalties and interest, as collected, that would have been due to the local agency.
I-iowever, although a local agency could receive the total levy for its property taxes without regard to
actual collections, funded from a reserve established and held by the county for this purpose, the basic
legal liability for property tax deficiencies at all times remains with the local agency.
The Teeter Plan remains in cffect unless the County Board of Supervisors orders its
discontinuance or unless, prior to the commencement of any fiscal year of the County (which commences
on July 1), the County Board of Supervisors receives a petition for its discontinuance joined in by
06035\pos-3
39
resolutions adoptcd by two-thirds of the participating revenue districts in the County, in which event, the
County Board of Supervisors is to order discontinuance of the Teeter Plan effective at the commencement
of the subsequent fiscal year. Thc County Board of Supervisors may, by resolution adopted not later than
July 15 of the Fiscal Year for which it is to apply, after holding a public hearing on the matter,
discontinue the procedures under the Teeter Plan with respect to any tax levying agency in the county.
The Redevelopment Agency is a participant in the Teeter Plan. Sce also "LIMITATIONS ON TAX
REVEM.TES—Property Tax Collection Procedures."
Assessment Appeal.s. Property tax values determined by the Riverside County Assessor's Office
may be subjcct to an appeal by the property owners. Assessment appeals are annually filed with the
Assessmcnt Appeals Board for a hearing and resolution. The resolution of an appeal may result in a
reduction to the Riverside County Assessor's Office's original taxable value and a tax refund to the
applicant/property owner. The reduction in future Project Area taxable values and the refund of taxes
affects all taxing entities, including the Redevelopment Agency.
Each assessment appeal could result in a reduction of the taxable value of the real property,
personal property or possessory interest of the property which is the subject of the appeal. A reduction in
such taxabie value would result in a reduction of the revenues of the Redevelopment Agency available for
Tax Revenues with respect to the Series 2007 Bonds. Alternatively, an appeal may be withdrawn by the
applicant or thc Appeals Board may deny or modify the appeal at a hearing or by stipulation.
Project Arca No. 1
General. The Project Area No. 1 is located in the City and includes approximately 5,820 acres,
comprising approximately 12,825 parcels, zoned for residential, office, commercial, industrial, public and
open space uses. Project Area No. 1 incorporates an approximately 70-acre Civic Center cainpus,
including thc Sheriffs and County Library facilities; multifamily rental, townhouse and single-family
developments; the Canyons at Bighom, a 275-unit luxury custom home development; and over two
million square fect of retail space, including three major retail malls. The Westfield Shoppingtown
(located in the Original Area) was expanded in January 2003 to add two parking garages totaling 1,000
parking spaces, the expansion of Macy's, and an additional 40,000 square feet of retail space, including
Barncs & Noble. For a map of Project Area No. 1, see page v. For certain information regarding the City,
sCC APPENDIX C—"GENERAL INFORMATION CONCERNING THE CITY OF PALM DESERT."
Orir�inal Area. The Original Area comprising approximately 580 acres and 444 parcels is
gcncrally bounded by the City limits on the wcst and east, Alessandro Drive on the north and
El Paseo on thc south.
Added Territorv. The Added Territory comprising approximately 5,240 acres and 12,665
parcels is generally bounded by the Whitewater Storm Channel on the north, the City limits on
the east and south and the Palm Valley Storm Channel and the City limits on the wcst.
Redevelopment Plan Limit.s. Projcct Area No. 1 was forrnally establishcd with thc adoption by thc
City Council of a redcvelopment plan (the "Original Plan") for approximately 580 acres (the "Original Arca")
pursuant to Ordinance No. 80, adopted on July 16, 1975. Approximately 5,240 acres (the "Added Temtory")
were added to the Original Area pursuant to amendments to the Original Plan approved and adopted by the
City Council by Ordinance No. 275, adopted on November 25, 1981 and Ordinance No. 324, adopted on
October 13, 1983 (collectively, the "Amendments"). The Original Plan, as amended by the Amendments, is
referred to as the "Redevelopment Plan."
06035\pos-3
40
On Decembcr 8, 1994, the City adopted Ordinancc No. 765 cstablishing Plan limits requircd by
AB 1290 for Project Area No. l, the Original Area and Added Territory. On February 27, 2003 the City
adopted Ordinance No. 1035, amending the Redevelopment Plan as permitted by SB 211 to eliminate the
time limit on incurring indebtedness. Pursuant to SB 1045 the Redevelopment Agency amended the
limits of the Project Area No. 1 on December 19, 2004 by adopting Ordinance No. ] 082, adding one year
to the term of effectiveness and the time limit to collect tax increment.
Ori�inal Area. On December 11, 1986, the City adopted Ordinance No. 484 which limits
the ainount of tax revenues which can be divided and allocated to the Agency from the Original
Area pursuant to the Redevelopmcnt Plan to a maximum of $758,000,000.
Table lA-1 summarizes the Redevelopment Plan Limits within the Original Area.
'I'ablc lA-1
Palm Desert Redevelopment Agency
Project Arca No. 1— Original Arca
Summary of Redevelopment Plan Limits
Plan Limit Termination
Reccipt of
Tax
Increment
Basc Dcbt Plan and Debt
Year Incurrence Expiration Repavment
1974-75 Eliminated��� 7/16/16�z� 7/16/26�1�
Revenue Limits
($ in millions)
Gross
Gross Tax Bonded Amount
Increment Cao Debt Received
$758 None 3j $124.963�'�
(1) Pursuant to SB 211, on February 27, 2003 the City Council adopted Ordinance No. ]035, amending the Project Area No. 1
Redevelopment Plan to eliminate the time limit to incur debt.
(2) Pursuant to SB 1045, the Redevelopment Agency amended the Redevelopment Plan on Dccember 19, 2004 through the
adoption of Ordinance No. 1082 to add one year to the term of effectiveness and the time limit to collect tax increment.
(3) At the time of the adoption of the Redcvelopment Plan for the Original Arca there was no requirement that a rcdevelopment
plan have a Bonded Debt Limit. This requirement for older redevelopment plans has not been changed.
(4) Represents gross tax increment revenues received as of June 30, 2006. Gross tax increment revenues includes secured,
unsecured, utility and supplemental revenue, less property tax administrative costs paid to the County pursuant to SB 2557.
See "L►tvt[TA'rio�s oh Tnx Rtve*�uEs—Property Tax Administrative Costs."
Sourcc: Redevelopmenl Agenc•y.
Added Temtorv. On January 24, 1991, the City approved the Sixth Amendment to the
Project Arca No. 1 Redevelopment Plan (the "Sixth Amendment") limiting thc amount of tax
revenues which can be divided and allocated to the Agency from the Added Territory to a
maximum of �500,000,000 (exclusive of amounts paid to any taxing agency, and exclusive of
amounts used to pay debt service, directly or indirectly, on obligations of the Agency or any
taxing agency, to finance the acquisition of land or the construction of buildings, facilities,
structures, or improvements of such taxing agencies). Through Fiscal Year 2004-05, thc Addcd
Territory has received S166,120,639 in net tax increment revenue. Both amounts are prior to the
allowed adjustment of dollars received pursuant to Section 33683 of the Redevelopment Law
which provides for an adjustment based on paymcnts made to ERAF. Sec also "CERTAIN RISKS
TO BONDHOLDERS—State Budgct.") The Sixth Amenciment also limits the amount of bonded
indebtedness which can be outstanding at one time to $200,000,000 (exclusive of bonds issued to
finance the acquisition of land or the construction of buildings, facilities, structures or
improvcments of taxing agencies).
06035\pos-3
41
Table 1 A-2 summarizes thc Rcdevelopment Plan Limits within the Added Territory.
Table lA-2
Palm Desert Redevelopment Agency
Project Area No. 1— Added Territory
Summary of Redevelopment Plan Limits
Plan Limit Tcrmination
Reccipt of
Tax
Increment
Base Uebt Plan and Debt
Year Incurrence Expiration Repavment
1981-82 None��� 11/25/22 11/25132�z�
Revenue Limits
($ in millions)
Gross Tax Gross
Increment Bonded Amount
Cap Debt Received
$500�3� $200�4� $293.205�s�
(1) Pursuant to SB 211, on February 27, 2003 the City Council adopted Ordinance No. 1035, amending the Project Area No. I
Redevelopment Plan to eliminate the time limit to incur debt.
(2) Pursuant to SB 1045, the Redevelopment Agency amenJed the Redevelopment Plan on December 19, 2004 through the
adoption of Ordinance No. 1082 to add one year to the teRn of effectiveness and the time limit to collect tax increment.
(3) Pursuant to the Sixth Amendment adopted on January 24, 1991, thc tax increment limit for Project Area No. 1 is exclusive of
amounts paid to taxing agencies and exclusivc of amounts paid directly or indirectly by the Redevelopment Agency or any
taxing entity to finance the acquisition of land, construction of buildings, facilities, structures or improvements i'or such
taxing agencics.
(4) Pursuant to the Sixth Amendment, the Bonded Debt Cap excludes bonds issued to finance the acyuisition of land,
construction of buildings, facilities, structures or improvements to taxing agencies.
(5) Represents gross tax increment revenues received as of June 30, 2006. Gross tax increment revenues includes secured,
unsecured, utility and supplemental revcnue, less properiy tax administrative costs paid to the County pursuant to SB 2557.
See "L�Hrrn�nc��s on Tnx R�vENUEs—Property Tax Administrative Costs."
Source: Reclevelopment �lgency.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
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06035\pos-3
42
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obo3s�r�s-3 44
Owner
WEA Palm Desert LP
PRU Desert Crossing I-V
llarsch Investment Realty
EI Paseo Collection
Vtay Department Stores Co.
ROP Inc. - Federated Western
Sears Roebuck & Co.
Dayton [ludson Corp.
El Paseo Land Co.
SKR PTP
SI;RTOTAL TOP TGN
All Others
To�rn�
No. of
Parcels
6
11
11
6
1
2
1
1
1
3
43
401
444
Table 1C-1
Palm Descrt Redevelopment Agency
Project Arca No. 1— Original Area
Principal Taxpaycrs�l�
Fiscal Year 2006-07
Saccific Land Use
Retail Shopping Mall
Major Commercial/ Shopping
Commercial Center
Commerci al/Restaurant
Department Store
Macy's Department Store
Sears Department Store
'1'arget Department Store
Mixed Commercial/Restaurant
Commercial Center
Land Usc
Cateeory
Commercial
Commercial
Commercial
Commercial
Commercial
Commercial
Commercial
Commercial
Commercial
Commercial
(1) Docs not retlect homeowncrs exemption.
(2) Includes secured value (S775,429,430) and unsecured value (S 1 13,909,971).
(3) Column docs not total due to independent rounding.
Source: Rivensrde Counry Offrce of 1he Auditor-Conlroller.
Owncr
Elisabeth Stewart
Gardens SPE II
Bighorn Development
Nationwide I iealth Propenies
Bosley, L.
Felcor TRS
Deep Canyon Partner
Summit Cable Services
CC Palm Lake
St. Margret's Episcopal
Su� ro�rn� ToN 1'F.N
All Others
TO7'AL
No. of
Parcels
349
1
170
3
2
4
5
1
90
2
627
11,754
12,381
Tablc 1C-2
Palm Desert Redevelopment Agency
Project Area No. 1— Added Territory
Principal Taxpaycrs���
Fiscal Ycar 2006-07
Land Usc
Cateeory
Residential
Commercial
Residential
Residential
Residential
Commercial
Vacant
Commercial
Residential
Institutional
Saccific Land Use
Residential Condominiums
Retail Shopping Center
Custom Home Sites
Senior Residential
Residential Land Development
Suite Hotel
None Listed
Commercial Shopping Center
Apartment Complex
School
(1) Docs not reflect homeowners exemption.
(2) Includes secured value (�4,187,633,924) and unsecured value (592,440,023).
(3) Column does not total due to independent rounding.
Source: Riverside County Office of 1he Audrtor-Contro!ler.
06035\pos-3
45
2006-07
Total
Assessed
V alue�Z�
$ I 17,156,693
90,505,974
31,646,751
29,945,320
29,681,029
22,543,253
20,b84,132
14,719,176
14,327,544
12,280,378
$383,490,250
505,849,151
$889,339,401
2006-07
Total
Assessed
Valuc�2�
$94,645,204
91,234,317
41,495,986
16,823,682
12,704,715
12,223,221
11,541,775
10,908,404
9,184,073
9.036,753
$309,762,130
3,970.311,817
$4,280,073,947
% of
Project Arca
1� o. 1
2006-07
Total
2.27%
1.75
0.61
0.58
0.57
0.44
0.40
0.28
0.28
0_24
7.42%
9.79
17.20%
% of
Project Arca
No. 1
2006-07
Total
2.19%
l .73
0.97
0.36
030
0.29
0.27
0.25
0.21
0.21
5.99%
76.80
82.80%
Historical, Current and Projected Tax Revenues. Thc basc year value cstablished for thc
Original Area is the Fiscal Year 1974-75 assessment roll and for the Addcd Territory thc Fiscal Year
1981-82 assessment roll. Table 1 D-1 and 1 D-2 presents the aggregate taxable value of all property within
Yroject Area No. 1 and the housing set-aside rcvenuc reccived for Fiscal Years ended June 30, 2002
through Junc 30, 2006.
Table 1 D-1
Palm Desert Redevelopment Agency
Project Area No 1— Original Area
Historical Taxable Values and Tax Increment Verification
Assesscd Valuc
Local Secured���
Utility (SBE)
Unsecured
TO"1'AL ASSESSED VALUE
[3ase Year Value
Incremental Value
Percentage Change
Estimated Revenue�2�
"1'ax Increment Revenue
Unitary Utility Revenue
Le.ss: County Administration Fee�3�
TO'I'AL ES"I'IMATEll R�VEM1UF.
2001-02 2002-03 2003-04 2004-OS 20U5-06
$564,983,710 $582,303,437 $614,105,002 $665,801,195 $730,954,568
98.628,475 95,533,915 106.856.251 102.344,827 9fi, I 84.531
$663,612,185 5677,837,352 $720,961,253 5768,146,022 $827,139,099
27,485.836 27,485,836 27,485,836 27,485,836 27.485.836
$636,126,349 S650,351,516 $693,475,417 $740,661,186 $799,653,263
— 2.24% 6.63% 6.80% 7.96%
$6,361,263 $6,503,515 $6,934,754 $7,406,602 $7,996,533
332,579 288,489 297,098 300,931 30U,931
(]04,8831 (101,7971 (103.877) (]01,6531 (78.9871
$6,588,960 $6,690,207 $7,127,975 $7,605,880 $8,218,477
Actual Reccipts
Secured, Vnsecured and Unitary Utility $6,646,083 $6,792,005 $7,231,852 $7,707,533 $8,270,799
Supplemental Payments 104,267 49,849 151,075 200,879 823,767
Less: County Administration Fee�'� (107,137) (lO1J971 (]03.877) (101,653) (78,987)
TOTAL AC'1'UAL RECEIPI'S $6,643,213 $6,740,057 57,279,051 $7,806,759 $9,015,579
(1) Values include homeowners exemption values.
(2) Assuming a 1.0% tax rate.
(3) Represents property tax administrative costs, in the amount equal to a percentage of the annual gross tax increment, that are
paid to the County pursuant to SB 2557. See "Lit�ttTnTio�s oti Tnx Rt.vENur:s—Property Tax Administrative Costs."
Sources: Rive�side CounN O�ce of the Audilor-Contru/!er nnd City oJPulm Deser/ Finunce Depurlment.
(REMAINDER OF TH1S PAGE INTENTIONALLY LEFT BLANK)
06035\pos-3
46
Table 1D-2
Palm Desert Redevclopment Agency
Project Arca l�0 1— Added Territory
Historical Taxable Values and Tax Increment Verification
Assessed Value
Local Secured���
Utility (S13L-')
linsccurcd
TOTAL ASSESSED VALUE
E3ase Year Value
Incremental Value
Percentage Change
Estimated Revenue�Z�
Tax Increment Revenue
L'nitary Utility Revenue
Less: County Administration Fee�3�
TOTAL ESTIMA7'ED REVENUP:
2001-02 2002-03 2003-04 20U4-OS 2005-06
$2,578,872,509 $2,885,218,745 $3,101,000,504 $3,353,983,977 $3,700,665,201
0 0 0 0 0
60.136.657 67,614,013 79,783,947 79,970,509 79.183,032
$2,639,009,166 $2,952,832,758 $3,180,784,451 $3,433,954,486 $3,779,183,032
656,065,059 656.065.059 656,065.059 656,065,059 656,065,059
� 1,982,944,107 $2,296,767,699 $2,524,719,392 $2,777,889,427 $3,123,783,174
— 15.83% 9.92% 10.03% 12.45%
$19,826,257 $22,967,677 $25,247,194 $27,778,894 �31,237,832
134,804 136,266 144,829 142,166 ] 67,752
(321.5511 (34b,]55) (364.672) (368,2401 (298.6691
519,639,510 $22,757,788 $25,027,351 $27,552,820 $31,106,915
Actual Reccipts
Secured, Unsecured and Unitary Utility $19,961,028 $23,103,974 $25,392,023 $27,921,060 $31,405,SR4
Supplemental Payments 2,011,351 910,786 886,454 1,502,190 5,644,432
Le.rs: County Administration Fee�3� (321,551) (346,155) (364.6721 (368Z401 (298,669)
�I�OTA1, AC'1'UAI. RECEIPTS $21,650,828 $23,688,605 $25,913,805 $29,055,010 S36,751,347
(I) Valucs includc homeownen exemption values.
(2) Assuming a I.0% tax ratc.
(3) Represents property tax administrative costs, in the amount equal to a percentage of the annual gross tax incrcment, that are
paid to the County pursuant to SB 2557. See "LtMrrnnons o� Tnx RrvENurs—Property Tax Administrative Costs."
Sources: Rrversrde Counry OfJice of the Auditor-Con[ro(!er and City of Pulm Desert Finance Department.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
06035\pos-3
47
Table lE-1 and Table lE-2 summarizc the projcctcd Tax Revenues received by Project Area
No. 1, the Original Area and the Added Tenitory, respectively, for the Fiscal Years ending June 30, 2007
through June 30, 2011. To datc, the County has paid to the Redevelopment Agcncy the full amount of
Tax Revenues expected to be received by the Redevelopment Agency, without regard to delinquencies in
tax collcction.
Table 1 E-1
Palm Desert Redevelopment Agency
Project Area No 1— Original Area
Projection of Incremental Taxable Value and Housing Set-Aside Revenues
2006-07 2007-OA 2008-09 2009-10
Taxable Values
Secured��� $775,429,430 $790,938,019 $825,540,691 $842,051,505
L nsccured�2� 113,909,971 114,194,746 114,480,233 114,766,433
New Development�3� — 18.415,600 — 500,000
To'rn�. V,��u�; 5889,339,401 $923,548,365 5940,020,924 5957,317,938
13ase Year Value
Taxablc Value ovcr Basc
Tax Increment Revenue
Unitary Tax Revenue
Le.rs: County Admin. Fee�4�
TO'CA1. 7�AX IVCREMEV'1'
2010-11
$859,402,535
115,053,349
$974,455,884
$27,485,836 $27,485,836 $27,485,836 $27,485,836 $27,485,R36
�861,853,565 5896,062,529 $912,535,088 $929,832,102 5946,970,048
$8,618,536 $8,960,625 $9,125,351
30U,930 300,930 30U,930
(77,4661 (80,437) (81,8681
$8,842,000 $9,181,118 $9,344,413
$9,298,321 $9,469,700
300,930 300,93U
(83,370) (84,859)
S9,515,88 �9,685,771
Housing Set-Aside Revenues�5� $1,768,400 $1,836,224 $1,868,883 $1,903,176 $1,937,154
(1) Growth in secured valucs is projected at 2.00% annually.
(2) Growth in unsecured values is projected at 0.25% annually.
(3) Represents value of anticipated new development expected to be added to the assessed roll between 2007 and 2010.
(4) Represents property tax administrative costs, in the amount equal to 0.$69% of the annual gross tax increment, that are
paid to the County pursuant to SB 2557. See "LtM�Tn7�oNs UN Tnx RevFnutis—Property Tax Administrative Costs."
(5) Represcnts 20% of Total Tax Increment.
Sources: Riverside Cocmry OfJice of the At�ditor-Con�ro(ler und Rosenow Spevucek Group Inc.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
06035\pos-3
48
Table 1 E-2
Palm Descrt Redevclopment Agency
Project Area No 1— Added Territory
Projection of Incremental Taxable Value and Housing Set-Aside Revenues
Taxablc Valucs
Secured���
,
Unsecured�`�
New Development�3�
TOTAL VALUE
Base Year Value
Taxable Value over Base
Tax [ncrement Revenue
Unitary Tax Revenue
Less: Counry Admin. Fee�4�
TOTAL TAX INCRN:MENT
2006-07 2007-08 2008-09 2009-10 2010-11
$4,187,633,924 $4,271,386,602 $4,568,153,681 $4,723,958,932 $4,837,802,989
92,440,023 92,671,123 92,902,801 93,135,058 93,367,896
— 207,195,438 63,178,605 18,895.175 22,659,725
54,280,073,947 54,427,236,330 $4,679,951,657 $4,839,753,715 54,948,830,610
$656,065,059 $656,065,059 $656,065,059 $656,065,059 $656,065,059
53,624,008,888 $3,915,188,105 $4,068,170,028 $4,180,0]4,106 $4,297,765,551
36,240,089 39,151,88]
167,752 167,752
(293.4921 (316,9651
S36,114,349 $39,002,668
40,681,700 41,800,141 42,977,656
167,752 167,752 167,752
(329.2971. (3383131 (347.805)
$40,520,155 $41,629,580 542,797,603
Housing Set-Aside Revenues�s� 57,222,870 �7,800,534 $8,104,031 $8,325,916 $8,559,520
( I) Growth in secured values is projccted at 2.00`% annually.
(2) Growth in unsecured values is projected at 0.25% annually.
(3) Represents valuc of anticipated new development expected to be added to the assessed roll between 2007 and 2010.
(4) Represents property tax administrative costs, in the amount equal to 0.101% of the annual gross tax increment, that are
paid to the County pursuant to SB 2557. See "LIh11TnT1oNs ov Tnx REVENUEs—Property Tax Administrative Costs."
(5) Rcprescnts 2U% oCTutal Tax Incrcmcnt.
Sources: Riversrde Counry Office of ahe Audi�or-Con�roller and Rosenow Spevncek Group Inc.
Assessment Appeals.
Ori�inal Area. Between Fiscal Year 2002-03 through September 1, 2006 therc have been
143 assessment appeals filed within the Original Area. Of thc appeals filed, 13 resulted in
rcductions in value ($10,054,459 or 1.48%), 121 were withdrawn and nine are pending. The
pending appeals have a combined assessed value of $21,633,292 under appeal and include
assessment appcals of value for Fiscal Years 2005-06 and 2006-07.
Added Territorv. Between Fiscal Year 2002-03 through September 1, 2006 thcrc havc
been I 61 assessment appeals filed within the Added Territory. Of the appeals filed, 14 resulted in
reductions in value ($6,739,118 or 022%), 125 were withdrawn and 22 are pending. The
pcnding appeals have a combined assessed value in the amount of $40,669,441 and include
appcals of valuc for Fiscal ycars 2003-04 through 2005-06.
06035\pos-3
49
Table 1F-1 and Table 1F-2 summarize thc appeals filed in Project Area No. 1 between Fiscal
Year 2002-03 and September 1, 2006.
Table 1 F-1
Palm Desert Redevelopment Agency
Project Area No 1— Original Area
Assessment Appeals
Fiscal Years 2002-03 through September 1, 2U06
Appcals
Total Withdrawn/ Appcals Total
#f of No Adjusted! Secured Total
Roll Appcals Appearance/ Reduced/ Appeals Assessed Requcsted
Ycar Filed Late Filc Stipulated Pendine Value Reduction
2006-07 1 0 0 1 $776,189,725 S86,700
2005-06 I8 10 0 8 825,767,882 34,747,611
2004-OS 43 43 0 0 768,146,022 67,A58,453
2003-04 31 30 1 0 720,961,253 74,452,334
2002-03 50 38 12 0 677,837.352 86.123.114
Tor,�� l43 121 13 9 S3,768,902,234 S263,268,212
Sources Rrverside County Assessor's OfJice and Rosenow Spevucek Group Inc.
Actual
Reduction
in Assessed
Value
SO
0
0
16,569
l 0,037.890
S ] 0,054,459
Table 1 F-2
Palm Desert Redevclopment Agency
Project Area No 1— Added Territory
Assessment Appcals
Fiscal Years 2002-03 through September 1, 2006
Appeals
Total VVithdrawn/ Appeals
ik of No Adjustedl Total Total
Roll Appeals Appearance/ Reduced/ Appeals Secured Requested
Ycar Filed Latc File Stipulated Pendine Assessed Valuc Reduction
2006-07 0 0 0 0 S4,258,751,348 $0
2005-06 17 8 0 9 5,772,744,132 19,763,829
2004-OS 45 32 1 12 3,433,954,486 30,161,112
2003-04 42 39 2 1 3,180,784,451 36,624,510
2002-03 57 46 11 0 2,952,R32.758 48.633.054
Torn� l6l l25 14 22 SI9,559,067,175 $135,182,505
Sources: Rlverside Counry dssessor's O�ce und Rosenow Spevucek Group Inc.
Project Arca No. 2
Actual
Reduction
in Assessed
Valuc
$0
U
597,381
251,997
5.889,740
$6,?39,118
Actual
Reduction
% of total
Assessed
Value
0.00%
1.4R
1.48%
Actual
Reduction
% of total
Assessed
Valuc
0.00%
0.00
0.02
0.01
0.20
0.22%
Pending
Reduction
in Assessed
Valuc
$86,700
20,674,907
0
a�i,�xs
0
$21,633,292
Pending
Reduction
in Assessed
Valuc
SO
16,988,3 I 8
14,417,734
9,263,389
0
$40,669,441
Ceneral. Project Area No. 2 is located in the City and includes approximately 2,927 acres,
comprising 54,866 parcels, zoned for residential, hotel/resort, office and undeveloped uses. Project Area
No. 2 is gencrally bounded by the City limits and Interstate 10 to thc north, portions of the City limits to
the cast, Country Club Drivc and Hovely Lane to the south and Portola Avenue and Montercy Avenue to
the wcst. For a map of Project Area No. 2, see page v. For certain information regarding the City, scc
APPENDIX C—"GGNERAL INFORMATION CONCERNING THG CITY OF PALM DESERT."
Pending
Reduction
% of
Total
Assessed
Valuc
0.0 i
2.50
0.00
0.�2
0.00
2.64%
Pending
Reduction
% of
Total
Assessed
Valuc
0.00°/a
0.29
�.42
0.29
0.00
I.OI%
06035\pos-3
5�
Redevelopment Plan Limits. The Redcvclopment Plan for Project Area No. 2 was adopted by
the City on July 15, 1987.
Table 2A summarizes the Redevelopment Plan Limits for Project Area No. 2.
Tablc 2A
Palm Desert Redevelopment Agency
Project Arca l�o. 2
Summary of Redevelopment Plan Limits
Basc
Year
198fi-87
Plan Limit Tcrmination
Receipt of
Tax Increment
Debt Plan and Debt
Incurrence Exairation Reaavment
7/15/28�1� 7/15/38«�
Eliminated���
Gross Tax
Increment Caa
$800�'�
Revenue Limits
($ in millions)
Bonded
Debt
S150
Gross Tax
Incrcment
Received�'�
S 124.898
(1) Pursuant to SB 21 I, on February 27, 2003 the City Council adopted Ordinance No. ]036 amending the Project Area No. 2
Redevelopment Plan to eliminate the time limit to incur debt.
(2) Pursuant to SB 1045, the Redevelopment Agency amended the Redevelopment Plan on December 19, 2004 through the
adoption of Ordinance No. 1083 to add one year to the term of cffectiveness and the time limit to collect tax increment.
(3) Adjusted annually based upon the Consumer Price Index ("CPI"). This limit is expresscd in 1987 dollars and is adjusted in
accordance with the changes in the regional CPI. The amount in 2005 dollars as adjusted for CPI, is $ I.365 billion.
(4) Represents gross tax increment revenues reccived as of June 30, 2006. Gross tax incrcment revcnucs includes secured,
unsecured, utility and supplemental revenue, less property tax administrative costs paid to the County pursuant to SB 2557.
Scc "Lit�u rnr�Ons oN Tnx RFVF�;Uf�s—Property Tax Administrativc Costs."
Source: Redevelopmenl Agency.
Land Use and Building Restrictions. The information in Table 2B is based on land usc
designations as provided by Riverside County Office of the Auditor Controller through tax roll data,
howevcr, County land use designations do not neccssarily parallcl City land use and zoning designations.
Unsecured and SBE non-unitary values are connected with parcels that are already accounted for in other
categories.
Tablc 2B
Palm Desert Redevelopment Agency
Project Area No. 2
Land Uses by Category
Land Use
Residcntial
V acant
Commcrcial/Profcssional
Unknown
Rccrcational
Institutional
TOTAL
Number of Parcels
22,483
373
27
23
17
1
22,924
2006-07 Total Assessed Value
Amount Percent
$1,318,246,270 76.61 %
87,431,498 5.08
276,377,231 16.06
288,939 0.02
38,473,352 2.24
S I ,720,817,290 100.00%
Source: Metro Scan TRW based upon information from the Riverside County Assessor's Office.
OG035\pos-3
51
Principal Taxpayers. Thc top 10 taxpayers within Projcct Arca No. 2 for Fiscal Year 2006-07
own property with an aggrcgate total assesscd value of S437,909,437, rcprescnting 25.04% of thc total
assessed value in Projcct Arca No. 2.
Table 2C lists the principal taxpayers and land uses in Project Area No. 2 based on the Fiscal
Ycar 2006-07 assesscd valuation.
Table 2C
Owner
Desert Springs I IoteUMarriott
Marriott Ownership Resorts Inc.
Ray J. Sanderson Desert Springs Partners
Desert Wclls 237
Palm Desert Funding Co.
Palm Descrt North 80
Resort Ventures
Sinatra & Cook Project
Desert Falls Country Club Inc.
Villas at Dcsert Falls
To�rn� Tor TFN
Other Property Owners
�I�OTAL
Palm Uescrt Redevelopment Agency
Project Arca No. 2
Principal Taxpayers���
Fiscal Year 2006-07
No. of
Parccls
81
73
18
10
3
2
51
I
6
52
297
22.627
22,924
Land Use CateEorV
HoteUResortJV acant
Timeshares/Vacant
CommercialNacant
VacanUVarious
Vacant/Agricultural
VacanUCommercial
ResidentialNacant
Vacant/Agricultural
Recreational/Vacant
VacandMiscellaneous
Snecific Land Use
Resort I-Iotel and Golf Course
Timeshares
None Listed
Mixed-Use Shopping Center
None Listed
None Listed
None Listed
None Listed
None Listed
None Listed
2006-07
Total
Assessed
Value�2j
�228,220,265
65,428,267
28,153,706
25,957,076
24,988,800
20,275,910
12,977,730
11,143,500
] 0,483,923
l Q.280.260
$437,909,437
1,245,877,816
� 1,683,787,253
% of
2006-07
"Cota1�3�
12.92%
3.76
1.67
1.54
1.48
1.20
0.77
0.6G
0.62
0.61
25.04
73.99
100.00%
(I) Includes secured value ($1,657,736) and unsecured value (S26,021,S17).
(2) Uocs not reflect homeowners exemption.
(3) Column does not total due to rounding.
Sources: Riverside County O�ce of the Auditor-Contro!ler.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
06035\pos-3
52
Historical, Current and Projected Tax Revenues. Thc base year value established for Projcct
Arca No. 2 is the Fiscal Ycar 1986-87 assessment roll. Table 2D presents the aggregate taxable value of
all property within Project Area No. 2 and the tax increment revenues received for Fiscal Years ended
Junc 30, 2002 through June 30, 2006 (Projected).
Table 2D
Palm Desert Redevelopment Agency
Project Area No. 2
Historical Taxable Values and Tax Increment Veri�cation
Assessed Value�'�
Local Secured
Utility (SBE)
Unsccured
To'rn1. Ass�:SSen Vnt,uN
Base Year Value
Incremental Value
Percentage Chang
2001-02
$948,228,023
0
11,464,203
959,692,226
102,157,447
857,534,779
2002-03
$1,134,005,914
0
10,426,145
1,144,432,059
102.157.447
1,042,274,612
21.54%
2003-04 2004-OS 2005-06�2j
$1,257,974,957 $1,347,408182 $1,451,495,972
0 0 0
l 5,969,361 17.745.052 16,317,319
1,273,944,318 1,365,153,234 1,477,813,291
] 02,157,447 102,157,447 102,157,447
1,171,786,871 1,262,995,787 1,375,655,844
12.43% 7.78% 8.92%
Estimated Revenuc
Tax Increment Revenue $8,575,348 $] 0,422,746 � 11,717,869 $12,629,958 $ I 3,756,558
Unitary Utility Revenue 22,519 22,768 25,689 23,063 39,774
Less: County Administration Fee�3� (138,4911 (156.4941 (168,6551 (166,884) ( I 31.1631
'Co'rnt. ESTIMATED RP:VENUE $8,459,376 $10,289,020 $11,574,903 512,486,136 513,665,169
Actual Reccipts
Sccured and Unitary Utility $8,597,867 $10,445,514 $11,743,558 $12,653,705 $13,79G,332
Supplemental Payments 257,896 548,517 812,847 698,023 1,553, ] 45
Less: County Administration Fee�3� (138,491) (156,4941 (168.6551 (166,8841 (131.1631
T07'ALAC1'UALRECEIP"I'S $8,717,262 510,837,537 $12,387,750 $13,184,843 $15,218,315
(1) Secured values includc homeowner exemption value.
(2) Assesscd values are based on actual data, all remaining information is projected.
(3) Represents property tax administrative costs, in the amount equal to a percentage of the annual gross tax increment, that arc
paid to the County pursuant to SB 2557. See "Llt�t�TnTlohs ON Tnx REVGNUEs—Property Tax Administrative Costs."
Soutces: Riverside C�unty� OJfice of the Auditor-Cnnlrotler and City of Pnlm i�esert Finunce Depur�men�.
(REMAINDER OF THIS PAGE 1NTENTIONALLY LEFT BLANK)
060�S�pos-3
53
Tablc 2E summarizcs thc projected Tax Revenues to be receivcd by Projcct Area No. 3 for Fiscal
Ycars ending June 30, 2007 through June 30, 2011. To date, the County has paid to the Redcvelopment
Agency the full amount of Tax Revenues expected to be received by the Redevelopment Agency, without
regard to delinquencies in tax collection. See "—Tax Levies, Collections and Delinquencies."
Table 2E
Palm Desert Redevelopment Agency
Project Area No. 2
Projection of Incremental Taxable Value and Housing Set-Aside Revenues
Taxable Values 2006-07 2007-08 2008-09 2009-10 2010-11
Secured��� $1,657,765,736 $1,690,921,051 $1,804,279,726 $1,923,958,502 $2,143,507,983
Unsecured�'� 26,021,517 26,086,571 26,151,787 26,217,167 26,282,710
Ne�v Development�3� — 77,980,641 81,954,100 177,519,913 127,384,400
"1'o�'ni, V,��uH: $1,683,787,253 51,794,9A8,263 $1,912,385,613 $2,127,695,582 52,297,175,093
Base Year Value
Taxablc Valuc ovcr Base
Tax Increment Revenue
Unitary Tax Revenue
Les,s: County Admin. Fee�4�
T07'AL TAX InCRE117Eti'I'
$102,157,447 $102,157,447 S ] 02,157,447 $102,157,447 $102,157,447
$1,581,629,806 51,692,830,816 $1,810,228,166 52,025,538,134 $2,195,017,645
$15,816,298 $16,928,308 $18,102,282
39,774 39,774 39,774
(135,492) (144.9941 ( I 55.0261
515,720,580 $16,823,088 $17,987,030
$20,255,381 $21,950,176
39,774 39,774
(173.4241 (187,9071
$20,121,731 $21,802,043
Housing Set-Aside Revenues�s� S3,144,116 $3,364,618 $3,597,406 54,024,346 $4,360,409
(1) Growth in secured values is projected at 2.00% annually.
(2) Growth in unsecured values is projected at 0.25% annually.
(3) Represents value of anticipated new development expected to be added to the assessed roll between 2007 and 2010.
(4) Rcpresents property tax administrative costs, in the amount cqual to 0.104% of the annual gross tax incremcnt, that are paid
to the County pwsuant to SB 2557. See "L�Mtra.'t ioNs on Tnx Reve�uEs—Property Tax Administrative Costs."
(5) Represents 20% of Total Tax Increment.
Sources: Riverside Counry O�ce qf the Audi�or-Controller und Rosenow Spevacek Group /nc.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
06035\pos-3
54
Assessrnent Appeals. Bctween Fiscal Year 2002-03 through September 1, 2006 there havc bccn
72 assessment appeals filed within Project Area No. 2. Of the appeals filed, 13 resulted in adjustments,
rcductions or stipulations of thc value, 46 wcre withdrawn and 13 are pending. The pending appcals havc
a combined total assessed value of $4,464,384,816 and request an aggregate reduction in value of
�214,220,417 for Fiscal Ycars 2004-OS through 2006-07.
Table 2F summarizcs the appcals filed in Project Area No. 2 since Fiscal Year 2002-03.
Table 2F
Palm Desert Redevelopment Agency
Project Area No. 2
Assessment Appeals
Fiscal Years 2000-01 through September 1, 2006
Appcals
Total Withdrawn/ Appcals
# of No Adjusted/
Roll Appcals Appearance/ Reduced/ Appeals
Year Filed Late File Stiaulated Pendin
2006-07 I 0 0 1
2005-06 10 0 0 10
2004-OS 22 18 2 2
2003-04 14 lU 4 0
2002-03 25 1R 7 0
Torn� 72 46 33 13
Sourccs: Rrverside Coemty Assessor's OJfice.
Yroject Area No. 3
Total
Secured
Assessed
Value
$1,665,421,120
1,451,555,514
1,347,408, l82
I,257,974,957
i . I 34.005.914
S6,856,365,687
Total
Requested
Reduction
51,949,535
85,994,638
126,276,244
123,391,265
129,897,604
S467,509,286
Actual
Reduction in
Assessed
Valuc
$1,949,535
0
21,635,99G
57,709,149
23.882,103
$ ] 05,716,783
Actual
Reduction
% of total
Assessed
Valuc
0.12%
0.00
1.61
4.59
2. I 1
8.42%
Pending
Reduction
in Assessed
Valuc
$1,949,535
85,994,638
2,294,417
0
0
590,238,590
General. Project Area No. 3 is located in the City and includes approximately 764 acres,
comprising 1,016 parcels, zoned for residential, office, commercial, industrial, public and open space
uscs. Projcct Arca No. 3 is generally bounded by Portola Avenue and Cook Street to the west, and
Carlotta Divc to the east, Hovely Lane and Running Springs Drive to the north and the Whitewater River
Channcl to thc south. The Portola Country Club is not within Project Area No. 3. For a map of Project
Area No. 3, sce pagc v. For certain information regarding the City, see APPENDIX C—"GENERAL
INFORMATION CONCERNING THE CITY OF PAI.M DESERI'."
Redevelopment Plan Limits. The Redevelopment Plan for Project Area No. 3 was adopted by
the City on July 17, 1991. Project Area No. 3 includes approximately 764 acres of residential, office,
commercial, industrial, public and open space uses.
(REMAINDER OF THIS PAGE IN1'ENTIONALLY LEFT BLANK)
Pending
Reduction
% of
Total
Assessed
Value
0.12%
5.92
O.17
0.00
0.00
6.21 %
0G035\pos-3
55
Tablc 3A summarizes the Redevclopment Plan Limits for Projcct Arca No. 3.
1'able 3A
Palm Desert Redevelopment Agency
Project Arca No. 3
Summary of Redevelopment Plan Limits
Plan Limit Termination
Receipt of
Tax
Increment
13ase Debt Plan and Debt
Year Incurrence Expiration Renavment
1990-91 Eliminated��� 07/17/32 07/17/42
Revenue Limits
($ in millions)
Net Tax Gross Tax
Net Tax Bonded Increment Increment
Increment Caa Debt Received�2� Received�'�
$360 $]00 $ $16.498
(I) Pursuant to SB 211, on March 1I, 2004 the City Council adopted Ordinance No. 1062 amending the Project Area No. 3
Redevelopment Plan to eliminate the time limit to incur debt.
(2) Represents net tax increment revenues received as of June 30, 2006. Net tax increment revenues equal gross tax increment
less the Housing Set-Aside and payments to taxing agencies.
(3) Represents gross tax increment revenues received as of June 30, 2006. Gross tax increment revenues incluJes secured,
unsecured, utiliry and supplemental revenuc, lcss property tax administrative costs paid to the County pursuant to SB 2557.
See "LtMl�rnr�ohs ov Tnx RevE�u�s—Property Tax Administrative Costs."
Sourcc: Reclevelopment Agencti�.
Land Uses. The information in Table 3B is based on land use designations as provided by
Riverside County Office of the Auditor Controller through tax roll data, however, County land use
designations do not necessarily parallel City land use and zoning designations. Unsecured and SBE non-
unitary values are connected with parcels that are already accounted for in other categories.
Table 3B
Palm Descrt Redevelopment Agency
Project Area No. 3
Land Uses by Category
Land Usc
Commercial/Profcssional
Rcsidential
V acant
lnstitutional
Misccllaneous
TOTAL
Number of Parcels
264
704
51
2
2
1,023
2006-07 Total Assessed Value
Amountt Pcrcent
$226,203,048 51.33%
208,491,871 47.31
5,790,765 1.31
215,425 0.05%
606 0.00
5440,701,715 100.0%
j- Total secured asscssed value was provided by the Rivcrside County Assessor's Office and varies from the information
provided by the County of Riverside Auditor-Controller. Secured assessed value is $432,181,892 less $19,311,510 for all
exemptions except homeowners.
Source: Metro Scan TRW based upon infottnation from the Riverside County Assessor's Office.
06035\pos-3
56
Principal Taxpayers. The top 10 taxpayers within Project Area No. 3 for Fiscal Ycar 2006-07
own property with an aggregate value of � 137,965,142, representing 28.17% of the total assessed value in
Projcct Arca No. 3.
Tablc 3C lists the principal taxpayers and land uses in Project Area No. 3 based on the Fiscal
Ycar 2006-07 asscsscd valuation.
Tablc 3C
Palm Desert Redevelopment Agency
Project Arca No. 3
Principal Taxpaycrs���
Fiscal Year 2006-07
Owner
PR X[V
Sunrise IV Carlotta SL
SMG 17
Palm Desert Disposal Services, Inc.
Northern '1'rust Bank of Califomia
Eddleman, Koy T.
SAG Palm Desert
Lakeside Inv. Property
Cook Street Oftice
I,akes Country Club Association, Inc
To�rnt, Tot� TE:N
Other Property Owners
ToTn�
No. of
Parcels
1
1
1
5
11
1
1
5
1
2
29
987
1,016
Land Use
CateQory
Residential
Commercial
Commercial
Commercial
Commercial
Commercial
Commercial
Commercial
Commercial
Commercial
Commercial
Various
Snecific Land Usc
Multifamily Residences
Senior Assisted Living Center
Commercial/Industrial Offices
C ommerc iaUIndustrial Offices
Commercial Offices and Adult Day Care
Radio Broadcasting Station
Industrial Storage
Mixed Use Industrial/Commercial
Business/Commercial Offices
Golf Course
(1) Includes secured value (5432,181,892) and unsecured value ($57,571,490).
(2) Docs not reflect homeowners exemption.
Sources: Riversrde County Offrce of the Auditor-Controller.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
2006-07
Total
Assessed
Value�Z�
$31,584,699
27,192,556
22,734,689
12,099,634
9,057,272
8,930,168
8,466,835
6,745,054
5,816,532
5,337,703
$137,965,142
351,788.240
$489,753,382
% of
2006-07
Total
6.45%
5.55
4.64
2.47
1.85
�.xz
1.73
1.38
1.19
1.04
28.17%
71.83
100.00%
a�oss�.��s-�
57
Nistorical, Current and Projected Tax Revenues. The base year value cstablishcd for Project
Arca No. 3 is thc Fiscal Year 1990-91 assessment roll. Table 3D presents the aggregatc taxablc value of
all property within Project Arca No. 3 and the tax increment revcnues reccived for Fiscal Ycars cnded
June 30, 2002 through June 30, 2006 (Projected).
Tablc 3D
Palm Desert Redevelopment Agency
Project Area No. 3
Historical Taxable Values and Tax Increment Veri�cation
2001-02 2002-03 2003-04 2004-05 2U05-06�Z�
Assessed Value���
Local Secured �237,162,I55 $251,593,562 $303,623,640 $318,385,414 $385,333,313
L'tility (SBE) 0 0 0 0 0
L`nsecured 32,762,000 33,885.278 49,987,025 44,912,824 50,081,784
7'O'I'AL ASSESSED VALUE 5269,924,155 $285,478,840 $353,610,665 �363,298,238 $435, 415,097
13ase Year Value
Incremental Value
Percentagelncrease
Estimated Revenue
Tax Increment Revenue
Unitary Utility Revenue
Les.s: County Administration Fee�'�
TOTAL ES'I7MA'CED REVENUE
Actual Receipts
Sccui•ed and Unitary Utility
Supplemental Payments
Le.rs: County Administration Fee�3�
TO'I'AL ACTIJAL RF,CEIPTS
$149,523,255 $149,523,255 $149,523,255 $149,523,255 $149,523,255
120.400,900 135,955,585 204,087,410 213,774,983 285,891.842
— 12.92% 50.11% 4.75% 33.73°/a
$1,204,009 $1,359,556 $2,040,874 $2,137,750 $2,838,392
723 731 I,001 763 3,147
f 19.405) (20.379) (29,3241 (28.204) (27,207)
$1,185,327 $1,339,908 52,012,551 $2,110,309 $2,834,859
$1,204,732 $1,360,287 $2,041,875 $2,138,513 �2,862,069
130,497 79,744 150,716 261,674 607,706
(19,4051 (20,3791 (29.3241 (28.204) (27,207)
$1,315,824 51,419,652 $2,163,267 52,371,983 53,442,565
(1) Secured values include homeowner exemption value.
(2) Assessed values are based on actual data, all remaining information is projected.
(3) Represents properiy tax administrative costs, in the amount equal to a percentage of the annual gross tax increment, that are
paid to thc County pursuant to SB 2557. Scc "LiMITn�riors O` Tnx REv�nuEs—Property Tax Administrativc Costs."
Sourccs: Riverside Counn� OfJice o/'the Auditor-Con(ro/(er und City of Pnlm Deser! Finance Depar�ment.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
obo;s����s-�
58
Table 3E summarizes the projected Tax Revenues to be received by Project Area No. 3 for Fiscal
Years ending June 30, 2007 through June 30, 201 1. To date, the County has paid to the Redevelopment
Agency the full amount of Tax Revenues expected to be received by the Redevelopment Agency, without
regard to delinquencies in tax collection. See "—Tax Levies, Collections and Delinquencies."
Table 3E
Palm Desert Redevelopment Agency
Project Arca No. 3
Projection of Incremental Taxable Value and Housing Set-Aside Revenues
'I'axablc Values 2006-07 2007-OS 2008-09 2004-10 2010-11
Secured��� $432,181,892 $440,825,530 $474,120,935 $483,603,353 $516,286,621
Unsecured�z� 57,571,490 57,715,419 57,859,707 58,004,357 58,149,357
New Development�3� 0 23,998,916 0 22,560,000 0
T07'AL VALUE $489,753,382 $522,539,865 $531,980,642 $564,167,710 5574,435,978
Base Year Value
Taxable Value over Base
Tax Increment Revenue
Unitary Tax Revenue
Leas: County Admin. Fee�4�
�COTAL TAX I:�CREMENT
$149,523,255 $149,523,255 $149,523,255 $149,523,255 $ ] 49,523,255
$340,230,127 $373,016,610 $382,457,387 $414,644,455 $424,912,723
$3,402,301 $3,730,166
3,147 3,147
(26.702) (29,2731
$3,378,746 $3,704,040
$3,824,574 $4,146,445 $4,249,127
3,147 3,147 3,147
(30.0131 (32,5371 (33,3421
53,797,708 $4,117,054 �4,218,932
Housing Set-Aside Revenues�5� $675,749 $740,808 $759,542 5823,411 5843,746
(1) Growth in secured values is projected at 2.00% annually.
(2) Growth in unsecured values is projected at 0.25% annually.
(3) Represents valuc of anticipated new development expected to be added to the assessed roll between 2007 and 2010.
(4) Represents property tax administrative costs, in the amount equal to 0.1 GS% of the annual gross tax increment, that are paid
to the County pursuant to SB 2557. See "L�rvtr['nT�Ur.s on' Tax RevENUE:s—PropeRy Tax Administrative Costs."
(5) Represents 20% of Total Tax Increment.
Sources: River.side Countt� O�ce ��jthe Audilor-Con�ro!ler und Ro,senow Spevacek Group Inc.
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06035\pos-3
59
Assessment Appeals. Between Fiscal Ycar 2002-03 through September 1, 2006 there have becn
26 assessment appeals filed within Project Area No. 3. Of the appeals filcd, 21 were withdrawn and fivc
are pcnding. The pending appeals have a combined assessed value of �383,280,660 and requcst a
rcduction in value of $18,411,140 for Fiscal Ycar 2005-06.
Table 3F
Palm Desert Redevelopment Agency
Project Area No. 3
Assessment Appeals
Fiscal Years 2002-03 through September l, 2006
Roll
Ycar
2006-07
2005-06
2004-OS
2003-04
2002-03
7'o rnt.
Total
# of
Appcals
Filed
0
5
R
10
3
26
Tablc 3F summarizes the appeals filed in Project Arca No. 3 since Fiscal Year 2002-03.
Appeals
Withdrawn/
No
Appearancc/
Latc File
0
0
2
10
3
21
Appcals
Adjusted/
Reduced/
Stipulated
0
0
0
0
0
0
Appcals
Pendine
0
5
0
0
0
5
Total
Secured
Assessed
Value
5451,493,402
383,280,660
318,385,414
303,623,640
251,593,562
S 1,708,376,678
Sources: Xiverside County Assessor's Office.
Project Area No. 4
Total
Requested
Reduction
$0
18,41 1,140
15,428,167
19,654,397
1,606,924
555,100,628
Actual
Reduction
in
Assessed
Value
50
0
0
0
0
$0
Actual
Reduction
% of total
Assessed
Valuc
0.00%
0.00
0.00
0.00
0.00
0.00°/a
Pending
Reduction
in Assessed
Value
SO
18,411,140
0
0
0
S 18,411,000
Genera� Project Area No. 4 is located in the City and includes approximatcly 2,260 acres,
comprising 6,267 parcels, zoned for residential, officc, commercial, industrial, public and open space
uscs. Project Area No. 4 is generally bounded by Eldorado Drive to the west, running southward to thc
boundary of the City of Indian Wells, then castward to thc corner boundary betwccn the county line and
the City of Indian Wells. The western boundary follows this line southward to Fred Waring Drive, which
is also the southern boundary of the Ciry limits. The eastem boundary is Washington Strcet and the
northern boundary is Country Club Drive. For a map of Project Area No. 4, see page v. For certain
information regarding the City, see APPENDIX C—"GENERAL INFORMATION CONCGRNING THE CITY OF
PALM DESGRT."
Redevelopment Plan Limits. The Redevclopment Plan for Project Arca No. 4 was adoptcd by
the City on July 19, 1993. Project Area No. 4 includes approximately 2,260 acres of residential, office,
commercial, industrial, public and open space uscs.
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OG035\pos-3
60
Pending
Reduction
% of
Totdl
Assessed
Valuc
0.00%
4.80
4.40
0.00
0.00
4.80`%
Table 4A summarizes thc Redevelopment Plan Limits for Project Area No. 4.
Table 4A
Palm Descrt Redevelopment Agency
Project Arca No. 4
Summary of Redevelopment Plan Limits
Plan Limit Termination
Reccipt of
Tax
Incremcnt
Base Debt Plan and Debt
Year Incurrence Exuiration Repavment
1992-93 Eliminated�'� 7/19/34 7/19/44
Revenue Limits
($ in millionsl
Gross Tax Bonded
Incremcnt Can, Debt
$600 $135
Net Tax Gross Tax
Increment lncrcment
CBp�Z� Received�'�
$200.000 $62.429
(1) Pursuant to SB 211, on March 11, 2004 the City Council adopted Ordinance No. ]063 amending the Project Area No. 4
Redevclopment Plan to eliminate the time limit to incur debt.
(2) The total gross amount of tax increment revenue that may be allocated to the Agency from Project Area No. 4 cannot not
exceed �600 million. Additionally, the number of tax dollars, which may be divided and allocated to the Agency, also may
not exceed the amount of $200 million, net of the funds required to be set-aside into the Housing Fund and payments to thc
Project Areas' taxing agencies pursuant to cooperative agreements. Both the S600 million gross cap and the �200 million
net cap may not be changed except by amendment of the redevelopment plan for the Project Areas.
(3) Represents gross tax increment revenues received as of June 30, 2006. Gross tax increment revenues includes secured,
unsecured, utility and supplemental revenuc, less property tax administrative costs paid to the County pursuant to SB 2557,
Scc "LihttTn�nons oN Tnx RFVENUEs—Property Tax Administrative Costs."
Source: Redevelopmen! Agency.
Land Use and Building Restrictions. The Rcdevelopment Plan for Projcct Arca No. 4 sets forth
the principal land uses permitted and the building restrictions to be imposed in project development. It
also assigns the Redevelopment Agency and the City their respective responsibilities in canying out the
Redevelopment Plan.
The infonnation in Table 4B is based on land use designations as provided by Riverside County
Office of the Auditor-Controller through tax roll data, however, County land use designations do not
necessarily parallel City land use and zoning dcsignations. Unsecured and SBE non-unitary values are
connected with parcels that are already accounted for in other categorics.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
OG035�pos-3
61
Land Use
Rcsidential
Recrcational
V acant
Industrial
Commercial/Professional
Miscellaneous
Unknown
Institutional
TOTAL
Table 4B
Palm Desert Redevclopment Agency
Project Area No. 4
Land Uses by Category
Numbcr of Parcels
5,845
86
387
1
10
10
2
6,343
2006-07 Total Assessed Value
Amount��� Percent�Z�
� 1,749,134,731 94.94%
45,131,891 2.45
24,215,130 1.31
12,480,326 0.68
10,610,367 0.58
736,779 0.04
0 0.00
0 0.00
$1,842,309,224 100.00%
(1) Total secured assessed value was provided by the Riversidc County Assessor's Office and varies from the information
provided by the Riverside County Oflice of the Auditor-Controller. Secured assesscd value is S 1,789,39Q547 less
S2,814,993 for all exemptions cxcept homeowners.
(2) Column does not total due to independent rounding.
Source: Riverside Counry Assessor's OfJice.
(REMAINDER OF THIS PAGE 1NTENTIONALLY LEFT BLANK)
06035\pos-3
62
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0�035�pos-3 63
f/istorical, Current and Projected Tax Revenues. The base value year established for Project
Arca No. 4 is the Fiscal Ycar 1992-93 assessment roll. Table 4D presents thc aggregate taxable value of
all property within Project Area No. 4 and the tax increment revenues received for Fiscal Years ended
June 30, 2002 through June 30, 2006.
Tablc 4D
Assessed Value���
LocalSecurcd
Utility (SBG)
Unsecured
TOl'AL ASSESSED VALUE
Base Year Value
Incremental Value
Perccntage Change
Palm Desert Redevelopment Agency
Project Area No. 4
Historical Taxable Values and Tax Increment Verification
Estimated Revenue
Tax Increment Revenue
Lnitary Utility Revenue
Less: County Administration Fee�'�
TOTAL ESTIMATED REVENUE
2001-02 2002-03 2003-04 2004-OS 2005-06�Z�
�,1,197,730,257
0
10,002,105
$1,207,732,362
$587,192,218
620,540,140
$6,205,401
1,930
(99,9811
$6,107,351
$1,306,313,080 $1,387,034,821 $1,482,254,586 $1>623,656,816
0 0 0 0
8.401.416 4,611.528 6.683.359 11,883,784
$1,314,714,496 $1,391,646,349 �1,488,937,945 51,635,540,600
$587,192,218 $587,192,218 $587,192,218 $SR7,192,218
727,522,278 804,454,131 901,745,727 1,048,349,382
17.24% 10.57% 12.09% 16.26%
$7,275,223 $8,044,541 $9,017,457 $10,476,810
1,952 3,641 2,036 2,036
(109,024), (115,583) (118,954) (99,794)
57,168,151 $7,932,599 $8,90U,539 510,379,052
Actual Rcccipts
Secured and Unitary Utility $6,207,332 $7,277,175 $8,048,182 $9,019,493 �10,498,493
Supplemental Payments 854,021 411,994 318,307 694,864 2,197,486
Less: County Administration Fee�3� (99,9811 (]09,0241 (115.5831 (118,954) (99,7941
TOTAL ACTUAI, RECEIPTS $6,961,372 $7,580,145 �8,250,906 $9,595,403 $12,596,184
(1) Secured values include homeowner exemption value.
(2) AssesseJ Values are based on actual data, all remaining information is projectcd.
(3) Rcpresents property tax administrative costs in the amount equal to a percentage of the annual gross tax incrcment, that are
paid to thc County pursuant to SB 2557. Scc "LttVtiTnTlo':s ON Tnx R�v�nu�s—Property Tax Administrativc Costs."
Sources: Riverside Countv O�ce of �he Audilor-Contro/ler anc! City� of Pulm Deser! Finunce Departmen�.
(R�MAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
o�,o3s���„-�
64
Table 4E summarizes the projected Tax Revenues reccived by Project Arca No. 4 for the Fiscal
Years ending June 30, 2007 through June 30, 201 l. To datc, the County has paid to the Redevelopment
Agcncy thc full amount of Tax Revenues expected to be receivcd by the Redcvelopment Agency, without
regard to delinquencics in tax collection. Sec "—Tax Lcvies, Collections and Delinquencics."
Tablc 4E
Palm Descrt Redevelopment Agency
Project Area No. 4
Projection of Incremental Taxable Value and Housing Set-Aside Revenues
Taxable Yalucs
Secured� � �
Unsecured�Z�
New Development';�
TO"CAL VALUF,
Base Year Value
Taxablc Valuc ovcr Base
Tax Increment Revenue
Unitary Tax Revenue
Less: County Admin. Fee�4�
To��n�, T�x Inc�n�EVT
Housing Set-Aside Revenucs�5�
2006-07 2007-08 2008-09 2009-10 2U10-11
$1,789,390,547 �1,825,178,358 $1,947,268,345 $2,028,691,510 $2,111,743,138
9,555,154 9,579,042 9,602,989 9,626,997 9,651,064
— 83,908,255 41,644.900 41,644,900 0
51,211,753,483 $1,331,473,437 $1,411,324,017 51,492,771,189 $1,534,201,985
$587,192,218 $587,192,218 $587,192,218 $587,192,218 �587,192,218
$1,211,753,483 $1,331,473,437 $1,411,324,O17 $1,49Z,771,189 51,534,201,985
$12,117,535
15,009
(95,3651
512,037,179
$2,407,436
$13,314,734
15,009
( ] 04.776)
$13,224,968
$2,644,994
$14,113,240
I 5,009
(111.052)
$14,O17,197
$2,803,439
$14,927,712 $15,342,020
15,009 15,009
(117,4541 (120,7111
$14,825,267 $15,236,318
�2,965,053 �3,047,264
(1) Growth in secured values is projected at 2.00% annually.
(2) Growth in unsecured values is projected at 0.25% annually.
(3) Represents value of anticipatcd new dcvelopmcnt based upon building permits issued by the City between October 2004 and
Dccember 2005.
(4) Represents property tax administrative costs, in the amount equal to 0.786% of the annual gross tax increment, that are
paid to the County pursuant to SB 2557. See `9.r�tirnTloNs o� Tnx R�v��u[S—Property Tax Administrative Costs."
(5) Represents 20% of Total Tax Increment.
Sources: Ri��er.ride Counry O�ce ojthe Auditor-Controller and Rosenow Spevacek Group Inc.
(REMAINDER OP T�IIS PAGE INTENTIONALLY LEFT BLANK)
06035\pos-3
65
Assessment Appeals. Betwcen Fiscal Year 2002-03 through September 1, 2006 thcre have been
63 assessment appeals filed within Project Area No. 4. Of the appeals filed, one resulted in a reduction in
value, 51 werc withdrawn and l 1 are pending. The pending appeals have a combined assessed value of
�3,073,953,602 under appeal and include assessment appeals of value for Fiscal Years 2004-OS and
2005-06.
Table 4F summarizes thc appeals filcd in Project Area No. 4 since Fiscal Year 2002-03.
Table 4F
Palm Desert Redevelopment Agency
Project Area No. 4
Asscssment Appeals
Fiscal Years 2002-03 through September 1, 2006
Appcals
Totai Withdrawn/ Appcals
# of No Adjusted/
Roll Appeals Appearance/ Reduced/ Appeais
Ycar Filed Late File Stipulated Pendin
2006-07 0 0 0 0
2005-06 8 0 0 6
2004-OS 10 5 0 5
2003-04 38 37 1 0
2002-03 7 7 0 0
1'orn� 63 51 1 11
Sources: Riverside Countv Assessor's O%frce.
Total
Secured
Assessed
Valuc
S 1,792,205,540
1,607,782,216
1,466,171,386
1,3 71,002,021
1,291,151.080
S7,528,312,243
Total
Requested
Reduction
50
7,576,970
13,802,554
2,059,989
631,656
524,089,069
THE FINANCING AUTHORITY
Actual
Reduction
in
Assessed
Value
SO
0
0
77,000
0
577,000
Actual
Reduction
% of total
Assessed
Valuc
0.00000°/a
0.00000
0.00000
0.0057G
0.00000
0.00576%
Pending
Reduction
in Assessed
Value
�0
7,5G2,138
9,352,500
0
0
$16,914,638
The Financing Authority is duly organized and existing under a Joint Exercise of Powcrs
Agrcement dated January 26, 1989, by and between the City and the Redevelopmcnt Agcncy, and under
thc provisions of Chaptcr 5 of Division 7 of Titic 1 of the State Government Code. The members of thc
City Council serve as the Commission members of the Financing Authority. The Financing Authority has
no taxing powcr and no source of revenue to pay debt scrvicc on the Series 2007 Bonds othcr than the
Revenucs. The Financing Authority has no taxing power. See "SECURITY AND SOURCES OF PAYMENT
FOR THE SERIES 2007 BONDS."
THE REDEVELOPMENT AGENCY
Authority, Members and Personnel
The Redevelopment Agency was established pursuant to the Redevelopment Law, and was
activated in 1974.
Mcmbers of thc City Council of the City scrve as members of the Rcdevclopment Agency. Thc
City Council members are elected at large for four-year overlapping terms. The cuirent members of the
Redevclopmcnt Agency are set forth on the inside cover pagc of this Official Statement.
06035\pos-3
66
Pending
Reduction
% of
Total
Assessed
Value
0.00%
0.47
0.64
0.00
0.00
l.l I%
The Redevelopmcnt Agency is administered by a staff selected from the cmployees of the City
and is undcr the overall direction of Mr. Ortcga. Brief resumes of the professional staff of the
Rcdcvclopment Agency are set forth below:
Carlos L. Ortega, Executive Director. Mr. Ortega has served as Executive Director of the
Redcvelopmcnt Agency since 1983. He was also appointed City Manager in August 2000. From 1980 to
2000, Mr. Ortega served as Assistant City Manager, and from 1977 to 1980 as Assistant to the City
Manager. Prior to 1977, hc served as Interim City Manager (one year) and Assistant City
Manager/Finance Director (five years) for the City of Coachella, California. Mr. Ortega received a
Bachelor of Science degree in Economics from University of California, Riverside, and has completed
graduatc studies in Public Administration and Management at University of California, Rivcrsidc and
University of Rcdlands.
Justii: MeCarthy, Assistant Ciry Manager for Redevelopment. Mr. McCarthy has served as
Assistant City Manager for Redevelopment since November 2001. From 1983 to 1987, Mr. McCarthy
was an analyst in the City of Long Beach implementing redevelopment projects in the downtown central
business district, the port industrial area and Long Beach Airport. From 1987 to 1988 he served as the
Redevclopment Manager for the San Diego Southeast Economic Development Corporation managing
industrial and commercial projects and from 1988 to 2001 he served as the Deputy Executive Director
and Community Development Director for the City of Commerce. Mr. McCarihy received a Bachelors
dcgree in Political Science and a Masters degree in Public Administration from California State
Univcrsity Long Beach.
Arla K. Scott, Senior Financia! Analyst jor Redevelopment. Ms. Scott was appointcd as Senior
Financial Analyst for Redevelopment in January 2006 and is responsible for the review, analysis and
budget monitoring of the finances and bond issucs of the Redevelopment Agency. From 1990 to 2006,
she was employed by JPMorgan Chase Bank, where she began in the Trust Operations Department and
was later promoted to the Treasury and Security Services Dcpartment as a Relationship Manager. In that
position she worked in the Municipal and Corporate Debt Department, where shc worked with various
municipalities and corporations serving as a bond trustee. She was later promoted to thc Trust
Compliance Department where she was responsible for reviewing documents, laws and regulations in
order to mitigate risk. Ms. Scoit received a Bachelor of Business Administration degree in Finance from
Univcrsity of Houston.
Slreila R. Gilligan, Assistant City Manager for Community Services. Ms. Gilligan has served as
the Assistant City Manager for Community Services since 2000. She is responsible for the areas of
Administration (including grants and franchise agreements), Human Resources, City Clcrk, Civic Arts,
Marketing and Promotion, Public Information, the Visitor's Information Center, and special events for the
City. Prior to appointment to her current position, Ms. Gilligan served as the Director of Community
Affairs while also serving as the City Clerk. Ms. Gilligan served as City Clcrk from 1976 to June, 2001.
Pau! S. Gibson, Treasurer/Finance Director. Mr. Gibson has served as Trcasurer/Financc
Director of the City since 1988 where he is responsible for preparation of the City budgets and annual
financial reports, administration of debt, investment of surplus cash, collection of business license fees,
payroll, purchasing, accounts payable and oversight of information systems. He has also served as the
Treasurer of the Redcvelopment Agency since 1988. Mr. Gibson has been employed by the City since
June 1985, when he was hired as the Accounting Supervisor. Prior to joining the City, he served from
1980 to 1985 as the Accountant-Auditor for the Imperial County Auditor-Controller's office. Mr. Gibson
holds a Bachelor of Science degree in Accounting from San Diego State University.
06035\pos-3
67
David L. Yrigoyen, Director of Redevelopment and Housing. Mr. Yrigoyen was appointcd as
Dircctor of Rcdevelopment and Housing and is responsible for all housing and redevelopment activities
within the City. He has becn employed with the City since 1985 when he scrved as the Senior
Administrativc Assistant to the Redevelopment Agency and then was promoted to Redevelopmcnt
Manager. From 1982 to 1985, Mr. Yrigoyen worked with the City of Coachella, as the Economic
Dcvelopment Coordinator. Mr. Yrigoyen received a Bachelor of Arts degree in Political Science from
University of California, Berkeley, and a Master of Arts degrce in Management from National University,
San Dicgo.
Lauri Aylaian, Redevelopment Manager. Ms. Aylaian is the Redevelopment Manager for the
Redevelopment Agency, where she has been a staff inember for seven years. Prior to joining thc
Redevelopmcnt Agency, Ms. Aylaian was a Project Manager and Construction Manager for Heery
International for 11 years where she managed design and construction of prisons, schools and commercial
facilities. Prior to that, Ms. Aylaian was a Project Manager, and then the Director of Public Facilities in
Fairbanks, Alaska. Ms. Aylaian received a Bachelor of Science degree, graduating Magna Cum Laude, in
Mechanical Engineering from the University of California at San Diego. She also received a Masters
degree in Psychology from Chapman University.
Ja�:et M. Moore, Huusing Authority Administrator. Ms. Moore has been with the City of Palm
Dcscrt for over 18 years, and for the last two and one- half years has served as Housing Authority
Administrator for thc Redevelopment Agcncy. She is responsible for the administration of thc
Redevelopment Agency's affordable housing portfolio valued at approximately $100 million. Ms. Moore
is also responsible for the housing programs for the Housing Department, including a home improvement
program, first-time homebuyers program, rent subsidy program and resale restrictions on for-sale
properties. Ms. Moore received a Bachelor of Arts degree, with honors, in Busincss Administration from
California State University at San Bernardino.
Rachelle D. Klassen, Secretary. Ms. Klassen has been Secretary of the Redevelopment Agency
and City Clerk since July 1, 2002. She has been employcd by the City since 1995. In 1997, she began
working in City Clerk's Office; initially as the Records Technician, was appointed Deputy City Clerk in
1998, and then City Clerk. She received Certified Municipal Clerk status from the International Institute
of Municipal Clerks in October, 2001. As City Clerk, she also serves as Secretary to Housing Authority
and the Finance Authority, with responsibilitics of preparing and presenting all agendas and minutes for
satne, maintaining all official City/Agency/Authority records, as well as the related duties of the City
elections and being available to the public for information on legislative and administrative actions. Ms.
Klassen holds an Associate in Arts Degrce, with honors, from Waldorf Collcge, Forest City, lowa, with
continuing units obtained at College of the Descrt.
Veronica Tapia, Redevelopment Accountant. Ms. Tapia has becn employed by the City for
more than nine years, and for the last two years has served as the Accountant for the Redevelopment
Agency. Ms. Tapia is responsible for compiling the federal and State mandated reports, the
administration of the outstanding bond issues of the Redevelopment Agency, and the overall accounting
dutics for both the Redevelopmcnt Agency and the Housing Department. Ms. Tapia received a Bachclor
of Scicncc degrce, graduating Summa Cum Laudc, in Business and Managemcnt from the University of
Kedlands and currently is completing graduate studies in Managemcnt at the University of Rcdlands.
Powers
All powcrs of the Redevelopment Agency are vested in its five-member Board. Thcy are charged
with the responsibility of eliminating blight through the process of redevelopmcnt. Generally, this
process culminates when the Redevelopment Agency disposes of land for development by the private
a6oss�r�s-3
68
sector. ln order to accomplish this, the Redevclopmcnt Agcncy has broad authority to acquirc, develop,
administer, sell or lease property, including the right of eminent domain and the authority to issue bonds
and expend their proceeds.
Prior to disposing of land for rcdevelopment, the Redevclopment Agency must completc thc
process of acquiring and assembling the necessary sites, relocating residents and businesses. In addition,
the Redevelopment Agency may demolish deteriorated improvements, undertake environmental
mitigation, grade and prepare sites for purchase, and in connection with any development can cause
strcets, highways and sidewalks to be constructed or reconstructed and public utilitics to be installed.
Rcdevelopment in the State of California is carried out pursuant to the Community
Redcvelopment Law (Scction 33000 et seg. of the Health and Safety Code). Section 33020 of thc
Redevelopment Law dcfines redevelopment as the planning, development, replanning, redcsign,
clearance, reconstruction or rehabilitation, or any combination of these, of all or part of a survey area and
the provision of such residential, commercial, industrial, public or other structures or spaces as may be
appropriate or necessary in the interest of the general welfare, including recreational and other facilities
incidental or appurtenant to them.
The Redevelopment Agency may, out of the funds available to it for such purposes, pay for all or
part of the value of the land and the cost of buildings, facilities, structures or other improvements to be
publicly owned and operated to the cxtent that such improvcments are of benefit to the project area and no
other reasonable mcans of financing is available.
The Redevelopment Agency must sell or lease remaining property within a project area for
redevelopment by others in strict conformity with the redevelopment plan, and may specify a period
within which such rcdevelopment must begin and be completed. In accordance with these criteria, the
Redcvelopmcnt Agency has adopted a Redcvclopment Plan, as amended, in thc Project Arcas that
authorizes the usc of the redevelopment process and procedures.
Redevelopment Agency Finances
Investment Po[icy. The investmcnt of funds of the City, the Financing Authority and thc
Redevelopment Agency, including those funds established under the 2007 Indenture, are made in
accordance with the Palm Desert Statement of Investment Policy, as amended, prepared by the City
Treasurer, the City Manager and the Palm Desert Audit, Investment and Finance Committee and
approved by the City Council (the "lnvestment Policy") and Section 53600 et seq. of Government Code
of the State of California (the "Govermnent Code"). The Government Code also dirccts the City to
present an annual investment policy for confirmation to the City Council. The Investment Policy is
subject to revision at any time, and is reviewed periodically to ensure compliance with the stated
objectives of safety, liquidity, yield and current laws and financial trends.
The Investment Policy sets forth the following primary objectives, in order of priority:
1. Safety - preservation of principal by mitigating capital losses due to issuer default, broker
default, or market erosion.
2. Liquidity - funds are to be invcsted in liquid, short-term securities to mcct disburscmcnt
requirements, and since all cash requirements cannot be anticipated, the portfolios should
consist largely of relatively low-duration securities with active secondary markets.
06035\pos-3
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Yield - generation of a favorable return on investment without compromise of the first
two objectives.
Authorized lnvestments. The Ciry Treasurer is empowered by State law to invest in certain
"cligiblc sccuritics" as defined in thc California Government Code Scctions 53600 et sey. The
Investment Policy is more conservative than permitted under State law in that additional restrictions,
including but limited to, limits on thc maximum maturity of investments, the percentages that can bc
invested with any one issuer, collateralization and rating criteria, are incorporated. Authorized
investments include, in accordance with California Government Code Section 16429.1, investments in the
State Local Agency Investment Fund ("LAIF"). The City does not enter into reverse repurchase
agreements. Authorization for specific instruments within these general categories, include the following:
U.S. Treasurics, Fedcral Agcncy or United States Governmcnt-Sponsored Enterprises, Bankers
Acceptances, Commercial Paper, Negotiable Certifcates of Deposit, Time Certificates of Deposit;
Rcpurchase Agreemcnts, Mcdium-term Notes/Bonds, Money Market Funds, LAIF, Structured Notcs,
Asset-Backcd Commercial Paper and Local Government lnvestment Pools.
Prohibited ]nvestments. No investment can be made in any financial instrument that is not
authorized by the Investment Policy. Prohibited investments include, but are not limited to, equity
securities, bond mutual funds, reverse repurchase agreements and derivative contracts (forwards, futures
and options). The purchase of derivative securities is prohibited, unless specifically authorized by the
Invcstment Policy, and investment officers are prohibited from en�aging in securities lending, short
selling, or other hedging strategies.
Deleeation of Authoritv and Reaortin�. Management responsibility for the investment program
is dclegatcd to the City Treasurer. The City Trcasurer is responsible for establishing written proccdures
for the operation of the investment program consistent with the investment policy, all transactions
undcrtaken, and establishing a system of controls to rcgulate the activities of subordinate officials.
Thc City Treasurer is requircd to prepare and submit to the Finance Committee and thc City
Council monthly investment reports in accordance with Government Accounting Standards Board
("GASB") Statement No. 40, Deposit and Investment Risk Disclosures to address common deposit and
invcstment risks related to credit risk, concentration of credit risk, interest rate risk and foreign currency
risk.
Adontion of Investmcnt Policv. The City's investmcnt policy is adopted annually by a resolution
of the City Council. Any modifications made thereto must be approved by the City Council. The most
recent Investment Policy was approved by the City Council on November 16, 2006.
A copy of the Investment Policy is available upon written request from the Senior Financial
Analyst of thc Redevelopment Agency, 73-510 Fred Waring Drive, Palm Desert, California 92260-2578;
tcicphone 760-346-0611.
Financial Statemenls. The accounts of the Redevelopment Agency are organized on the basis of
funds and account groups. The operations of each fund are accounted for with a separate set of self-
balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures. The
audited financial statements of the Redevelopment Agency for the Fiscal Ycar ending June 30, 2006 are
set forth in APPENDIX B. The auditor has consented to the inclusion of its report in this Official
Statement. Sec also "FINANCIAL STATEMENTS."
06035\pos-3
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Retirement Plan. Substantially all full-time City employees, including cmployees of the
Redevclopment Agency, are eligible to participate in retirement benefit plans through a contract with the
California Public Employees' Retirement System ("PERS"), a multiple-employer public sector employee
dcfined bencfit pension plan. PERS providcs retirement and disability benefits, annual cost-of-living
adjustments and death benefits to PERS members and beneficiaries. PERS acts as a common invcstment
and administrative agcnt for participating public entities within the State. PERS is a contributory plan
deriving funds from employee contributions as well as from employer contributions and earnings from
investmcnts.
PERS maintains a Miscellaneous Plan (the "PERS Plan") on behalf of the City. The City
contributes to PERS amounts equal to the recommended rates for the PERS Plan multiplied by the payroll
of those cunent employees of the City, including the Redevelopment Agency, who are eligible under
PERS. There are 19 positions in the Redevelopment Agency eligible to participate in PERS.
For information conccrning PERS, including information relating to its financial position and
investments contact PERS directly at Ca1PERS, Lincoln Plaza, 400 P Street, Sacramento, California
95814, tclephonc: 888-225-7377.
Information regarding the contributions made by the City to PERS for the PERS Plan is available
in thc City's Comprehensive Annual Financial Report copies of which are available upon request from
the City of Palm Desert Finance Department, 73-510 Fred Waring Drive, Palm Desert, California 92260-
2578; tcicphonc: 760-346-06] l.
Other Post Employment Benefrts. The City offcrs the PERS Hcalth Care Pro�-am to its retirees.
The City contributes S48 per month on behalf of each retiree eligible for PERS and makes an additional
contribution towards certain rctirees' premiums under a Rctiree Servicc Stipend program. If the retiree
retires from both the City and PERS simultaneously, has attained thc age of 50 and completed a minimum
of 10 years of service with the City and satisfies any other requirements specified in such program
hcalthcare coverage continues for eligible retirees, spouses and/or eligible dependents for the lifetime of
the retirec upon satisfaction of the above-referenced critcria. The Retiree Service Stipend is not
actuarially funded and the assets are accounted for in an agency fund. An actuarial valuation completed
for the Retiree Service Stipend program as of July 1, 2002 indicated that the amount of the actuarial
liability to current and future liabilities for the City to be �9,761,065.
TAX MATTERS
In the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, under
cxisting law, interest on the Series 2007 Bonds is excluded from gross income for federal income tax
purposcs under Scction 103 of the Internal Revenue Code of 1986, as amendcd (the "Code"), and is not
an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and
corporations. In addition, Bond Counsel is of the opinion that, under existing law, the excess of Accreted
Value of the Capital Appreciation Bonds over the original Principal Amount thereof, to the extent that
such excess represents interest properly allocated to the Owner of such Capital Appreciation Bonds (the
"Excess Accreted Value"), is excluded from gross income for federal income tax purposes under the
Codc, and is not an item of tax preferencc 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
consequenccs regarding the Series 2007 Bonds.
06035\pos-3
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Thc opinion on federal tax matters will bc bascd on and will assume the accuracy of certain
representations and certifications, and continuing compliance with certain covenants, of the Agency and
the Authority that are intcnded to assure the foregoing, including that the Series 2007 Bonds are and will
rcmain obligations, the interest on which is cxcluded from gross income for federal income tax purposcs.
Bond Counscl 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 thcsc qualifications and conditions by thc Authority or thc Agcncy may causc thc
interest on the Series 2007 Bonds to be included in gross income for federal income tax purposes
retroactively to the date of issuance of the Series 2007 Bonds. The Authority and the Agency have
covenanted to take thc actions required of them for thc interest on the Series 2007 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 Series 2007 Bonds earned by certain corporations
may be subjcct to a corporate alternative minimum tax. In addition, intcrest on the Serics 2007 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 fcderal 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 Series 2007 Bonds. Bond Counsel will express no opinion regarding
thosc conscqucnces.
Any excess of the stated redemption price at maturity of the Series 2007 Bonds over the initial
offering price to thc public of the Serics 2007 Bonds set forth on the insidc cover of this Official
Statement is "original issue discount" Such original issue discount accruing on a Series 2007 Bond is
trcatcd as intcrest excluded from the gross income of the owner thereof for fedcral income tax purposes
and exempt from California personal income tax. Original issue discount on any Series 2007 Bond
purchased at such initial offering price and pursuant to such initial offering will accrue on a semiannual
basis over the term of the Series 2007 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
Series 2007 Bond accruing during each period is added to the adjusted basis of such Series 2007 Bond to
determine taxable gain upon disposition (including sale, redemption or payment on maturity) of such
Scries 2007 Bond. The Code includes certain provisions relating to the accrual of original issue discount
in the case of purchasers of the Series 2007 Bonds who purchase the Series 2007 Bonds other than at thc
initial offcring pricc and pursuant to thc initial offcring. Any person considering purchasing a Scrics
2007 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 purchasc 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 corporatc altcrativc minimum taxcs.
06035\pos-3
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If the Series 2007 Bonds were offered and sold to the public at a pricc in excess of their statcd
redemption price (the principal amount) at maturity, that excess constitutes "premium." For federal
incomc tax purposes, that premium is amortized over the period to maturity of the Series 2007 Bonds,
based on the yield to maturity of the Series 2007 Bonds, compounded semiannually. No portion of that
prcmium is dcductible by the owner of a Series 2007 Bond. For purposes of determining the owner's
gain or loss on the sale, redemption (including redemption at maturity) or other disposition of a Series
2007 Bond, the owner's tax basis in the Series 2007 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 Series 2007 Bond for an amount equal to or less than
the amount paid by the owner for that Series 2007 Bond. A purchaser of a Series 2007 Bond in the initial
public offering at the price for that Series 2007 Bond stated on the inside covcr of this Official Statement
who holds that Serics 2007 Bond to maturity will realize no gain or loss upon the retirement of that Series
2007 Bond. Owners of thc Scries 2007 Bonds should consult their own tax adviscrs as to thc
determination for federal income tax purposes of the amount of premium properly accruable in any period
with respcct to the Scrics 2007 Bonds and as to other federal tax consequences and the treatment of
premium for purposcs of state and local taxes on, or bascd on, income.
Purchasers of the Series 2007 Bonds at other than their original issuance at the respective priccs
indicated on the inside cover of this Official Statement should consult their own tax advisers regarding
other tax considerations such as the consequences of market discount or premium.
In thc further opinion of Bond Counsel, interest on the Series 2007 Bonds is exempt from
personal income taxation imposed by the State of California.
A copy of the proposed form of Bond Counsel's final approving opinions with respect to the
Scrics 2007 Bonds is attached hcrcto as APPENDIx E.
APPROVAL OF LEGAL PROCEEDINGS
Certain legal matters incident to the authorization, issuance and sale of the Series 2007 Bonds are
subject to the approval of Richards, Watson & Gershon, A Professional Corporation, Los Angeles,
California, Bond Counsel. A copy of the proposed form of Bond Counsel's opinion is contained in
APPENDIX E to this Official Statement, and the final opinion will be made available to the owners of thc
Series 2007 Bonds at the time of dclivery of the Scries 2007 Bonds. Certain legal matters will be passed
upon for the Financing Authority and the Redevelopment Agency by their General Counsel, Richards,
Watson & Gcrshon, A Professional Corporation, for the Financing Authority and the Redevelopment
Agency by Lofton & Jennings, San Francisco, California, Disclosure Counsel.
Bond Counsel will also deliver a supplemental opinion as to the accuracy in all material respects
of the descriptions contained in this Official Statement of the Bonds, and Bond Counsel's federal and
Statc tax opinions. Except as expressly described in said opinion, Bond Counsel is not passing upon and
undertakes no responsibility for the accuracy, completeness or fairness of the information contained in
this Official Statemcnt.
Bond Counsel and Disclosure Counscl will each receive compensation from the Redevelopmcnt
Agency that is contingent upon the sale and delivery of the Series 2007 Bonds.
UGO]5\pos-3
73
Gencral
ABSENCE OF MATERIAL LITIGATION
There is no litigation pcnding or known to thc Financing Authority or thc Redevclopment Agcncy
concerning the validity of the 2007 Indenture or the Series 2007 Bonds or the issuance and delivery
thereof, the existence of the Financing Authority or the Redevelopment Agency, the title of the officers
thcrcof who shall execute the Series 2007 Bonds to their respective offices, the pledge of Revenues to the
paymcnt of the Series 2007 Bonds, or the pledge of Pledged Tax Revenues to the payment of thc Series
2007 Loan.
Other Mattcrs
In the regular course of the business, the Financing Authority and the Rcdevelopmcnt Agency are
each parties to a variety of pending and threatened lawsuits and administrative proceedings, in addition to
those specifically discussed herein. Neither the Financing Authority nor the Redevelopment Agency
bclieves that any such lawsuits or proceedings will havc a material adverse effect on the operations or
financial condition of the Financing Authority and the Redevelopment Agency, respectively.
FINANCIAL ADVISOR
Del Rio Advisors, LLC, Modesto, California, has served as Financial Advisor to the Financing
Authority and the Redcvelopment Agency with respect to the sale of the Series 2007 Bonds. The
Financial Advisor has assisted the Financing Authority and the Redevelopment Agency in the review of
this Official Statement and in other matters relating to the planning, structuring, execution and delivery of
the Series 2007 Bonds. The Financial Advisor has not independently verified any of thc data contained
hcrcin or conducted a detailed investigation of the affairs of the Financing Authoriry and the
Redevelopment Agency to detertnine the accuracy or completeness of this Official Statement. Due to
their limited participation, thc Financial Advisor assumes no responsibility for the accuracy or
completeness of any of the information contained herein.
The Financial Advisor will receive compensation from the Redevelopment Agency contingent
upon the sale and delivery of the Series 2007 Bonds.
CONTINUING DISCLOSURE
The Rcdevelopment Agency has covenanted in the Continuing Disclosure Agreement datcd
January _, 2007, by and among the Redevelopment Agency, the Trustee, and MuniFinancial Inc., as
Dissemination Agent for the benefit of the holders and beneficial owners of the Series 2007 Bonds to
provide certain financial information and operating data relating to the Redevelopment Agency cach year
by not latcr than the date which is six months following the end of the Fiscal Year, commencing with the
report for the 2006-07 Fiscal Year (the "Annual Report"), and to provide notices of the occurrence of
certain enumerated events, if material. The Annual Report and notices of material events will be filed by
the "I�rustee as Dissemination Agent with each nationally Recognized Municipal Securities Information
Repository and with any then existing State Repository, if any. Currently, there is no State Repository.
The covenants set forth in the Continuing Disclosure Agreement have been made by the Redevelopment
Agency in order to assist the Underwriters in complying with Securities and Exchange Commission Rule
15c2-12(b)(5). The specific nature of the information to be contained in the Annual Report and the
notices of material events is set forth in APPENDIX F—"FORM OF CONTINUING DISCLOSURE AGREEMENT."
06035\pos-3
74
The Redevelopment Agency has never failed to comply in all matcrial respects with any prcvious
undcrtakings with regard to said Rule to provide annual reports or notices of matcrial events.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
Upon delivery of thc Series 2007 Bonds, Grant Thornton LLP, Minneapolis, Minnesota (the
"Verification Agent"), will delivcr a report stating that it has reviewed and confirmed the mathematical
accuracy of certain computations relating to the adequacy of the funds andlor securities deposited in the
Escrow Securities and the interest thereon, if any, to pay, when due, the redemption price and interest on
the Prior Bonds on the spccified payment or redemption date thereof.
UNDERWRITING
Pursuant to the terms of a Bond Purchase Agreement dated January _, 2007 (the "Purchase
Agreement"), among the Financing Authority, the Redevelopment Agency and Hutchinson, Shockey,
Erley & Co. (the "Underwriter"), the Underwriter will purchase all of the Series 2007 Bonds, if any are
purchased, however, the obligation of the Underwriter to make such purchase is subject to certain terms
and conditions set forth in the Purchase Agreement. The Underwriter purchased the Series 2007 Bonds,
at a pricc of $ (representing the principal amount of the Series 2007 Bonds less an
Underwriter's discount in the amount of $ and less a net original issue discount in the
amount of � ).
The public offering prices of the Series 2007 Bonds may be changed from time to time by the
Underwriter. The Underwriter may offer and sell Serics 2007 Bonds to certain dealers and others at a
price lower than the offering price stated on the inside cover page hereof.
RATINGS '
Moody's and S&P have assigned ratings of " " and "_," respectively, to the Series 2007
Bonds with the understanding that upon delivery of the Series 2007 Bonds the Policy will be issued by
thc Bond Insurer. See "FINANCIAL GUARANTY 1NSURANCE" and APPENDIX H—"SPECIMEN FINANCIAL
GUARANTY 1NSURANCE POLICY." Moody's and S&P have also assigned underlying ratings to the Scries
2007 Bonds of "_" and " ," respectively. A rating reflects only the view of the agency giving such
rating and is not a rccommendation to buy, sell or hold the Series 2007 Bonds. An explanation of the
significance of the rating may be obtained from Moody's Investors Service ("Moody's"), 99 Church
Street, New York, New York ] 0007 and Standard & Poor's Ratings Services, a division of the McGraw
Hill Companies ("S&P"), 55 Water Strect, New York, New York 10041. There is no assurance that such
ratings will continue for any given period of timc or that they will not be reduced or withdrawn entirely
by Moody's or S&P, if in their individual judgment circumstances so warrant. The Redevelopment
Agcncy has not undertaken any responsibility to oppose any such proposed revision or withdrawal. Any
such revision or withdrawal of a rating may havc an advcrse effect on the markctability or market price of
thc Serics 2007 Bonds ratcd by such agcncy.
06035\pos-3
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FINANCIAL STATEMENTS
The audited financial statements of the Redevelopment Agency for Fiscal Year 2005-06, prepared
by Lance, Soll and Lunghard LLP, indepcndent ccrtifed public accountants, in accordance with
Govcrnmental Accounting Standards Board guidelines, are included as APPENDIX B attached hereto.
Lancc, Soll and Lunghard LLP has consented to the inclusion of its report in APPeNDIX B, and has not
undertaken to update its report or take any action intended or likcly to clicit information concerning the
accuracy, completeness or fairness of statements made in this Official Statement and no opinion is
cxpresscd by Lance, Soll and Lunghard LLP with respect to any event subsequent to thc date of its report.
MISCELLANEOUS
All of the preccding summaries of the Series 2007 Bonds, the 2007 Indenture, the 2007 Loan
Agreemcnt, the Redevelopment Law, the Redevclopment Plan, the Project Areas, other applicablc
lcgislation, agreemcnts and other documents are made subject to the provisions of the Series 2007 Bonds
and such documents, respectively, and do not purport to be complete statements of any or all of such
provisions. Reference is hcreby made to such documents on file with the Redevelopment Agency for
further information in connection therewith.
Any statements made in this Official Statement involving matters of opinion or of estimates,
whcther or not expressly stated, are set forth as such and not as representations of fact, and no
rcpresentation is made that any of the estimates will be realized.
Thc exccution and delivery of this Official Statement by the Chief Administrative Officer of the
Financing Authority has been duly authorized by the Financing Authority.
PALM DESERT FINANCING AUTHORITY
:
Carlos L. Ortega
Chief Administrative Officer
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APPENDIX A
REPORT OF THE FISCAL CONSULTANT
06035�pos-3 /�- j
APPENDIX B
REDEVELOPMENT AGENCY AUDITED FINANCIAL STATEMENTS
FOR FISCAL YEAR ENDED JUNE 30, 2006
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��
APPENDIX C
GENERAL INFORMATION CONCERNING THE CITY OF PALM DESERT
The following information concerning the Ciry of Palm Desert, the County of Riverside and
sau�rounding ureas is included only for the purpose of supplying general information regarding the
communiry.
Ovcrview
The City of Palm Descrt (the "City"), incorporated in November 26, 1973 as a general law city,
became a charter city through the adoption of Ordinance 858 by the City Council on January 8, 1998. The
City is located in the Coachella Valley and is approximately mid-way 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 occupies an area of approximately 26 square miles. Elevation of the City is 243 fcct and
the mean temperature is 73.1 degrees. Except in summer, the weather is mild and annual avcrage rainfall is
3.38 inches. According to the State Department of Finance, the City population as of January 1, 2006 was
approximately 49,539, an incrcase of approximately 19.5% since 2000, attributable in part to icrritorial
annexation.
Govcrnment
1'he City Council is comprised of five members, elected at large for four-year stabgered terms
every two years. The general municipal election is conducted in November of even-numbered years,
consolidated with the Statewide Gencral Election and councilmembcrs are swom in and take office at the
first meeting in December following each election. There is currently one vacancy on the City Council.
The City Council selects one of its members to serve as Mayor for a one-year term and appoints a
City Manager to conduct the day to day business of the City and the City Clerk. The City Attorney is
appointcd by City Council. The City operates as"Contract City" utilizing, primarily, agreements with
other governmental entities, private companies and individuals to provide services. Contracted services
include police and fire protection provided through the County, animal control, health services, legal
services and landscape maintenance.
The City Council also serves as the governing board of the Financing Authority, the
Redevelopment Agency, the Housing Authority and the Parking Authority and the City Manger serves as
the Chief Administrative Officer of the Financing Authority and the Executive Director of the
Redevclopment Agency, the Housing Authority and the Parking Authority. The City Attorney and the
City Clerk also serve as the General Counsel and Secretary, respectively, of the Redevelopment Agency
and these Authorities. The cuncnt members of the City Council and key administrative personnel of the
City arc listed in Table C-1 and Table C-2, respcctively:
06035\pos-3 C-1
TABLE C-1
CITY OF PALM DESERT
City Council Members
Name Officc
Jim Fcrguson Mayor
Richard S. Kelly Mayor Pro Tem
Jean M. Benson Councilmember
Robert A. Spiegel Councilmember
Vacant Councilmember
�
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Term Expires
Novcmber 2006���
November 2008
November 2006���
Novcmber 2008
November 2008�2�
Occupation
Attorney
Retired GTE Executive
Retired Travel Industry Professional
Retired Retail Industry Executive
The term of this mcmber of the Pinancing Authority and City Council expired in November 2006. The person clected at the November 2006
StatewiJe General Glection to fill this position will be sworn in and take ofiice December 14, 2006.
"Ihis vacancy will be filled at the November 2006 Statewide General Blection. The person elected to fill this �msition will be sworn in and take
o�ce on December 14, 2006.
TABLE C-2
CITY OF PALM DE5ERT
Key Administrative Personnel
Namc
Carlos L. Ortega
Justin McCarthy
Paul S. Gibson
David L. Yrigoyen
Rachellc D. Klasscn
Population
Position
City Manager
Assistant City Manager
Treasurer/Finance Director
Director of Redevelopment and Housing
City Clcrk
Between 2000 and 2006, the City's population increased by a total of 8,089 or approximatcly
19.5%. In addition to permanent residents, the City has approximately 15, 000 seasonal residential residcnts
who live three to six months in the City, primarily during the winter months. Table C-3 illustrates the
population of the City, the County and the State for 2000 and 2002 through 2006.
Table C-3
CITY OF PALM DESERT AND RIVER5IDE COUNTY AND STATE OF CALIFORNIA
POPULATION
Year
(January Il
2000
2002
2003
2004
2005
2006
Citv of Palm Descrt
41,450
42,900
4�1,300
45,610
49,595
49,539
Riverside Countv
1,557,800
1,645,300
1,719,000
1,807,858
1,888,311
1,953,330
State of California
34,207,000
35,037,000
35,591,000
36,271,091
36,728,196
37,172,015
Sources: United S�u�es Department nf Commerce, Bureuu of the Cen.rus for 2000 und State of Culrfornru Depurlment of
Frnunce foi• remurning years.
06035\pos-3 C-2,
Labor Forcc and Employment
"I'he main sourccs of revcnue in thc City arc derivcd from tourism and sales tax. F-Iistorically, the
unemploymcnt rate in the City has been lower than that for the County and the State.
Tablc C-4 table represents the labor pattcrns in the City, the County, the State, and the United States
from 2001 through 2005.
Tablc C-4
CITY OF PALM DESERT, RIVERSIDE COUNTY,
STATE OF CALIFORNIA AND UNITED STATES
CIVILIAN LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT
2001through 2005
Ycar and Arca
2001
City
County
State
United States
2002
City
County
State
United States
2003
C ity
County
Statc
Unitcd States
2004
City
County
Statc
Unitcd Statcs
Labor Force Emplovment Unemnlovment
20,000
711,200
17,150,100
141,815,000
19,400
672,500
16,217,500
135,073,000
600
38,700
932,600
6,742,000
21,100
749,800
17,326,900
144,863,000
21,900
781,600
17,414,000
146,510,000
22,800
812,000
17,552,300
147,401,000
20,300
702,300
16,165,100
136,485,000
21,100
732,300
16,223,500
137,736,000
22,100
764,900
16,459,900
139,252,000
800
47,500
1,161,800
8,378,000
800
49,300
1,190,500
8,774,000
700
47, l 00
1,092,400
8,149,000
Unemployment
Rate
3.1%
5.4
5.4
4.8
3.6
6.3
6.7
5.8
3.6
6.3
6.8
6.0
3.3
5.8
6.2
5.5
2005
City 24,000 23,300 700 2.8
County 849,600 806,700 42,900 5.1
Statc 17,695,600 16,746,900 948,700 5.4
Unitcd Statcs 149,321,000 141,730,000 7,591,000 5.1
Sources: Cu/ifurnru Stute Enrplo}�ment Developmen� Depur�men� and U.S. Depur�ment ofLabor, Bureuu ofLubor Stutislics.
06035\pos-3 C-3
Table C-5 describcs the largcst employers in the City.
Table C-5
CITY OF PALM DESERT+
LARGEST EMPLOYERS
(As of January 1, 2006)
Company
ProducdScrvice
Number of
Emnlovees
JW Marriott Dcsert Springs Rcsort
Securitas Security Svc USA Inc.
Collegc of the Desert
Marriott's Descrt Spas Villas
Sunshine Landscapc
Desert Valley Industries
Marriott Ownership Resorts lnc.
Sunrise Colony Co.
Foundation For the Retarded
1'ime Warncr Cable
Bighorn Golf Club
Springs At the Fountains
Macy's West
Monierey Palms Health Care
Fountains At thc Carlotta
Indian Ridgc Country Club
Williams Mechanical Inc.
Palm Vallcy Country Club
Koala Tce Printing
Hospitality
Security Services
Education
Hospitality
Landscaping Services
Business Support Services
Hospitality
Golf Course Community
Social Serviccs
Tclecommunications
Golf Resort
Convalesccnt and Nursing Carc
Retail
Hcalthcarc
Convalescent and Nursing Care
Golf Course Community
Plumbing
Golf Course Community
Scrccn Printing
�' Federal and State Government not included.
Source: America's Labor Market Information System (ALMIS).
Commercial Activity
1,300
700
630
500
500
400
300
250
236
220
220
200
200
200
200
200
200
200
200
A sales tax is imposed on retail sale or consumption of personal property. Sales tax
revenues are determined by the total taxable transactions within a jurisdiction and distributed by the State
Board of Equalization to the jurisdiction where the sale took place. Sales taxes collected from merchants
with no permanent place of business (i.e., manufacturers, construction contractors, etc.) are accumulated
to a Countywide or State-wide (out-of-state businesses) pool and distributed to cities and countics in
proportion to thcir collcctions from all salcs taxpayers.
"1'he value and volume of these taxable transactions are dependent on economic
conditions and other factors. Such factors included the level of inflation affecting the price of goods and
services subject to the sales tax, the rate of population growth in the general area, the characteristics of
retail devclopments, such as the relative size of markct service areas, the scnsitivity of the types of
businesses within the City to changes in the economy, and competing retail establishments outside the
City. A deterioration of economic conditions and other factors influencing taxable sales generated in the
City, may reduce the City's sales tax revenues.
06035\pos-3 C-4
Tablc C-6 summarizcs taxable transactions in the City for calendar ycars 2000 through 2004.
"1'ABLE C-6
CITY OF PALM DESERT
Taxable Retail Sales Data
Calendar Years 2000 to 2004
($ in 000's)
RGTAiL STORES
Apparel Stores
General Merchandise
Food Stores
Eating & Drinking Placcs
IIome Furnishings and Appliances
Building Materials and Farm
Implcments
Auto Dealcrs and Auto Supplics
Scrvice Stations
Othcr Retail Stores
TOTAL RGTAIL STORGS
All Other Outlets
TOTAL ALL OUTLETS
' Most recent annual data available.
Source: SJute Bourd ofEqualiza�ion.
Construction Activity
2000 2001
$92,192 S93,792
269,776 272,856
55,817 52,282
153,970 155,911
128,899 125,130
57,865 64,251
8,108 8,825
25,807 22,633
227,591 220,252
1,020,025 1,015,932
197,961 195.137
2002 2003
S97,924 $108,829
278,583 307,186
51,738 52,461
148,228 152,508
129,623 135,694
54,111 56,180
6,904 8,211
23,930 39,146
228,286 243,474
1,019,327 1,103,689
190,058 193,041
2004r
�,132,831
340,277
47,455
167,315
155,921
68,737
5,862
45,585
264,129
1,228,112
205,184
$1,217,986 $1,211,069 �1,209,385 $1,296,730 S1,433,296
ln Fiscal Year 2004-05, the City issued construction permits valued in excess of S170 million.
This total amount, approxiinately 27.5% consisted of new single family construction and approximately
] 0.3% consisted of new multifamily construction. A fivc-year history of building permits and valuation
appcars in Table C-7.
Table C-7
CITY OF PALM DESERT
BUILDING PERMITS AND VALUATIONS 2001-2005
Rcsidential
Number of Units
Ycar Sins;le Family Multifamilv
2001 255 411
2002 221 310
2003 237 101
2004 325 111
2005 100 135
Valuation
($ in 000's)t
$120,073.2
100,486.0
8b,387.6
103,738.2
78,130.9
t Includes value of individual units, alterations and additions.
Source: Construc�ion Induslry Reseurch Baurd, Burldrng Permit Survey.
Nonresidential
Valuation
($ in 000's)r
S36,319.0
41,413.7
20,123.0
43, ] 12.1
42,535.4
"I'otal
S 156,392.0
141,899.7
106,510.6
146,850.3
170,663.3
0G035\pos-3 C-$
Effectivc Buying Income
"Effectivc buying income" ("EBI") is a classification developed exclusivcly by Sales &
Marketing Management magazine to distinguish it from other sources reporting income statistics. EBI is
defincd as "money income" less personal tax and nontax payments - a number often referred to as
"disposable" or "after-tax" income. Money income is the aggregate of wages and salaries, net farm and
nonfann self-employment income, interest, dividends, net rental and royalty income, 5ocial Security and
railroad retirement income, other rctirement and disability income, public assistance income,
unemployment compensation, Veterans Administration payments, alimony and child support, military
family allotments, net winnings from gambling and other periodic income. Money income does not
include money received from the sale of property (unless the recipient is engaged in the business of
selling property); the value of "in-kind" incomc such as food stamps, public housing subsidies, medical
care, employer contributions for persons, etc.; withdrawal of bank deposits; money borrowed; tax refunds;
exchange of money betwecn relatives living in the same household; gifts and lump-sum inheritances,
insurance payments, and other types of lump-sum receipts. EBI is computed by deducting from money
income all personal income taxes (federal, state and local), personal contributions to social insurance
(Social Security and federal retirement payroll deductions), and taxes on owner-occupied nonbusiness
rcal estatc.
The total EBI for the City, as reportcd by Sales & Marketing Management in its 2005
Survey oJBuying Power, was $1,295,785 and the median houschold EBI was $42,769. Thc 2005 City
median household EBI of $42,769 compares that of �,33,357 for the City of Palm Springs; S39,287 for the
City of Ontario; �S1,803 for the City of Corona; S53,205 for the City of Temecula; and $39,414 for the
City of Los Angcles.
(REMAINDER OF THIS PAGE 1NTENTIONALLY LEFT BLANK)
06035\pos-3 C-()
Tablc C-8 presents the latcst available total effective buying income and median household
cf'fectivc buying income for thc City, the County, thc State and thc nation.
Table C-8
CITY OF PALM DESERT, RIVERSIDE COUNTY,
STATE OF CALIFORNIA AND UNITED STATES
EFFECTIVE BUYING INCOME
Ycar
and Area
2000
City
County
State
United Statcs
2U01
City
County
State
United States
2002
City
County
Statc
Unitcd Statcs
2003
City
County
Statc
Unitcd States
2004
City
County
State
United Statcs
Total Effective
Buying lncome
($ in 000's)
S 1,109,327
25,144,120
652,190,282
5,230,824,904
1,008,568
23,617,301
650,521,407
5,303,481,498
1,184,128
25,180,040
647,879,427
5,340,682,818
1,238,323
27,623,743
674,721,020
5,466,880,008
1,295,785
29,468,208
705,108,410
5,692,909,567
Snt�rces: Sales & Marketing Management, 2001 through 2005 Surveys of Buying Po�ver.
Utilities
Median Household
Effective
Buvins Income
$46,046
39,293
44,464
39,129
37,975
37,480
43,532
38,365
42,299
38,691
42,484
38,035
41,699
39,321
42,924
38,201
42,769
40,275
43,915
39,324
Water, sewagc treatment and wastewater disposal are provided by the Coachella Valley Water
District. Southern Califomia Gas Company supplies natural gas to the City and electric power is
provided by the Southcrn California Edison Company. Telephone service is available through Verizon.
Cable television service is provided by Time Warncr.
06035\pos-3 C-%
Transportation
Intcr-City transportation is provided by Greyhound Bus which provides scrvicc from its
connection points in the City to its lines outside of the City in addition to the community owned and
operated Sunline Bus System which provides service throughout the entire Coachella Valley. Intra-City
transportation is providcd 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.
Shipping is provided by nu►nerous truck carriers which have overnight service to Los Angeles,
San Francisco, San Diego and Phoenix. Rail transportation is provided by thc Southern Pacific Railroad
located in Indio, 10 miles cast of the City, and by Amtrak, which has two stations located in Coachella
Vallcy.
A full service airport is located in Palm Springs, 12 miles northwest of the City, with
approximately seven carriers providing servicc. The airport has an 8,500 foot runway and gcneral
aviation facilities. There is also a private airport in Bermuda Dunes, eight miles northeast of the City.
Community Scrvices
The City of Palm Desert provides both policc and fire protection through contracts with the
County of Rivcrside.
1'he Riverside County Public Library System provides library services to the City. The City also
operates a 43,000 square fooi public library on the College of the Desert campus which is jointly used by
the public and thc Collcge of the Desert.
Education, Culture and Recreation
Public school education is provided by the Desert Sands Unified School District (the "School
District"). The School District provides preschool through grade 12 education to students living in the
City and the communities of Indian Wells, Indio, La Quinto, Rancho Mirage and Bermuda Dunes. The
School District and operates 17 elementary schools, six middle schools, three comprehensive high
schools, one independent study/alternative school and a continuation high school.
The College of the Desert, the Coachella Vallcy Community Collegc is located in the City. A
satellite campus of California State University, San Bernardino is also located on the College of thc
Desert Campus.
Cultural facilities in thc City include the 1,127 seat McCallum Theater for the Performing Arts
located in Bob Hope Cultural Center, the 1,200 acre Living Desert Zoo and Gardens, and the Art in
Public Places (a museum without walls featuring more than 130 works of art throughout the City).
Recreation programs for residents of the City and other neighboring communities are offered
through the Coachella Valley Recreation and Park District (the "Park District"). The Park District
provides recrcational activities and programs ranging from tiny tots programs, kids clubs and summer day
camp, to dance, health and fitness and music instruction, to the senior games.
The Desert Willow Golf Resort, two championship 18-hole, public golf course, is located on
approximately 540 acres in the northern area of the City. This golf course also features a 33,000 square
foot clubhouse with restaurant, dining and banquet facilities. The City also is home to five other public
golf courses and resorts and 20 privatc or semi-private golf clubs and resorts.
06035\pos-3 C-g
APPENDIX D
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
The following is a brief summury of the provision.s of the Indenture and the Loan Agreement.
Such .summary is not intended to he definitive, and reference is made to the complete documents for the
complete terms thereof.
o�o3s���„-3 D-1
APPENDIX E
FORM OF OPINION OF BOND COUNSEL
06035\pos-3 E` 1
APPENDIX F
F'ORM OF CONTINUING DISCLOSURE AGREEMENT
The Continuing Disclosure Agreement (the "Disclosure Agreement") is executed and delivered
by and among the Palm Desert Redevelopment Agency (the "Redevelopment Agency"), Wells Fargo
Bank, National Association (the "Trustec") and MuniFinancial, Inc. (the "Dissemination Agent") in
conncction with the issuance of the � principal amount of thc Palm Desert Financing
Authority, Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds, Series 2007 (the "Bonds").
The Bonds are being executed and delivered pursuant to an Indenture of Trust dated as of February 1,
2007 (the "Indenturc"), by and between the Palm Dcsert Financing Authority (the "Financing Authority")
and the Trustee. The Financing Authority will loan the proceeds of the Bonds to the Redevelopment
Agency pursuant to a Loan Agreement made and entered into as of February 1, 2007. The
Redevelopment Agency covenants and agrees as follows:
SECTION 1. Purnose of this Disclosure A�reement. 7�his Disclosure Agreement is being
executed and delivered by the Redevelopment Agency for the benefit of the Holders and Beneficial
Owners of the Bonds and in order to assist the Participating Underwriter in complying with Securities and
Exchange Commission ("SEC") Rule 15c2-12(b)(5). The Redevelopment Agency acknowledges that the
Financing Authority has undertaken no responsibility with respect to any reports, notices or disclosures
provided or required under this Disclosure Agrecment, and has no liability to any person, including thc
owncrs of the Bonds, with respect to any reports, notices or disclosures.
SECTION 2. Definitions. In addition to the deiinitions set forth in the Indenture, which apply to
any capitalizcd term used in this Disclosure Agreement unless otherwise defined in this Section, the
following capitalized tcrms shall have the following meanings:
"Annual Report" shall mean any annual report provided by the Rcdevelopmcnt Agency pursuant
to, and as described in, Sections 3 and 4 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.
"Central Post Office" shall mean the Disclosure USA website maintained by the Municipal
Advisory Council of Texas or any successor thereto, or any other organization or method approved by the
staff' or members of the Sccurities and Exchange Commission as an intermediary through which issuers
may, in compliance with the Rule, make filings required by this Continuing Disclosure Certificate.
"Dissemination Agent" shall mean MuniFinancial, Inc., acting in its capacity as Dissemination
Agent hereunder, or any successor Dissemination Agent designated in writing by the Redevelopmcnt
Agency and which has filcd with the Trustee a written acceptance of such designation.
"Fiscal Year" shall mean with respect to the Redevelopment Agency, the period beginning on
July 1 of cach year and ending on the next succeeding June 30, or any twelve month or fifty-two week
period thereafter selected by the Redevclopment Agency with notice of such selection of change in fiscal
year to be provided as set forth herein.
"Holders" shall mean either the registered owners of the Bonds, or, if thc Bonds are registered in
the name of The Depository Trust Company or another recognized depository, any applicable participant
in its dcpository system.
06035\pos-3 F-1
"Listed Event" shall mean any of the cvents listed in Section 5(a) of this Disclosure Agrecment.
"National Rcpository" shall mean any Nationally Rccognized Municipal Securities lnformation
Repository for purposcs of the Rule. A list of thc currcnt National Rcpositories approvcd by the S.E.C.
may be found at the S.E.C. website: http://www.sec.gov/info/municipal/nrmsir.htm.
"Participating Underwriter" shall mean Hutchinson, Shockey, Erley & Co., as the original
undcrwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.
"Repository" shall mean each National Repository and each State Repository, if any.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
"State" shall mean the State of California.
"State Rcpository" shall mean any public or privatc repository or entity designated by the Statc 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 3. Provision of Annual Reports.
(a) The Redevelopment Agency shall, not later than six months after the end of the
Redevelopment Agency's Fiscal Year (which currently is June 30), commencing with the report for the
2005-06 Fiscal Year, provide to each Repository an Annual Report which is consistent with the
rcquircmcnts of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single
document or as separate documents comprising a package, and may include by reference other
information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial
statements of the Redevelopment Agency may be submitted separately from the balance of the Annual
Report. The Rcdevelopment Agency shall provide a written certification with each Annual Report
furnished to the Dissemination Agent and the Trustee to the effect that such Annual Report constitutes the
Annual Report required to be furnished by the Redevelopment Agency hereunder. The Dissemination
Agcnt and the Trustee may conclusively rely upon such certification of the Redevelopment Abency. lf
the Redevelopment Agency's Fiscal Year changes, it shall give notice of such change in the same inanner
as for a Listed Event under Section 5(c).
(b) If the Dissemination Agent is other than the Redevelopmcnt Agency, then not later than
fifteen (15) Business Days prior to said date, the Redevelopment Agency shall provide the Annual Report
to the Dissemination Agent. If the Dissemination Agent is unable to verify that an Annual Report has
bcen provided to thc Repositories by the date required in subsection (a), the Dissemination Agent shall
send a notice to the Municipal Securities Rulemaking Board and the State Repository, if any, in
substantially the form attached as Exhibit A to this Disclosure Agreement.
(c) Thc Disscminati�n Agcnt shall:
(i) determine each year prior to the date for providing the Annual Report the name
and address of cach Rcpository;
(ii) file the Annual Report with each Repository by the date requircd therefor by
Section 3(a) and filc any notice of a listed Event, if requested by the Redevclopment Agency, as soon as
practicable following receipt from the Redevelopment Agency of such notice; and
o�a3s��os-3 F-2
(iii) if the Disscmination Ageni is other than the Rcdevelopment Agency, file a rcport
with the Redevelopment Agency 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.
(d) Notwithstanding any other provision of this Continuing Disclosure Ccrtificate, the City
and the Disscmination Agent reserve the right to make any of the aforementioned filings through thc
Ccntral Post Officc.
SECTION 4. Content of Annual Reports. The Rcdevelopment Agency's Annual Report shall
contain or incorporate by reference the following:
(a) The audited financial statements of the Redevclopment Agency, presented in accordance
with generally accepted accounting principles as promulgated to apply to governmental entities Commission
from time to time. If the auditcd tinancial statements of the Rcdevelopment Agency are not available by the
timc the Annual Report is required to be filed as described above, the Annual Report shall contain unaudited
financial statcments in a format similar to thc financial statements contained in the finat Official Statcment,
and the audited financial statements shall be filed in the same manner as the Annual Report when they
become available.
(b) Unless otherwise provided in the audited financial statements filed on or prior to the
annual filing deadline for Annual Reports provided in Section 3 above, financial information and
operating data with respect to the Redevelopment Agency for the preceding Fiscal Year, substantially
similar to that provided in the following tables and charts in the Official Statement:
(i) The Principal Taxpayers within each Project Area as set forth in Tables 1 C-1,
1G2, 2C, 3C and 4C; and
(ii) The Historical Taxable Values and Tax Increment Verification as set forth in
Tables l D-1, 1 D-2, 2D, 3D and 4D.
Such annual information and operating data described above may be included by specific
reference to other documents, including official statements of debt issues of the Redevelopment Agency
or rclated public entities, which havc been submitted to cach of the Repositories or the Securities and
Exchange Commission; pr�vided, that if the documents included by reference is a final official statemcnt,
it must be available from the Municipal Securities Rulemaking Board; and provided further, that the
Redevelopment Agency shall clearly identify each such other document so included by reference.
SECTION 5. Rcvortin� of Si�nificant Events.
(a) Pursuant to the provisions of this Section 5, the Redevelopment Agency shall give, or
cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if
material:
(i) principal and interest payment delinquencies.
(ii) non-payment related defaults.
(iii) modifications to rights of Bondholders.
(iv) optional, contingent or unscheduled bond calls.
(v) dcfeasanccs.
06035\pos-3 F-3
$onds.
(vi) rating changcs.
(vii) adverse tax opinions or events advcrsely affecting thc tax-exempt status of thc
(viii) unscheduled draws on the Reserve Fund reflecting financial difficulties.
(ix) unscheduled draws on the credit enhancements reflecting financial dif'ficulties.
(x) substitution of the credit or liquidity providers or their failure to perfonn.
(xi) release, substitution or sale of property securing repayment of the Bonds.
(xii) Significant amendmcnts to the land use rcgulations or entitlements of the City of
Palm Desert within the Project Areas which would adverseiy affect development of property
thcrcin.
(b) The Trustee shall, promptly upon obtaining actual knowledge of the occurrence of any of
the Listed Events contact the Disclosure Representative, inform such person of the event, and request that
the Rcdevclopment Agency promptly notify the Dissemination Agcnt in writing whether or not to rcport
thc event pursuant to subsection (� and promptly notify the Trustce in writing whether or not to report the
event to the Owners (unlcss notice to thc Owners is required by the Indenture). For purposcs of this
Disclosure Agreement, "actual knowledge" of the occurrence of such Listed Events shall mean actual
knowledge by thc officer at thc Trust Office of thc Trustee with regular responsibility for the
administration of the Indenture.
(c) Whenever the Redevelopment Agency obtains knowledge of the occurrenee of a Listed
Event, whether because of a notice from the Trustee pursuant to Section 5(b) or otherwise, the
Redevelopment Agency shall as soon as possible dctermine if such event would be material under
applicablc federal securities laws.
(d) If the Redevelopment Agency determines that knowledge of the occurrence of a Listed
Evcnt would be material under applicable federal sccuritics laws, the Redevelopment Agency shall
promptly notify the Dissemination Agent and the Trustee in writing. Such notice shall instruct the
Dissemination Agent to file a notice of such occurrence with the Municipal Securities Rulemaking Board
and thc Statc Repository, if any. Notwithstanding thc foregoing, notice of Listed Events described in
subsections (a)(iv) and (a)(v) need not be given under this subsection any earlier than the notice (if any)
of the underlying cvcnt is given to Holders of affccted Bonds pursuant to the [ndenture.
(c) If in response to a request under subsection (b), the Redevelopment Agency determincs
that the Listed Event is not material, the Redevclopment Agency shall so notify the Dissemination Agent
and the Trustee in writing and instruct the Dissemination Agent and the Trustee not to report the
occut�rencc.
SECTION 6. Termination of Reoortin� Oblieation. The obligations of the Redevelopment
Agency under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or
payment in full of all of the Bonds. If such termination occurs prior to the final maturiry of the Bonds, the
Redevelopment Agency shall give notice of such termination in the same manner as for a Listed Event
undcr Section 5(c).
06035\pos-3 F-4
SECTION 7. Dissemination A�ent. The Redevelopment Agency may, from time to time,
appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosurc
Agrecment, and may dischargc any such Dissemination Agent, with or without appointing a succcssor
Disscmination Agent. The Dissemination Agent shall not be responsible in any manner for the content of
any notice or report prepared by the Rcdevclopment Agency pursuant to this Disclosurc Agrecment.
The initial Dissemination Agent shall be the MuniFinancial, lnc.
Thc Dissemination Agent may resign its duties hereunder at any time upon written noticc to thc
Redcvelopment Agency.
SECTION 8. Amcndment. Notwithstanding any other provision of this Disclosure Agrecment,
thc parities may amcnd this Disclosure Agreement (and thc Trustee and the Dissemination Agcnt shall
agrec to any amcndment so rcquested by the Redcvelopment Agency providcd that neither the Trustec nor
thc Dissemination Agent shall bc obligatcd to enter into any such amendment that modifies or increases
its duties or obligations hereunder) only if:
(a) the amendment is made in connection with a change in circumstances that arises from a
change in legal requirements, change in law, or change in identity, nature, or status of the Redevelopment
Agency, or type of business conducted;
(b) this Disclosurc Agreement, as amended, would havc compiled with thc requirements of
the Rule at the time of sale of the Bonds, after taking into account any amendments or interpretations of
the Rule, as well as any change in circumstances;
(c) the amendment docs not matcrially impair the interests of the Owners, as determined by
parties unaffiliated with the Rcdevelopment Agency (such as, but without limitation, thc Redevelopmcnt
Agency's bond counscl) or by Owner's consent pursuant to Section 7.01 of the Indcnture; and
(d) the annual financial information containing (if applicable) the amcnded operating data or
financial information will cxplain, in narrative form, the reasons for the amendment and the "impact" (as
that word is used in the lettcr from the staff of thc Securities and Exchangc Commission to the National
Association of Bond Lawyers dated June 23, 1995) of thc change in the type of operating data or financial
information bcing provided.
SECTION 9. Additional Information.
(a) The Redevelopment Agency agrees to provide public information concerning the Bonds
and the Rcdevelopment Agency to any Holder or Bcneficial Owner making a writtcn requcst thercfor.
(b) Nothing in this Disclosure Agreement shall bc decmed to prevent the Redevelopment
Agency from disseminating any othcr 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 Agreemcnt. If the Redevelopmcnt Agency 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 Redevelopment Agency shall have no obligation under this Disclosurc
Agreement to update such information or include it in any future Annual Report or notice of occurrence
of a Listed Event.
SECTION 10. Default. In the even to a failure of the Redevelopment Agency to comply with any
provision of this Disclosure Agreement, the Trustee shall, at the written direction of any Participating
Underwriter or the Owners of a majority in aggregate principal amount of Outstanding Bonds (but only to
06035\pos-3 F-$
the cxtent funds have becn provided to it or it has bcen otherwise indemnified to its satisfaction from any
cost, liability, expense or additional charges of the Trustee whatsoever, including, without limitation, fces
and expenses of its attorneys), or any Owner may, take such actions as may be necessary and appropriate,
including seeking mandate or specific performance by court order, to cause the Redevelopment Agency,
the Trustee or the Dissemination Agent, as the case may be, to comply with its obligations under this
Disclosure Agreement; provided that any such action may be instituted only in the Federal or State Court
located in the County of Los Anbeles, State of California and no remedy other than specific performance
may be sought or grantcd. A default under this Disclosurc Agrcement shall not be deemed an Event of
Default under the Indenture or the Loan Agreement, and the sole remedy under this Disclosure
Agrcement in the event of a failure of the Redevelopment Agency, the Trustee or the Dissemination
Agent to comply with this Disclosure Agrecment shall be an action to compel performance.
SECTION 11. Duties, lmmunities and Liabilities of Dissemination A�ent. The Disscmination
Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the
Rcdevelopmcnt Agency agrecs to indemnify and save the Dissemination Agent and the Trustee, thcir
officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may
incur arising out of or in the cxercise or performance of its powers and duties hercunder, including the
costs and expenses (including attomeys fecs) of defending against any claim of liability, but excluding
liabilities due to thc Dissemination Agent's or Trustee's negligence or willful misconduct. 'The
Dissemination Agent may rely on and shall be protected in acting or refraining from acting upon any
direction from the Issucr or an opinion of nationally recognized bond counsel. The Dissemination Agent
and the Trustce shall be paid compensation by the Redevclopment Agcncy for its services provided
hcreunder in accordance with its schedule of fees as amended from time to timc and all expenses, legal
fees and advances made or incurred by the Dissemination Agent in the performance of its duties
hcreunder. The Dissemination Agent and the Trustee shall have no duty or obligation to revicw any
information providcd to them by the Redevclopment Agency hereundcr and shall not be deemcd to bc
acting in a fiduciary capacity for the Financing Authority, the Redevelopment Agency, the Owners, or
any other party. Thc obligations of the Rcdevelopment Agency undcr this Section shall survive
resignation or rcmoval of the Dissemination Agent and payment of the Bonds. No person shall have any
right to commence any action against the Dissemination Agent seeking any remedy other than to compel
specific performance of this Disclosure Agreement. The Dissemination Agent shall not be liable under
any circumstances for monetary damages to any person for any brcach of this Disclosure Agreemcnt.
SECTION 12. Bencficiaries. This Disclosure Agrcement shall inure solcly to the benefit of thc
Redcvelopment Agency, the Participating Underwriter, the Dissemination Agent and Holders and
Bencficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 13. Notices. Noticcs should be sent in writing to the following addresses. Thc
following information may be conclusively relied upon until changed in writing.
Redevelopment Agency: Palm Descrt Redcvelopment Agcncy
73-510 Fred Waring Drive
Palm Desert, California 92260
(760)346-0611
(760) 346-0574 Fax
Trustee: Wells Fargo Bank, National Association
700 South Flower Street, Suite 500
Los Angeles, California 90017-4104
(213)630-6237
(213) 630-6215 Fax
06035\pos-3 F-6
Dissemination Agency: MuniFinancial, Inc.
27368 Via lndustrial, Suitc 10
Tcmecula, California 92590
(951) 587-3500
(951) 587-3510 Fax
SECTION 14. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrumcnt.
Date: , 2007
PALM DESERT REDEVELOPMENT AGENCY OF
�
Authorized Officer
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustcc
:
Authorized Officcr
MUNIFINANCIAL, INC.,
as Dissemination Agent
:
Authorizcd Officcr
06035\pos-3 F-%
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Namc of Obligatcd Party: Palm Dcsert Redcvclopment Agency
Name of Bond Issuc: Palm Desert Financing Authority Tax Allocation (Housing Set-
Aside) Refunding Revenuc Bonds Series 2007
Date of Issuancc: , 2007
NOTICE IS HEREBY GIVEN that the Palm Desert Redevelopment Agency (the
"Rcdevelopment Agency") has not provided an Annual Report with respect to the above-named Bonds as
required by Section 3 of the Continuing Disclosure Agreement dated , 2007, by and among the
Rcdevelopmcnt Agency, the Trustee and the Dissemination Agent executed by the Dissemination Agent
for the benefit of the Holders and Beneficial Owners of the above-referenced bonds. The Redevelopment
Agency anticipates that the Annual Report will be filed by .
Dated:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee, on behalf of the Redevelopment Agency
By:
Its:
cc: Executivc Director, Palm Desert Redevelopment Agency
06035\pos-3 F-g
APPENDIX G
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The information in this Appendix G concerning The Depository Trust Company, New York, Netiv
York ("DTC') and DTC's book-entry system has been obtained from DTC und the Redevelopment
Agenc•y takes no responsibility for the completeness or accuracy thereof. The Redevelopment Agencv
cannot and doe.s not give any assurances that DTC, DTC Purticipants or Indirect Participants wil!
distrihute to the Beneficia! Owners (a) payments of interest, principal or premium, if any, with respecr to
the Series 2007 Bonds, (b) certificates representing ownership interest in or other confrrmation or
o�vnership interest in the Series 2007 Bonds, or (c) redemption or other notices sent to DTC or Cede &
Co., its nominee, as the registered owner �f the Series z007 Bonds, or that they witl so do on a timely
ba.sis, or that DTC, DTC Participants or DTC Indirect Participants will aci in the manner described in
this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange
Commi.ssion and the current "Procedures " of DTC to be followed in dealing with DTC Participants are
on file with DTC.
The Depository Trust Company ("DTC"), New York, NY, will act as securities depository f'or the
Series 2007 Bonds. The Scries 2007 Bonds will bc issued as fully-rcgistercd securities registered in the
name of Cede & Co. (DTC's partncrship nominee) or such other name as may be requested by an
authorized represcntative of DTC. One fully-registercd security certificate will bc issued for each maturity
of the Series 2007 Bonds, each in the aggregatc principal amount of such maturity, and will be deposited
with DTC.
DTC, the world's largest depository, is a limited-purpose trust company organized under the New
York Banking Law, a"banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a"clearing corporation" within the meaning of the New York
Uniform Coinmercial Code, and a"clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million
issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market
instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC.
DTC also facilitates the post-trade settlement among Direct Participants of sales and other securitics
transactions in deposited securities, through electronic computerized book-entry transfers and pledges
between Direct Participants' accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, cicaring corporations, and ccrtain othcr organizations. DTC is a wholly-owncd subsidiary of
The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct
Participants of DTC and Members of the National Securities Clearing Corporation, Government
Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing
Corporation, (respectively, "NSCC", "GSCC", "MBSCC", and "EMCC", also subsidiaries of DTCC), as
well as by the New York Stock Exchange, Inc., the Amcrican Stock Exchange LLC, and the National
Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both
U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that
clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to
its Participants are on file with the Securities and Exchange Commission. More information about DTC
can be found at www.dtcc.com and www.dtc.org.
Purchases of the Series 2007 Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Series 2007 Bonds on DTC's records. The ownership
interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be rccorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from
DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations
06035\pos-3 Ci-1
providing details of the transaction, as wcll as periodic statcmcnts of their holdings, from the Dircct or
Indircct Participant through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Series 2007 Bonds are to be accomplished by entries made on the books of
Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
reccive ccrtificates representing their ownership interests in thc Scries 2007 Bonds, except in the event
that use of the book-entry system for the Series 2007 Bonds is discontinued.
To facilitate subsequent transfers, all Series 2007 Bonds deposited by Direct Participants with
DTC are rcgistered in the name of DTC's partnership nominee, Cede & Co., or such other name as may
be requested by an authorized representative of DTC. The dcposit of the Series 2007 Bonds with DTC
and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2007 Bonds;
DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are
credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and lndirect Participants to Beneficial
Owners will be governcd by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of the Series 2007 Bonds may
wish to take certain steps to augment the transmission to them of notices of significant events with respect
to the Scrics 20U7 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the
Indenture. For example, Beneficial Owners of the Series 2007 Bonds may wish to ascertain that the
nominee holding the Scries 2007 Bonds for their benefit has agreed to obtain and transmit noticcs to
Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses
to the registrar and request that copies of notices be Qrovided directly to them.
Redemption notices shall be sent to DTC. The conveyance of notices and other communications
by DTC to DTC Participants, by DTC Participants to Indirect Participants and by DTC Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time. Any failure of DTC to advise
any DTC Participant, or of any DTC Participant or Indirect Participant to notify a Beneficial Owner, of
any such notice and its content or effect will not affect the validity of the redemption of the Series 2007
Bonds called for redemption or of any other action premised on such notice. Redemption of portions of
the Series 2007 Bonds by the Redevelopment Agency will reduce the outstanding principal amount of
Bonds held by DTC. In such evcnt, DTC will implement, through its book-entry system, a redcmption by
lot of interests in the Series 2007 Bonds held for the account of DTC Participants in accordance with its
own rulcs or other agreements with DTC Participants and then DTC Participants and Indirect Participants
will implement a redemption of the Series 2007 Bonds for the Beneficial Owners. Any such selection of
Bonds to be redeemed will not be governed by the Indenture and wi(1 not be conducted by thc
Redevelopment Agency or the Trustee.
Ncither DTC nor Cede & Co. (nor any other DTC nominee) will conscnt or vote with respect to
the Serics 2007 Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures.
Under its usual procedures, DTC mails an Omnibus Proxy to the 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 thc Series 2007 Bonds are credited on the rccord date (identified in a
listing attached to the Omnibus Proxy).
Payments of principal of, premium, if any, and interest evidenced by the Series 2007 Bonds will
be made to Cede & Co., or such other nominee as may be requested by an authorized representative of
DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and
con-esponding detail information from the Redevelopment Agency or the Trustee, on payable date in
06035\pos-3 Cr-2
accordancc with their respective holdings shown on DTC's records. Payments by Participants to
Beneficial Owners will bc governed by standing instructions and customary practices, as is the case with
sccurities 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 (nor its nominee), the Trustee, or the Redevelopment
Agency, subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of principal of, premium, if any, and interest evidenced by the Serics 2007 Bonds to Cede & Co.
(or such othcr nominee as may be requested by an authorized representative of DTC) is the responsibility
of the Redevelopment Agency or the Trustee, disbursement of such payments to Direct Participants will
bc the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the
responsibility of Direct and Indirect Participants.
NEITHER THE REDEVELOPMENT AGENCY NOR THE TRUSTEE WILL HAVE ANY
RL'SPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR
BENEFICIAL OWNERS WITH RESPECT TO THE PAYMENTS OR THE PROVIDING OF NOTICE
TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS OR THE
SELECTION OF BONDS FOR REDEMPTION.
Neither the Redevelopment Agency nor the Trustee can give any assuranccs that DTC, DTC
Participants, Indirect Participants or others will distribute payments of principal of, premium, if any, and
interest on the Series 2007 Bonds paid to DTC or its nomince, as the registered Owner, or any redemption
or other notice, to the Beneficial Owners or that thcy will do so on a timely basis or that DTC will serve
and act in a manner described in this Official Statement.
DTC may discontinue providing its services as depository with respect to the Series 2007 Bonds
at any time by giving reasonable notice to the Redevelopment Agency or the Trustee. Under such
circumstances, in the event that a successor depository is not obtained, Bond cercificates are required to be
printcd and dclivcred.
The Redevelopment Agency may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depository). In that event, Bond certificates will be printed and
delivcrcd.
In the event that the book-entry system is discontinued as described above, the rcquirements of
the Indenture will apply. The foregoing information concerning DTC concerning and DTC's book-entry
system has bcen providcd by DTC, and ncither the Rcdevelopment Agency nor the Trustec take any
responsibility for the accuracy thereof.
The Redevelopment Agency and the Trustee cannot and do not give any assurances that DTC, the
Participants or others will distribute payments of principal, interest or premium, if any, evidenced by the
Series 2007 Bonds paid to DTC or its nominee as the registered owner, or will distribute any redemption
noticcs or other notices, to the Beneficial Owners, or that they will do so on a timely basis or will servc
and act in the manner described in this Official Statement. Neither the Redevelopment Agency nor the
Trustee are responsible or liable for the failure of DTC or any Participant to make any payment or give
any notice to a Beneficial Owner with respect to the Series 2007 Bonds or an error or delay relating
thereto.
0G035\pos-3 Cr-3
APPENDIX H
SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY
06035\pos-3 H-]
L&J DRAFT #2
11/29f06
$
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION (HOUSING SET-ASIDE) REVENUE BONDS
SERIES 2007
BOND PURCHASE AGREEMENT
, 2007
Palm Desert Financing Authority
73-510 Frcd Waring Drivc
Palm Desert, California 92260-2578
Ladics and Gentlemen:
Hutchinson, Shockey, Erley & Co. (the "Underwriter "), offers to enter into this Bond Purchase
Agreement (the "Purchase Agreement ") with the Palm Desert Financing Authority (the "Financing
Authority"), a joint powers authority created by a Joint Excrcisc of Powers Agrecment datcd Januacy 26,
1989 (the "JPA Agreement'� betwcen the City of Palm Descrt and the Palm Desert Redcvelopment Agency
(the "Redevelopment Agency"), which upon acceptance and approval, will be binding upon the Financing
Authority and the Underwriter. This offer is made subject to acceptance by the Financing Authority and
approval by the Redevelopment Agency by execution of this Purchase Agrecment and delivery of thc
same to the Underwriter on or before 11:59 p.m. (California time) on the date hereof, and, if not so
accepted and approved, will be subject to withdrawal by the Underwriter upon notice delivered to the
Financing Authority at any time prior to such acccptancc and approval.
Capitalized terms used in this Purchasc Agreement and not otherwise defined hcrein shall have
the respective meanings set forth for such terms in the 2007 Indenture (defined beiow) and if not
otherwise defined therein, shall have the meanings given to such terms as set forth in the Official
Statcment (dcfincd bclow).
Section 1. Purchase and Sale of the 2007 Bonds. Upon the terms and conditions and upon the
basis of the representations set forth in this Purchase Agreement, the Underwriter agrees to purchase from
the Financing Authority, and the Financing Authority agrces to sell and deliver to the Underwriter, all
(but not less than all) of � aggregate principal amount of Palm Desert Financing Authority Tax
Allocation (Housing Set-Aside) Revenue Bonds Series 2Q07 (the "2007 Bond.s ").
The 2007 Bonds shall be dated the date of delivery and shall have the maturities, bcar interest at
the rates per annum, have the yields and be subject to mandatory sinking fund redemption all as set forth
on Schedulc I attached hereto. The purchase price for the 2007 Bonds shall bc �, (calculated as
the principal ainount of the 2007 Bonds, [less ! plus] an original issue discount in the amount of
� and less an Underwriter's discount in the amount of � ).
234-06035\pc-2
Section 2. Preliminary Official Statement. The Financing Authority has dclivcrcd to the
Underwriter a Preliminary Official Statement, dated January _, 2007 (the "Preliminary Official
Statement "), and will delivcr to thc Underwriter a final Official Statement dated the date hereof as
provided in Scction 5 of this Purchase Agreement (as amended and supplemented from time to time
pursuant to Section 6(k) of this Purchase Agreement, the "O.J'�cial Statement "). The Financing Authority
and the Redevelopment Agency have each delivered to the Underwriter a certificate pursuant to Securities
and Exchange Commission Rule 15c2-12 ("Rule ISc2-12") relating to the Preliminary Official
5tatement, in substantially the forms attached hereto as Exhibit A-1 and Exhibit A-2, respectively.
Section 3. Description of the 2007 Bonds. The 2007 Bonds are issued pursuant to the
Community Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the
Health and Safety Code, commencing with Section 33000 (the "Redevelopment Law ") and Resolution
No. adopted by the Financing Authority on , 2007 (the "Financing Authority
Resolution "). The 2007 Bonds shall be payable and subject to redemption as provided in the 2007
Indenture (defined herein} and as set forth in the Official Statement. The 2007 Bonds are legal, valid and
binding limited obligations of the Financing Authority, and are payable solely from and secured by a
pledge of Revenues (as defined in the 2007 Indenture) derived primarily from loan payments made by the
Redevelopment Agency pursuant to the 2007 Loan Agreement (defined herein).
The 2007 Bonds shall be substantially in the form described in, shall be issued and secured under
the provisions of, and shall be payable as provided in, the Indenture of Trust, dated as of February 1, 2007
(the "2007 lndenture "), by and bctween the Financing Authority and Wells Fargo Bank, National
Association (the "Trustee"). The Financing Authority is issuing the 2007 Bonds to make a loan (the
"Loan "), to thc Palm Desert Redevelopment Agency (the "Redevelvpment Agency") pursuant to the terms
of a 2007 Housing Project Loan Agreement made and executed as of February 1, 2007 (the "2007 Loan
Ag►•eement"} by and among the Financing Authority, the Redevelopment Agency and the Trustce. The
Redevelopment Agency will apply the proceeds of the 2007 Loan to: (i) refinance a portion of the
outstanding obligations of the Redevelopment Agency under a loan agreement dated as of January 1,
1998 (the "Prior Loan Agreement "); (ii) finance the dcvclopment of low and moderate income housing
by the Redevelopment Agency within Project Area No. 1, Project Area No. 2, Project Area No. 3 and
Project Area No. 4 located in the City of Palm Desert (the "Project Areas"); and (iii) pay certain costs
associated with the issuance of the 2007 Bonds.
The payment of principal of and interest on the 2007 Bonds when due will be insured by a
financial guaranty insurance policy (the "Financial Guaranty Insurance Policy ") to be issued by
(the "Bond Insurer "), simultaneously with the delivery of the 2007 Bonds.
Section 4. Public Offering. Thc Underwriter agrees to make a bona fide public offering of all
the 2007 Bonds at not in excess of the initial public offering prices or yields set forth in Schedulc 1
attached hereto, plus interest accrued thereon, if applicable, from the date of the 2007 Bonds. The
Underwriter reserves the right to make concessions to dealers and to change such initial public offering
prices or yields as the Underwriter reasonably deems necessary in connection with the marketin�; of the
2007 Bonds. The Underwriter also reserves the right (i) to over-allot or effect transactions that stabilize
or maintain the market price of the 2007 Bonds at a level above that which might otherwise prevail in the
opcn market and (ii) to discontinue such stabilizing, if commenced, at any time.
234-06035�pc-2
2
Section 5. Delivery of Official Statement. The Financing Authority shall deliver to the
Underwriter, as promptly as practical but in no event later than the Closing Date (as defincd herein), such
number of copies of the tinal Official Statement, as the Underwriter may reasonably requcst in order to
comply with the Securities and Exchange Commission Rule 15c2-12(b) and the rules of the Municipal
Securities Rulemaking Board (the "MSRB ").
The Financing Authority hereby authorizes the Underwriter to use the Offcial Statcment and the
information contained therein in connection with the offering and sale of the 2007 Bonds and ratifies and
confirms the authorization of the use by the Underwriter prior to the date hereof of the Preliminary
Official Statement, furnished to the Underwriter by the Financing Authority in connection with such
offcring and sale.
The Undcrwriter agrees that from the time the Official Statement becomes available until the
earlier of (i) the "End of the Underwriting Period, " as defined in Scction 6(j) herein, or (ii) the time when
the Official Statement is available to any person from a nationally recognized municipal securities
information repository, but in no case less than 25 days following the End of the Underwriting Period, the
Underwriter shall send no later than the next business day following a request for a copy thereof, by first
class mail or other equally prompt means, to any Potential Customer, as defined in Rule 15c2-12, on
request, a single copy of the Official Statement. The Underwriter agrees to file as soon as reasonably
practicable a copy of the Official Statement with a nationally recognized municipal securities information
repository and take any and all actions necessary to comply with applicable Securities and Exchange
Commission rules and MSRB rules governing the offering, sale and delivery of the 2007 Bonds to
ultimatc purchascrs.
At the time of pricing, the Underwriter shall deliver to the Financing Authority a summary of the
orders by maturity.
Section 6. Representations, Warranties and Covenants of the Financing Authority. Thc
Financing Authority represents, warrants and covenants with the Underwriter that:
(a) the governing board of the Financing Authority has by the Financing Authority Resolution
adopted by a majority of its members at a meeting duly called, noticed and conducted, at which a quorum was
present and acting throughout on , 2007, taken all action necessary for the execution, delivery
and due performance of the 2007 Indenture, the 2007 Loan Agreement, the Escrow Agreement dated as of
Fcbruary 1, 2007 (the "Escrow Agreeme»t"), by and among the Financing Authority, the Redevelopment
Agency and Wells Fargo Bank, National Association, as escrow bank (the "Escrow Bank") regarding the
ref'unding of $ outstanding principal amount of Palm Desert Financing Authority Tax Allocation
(Housing Set-Aside) Revenue Bonds, Series 1998 (the "Prior Bonds"), the Certificate Regarding
Compliance of Certain Tax Matters of the Financing Authority dated as of the date of the initial delivery of the
2007 Bonds (the "Tcrx Certificate ") and this Purchase Agreement (collectively, the "Financing Authoriry
Agreements ") and the authorization and approval of the Preliminary Official Statement and the Official
Statement; the Financing Authority Resolution is in full force and effect and has not been amcnded, mcxiified
or rescinded; the adoption of the Financing Authority Resolution constitutes all necessary action to be taken
by the Financial Authority for the execution, issuance and delivery of the 2007 Bonds and the execution
dclivery and due performance of the Financing Authority Agrcements.
(b) the Financing Authority is and will be on the Closing Date a joint exercise of powers
authority duly organized and existing under the laws of the State of California (the "State ") and the JPA
Agreement and has all necessary power and authority to adopt the Financing Authority Resolution, to enter
into and perform its duties under the Financing Authoriry Agreements; and, when executed and delivered by
234-06035\pc-2
the respcctivc partics thcrcto, thc Financing Authority Agrcements will each constitute lcgal, valid and
binding obligation of the Financing Authority enforceable in accordance with its respective terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or affecting creditors' rights generally.
(c) this Purchase Agreement has been duly executed and delivered by the Financing Authority,
and constitutes, and upon their execution and delivery, the Financing Authority Agreements and the 200?
Bonds will constitute, legal, valid and binding obligations of the Financing Authority enforceable in
accordance with their terms, except as cnforceability may be limited by bankruptcy, insolvency, moratorium
or creditors' rights generally; and the execution and delivery of the Purchase Agreement does not and the
execution and delivery of the Financin� Authority Agreements and the 2007 Bonds and compliance with the
provisions of each thereof will not conflict with or constitute a breach of or a default under any applicable law
or administrative regulation of the State or the United States, or any applicable judgment, decree, a�,neement or
other instrument to which the Financing Authority is a party or is otherwise subject;
(d) at the time of acceptance hereof by the Financing Authority, and (unless an event occurs
of the nature described in Section 6(k)) at all times during the period from the date of this Purchase
Agreement to and including the date which is 25 days following thc End of the Underwriting Period for
the 2007 Bonds (as determined in accordance with Section 6(j)}, the statements and information contained
in the Preliminary Official Statement as of its date, and the Official Statement as of its datc under the
caption "THE FINANCING AUTHORITY" is true, correct and complete in all material respects and such
statecnents with respect to the Preliminary Official Statement do not, and with respect to thc Official
Statcment will not, omit to state any material fact necessary to make such statements, in light of thc
circumstances under which they were made, not misleading;
(c) to the best of its knowledge, thc Financing Authority is not in violation or breach of or
dcfault under any applicable constitutional provision, law or administrative rule or regulation of the State
of California or the United States of America, or any agency or instrumentality of either of them, or any
applicable judgmcnt or decree, or any loan agreement, indenture, bond, note, resolution, agreemcnt or
other instrument to which the Financing Authority is a party or is otherwise subject, which would
constitute a default under any of the Financing Authority Agreements or the 2007 Bonds, and no event
has occurred and is continuing which, with the passage of time or the giving of notice, or both would
constitute a violation or a breach of or a default under any such loan agreement, indenture, bond, note,
resolution, agreement or other instrument to which the Financing Authority is a party or is otherwise
subjcct;
(� at the date hereof and on the Closing Date, the Financing Authority will be in compliancc
in all respects with the material covenants and agreements contained in the Financing Authority
Agrcements and no event of default and no event has occurred and is continuing which, with the passage
of time or giving of notice, or both, would constitute an event of default thereunder shall have occurred
and bc continuing;
(g) to the best knowledge of the Financing Authority, after due investigation, other than as
set forth in the Official Statement or as the Financing Authority has otherwise disclosed in writing to the
Underwriter, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, or by or
bef'ore any court, governmental agency, public board or body, pending and served on the Financing
Authority or threatened against the Financing Authority, (i) wherein an unfavorable decision, ruling or
finding would adversely affect the existence of the Financing Authority or the title of any official of the
Financing Authority to such person's office, or (ii) seeking to restrain or enjoin the issuance, sale or
delivery of the 2407 Bonds, or the assignment by the Financing Authority of its rights under the 2007
234-Ofi035\Fx:-2
Indenture, or (iii) in any way contesting or affecting the validity or enforccability of the Financing
Authority Agrecmcnts or thc 2007 Bonds, or (iv) contesting in any way the completeness or accuracy of
the Preliminary Official Statement, or (v) contesting the power of the Financing Authority or its authority
with respect to thc 2007 Bonds or the Financing Authority Agreements, or (vi) contesting the exclusion of
interest on the 200? Bonds from gross income for fcdcral and State income wherein an unfavorable
decision, ruling or finding would materially adversely affect the validity of the Financing Authority
Agreements or the authorization, execution, delivery or performance by the Financing Authority of the
2007 Bonds or the Financing Authority Agreements;
(h) the Financing Authority will furnish such information, execute such instruments and take
such other action not inconsistent with law in cooperation with the Underwriter which the Underwriter
may reasonably request in order for thc Underwriter to qualify the 2007 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 as the Underwriter may designate and to determine the eligibility of the 2007 Bonds for investment
under the laws of such states and other jurisdictions; provided, however, that in no event shall the
Financing Authority be required to take any action which would subject it to service of process in any
jurisdiction in which it is not now subject;
(i) to the best of knowledge of the Financing Authority, all approvals, consents and orders of
any governmental authority or agency having jurisdiction in the matter which would constitute a
condition precedent to the due performance by the Financing Authority of its obligations under the
Financing Authority Agreements or the 2007 Bonds have been duly obtained or made, and are, and will
be on the Closing Date, in full force and effect;
(j) as used in this Purchase Agreement, the term "End o�the Underwriting Period" for the
2007 Bonds shall mean the earlier of (i) the Closing Date unless the Financing Authority shall have been
notificd in writing to thc contrary by the Underwritcr on or prior to the Closing Date or (ii) the date on
which the End of the Underwriting Period for the 2007 Bonds has occurred under Rule 15c2-12,
provided, however, that the Financing Authority may treat as the End of the Underwriting Period for the
2007 Bonds the date specified as such in a notice from the Underwriter stating the date which is the End
of the Underwriting Period;
(k) if between the date hcreof and the datc which is 25 days after the End of the
Undcrwriting Period for the 2007 Bonds, an event occurs, or facts or conditions become known to the
Financing Authority which, in the reasonable opinion of Richards, Watson & Gershon, A Professional
Corporation ("Bond CounseP') or Lofton & Jennings, San Francisco, California ("Disclosure Counsel "),
might or would cause the information contained in the Official Statement, as then supplemented or
amcnded, to contain an untrue statement of a material fact or to omit to state a material fact required to bc
stated thercin or necessary to make such information therein, in the light of the circumstances under
which it was made, not misleading in any material respect, the Financing Authority will notify the
Underwriter, and if in the opinion of the Underwriter such event requires the preparation and publication
of a supplement or amendment to the Official Statement, the Financing Authority will forthwith prepare
and furnish to the Underwriter (at the expense of the Financing Authority) a reasonable number of copies
of an amendment of or supplcment to the Official Statement (in the form and substance satisfactory to the
Underwriter) which will amcnd or supplement the Official Statement so that it will not contain an untruc
statcment of a material fact or omit to state a material fact necessary in ordcr to make the statements
thercin, in thc light of the circumstances existing at the time the Official Statement is delivered to
prospective purchasers, not misleading in any material respect with respect to the information of the
Financing Authority. If such notification shall be subsequent to the Closing Date, the Financing
Authority shall forthwith provide to the Underwriter such legal opinions, ccrtificates, instruments and
234-06035\pc-2
other documents as the Underwriter may reasonably deem necessary to evidence the truth and accuracy of
such supplement or amendment to the Official Statement. For the purposes of this subsection, between the
date hereof and the date which is 25 days after the End of the Underwriting Period for the 2007 Bonds,
the Financing Authority will furnish such information with respect to itself as the Underwriter may from
time to time reasonably request;
(I) if the information contained in the Official Statement relating to the Financing Authority
is amended or supplemented pursuant to Section 6(k), at the time of such supplement or amendment
thercto and (unless subscquently again supplemented or amendcd pursuant to such subparagraph} at all
times subsequent thereto up to and including the date which is 25 days after the End of the Underwriting
Period for the 2007 Bonds, the portions of thc Official Statement so supplemented or amendcd (including
any financial and statistical data contained therein), will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make such information
thcrcin, in thc light of the circumstances under which it was made, not misleading;
(m} any certificate signed by any officcr of the Financing Authority and delivered to the
Underwriter pursuant to the 2007 Indenture or this Purchase Agreement or any document contemplated
thercby shall bc deemed a representation and warranty by the Financing Authority to the Underwriter as
to the statements made therein and that such officer shall have been duly authorized to execute the same;
(n) to the best knowledge of the Financing Authority, there is no public vote or referendum
pending or proposed, the results of which could materially adversely affect the transactions contemplated
by the Offcial 5tatement or the Financing Authority Agreements or the 2007 Bonds, or the validity or
cnforccability of the 2007 Bonds;
(o) the Financing Authority will comply with the requirements of the Tax Ceriificate
executed by the Financing Authority in connection with the delivery of the 2007 Bonds; and
(p) the Financing Authority will apply the procecds from the sale of the 2007 Bonds for the
purposcs specified in the 2007 Indenture.
Section 7. Representations, Warranties and Covenants of the Redevelopment Agency. The
Redevelopment Agency represents, warrants and covenants with the Underwriter that:
(a) the Redevelopment Agency is a public body corporate and politic, organized and existing
under the laws of the State, including the Redevelopment Law, with full right, power and authority to
execute, dcliver and perform its obligations undcr thc 2007 Loan Agreement, the Escrow Agreement, the
Continuing Disclosure Agreement among the Redcvelopment Agency, the Trustee and MuniFinancial,
Inc., as Dissemination Agent, dated the Closing Date and substantially in the form attached to the Official
Statement as Exhibit F(the "Continuing Disclosure Agreement "), and to approve this Purchase
Agreement (collectively, the "Redevelopment Agency Agreements "), and to carry out all transactions
contemplated by each of the Redevelopment Agency Agreements and the Official Statement.
(b) the Redevclopment Agency has by Resolution No. (the "Redevelopment Agency
Resolution") adopted by a majority of its members at a meeting duly called, noticed and conducted, at which a
quorum was present and acting throughout, on , 2007, taken all action necessary to be taken by it
to authorize and approve the execution, delivery of and the performance by the Redevelopment Agency
of the obligations contained in the Redevelopment Agency Agreements; the Redevelopment Agency
Resolution is in full force and effect and has not been amended, modified or rescinded; and the adoption
of the Redevelopment Agency Resolution constitutes all action necessary to be taken by the
234-06035\pc-2
0
Redevclopment Agency for the execution, delivcry and due performance of the Rcdevelopment Agcncy
Agreements;
(c) when executed and delivcred by the respective par[ies thereto, each of the
Redevelopment Agency Agreements will constitute a legally valid and binding obligation of the
Redevelopment Agency enforceable in accordance with their respective terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or affecting creditors' rights generally; the Redevelopment Agency has complied,
and will at the Closing be in compliance in all material respects, with the terms of the Redevelopment
Agency Agreemcnts;
(d) at the time of acceptance hereof by the Redevelopment Agency, and (uniess an cvent
occurs of the nature described in Section 7(k)) at all times during the period from the date of this Purchase
Agreement to and including the date which is 25 days following the End of the Underwriting Period for
the 2007 Bonds (as determined in accordance with Section 7(j)), the statements and information contained
in the Preliminary Official Statement as of its date, and the Official Statement as of its date (excluding the
information undcr the captions "FINANCIAL GUARANTY INSURANCG," and "UNDERWRITING," and
contained in APPENDIX G—"DTC AND THE BOOK-ENTRY SYSTEM," and APPENDIX H—"SPECIMEN
FINANCIAL GUARANTY INSURANCE POLICY" arc true, correct and complete in all material respects and
such statements do not with respect to the Preliminary Official Statement, and will not with respect to the
Official Statement, omit to state any material fact necessary to make such statements, in light of the
circumstances under which they wcre made, not misleading;
(e) to the best of its knowledge, the Redevclopment Agency is not in violation or brcach of
or default under any applicablc constitutional provision, law or administrative rulc or regulation of the
State or the United States of America, or any agency or instrumentality of either of them, or any
applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement or
other instrument to which the Redevclopment Agency is a party or is otherwise subject, which would
constitute a default under any of the Redevelopment Agreements, no event has occurred and is continuing
which, with the passage of time or the giving of notice, or both would constitute a violation or a breach of
or a dcfault under any such loan agreement, indenture, bond, note, resolution, agrecment or other
instrument to which the Redevelopment Agency is a party or is otherwise subject; and compliance with
the provisions of the Redevelopment Agency Agreements will not materially conflict with or constitute a
breach of or default under any applicable constitutional provision, law, administrative regulation, court
order or consent decree or any applicable judgment or decree or any loan agreement, note, resolution,
indenture, agreement or other instrument to which the Redevelopment Agency is a party or may be
othcrwisc subject;
(� at the date hereof and on the Closing Date, the Redevelopment Agency will be in
compliance in all respects with the material covenants and agreements contained in the Redevelopment
Agency Agreemcnts and no event of default and no event has occurred and is continuing which, with the
passagc of time or giving of notice, or both, would constitute an event of default thereunder shall have
occuned and be continuing;
(g) to the best knowledge of thc Redevclopment Agency, after due investigation, other than
as set forth in the Official Statement or as the Redevelopment Agency has othenvise disclosed in writing
to the Underwriter, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, or by
or before any court, governmental agency, public board or body, pending and served on the
Redevelopment Agency or threatened against the Redevelopment Agency, (i) wherein an unfavorable
decision, ruling or fnding would adversely affect the existence of the Redevelopment Agency or the title
234-06035�pc-2
%
of any official of the Redevclopment Agency to such person's office, or (ii) in any way contesting or
affecting the validity or enforceability of the Redevelopment Agency Agreements or the 2007 Bonds, or
(iii) contesting in any way the completeness or accuracy of the information in the Preliminary Official
Statement, or (iv) contesting the power of the Redevelopment Agency or its authority with respect to the
Redevelopment Agency Agreements; wherein an unfavorable decision, ruling or finding would materially
adversely affect the validity of the Redevelopment Agency Agreements or the authorization, execution,
delivery or performance by the Redevelopment Agency of the Redevelopment Agency Agreements;
(h) the Redevelopment Agcncy will furnish such information, execute such instruments and
take such other action not inconsistent with law in cooperation with the Underwriter which the
Underwriter may reasonably request in order for the Underwriter to qualify the 2007 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 as thc Underwriter may designate and to determine the eligibility of the 2007 Bonds for
investment under thc laws of such states and other jurisdictions; provided, however, that in no event shall
the Redevelopment Agency be required to take any action which would subject it to service of process in
any jurisdiction in which it is not now subject;
(i) to the best of knowledgc of the Redcvelopment Agency, all approvals, consents and
orders of any governmental authority or agency having jurisdiction in the matter which would constitute a
condition precedent to the due performance by the Redevelopment Agency of its obligations under the
Redevelopment Agency Agreements have been duly obtained or made, and are, and will be on the
Closing Datc, in full forcc and effect;
(j) as used in this Purchase Agrecment, thc term "End of the Underwriting Period" for the
2007 Bonds shall mcan the earlier of (i) the Closing Date unlcss the Redevelopment Agency shall have
becn notificd in writing to the contrary by the Underwritcr on or prior to the Closing Date or (ii) the date
on which the End of the Underwriting Period for the 2007 Bonds has occurred under Rule 15c2-12,
provided, however, that the Redevelopment Agency may treat as the End of the Underwriting Period for
the 2007 Bonds the date specified as such in a notice from the Underwriter stating the date which is the
End of the Undcrwriting Pcriod;
(k) if between the date hereof and the date which is 25 days after the End of the
Underwriting Period for the 2007 Bonds, an event occurs, or facts or conditions become known to the
Redevelopment Agency which, in the reasonable opinion of the Bond Counsel or Disclosure Counsel,
might or would cause the information contained in the Official Statement, as then supplemented or
amended, to contain an untrue statement of a material fact or to omit to state a matcrial fact required to be
stated therein or necessary to make such information therein, in the light of the circumstances under
which it was made, not misleading in any material respect, the Redevelopment Agency will notify the
Underwritcr, and if in thc opinion of the Underwriter such event requires the preparation and publication
of a supplcment or amendment to the Official Statement, the Redevelopment Agency will forthwith
prepare and furnish to the Underwriter or cause the Financing Authority to prepare and furnish to the
Underwriter (at the expcnse of the Redevclopment Agency) a reasonable number of copies of an
amendmcnt of or supplement to the Official Statement (in the form and substance satisfactory to thc
Underwritcr) which will amend or supplement the Official Statement so that it will not contain an untruc
statement of a material fact or omit to state a material fact necessary in order to make the statemcnts
therein, in the light of the circumstances existing at the time the Official Statement is delivered to
prospective purchasers, not misleading in any material respect with respect to the information of the
Redevelopment Agency. If such notification shall be subsequent to the Closing Datc, the Redevelopmcnt
Agency shall foRhwith provide to the Undenvriter such legal opinions, certificates, instruments and other
documents as the Underwriter may reasonably deem necessary to evidence the truth and accuracy of such
234-06035\pc-2
�
supplement or amendmcnt to the Official Statcmcnt. For the purposcs of this subscction, betwecn thc
date hereof and thc date which is 25 days after the End of the Undcrwriting Pcriod for thc 2007 Bonds,
the Redevelopment Agency will furnish such information with respect to itself as the Underwriter may
from timc to time reasonably request;
(1) if the information contained in the Official Statement relating to the Redevelopment
Agency is amended or supplemented pursuant to Section 7(k), at the time of such supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to such
subparagraph) at all times subsequcnt thereto up to and including the date which is 25 days after the End
of the Underwriting Period for the 2007 Bonds, the portions of the Official Statement so supplemented or
amended (including any financial and statistical data contained therein), will not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to
makc such information therein, in the light of the circumstances under which it was made, not mislcading;
(m) any certificate signed by any officer of the Redevelopment Agency and delivercd to the
Underwriter pursuant to the Redcvelopment Agency Agreements or this Purchase Agreement or any
document contemplated thereby shall be deemed a representation and warranty by the Redevelopment
Agency to the Underwriter as to the stateinents made thcrein and that such officer shall have been duly
authorized to execute the same;
(n) to the best knowledge of the Redevelopment Agency, there is no public vote or
referendum pending or proposed, the results of which could materially adversely affect the transactions
contemplatcd by the Official Statement or the Redevelopment Agency Agreemcnts or the validity or
enforceability of the 2007 Bonds;
(o) the Redevelopment Agency will apply the proceeds from the 2007 Loan for the purposes
specified in the 2007 Loan Agreement;
(p) the Low and Moderate Income Housing Fund does not, on the date hereof, contain any
"excess surplus" (as that term is defined in Section 33334.12 of the Redevelopment Law) that would
cause the Redevelopment Agency to be subject to the prohibitions contained in Section 33334.12(e) of
the Redevelopment Law.
(q) as of the time of acceptance hereof and as of the date of the Closing, except as otherwise
disclosed in the Official Statement, the Redevelopment Agency has complied with all material provisions
of the Redevelopment Law, without limitation, use of the Tax Revenues and the filing requirements of
Section 33080, 33080.6 and 33334.6 of the Redevelopment Law as applicable to the Redevelopment
Agency and the Project Areas.
(r) the financial statements of the Redevelopmcnt Agency contained in the Official
Statement as Appendix B fairly present the financial positions and results of operations thcreof as of the
dates and for the periods therein set forth, and the Redevelopment Agency has no rcason to bclieve that
such financial statements have not been prepared in accordance with generally accepted accounting
principles consistently applied; and
234-06035\pc-2
9
(s) the Redcvelopmcnt Agency is in compliance with all of its prior continuing disclosurc
undcrtakings entcred into pursuant to Rule 15c2-12 and at or prior to the Closing Date, thc
Rcdevclopment Agency shall havc duly authorizcd, cxecuted and delivercd the Continuing Disclosurc
Agrccment.
Section 8. Closing. At 8:00 A.M., California time, on , 2007, or on such earlier or
latcr date as may be mutually agrecd upon by parties hcreto (the "Closing Date "), the Financing
Authority, will deliver or cause to be delivered to the Underwriter the duly executcd Bonds through the
f'acilities of The Depository Trust Company in New York, New York ("DTC ") by the initial deposit with
the Trustee (in care of DTC} through the Fast Automated Securities Transfer System, and will deliver or
cause to be delivered at the offices of Bond Counsel in Los Angeles, California, or such other place as
shall have been mutually agreed upon by the parties, the other documents described herein; and the
Underwritcr shall pay the purchase price of each Series of 2007 Bonds as set forth in Section 1 of this
Purchase Agreement, less the premium for the Financial Guaranty Policy in the amount of �, ,
which the Underwriter will wire directly to the Bond Insurer.
The 2007 Bonds shall be issued in fully registered form. It is anticipated that CUSIP
identification numbers will be inserted on the 2007 Bonds, but ncither the failure to provide such numbers
nor any crror with respect thereto shall constitutc a cause for failure or refusal by the Underwriter to
accept delivery of the 2007 Bonds in accordance with the terms of this Purchase Agreement.
Section 9. Termination. The Undcrwriter shall havc the right to terminatc the obligations of thc
underwritcrs undcr this Purchase Agreement to purchase, to accept delivery of and to pay for thc 2007
Bonds by notifying the Financing Authority of its election to do so if, after the exccution hereof and prior
to the Closing Date: (1) legislation (including any amendments thereto), resolution, rule or regulation
(including any a�nendments thereto) shall be introduccd in, considered by or be enacted by any
governmental body, department or political subdivision of the State, or a decision by any court of
competent jurisdiction within the State shall be rendered which, in the reasonable opinion of the
Underwriter, would makc it impracticable or inadvisable to proceed with the offer, sale or delivery of'the
200? Bonds on the terms and in the manner contemplated in the Official Statement; (2) the outbreak or
declaration of war, institution of a police action, engagement in or escalation of military hostilities by or
against the United States, or any escalation of any existing conflict or hostilities in which the Unitcd
States is involved or the occurrences of any other national emergency or calamity or crisis or any change
in financial markets resulting from the foregoing, which, in the reasonable opinion of the Underwriter,
would make it impracticable or inadvisable to proceed with the offer, sale or delivery of the 2007 Bonds
on the terms and in the manner contemplated in the Official Statement; (3) the declaration of a general
banking moratorium by federal, New York or California authorities, or the general suspension or material
limitation of trading on any national securities exchangc which matcrially adversely affects the market
price of the 2007 Bonds; (4) the imposition by the New York Stock Exchange or other national securities
exchangc, or any governmental authority, of any material restrictions not now in force with respect to the
2007 Bonds or obligations of the general character of the 2007 Bonds or securities generally, or thc
material increase of any such restrictions now in force, including those relating to thc extension of crcdit
by, or the charge to the net capital requirements of, the Underwriter which, in the reasonable opinion of
the Underwriter would make it impracticable or inadvisable to proceed with the offer, sale or delivery of'
the 2007 Bonds on thc tcrms and in the manner contemplated in thc Official Statement; (5) legislation
enacted (or resolution passed) by or introduced or pending legislation amended in the Congress or
recommended for passage by the President of the United States, or an order, decree or injunction issued
by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed)
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 securities of the general character of the
z3a-o�,oss���-z
10
2007 Bonds, or the 2007 Bonds, including any or all underlying arrangements, are not exempt from
registration under the Securities Act of 1933, as amended, or that the 2007 Indenture is not exempt from
qualification under the Trust Indenture Act of 1939, as amended, or that the execution, offering or sale of
obligations of the general character of the 2007 Bonds, including any or all underlying arrangements, as
contemplated hereby or by the Official Statement, otherwise is or would be in violation of the federal
securities laws as amended and then in effect; (6) action by or on behalf of the State or the California
Franchisc Tax Board, with the purpose or cffcct, directly or indircctly, of imposing California personal
income taxation upon such interest as would be received by the Owners of the 2007 Bonds; (7) (i)
legislation (including any amendment thercto) shall havc been introduced in or adopted by either House
of the Congress of the United States or recommended to the Congress or otherwise endorsed for passage
by the President of the United States, the Treasury Department of the United States, the Intemal Revenue
or the chairman or ranking minority member of the Committee on Finance of the United States Senate or
thc Committee on Ways and Means of the United States I-Iouse of Represcntatives, or legislation is
proposed for consideration by either such committee by any member thereof or presented as an option for
consideration by either such committee by the staff of such committee, or by the staff of the Joint
Committec on Taxation of the Congress of the United States, or a bill to amend the Internal Revenue
Code shall be filed in either house, or (ii) a decision shall have been rendered by any federal or state
court, or (iii) an order, filing, ruling or regulation shall have been issued or proposed by or on behalf of
the Treasury Dcpartment of the United States or the Internal Rcvenuc Service or any other agency of the
United States, or (iv) a release or official statement shall have been issued by the President of thc United
Statcs or by the Trcasury Dcpartment of the United States or by the Internal Rcvenue Servicc, thc effect
of which, in any such case described in clause (i), (ii), (iii), or (iv), would be to impose, directly or
indirectly, federal income taxation upon interest received on obligations of the general character of the
2007 Bonds or upon income of the general character to be derived by the Financing Authority, other than
as imposed on the 2007 Bonds and income therefrom under the federal tax laws in effect on the date
hcreof, in such a manner as in the rcasonable judgment of the Underwriter would make it impracticable or
inadvisable to proceed with the offer, sale or delivery of the 2007 Bonds on the tcrms and in the manner
contemplated in the Official Statement; (8) the withdrawal or downgrading or any notice of an intended
or potential downgrading of any rating of the obligations of the Financing Authority or the
Rcdevelopment Agency (including the rating to be issued with respect to the 2007 Bonds) by a
"nationally recognized statistical rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act of 1933, as amended which, in the reasonable opinion of the
Underwriter, would make it impracticable or inadvisable to proceed with the offer, sale or delivery of the
2007 Bonds on the tenns and in the manner contemplated in the Official Statement; (9) any event
occurring, or information becoming known which, in the reasonable judgment of the Underwriter, makes
untrue in any material respect any statement or information contained in the Official Statement, or has the
effect that the Official Statement contains any untrue statement of a material fact or omits to state a
material fact to be stated therein or nccessary in order to make the statcments therein, in the light of the
circumstances under which they were made, not misleading; (10) any change or development involving a
prospective change in the condition of the Financing Authority or the Rcdevelopment Agency, financial
or otherwise, or in the operations of the Financing Authority or the Redevelopment Agency from those set
forth in the Official Statement that makes the 2007 Bonds, in the reasonable judgmcnt of the Underwritcr,
impracticable or inadvisable to offer, sell or deliver the 2007 Bonds on the terms and in the manner
contemplated by thc Official Statement; (11) (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange or thc Nasdaq National
Market; (ii) trading of any securities of the Financing Authority shall have been suspended on any
exchange or in any over-the-counter market; (iii) a material disruption in securities settlement, payment or
clearance services in the United States shall have occuned; or (iv) any moratorium on commercial
banking activities shall have been declared by Federal or New York State authorities; or (12) the purchase
of and payment for the 2007 Bonds by the Underwriter, or the resale of the 2007 Bonds by the
234-06035\pc-2
1�
Underwriter, on the terms and conditions hec�cin provided shall be prohibited by any applicable law,
govcrnmcntal authority, board, agency or commission.
Section 10. Closing Conditions. The Underwriter hereby enters into this Purchase Agreement
in reliancc upon the representations and warranties of the Financing Authority and the Redcvclopment
Agency contained herein and the rcpresentations and warranties to be contained in the documents and
instruments to be delivered on the Closing Datc and upon the performance by the Financing Authority,
the Redevclopment Agency and the Trustec of their respective obligations both on and as of the date
hereof and as of the Closing Date. Accordingly, the obligations of the Underwriter under this Purchase
Agreement to purchase, to accept delivery of and to pay for the 2007 Bonds shall be subject, at the option
of the Undcrwritcr, to the accuracy in all material respects of the rcpresentations and warranties of the
Financing Authority and the Redevelopment Agency contained herein as of the date hereof and as of the
Closing Date, to thc accuracy in all material respects of the statements of the officers and other officials of
the Financing Authority, the Redevclopment Agency and the Trustee made in any certificate or document
furnished pursuant to the provisions hereof, to the performance by the Financing Authority, the
Rcdevelopment Agency and the Trustee of their respective obligations to bc performed hereunder and
under the Financing Authority Agreements and the Rcdevelopment Agency Agreements, at or prior to the
Closing Date, and also shall be subject to the following additional conditions:
(a) the Underwriter shall receivc, within seven business days aftcr the date hereof, copies of
the Official Statement (including all information permitted to have been omitted from the Preliminary
Official Statement by the Rule 15c2-12 and any amendments or supplements as have been approved by
the Undcrwriter), in such reasonable quantity as the Underwriter shall have requested;
(b) on the Closing Date, the Financing Authority Agreements and the Redevelopment
Agency Agrecments shall have been duly authorized, cxecuted and dclivered by the parties thereto, all in
substantially the forms heretofore submitted to the Underwriter, with only such changes as shall have
been agreed to in writing by the Underwriter, and such agreements shall be in full force and effect; and
there shall be in full force and effect such resolutions of the goveming boards of the Financing Authority
and the Redcvelopment Agcncy as, in the opinion of Bond Counscl, shall be necessary or appropriate in
connection with the transactions contemplated hereby;
(c) on the Closing Date, all necessary action of the Financing Authority relating to thc
execution and delivery of the 200? Bonds will have been taken and will be in full force and effect and
will not have been amended, modified or supplemented;
(d) at or prior to the Closing Date, the Underwriter shall have received the following
documents, in each case satisfactory in form and substance to the Underwriter:
(i) the Financing Authority Agreements, the Redevelopment Agency Agreements
and the Official Statement, each duly executed and delivered by the respective parties thereto, and
certified copies of the Financing Authority Resolution, the Redevelopment Agency Resolution and
Resolution No. 07- adopted by the City Council of the City on , 2007 making, among
othcr things, a finding of significant public bcnefit;
(ii) the approving opinion of Bond Counsel, dated the Closing Date and addressed to
the Financing Authority, in substantially the form attached to the Official Statement as Appendix E,
together with a letter of Bond Counsel, addressed to the Underwriter to the effect that such opinion may
bc relied upon by thc Undcrwriter to the same extent as if such opinion were addresscd to it;
234-06035\pc-2
�2
(iii) thc supplemental opinion of Bond Counsel, dated the Closing Date and addresscd
to thc Underwriter, substantially to the effect that: (A) this Purchase Agreement has been duly authorized,
executed and delivered by the Financing Authority and is a valid and binding agreement of the Financing
Authority, enforceable in accordance with its terms, except as enforcement thercof may be limited by
bankruptcy, insolvency or other laws affecting the enforcement of creditors, rights and by the application
of equitable principles if equitable remedies are sought; (B) the 2007 Bonds are not subject to the
rcgistration requircments of the Securities Act of 1933, as amended, and the 2007 Indenture is excmpt
from qualification under the Trust Indenture Act of 1939, as amended; (C) the Continuing Disclosure
Agreement has been duly authorized, executed and delivered by the Financing Authority; and (D) the
statements contained in the Official Statement under the captions "THE SERIE5 2007 A BoNDs,"
"SECURITY ANU SOURCES OF PAYMGNT FOR THE BONDS" and "TAX MATTERS" and containcd in
Appendix E, insofar as such statemcnts expressly summarize certain provisions of thc 2007 Bonds, thc
2007 Indenture, and the final opinion of Bond Counsel concerning ceRain federal tax matters relating to
the 2007 Bonds, are accurate in all material respccts;
(iv) an opinion of Bond Counsel with respect to the Prior Bonds, dated the Closing
Date and addressed to the Financing Authority, the Redevelopment Agency and the Underwriter, to the
effect that all of the liability of the Financing Authority with respect to the Prior Bonds has ceased and
been completcly discharged (except that the holders thereof shall be entitled to the payment of the
principal, interest and premium with respect to the Prior Bonds from moneys deposited in the applicable
Escrow Fund), and the Prior Bonds will no longer be considered outstanding under the Trust Agreement
pursuant to which each such Prior Bonds were issued.
(v) the opinion of Richards, Watson & Gershon, A Professional Corporation, as
General Counsel to the Financing Authority, dated thc Closing Date and addressed to the Financing
Authoriry and the Underwriter, in substantially the form of Exhibit B;
(vi) the opinion of Richards, Watson & Gershon, A Professional Corporation, as
Gcneral Counsel to the Redevelopment Agency, dated the Closing Date and addressed to thc Financing
Authority and the Underwriter in substantially the fonn of Exhibit C;
(vii) the opinion of Disclosure Counsel, datcd the Closing Date and addressed to the
Financing Authority and the Redevelopment Agency [and the Underwriter], to the effect that, on the basis
of the information made available to them, no facts came to their attention in connection with thc
preparation of the Official Statement which cause thcm to believe that the Official Statemeni as of its date
(excluding therefrom financial, engineering and statistical data, forecasts, projections, estimates,
assumptions and expressions of opinions, statements relating to DTC, Cede & Co. and the operation of
the book-entry system, the Bond Insurer and the Financial Guaranty Insurance Policy and the appendices
(except for Appendix F), as to all of which no view need be expressed) contained any untrue statement of
a material fact or omitted to state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading in any material respect, the 2007 Bonds
are not subject to the registration requirements of the Securities Act of 1933, as amended, and the 2007
Indenture is exempt from qualification under the Trust Indenturc Act of 1939, as amended, and the
Continuing Disclosure Agreement provides a suitable basis for the Underwriter, in connection with the
Offering (as defined in Rule 15c2-12) of the 2007 Bonds to make a reasonable determination as required
by scction (b)(5) of such Rule.
(viii) the opinion of counsel to the Trustee, dated the Closing Date and addressed to the
Undenvriter and the Financing Authority, to the effect that: (A) the Trustee has been duly incorporated as
a national banking association, duly organized and validly existing and in good standing under the laws of
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13
the United States of America and the State, having the legal authority to exercise trust powers in the State
and having full power and authority to enter into and to perform its duties as Trustee under the 2007
Indenture; (B) the Trustee has duly authorized, executed and delivered the 2007 Indcnture and the 2007
Loan Agreement, and by all proper corporate action has authorized the acceptance of the trusts of the
2007 Indenture; (C) the 2007 Indenture and the 2007 Loan Agreement constitutes a legally valid and
binding agreement of the Trustee, enforceable against it in accordance with its respective terms; (D) the
2007 Bonds have been validly authenticated, registered and delivered by the Trustee; (E) no
authorization, approval, consent or other order of the State or any other governmental authority or agency
within the State having jurisdiction over the Trustee, or, to such counsel's knowledge after reasonable
investigation, any other person or corporation, is required for the valid authorization, execution, dclivery
and performance by the Trustee of the 2007 Indenture; and (F) the execution and delivery of the 2007
Indcnture, and compliance by the Trustee with the provisions of the 2007 Indenture under the
circumstances contemplated thereby, does not and will not in any material respect conflict with or
constitute on the part of the Trustee a breach or default under any agreements or other instrument to
which the Trustee is a party (and of which such counsel is aware after reasonable investigation) or by
which it is bound (and of which such counsel is aware after reasonable investigation) or any existing law,
regulation, court order or consent decree to which the Trustee is subject;
(ix) the opinion of counsel to Wells Fargo Bank, National Association ("Wells
Fargo "), dated the Closing Date and addressed to the Underwritcr and the Financing Authority, to the
effect that: (A) Wells Fargo has been duly incorporated as a national banking association, duly organized
and validly existing and in good standing under the laws of the United States of America and the State,
having the legal authority to exercise trust powers in the State and having full power and authority to
entcr into and to perform its duties as Trustee Fargo under the 2007 Indenture and as Escrow Bank under
the Escrow Agreement; (B) Wells Fargo has duly authorized, executed and delivcred the each of the 2007
Indenture, the 2007 Loan Agreement and the Escrow Agreement, and by all proper corporate action has
authorized the acceptance of the trusts of the 2007 Indenture; (C) each of the 2007 Indenturc, the 2007
Loan Agrecment and the Escrow Agreement constitutes a legally valid and binding agreement of Wells
Fargo, enforceable against it in accordance with its respective terms; (D) the 2007 Bonds have been
validly authenticated, registered and delivcred by Wells Fargo, as Trustee; (E) no authorization, approval,
conscnt or other order of the State or any other governmental authority or agency within the State having
jurisdiction over Wells Fargo, or, to such counsel's knowledge after reasonable investigation, any othcr
person or corporation, is required for the valid authorization, execution, delivery and performance by
Wclls Fargo of the 2007 lndenture or the Escrow Agreemcnt; and (F) the execution and delivery of thc
2Q07 Indenture and the Escrow Agreement, and compliance by Wells Fargo with the provisions of each
of the 2007 Indenture and the Escrow Agreement under the circumstances contemplated thereby, does not
and will not in any material respect conflict with or constitute on the part of Wells Fargo a breach or
def'ault under any agreemcnts or other instrument to which Wells Fargo is a party (and of which such
counsel is aware after reasonable investigation) or by which it is bound (and of which such counsel is
aware after rcasonable investigation) or any existing law, regulation, court order or consent decree to
which Wells Fargo is subject;
(x) a certificate of thc Financing Authority dated thc Closing Date, signed by a duly
authorized official, in form and substance satisfactory to the Underwriter, to the effect that, to the best of
such official's knowledge: (A) the representations and warranties of the Financing Authority contained in
the Purchase Agreement 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; (B) the Financing Authority has complied with the
requirements of the Financing Authority Agreements required to be complied with on and as of the
Closing Date with respect to the 2007 Bonds; and (C) no event materially adversely affecting thc
Financing Authority has occurred since the date of the Official Statement;
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14
(xi) a certificate of the Redevctopment Agency dated the Closing Date, signed by a
duly authorized official, in form and substance satisfactory to the Underwriter, to the effect that, to the
best of such official's knowledge: (A) the representations and warranties of the Redevelopment Agency
contained in the Purchase Agreement 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; (B) the Redevelopment Agency has complied
with the requirements of the Redevclopmcnt Agency Agrcements required to be complied with on and as
of the Closing Date; (C) no event materially adversely affecting the Redevelopment Agency has occurred
sincc the date of the Official Statement; and (D) that the financial statcments of the Redevelopment
Agency contained in the Official Statement fairly present the financial positions and results of operations
thcreof as of the dates and for the periods thercin set forth, and such officer has no reason to believe that
such financial statements have not been prepared in accordance with generally accepted accounting
principles consistently applied;
(xii) a certificate of the Trustee dated the Closing Date, signed by a duly authorized
official, in form and substance satisfactory to the Underwriter, to the effect that: (A) thc Trustee is a
national banking association organized and existing under and by virtue of the laws of the United States,
having the full power and being qualified to enter into and perform its duties under thc 2007 Indenturc
and to authenticate and deliver the 2007 Bonds to the Underwriter; (B) the Trustee is duly authorized to
enter into the 2007 Indenture and to execute and dcliver the 2007 Bonds to the Underwriter pursuant to
the 2007 Indenture; (C) the 2007 Bonds will havc been duly authenticatcd and delivered by the Trustce;
(U) the execution and delivery of the 2007 Indenture and the 2007 Loan Agreement and compliance with
the provisions on the part of the Trustce contained in the 2007 Indenturc and the 2007 Loan Agreement,
will not conflict with or constitute a breach of or default under any law, administrative regulation,
judgment, decree, loan agreement, indenture, note, resolution, agreement or other instrument to which the
Trustee is a party or is otherwise subject (except that no representation or warranty is made with respect
to any federal or state securities or blue sky laws or regulations), nor will any such exccution, delivery,
adoption or compliance result in the crcation or imposition of any lien, charge or other security interest or
encumbrancc of any nature whatsocver upon any of thc properties or assets held by the Trustee pursuant
to the lien created by the 2007 Indenture under the terms of any such law, administrative regulation,
judgment, dccree, loan agreement, indenture, bond, note, resolution, agreement or other instrument,
exccpt as providcd by the 2007 Indenturc; and (E) to the bcst of the knowledge of thc Trustce, it has not
been servcd with any action, suit, proceeding, inquiry or investigation in law or in equity, before or by
any court, governmental agency, public board or body, nor is any such action or other proceeding
threatened against it, affecting its existence, or the titles of its officers to their respective offices or
seeking to prohibit, restrain, or enjoining the execution and delivery of the 2007 Bonds or the collection
of revenues to be applied to pay the principal, premium, if any, and interest with respect to the 2007
Bonds, or the pledge thcreof, or in any way contesting or affecting the validity or enforceability of the
2007 lndenture or contesting the powers of the Trustee or its authority to enter into, adopt or perform its
obligations under any of the foregoing to which it is a party, wherein an unfavorable decision, ruling or
finding would matcrially adversely affect the validity or enforceability of the 2007 Bonds, the 2007
Indenture and the 2007 Loan Agreement or the power and authority of the Trustce to enter into and
perform its respective duties under the 2007 Indenture and to authenticate and dcliver the 2007 Bonds to
thc Underwritcr;
(xiii) a certificate of Wells Fargo dated the Closing Date, signed by a duly authorized
official, in form and substance satisfactory to the Underwriter, to the effect that: (A) Wells Fargo is a
national banking association organized and existing under and by virtue of the laws of the United States,
having the full power and being qualified to enter into and perform its duties under the 2007 Indenture
and the Escr6w Agreement and to authenticate and deliver the 2007 Bonds to the Underwriter; (B) Wells
Fargo is duly authorized to enter into the 2007 Indenture and the Escrow Agreement and to execute and
234-06035\pc-2
15
dcliver the 2007 Bonds to the Underwriter pursuant to the 2007 Indenture; (C) the 2007 Bonds have been
duly authenticated and dclivered by Wells Fargo, as Trustee; (D) the execution and delivery of the 2007
Indenture, the 2007 Loan Agrcement and the Escrow Agrcement and compliance with thc provisions on
thc part of Wells Fargo contained in each of the 2007 Indenture, the 2007 Loan Agrcement and the
Escrow Agreement, will not conflict with or constitute a breach of or default under any law,
administrative regulation, judgment, decree, loan agreemcnt, indenture, note, resolution, agreement or
other instrument to which Wells Fargo is a party or is otherwise subject (except that no representation or
warranty is made with respect to any federal or state securities or blue sky laws or regulations), nor will
any such execution, delivery, adoption or compliance result in the creation or imposition of any lien,
charge or other security interest or encumbrance of any nature whatsoever upon any of the propertics or
assets held by Wells Fargo pursuant to the lien created by the 2007 Indenture undcr the terms of any such
law, administrative regulation, judgment, decree, loan agreement, indenture, bond, notc, resolution,
agreement or other instrument, except as providcd by the 2007 Indenture; and (E) to the best of the
knowledge of Wells Fargo, it has not been served with any action, suit, proceeding, inquiry or
investigation in law or in equity, before or by any court, governmental agency, public board or body, nor
is any such action or other proceeding threatened against it, affecting its existence, or the titles of its
ofricers to their respective offices or seeking to prohibit, restrain, or enjoining the execution and delivery
of the 2007 Indenture, the 2007 Bonds or the Escrow or the collection of revenues to be applicd to pay the
principal, premium, if any, and interest with respect to the 2007 Bonds, or the pledge thereof, or in any
way contesting or affecting the validity or enforceability of the 2007 Indenture, the 2007 Loan Agreement
or the Escrow Agrcement or contcsting its powers or its authority to enter into, adopt or perform its
obligations under any of the foregoing to which it is a party, wherein an unfavorable decision, ruling or
tinding would materially adversely affect the validiry or enforceabiliry of the 2007 Indenture, the 2007
Loan Agreement the 2007 Bonds or the Escrow Agreement or the power and authority of Wclls Fargo to
cnter into and perform its respcctive duties undcr the 2007 Indenture, the 2007 Loan Agreement or the
Escrow Agreement and to authenticate and deliver the 2007 Bonds to the Underwriter;
(xiv) a certificate of the City signed by an authorized officer of the City dated the
Closing Date to the effect that the information relating to the City in APPENDIX C—"GENERAL
INFORMATION CONCERNING THE CITY OF PALM DESERT" to the Official Statement, as of its date and as
of the date of the Closing, is true and correct in all material respects;
(xv) a certificate of Grant Thornton LLP (the "Verifrcation Agent "), independent
certified public accountants, dated the Closing Date, to the effect that it has verified the accuracy of the
mathematical computations of the adequacy of the maturing principal amounts of the Escrow Securities
with respect to the Prior Bonds to be held by the Escrow Bank, together with the interest earned and to be
earned thereon to make full and timely payment of all principal and interest due with respect to the Prior
Bonds as are then outstanding, and on the specified dates at the then applicable redemption prices;
(xvi) evidence of insured ratings with respect to the 2007 Bonds of "[Aaa]" by
Moody's Investors Service and "[AAA]" by Standard & Poor's Ratings Services, a division of the
McGraw Hill Companies being in full force and effect as of the Closing Date;
(xvii) the Financial Guaranty Insurance Policy issued by the Bond lnsurer;
(xviii) an opinion of Counsel to the Bond Insurer, dated the Closing Date and adciressed
to thc Financing Authority and the Underwriter to the effect that (a) the Financial Guaranty Insurancc
Policy described in the Official Statement is a legal, valid and binding obligation of the Bond lnsurer
enforceable in accordance with its terms, and (b) the statements in the Preliminary Official Statcment and
the OffiCial Statement under the caption "FINANCIAL GUARANTY INSURANCE" and contained in
z;a-oc,o3s���-z
16
APPENDIX H—"SPGCIMEN FINANCIAL GUARANTY INSURANCB POLICY" accurately reflects and iairly
represents the information purported to be shown therein;
(xix) a certificate of Rosenow Spevacek Group lnc. (the "Fiscal Consultant ") to the
effect that the report of the Fiscal Consultant dated , 2006 (the "Report ") contained in the
Official Statement does not contain any untrue statement of a material fact or omitted to statc a material
fact necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading in any material respect, and consenting to the use of the Report in the Preliminary
and Final Official Statemcnts;
(xx) evidence that Lance, Soll and Lunghard has consented to the inclusion of its
report in the Preliminary Official Statement and the Official Statement as APPEN�Ix B—
"REDEVELOPMGNT AGENCY AUDITLD FINANCIAL STA1'EMGNTS FOR THE FISCAL YEAR ENDED JUNE 30,
2006;"
(xxi) thc Tax Certificate of the Financing Authority in form and substance acceptable
to Bond Counsel;
(xxii) evidcnce that thc federal tax information form 8038-G has been prcpared for
filing;
(xxiii) the prcliminary and final Notices of Sale required to be delivercd to the
California Debt and Investment Advisory Commission pursuant to Section 8855(g) and 53583 of the
California Government Code; and
(xxiv) the Blanket Letter of Representations of the Financing Authority to the
Depository Trust Company, New York, New York, relating to the book-entry only systcm for the 2007
Bonds; and
(xxv) such additional legal opinions, certificates, instruments or evidences thereof and
other documents as the Disclosure Counsel or Bond Counsel may reasonably request to cvidence the due
authorization, execution and delivery of thc 2007 Bonds and the conformity of the 2007 Bonds and the
2007 Indcnture with the terms of the 2007 Bonds and as summarized in the Official Statement.
All of the opinions, letters, certificates, instruments and othcr documents mentioned above or
clsewhere in this Purchase Agreement will be deemed to be in compliance with the provisions hereof if
and only if they arc in form and substance satisfactory to the Underwriter.
If the Financing Authority shall be unable to satisfy the conditions to the Underwriter's
obligations contained in this Purchase Agrcement or if the Underwriter, obligations shall be terminated
for any rcason permitted herein, all obligations of the Underwriten c�reunder may be terminatcd by the
Underwriter at, or at any time prior to, the Closing Date by written noticc to the Financing Authority and
none of thc Underwriter the Financing Authority shall have any further obligations hereunder, except that
thc respective obligations of the parties set forth in Section 10.
Section 11. Expenses. (a) The Underwriter shall be under no obligation to pay, and the
Financing Authority shall pay the following expenses incident to the performance of the Financing
Authority's obligations hereunder: (i) the fecs and disbursements of Bond Counsel and Disclosurc
Counscl; (ii) the cost of printing and delivcring the 2007 Bonds, thc Preliminary Official Statcmcnt and
the Official Statement (and any amendment or supplement prepared pursuant to this Purchase
234-06035\pc-2
�i
Agreemcnt); (iii) the fees and disbursements of Del Rio Advisors, LLC, as Financial Advisor to the
Financing Authority, the Trustee and its counsel, the Escrow Bank and it counsel, the Fiscal Consultant,
the Vcrification Agent, accountants, advisers and of any other experts or consultants retained by or for thc
Financing Authority or the Redevelopment Agency; and (iv) subject to Section 11(b) any other expenses
and costs of the Financing Authority incident to the performance of their respective obligations in
connection with the authorization, issuance and sale of the 2007 Bonds, including out-of-pocket cxpenses
and regulatory expenses, and any other expenses agreed to by the pariies.
(b) The Underwriter shall pay all expenses incurred by them in connection with the public
offering and distribution of the 2007 Bonds including, but not limited to: (i) all advertising expenses in
connection with thc offering of the 2007 Bonds; and (ii) all out-of-pocket disbursements and expenses
incurred by the Underwriter in connection with the offering and distribution of the 2007 Bonds (including
travcl and other expenses, [the fees and expenses of Underwriter's Counsel], fees of the Califomia Debt
and Investment Advisory Commission, CUS1P Service Bureau fees and any other fees and expenses),
except as provided in (a) above or as otherwise agreed to by the Underwriter and the Financing Authority.
Section 12. Notices Any notice or other communication to be given to the Financing Authority
or the Financing Authority under this Purchase Agreement may be given by delivering the same in
writing at the address of the Financing Authority set forth above, and any notice or other communication
to be given to the Underwriter under this Purchase Agreemcnt may be given by delivering the same in
writing to the Underwriter: Hutchinson, Shockey, Erley & Co., 2020 Cordero Road, Del Mar, Calif'ornia
92014; Attcntion: [Lauro Garcia, ]II].
Section 13. Parties in Interest. This Purchase Agrecment is madc solely for the bcnefit of the
Financing Authority and the Underwriter (including the successors or assigns of the Underwriter) and no
other person shall acquire or have any right hcreunder or by virtue hereof. All the representations and
warranties of the parties hereto contained in this Purchase Agreement shall remain operative and in full
f'orce and effect, regardless of (a) any investigations made by or on behalf of the Underwriter or the
Financing Authority or (b) delivery of and payment for the 2007 Bonds. The agreements contained in
Scction 10 herein shall survive any termination of this Purchase Agreement.
Section 14. Severability. In the event any provision of this Purchase Agreement shall be held or
dccmcd to be invalid, inoperative or unenforceable by any court of competent jurisdiction, such holdinb
shall not invalidatc or rcnder unenforccable any other provision hereof.
Section l5. Governing Law; Venue. This Purchase Agreement shall be governed and
interpreted exclusively by and construed in accordance with the laws of the State applicable to contracts
made and to be performed in the State. Any and all disputes or legal actions or proceedings arising out of
this Purchase Agreement or any document related hereto shall be filed and maintained in a court of'
competent jurisdiction for matters arising in Riverside County, California. By execution of and delivery
of this Purchase Agreement, the parties hereto accept and consent to the aforesaid jurisdiction.
Section 16. Execution in Counterparts. This Purchase Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one agreement, and any of the partics
hcrcto may cxecute the Purchase Agreement by signing any such counterpart.
234-06035\pc-2
1�
Section 17. Entire Agreement. The parties agree that the terms and conditions of this Purchase
Agreement superscde those of all previous agreements between the partics, and that this Purchase
Agrccment contains the entirc agreement between thc parties hereto. In the evcnt of a dispute betwecn
thc partics under this Purchasc Agrcement, the losing party in such dispute shall pay all rcasonable costs
and expenscs incurred by the prevailing party in conncction therewith, including but not limited to
attorncys' fccs.
Section 18. Effectiveness. This Purchase Agreement shall be effective as of the date set forth
above upon the execution of the acceptance hereof by authorized officers of the Financing Authority and
approval by the Redevelopment Agency shall be valid and enforceable as of the time of such acceptance
and approval.
Very truly yours,
Acccpted:
PALM DESERT FINANCING AUTHORITY
:
Carlos L. Ortega, Chief Administrative Officer
Approvcd:
PALM DESERT REDEVELOPMENT AGENCY
:
Carlos L. Ortega, Executive Director
HUTCHINSON, SHOCKEY, ERLEY & CO.
:
Lauro Garcia, III, [Titic]
234-06035\pc-2
19
SCHEDULEI
SINKING FUND PAYMENT DATES, AMOUNTS, RATES, YIELDS AND PRICES
$ 2007 Bonds
Principal Interest
(Anril 11 Amount Rate Yield Price
� % Term Bond due April 1, 20= Yield: %—Price: %
234-06035\pc-2
I-1
EXHIBIT A-1
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION (HOUSING SET-ASIDE) REVENUE BONDS
SERIES 2007
FORM OF THE CERTIFICATE OF THE FIANCING AUTHORITY
REGARDING PRELIMINARY OFFICIAL STATEMENT
The undersigned hereby states and certifics:
1. That he is the duly appointed, qualified and acting Chief Administrative Officer of the
Palm Desert Financing Authority (the "Financing Authority") and as such, is familiar with the facts herein
certified and is authorized and qualified to certify the same;
2. That there has been delivered to Hutchinson, Shockey, Erley & Co. (the "Underwriter")
of thc captioned Bonds, a Preliminary Official Statement, relative to the captioned Bonds, dated
January_, 20U7 (including the cover page and all appendices thereto, the "Preliminary Official
Statement"), which the Financing Authority, deems final as of its date for purposes of Rule 15c2-12
promulgated under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12"), except for
information permitted to be omitted therefrom by Rule 15c2-12; and
3. Thc Financing Authority hereby approves the use and distribution by the Undcrwriter of
thc Prcliminary Official Statement.
Dated: , 2007
PALM DESERT FINANCING AUTHORITY
:
Carlos L. Ortega, Chief Administrative Officer
234-06035\pc-2
A-1-1
EXHIBIT A-2
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION (HOUSING SET-ASIDE) REVENUE BONDS
SERIES 2007
FORM OF THE CERTIFICATE OF THE FINANCING AUTHORITY
REGARDING PRELIMINARY OFFICIAL STATEMENT
The undersigned hereby states and certifies:
1. That he is the duly appointed, qualificd and acting Executive Director of the Palm Desert
ftedevelopment Agency (the "Redevelopment Agency") and as such, is familiar with the facts hercin
certified and is authorized and qualified to certify the same;
2. That there has been delivered to Hutchinson, Shockey, Erley & Co. (the "Underwriter")
of the captioned Bonds, a Preliminary Official Statement, relative to the captioned Bonds, dated January
, 2007 (including the cover page and all appendices thereto, the "Preliminary Official Statement"),
which with respect to the statements contained under the captions "TH� REDEVELOPMENT AGENCY" and
"THE PROJECT AREA" and containcd in APPENDIX B—"R[DEVELOPMENT AGENCY AUDITED FINANCIAL
STATEMLNTS FOR THE FISCAI_ YLAR ENDED JLTNG 30, 2006" are true, correct and complete in all material
respects and such statements do not omit to state a material fact necessary to make such statements, in
light of the circumstances under which they were made, not misleading.
Datcd: , 2007
PALM DESERT REDEVELOPMENT AGENCY
:
Carlos L. Ortega, Executive Director
234-Oh035\pc-2
A-2-1
EXHIBIT B
FORM OF OPINION OF FINANCING AUTHORITY COUNSEL
[Letterhead of Counscl to thc Financing Authority]
January _, 2007
Palm Dcsert Financing Authority
Palm Dcsert, California
Hutchinson, Shockcy, Erlcy & Co.
Dcl Mar, California
Rc: Palm Desert Financing Authority Tax Allocation (Housing Set-Aside) Revcnue Bonds
Series 2007
Ladies and Gentlemen:
This letter is being delivered to you pursuant to Section 10(v) of the Bond Purchase Agrcement, datcd
January _, 2007 (the "Bond Purchase Agreement"), by and among the Palm Descrt Financing Authority (the
"Financing Authority"), the Palm Desert Redevelopment Agency (the "Redevelopment Agency") and
Hutchinson, Shockey, Erley & Co., as the Underwriter, relating to the above-captioned bonds (thc "2007
Bonds"). All capitalized terms used but not defined herein have the mcanings ascribed to them in the Bond
Purchase Agreement. In our capacity as counsel to the Financing Authority, we have examined the original,
certified copies, or copies otherwise identified to our satisfaction as being true copies of such documents,
certificates, and recorcis as we have deemed relevant and necessary (except as we have specifically limited the
scope of our investigation herein) as the basis for the opinion set forth herein. Relying on such examination
and pertinent law and subject to the limitations and qualifications hereinafter set forth, we are of the opinion
that:
1. The Financing Authority is a joint exercise of power authority duly created, organized and
existing under the laws of thc State of Califomia pursuant to an Agreement entitled "Joint Exercise of Powers
Agrcemcnt" dated January 26, 1989, between the City of Palm Desert and thc Redevelopment Agency.
2. The Resolution approving and authorizing the issuance, execution, and delivery of thc 2007
Bonds, and the cxecution and dclivery of the Financing Authority Agrccments and the Official Statement has
been duly adopted, and is in full force and effect and has not been modified, amended or rescinded.
3. The Financing Authority has the full legal right, power and authority to execute, deliver and
perform its obligations and duties under the 2007 Bonds and Financing Authority Agreements.
4. The Financing Authority A��eements have been duly authorized, executed and delivered by
the Financing Authority, and assuming due authorization and delivery by the other parties thereto, constitute
legal, valid and binding agreements of the Financing Authority enforceable against the Financing Authority in
234-0G035\pc-2
:
accordancc with their respcctive terms, exccpt as the cnforceability thereof may bc limited by any
applicable bankruptcy, insolvency, debt adjustment, fraudulent conveyance or transfer, moratorium,
reorganization or other similar laws affecting creditors' rights, to the application of equitable principles,
to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against
public cntitics in the Statc of California.
5. All approvals, consents, authorizations, elections and orders of or filings or rcgistrations with
any governmental authority, board, agency or commission having jurisdiction which would constitute a
condition precedent to, the absence of which would materially adversely affect, the performance by the
Financing Authority of its obligations under the Financing Authority Agreements have been obtained and are
in full forcc and effect; except no opinion is express herein with respect to any such approval, consent or
authorization required under State securities or blue sky laws in connection with the 2007 Bonds or the
purchase and distribution thereof by the Underwriter.
6. The execution and delivery of the Financing Authority Agrecments and compliance with the
provisions of each thereof, do not and 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 or any
department, division, agency or instrumentality of either thereof, or any applicable court or administrative
decree or order or any loan a�eement, note, resolution, indcnture, contract, agreement or other instrument to
which the Financing Authority is a party or is otherwise subject or bound (and of which such counsel is
aware after reasonable investigation) in any manner which would materially adversely affcct the Financing
Authority's performance under the Financing Authority Agrecments.
7. To the best of our knowledge, except as otherwise disclosed in the Official Statement, there is
no action, suit, proceeding, inquiry or investigation, at law or in equity, or before any court, public board or
body pending or threatened against the Financing Authority, challenging the creation, organization, existence
or powers of the Financing Authority, or challenging the capacity of iLs officers, or the validiry of the 2007
Bonds, the Financing Authority A�-eements or the transactions contemplated thereby, or the proceedings
taken by the Financing Authority in connection with the authorization, exccution or delivery of the 2007
Bonds or the Financing Authority A�-eements, wherein any unfavorable decision, ruling or finding would
adversely ai�'ect the transactions contemplated thereby or by the Official Statement, or which, in any way,
would adversely affect the validity or enforceability of the 2007 Bonds or the Financing Authority
Agreements or, in any material respect, the ability of the Financing Authority to perform its obligations
thereunder.
This opinion is based on such examination of the law of the Statc of California as wc decmcd
relevant for the purposes of this opinion. We have not considered the effect, if any, of the laws of any
other jurisdiction upon matters covered by this opinion. We express no opinion herein as to the status of
the 2007 Bonds or the interest thereon, or the Financing Authority Agreements under any federal
securities laws or any state securities or "Blue Sky" law or any federal, state or local tax law. Further, we
express no opinion with respect to any indemnification, contribution, choice of law, choice of forum or
waiver provisions contained in the Financing Authority Agreements. Without limiting any of the
foregoing, wc express no opinion as to any matter other than as expressly set forth above.
Whenever a statement hercin is qualified by "to the best of our knowledge," it shall be dcemed to
indicate that, during the course of our representation of the Financing Authority in connection with the
financing described herein, no information that would give us current, actual knowledge of the inaccuracy
of such statemcnt has come to our attention. We have not, however, undertaken any independent
investigation to determine the accuracy of such statements, and any limited inquiry undertaken by us
during the preparation of this opinion letter should not be regarded as such investigation. No infercnce as
234-0G035\pc-2
B-2,
to our knowledge of any matters bearing upon the accuracy of any such statement should be drawn from
the fact of our representation of the Financing Authority.
This letter is furnished by us as counsel to the Financing Authority. Other than the Financing
Authority, no attorney-client rclationship has existed or exists between our firm and you in connection
with the 2007 Bonds or by virtue of this letter. We disclaim any obligation to update this Ietter. This
letter is delivered to you, is solely for your benefit and is not to be used, quoted or otherwise refcned to or
relied upon for any other purpose or by any other person. This letter is not intended to, and may, not, be
relicd upon by owners of the 2007 Bonds.
Respectfully submitted,
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B-3
EXHIBIT C
FORM OF OPINION OF REDEVELOPMENT AGENCY COUNSEL
[Lettcrhead of Counsel to thc Redcvelopmcnt Agency]
, 2007
Palm Dcsert Financing Authority
Palm Descrt, California
Hutchinson, Shockey, Erley & Co.
Dcl Mar, California
Re: Palm Desert Pinancing Authority Tax Allocation (Housing Set-Aside) Revenue Bonds
Scries 2007
Ladies and Gentlemen:
This letter is being delivered to you pursuant to Section 10(vi) of the Bond Purchase Agreement, dated
January _, 2007 (the "Bond Purchase Agreement"), by and among the Palm Desert Financing Authority, the
Palm Desert Redevelopment Agency (the "Redevelopment Agency") and Hutchinson, Shoc;key, Erley & Co.,
as thc Underwriter, relating to the above-captioncd bonds (the "2007 Bonds"). All capitalized terms used but
not defined herein have the meanings ascribed to them in the Bond Purchase Agreement. In our capacity as
counsel to the Redevelopment Agency, we have examined the original, certified copies, or copies otherwisc
identified to our satisfaction as being true copies of such documents, certificates, and records as we have
deemed relevant and necessary (except as we have specifically limited the scope of our investigation herein)
as the basis for the opinion set forth herein. Relying on such examination and pertinent law and subject to the
limitations and qualifications hereinafter set forth, we are of the opinion that:
1. The Rcdevelopment Agency is duly organized and validly existing under thc Constitution
and laws of the Statc of California.
2. The Rcsolution approvin�; and authorizing the execution and delivery of the
Redevelopment Agency Agreements was duly adopted at a meeting of the Redevelopment Agency 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 is in full force and effect and has not been amended or repealed;
3. The Redevelopment Agency Agreements have been duly authorized, executed and
dclivered by the Redevelopment Agency and, assuming due authorization, execution and dclivery by thc
other parties thereto, constitute legal, valid and binding agreements of the Redevelopment Agency
enforccable in accordance with the respective tenns cxcept as the enforceability thereof may be limited by
any applicable bankruptcy, insolvency, debt adjustment, fraudulent conveyance or transfer, moratorium,
reorganization or other similar laws affecting creditors' rights, to the application of equitable principles,
z3a-oeo3s���-z
C-1
to the cxercise of judicial discretion in appropriate cases and to the limitations on Icgal remcdies against
public entities in thc Statc of California.
4. The execution and delivery of the Redevelopment Agency Agreements and compliance
with the provisions of each thereof, do not and 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 Statcs
or any department, division, agency or instrumentality of either thereof, or any applicable court or
administrative decree or order or any loan agreement, note, resolution, indenture, contract, agreement or
other instrument to which the Redevelopment Agency is a party or is otherwise subject or bound (and of
which such counsel is aware after reasonable investigation) in any manner which would materially
adversely affect the Redevelopment Agency's performance under the Redevelopment Agency
Agrccmcnts.;
5. 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, the absence of which would �naterially adverscly affect, thc
performance by the Redevelopment Agency of its obligations under the Redevelopment Agency
Agrecments have becn obtained and are in full force and effect..
6. To the best of our knowledge, except as otherwise disclosed in the Official Statement, there is
no action, suit, proceeding, inquiry or investigation, at law or in equity, or before any court, public board or
body pending or threatened against the Redevelopment Agency, challenging the creation, organization,
existence or powers of thc Redevelopment Agency, or challenging the capacity of its officers, or the validity
of the Redcvelopmcnt Agency A�-cemcnts or the transactions contemplated thereby, or the proceedings
taken by the Redevelopment Agency in connection with the authorization, execution or delivcry of the
Redevelopment Agency Agreements, wherein any unfavorable decision, ruling or finding would adverscly
affect the transactions contemplated thereby or by the Official Statement, or which, in any way, would
adversely affcct the validity or enforceability of thc Redevelopment Agency Agreements or, in any material
respect, the ability of thc Redevelopment Agency to perform its obligations thereunder.
"I'his opinion is based on such examination of the law of the State of California as we deemed
rcicvant for the purposes of this opinion. We have not considered the effect, if any, of the laws of any
othcr jurisdiction upon matters covercd by this opinion. We express no opinion herein as to the status of
the 2U07 Bonds or thc interest thereon, or the Redevelopment Agency Agreements under any federal
securitics laws or any state securities or "Blue Sky" law or any federal, state or local tax law. Further, wc
express no opinion with respect to any indemnification, contribution, choice of law, choice of forum or
waiver provisions contained in the Redevelopment Agency Agreements. Without limiting any of the
foregoing, we express no opinion as to any matter other than as expressly set forth above.
Whcnever a statement herein is qualified by "to the best of our knowledge," it shall be deemed to
indicate that, during the course of our representation of the Redevelopment Agency in connection with
the financing described herein, no information that would give us current, actual knowledge of the
inaccuracy of such statement has come to our attention. We have not, however, undertaken any
independent investigation to determine the accuracy of such statements, and any limited inquiry
undertaken by us during the preparation of this opinion letter should not be regarded as such
investigation. No infcrence as to our knowledge of any matters bearing upon the accuracy of any such
statement should be drawn from the fact of our rcpresentation of the Redevelopment Agency.
234-06035\pc-2
C-2
This letter is furnished by us as counsel to the Redevelopment Agency. Othcr than the Redevelopment
Agency, no attorney-clicnt rclationship has existcd or exists between our firm and you in connection with
the 2007 Bonds or by virtue of this letter. We disclaim any obligation to update this letter. This lettcr is
delivered to you, is solely for your benefit and is not to be used, quoted or otherwise referred to or relied
upon for any other purpose or by any other person. This letter is not intended to, and may, noi, be relied
upon by owncrs of the 2007 Bonds.
234-0603 5\pc-2
Respectfully submitted,
C-3
L&J DRAFT
CONTINUING DISCLOSURE AGREEMENT
The Continuing Disclosure Agreement (the "Disclosure Agreement") is executed and delivered
by and among the Palm Desert Redevelopment Agency (the "Redevelopment Agency"), Wells Fargo
Bank, National Association (the "Trustee") and MuniFinancial, Inc. (the "Dissemination Agent") in
connection with the issuance of the S principal amount of the Palm Desert Financing
Authority, Tax Allocation (Housing Set -Aside) Refunding Revenue Bonds, Series 2007 (the "Bonds").
The Bonds are being executed and delivered pursuant to an Indenture of Trust dated as of February 1,
2007 (the "Indenture"), by and between the Palm Desert Financing Authority (the "Financing Authority")
and the Trustee. The Financing Authority will loan the proceeds of the Bonds to the Redevelopment
Agency pursuant to a Loan Agreement made and entered into as of February 1, 2007. The
Redevelopment Agency covenants and agrees as follows:
SECTION 1. Purpose of this Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the Redevelopment Agency for the benefit of the Holders and Beneficial
Owners of the Bonds and in order to assist the Participating Underwriter in complying with Securities and
Exchange Commission ("SEC") Rule 15c2-12(b)(5). The Redevelopment Agency acknowledges that the
Financing Authority has undertaken no responsibility with respect to any reports, notices or disclosures
provided or required under this Disclosure Agreement, and has no liability to any person, including the
owners of the Bonds, with respect to any reports, notices or disclosures.
SECTION 2. 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 Redevelopment Agency pursuant
to, and as described in, Sections 3 and 4 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.
"Central Post Office" shall mean the Disclosure USA website maintained by the Municipal
Advisory Council of Texas or any successor thereto, or any other organization or method approved by the
staff or members of the Securities and Exchange Commission as an intermediary through which issuers
may, in compliance with the Rule, make filings required by this Continuing Disclosure Certificate.
"Dissemination Agent" shall mean MuniFinancial, Inc., acting in its capacity as Dissemination
Agent hereunder, or any successor Dissemination Agent designated in writing by the Redevelopment
Agency and which has filed with the Trustee a written acceptance of such designation.
"Fiscal Year" shall mean with respect to the Redevelopment Agency, the period beginning on
July 1 of each year and ending on the next succeeding June 30, or any twelve month or fifty-two week
period thereafter selected by the Redevelopment Agency with notice of such selection of change in fiscal
year to be provided as set forth herein.
"Holders" shall mean either the registered owners of the Bonds, or, if the Bonds are registered in
the name of The Depository Trust Company or another recognized depository, any applicable participant
in its depository system.
234-06035\cda-1
"Listed Event" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
"National Repository" shall mean any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule. A list of the current National Repositories approved by the S.E.C.
may be found at the S.E.C. website: http://www.sec.gov/info/municipal/nrmsir.htm.
"Participating Underwriter" shall mean Hutchinson, Shockey, Erley & Co., as the original
underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.
"Repository" shall mean each National Repository and each State Repository, if any.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities 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 3. Provision of Annual Reports.
(a) The Redevelopment Agency shall, not later than six months after the end of the
Redevelopment Agency's Fiscal Year (which currently is June 30), commencing with the report for the
2005-06 Fiscal Year, provide to each Repository an Annual Report which is consistent with the
requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single
document or as separate documents comprising a package, and may include by reference other
information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial
statements of the Redevelopment Agency may be submitted separately from the balance of the Annual
Report. The Redevelopment Agency shall provide a written certification with each Annual Report
furnished to the Dissemination Agent and the Trustee to the effect that such Annual Report constitutes the
Annual Report required to be furnished by the Redevelopment Agency hereunder. The Dissemination
Agent and the Trustee may conclusively rely upon such certification of the Redevelopment Agency. If
the Redevelopment Agency's Fiscal Year changes, it shall give notice of such change in the same manner
as for a Listed Event under Section 5(c).
(b) If the Dissemination Agent is other than the Redevelopment Agency, then not later than
fifteen (15) Business Days prior to said date, the Redevelopment Agency shall provide the Annual Report
to the Dissemination Agent. 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
send a notice to the Municipal Securities Rulemaking Board and the State Repository, if any, in
substantially the form attached as Exhibit A to this Disclosure Agreement.
(c) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the name
and address of each Repository;
(ii) file the Annual Report with each Repository by the date required therefor by
Section 3(a) and file any notice of a listed Event, if requested by the Redevelopment Agency, as soon as
practicable following receipt from the Redevelopment Agency of such notice; and
234-06035\cda-1
2
(iii) if the Dissemination Agent is other than the Redevelopment Agency, file a report
with the Redevelopment Agency 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.
(d) Notwithstanding any other provision of this Continuing Disclosure Certificate, the City
and the Dissemination Agent reserve the right to make any of the aforementioned filings through the
Central Post Office.
SECTION 4. Content of Annual Reports. The Redevelopment Agency's Annual Report shall
contain or incorporate by reference the following:
(a) The audited financial statements of the Redevelopment Agency, presented in accordance
with generally accepted accounting principles as promulgated to apply to governmental entities Commission
from time to time. If the audited financial statements of the Redevelopment Agency are not available by the
time the Annual Report is required to be filed as described above, the Annual Report shall contain unaudited
financial statements in a format similar to the financial statements contained in the final Official Statement,
and the audited financial statements shall be filed in the same manner as the Annual Report when they
become available.
(b) Unless otherwise provided in the audited financial statements filed on or prior to the
annual filing deadline for Annual Reports provided in Section 3 above, financial information and
operating data with respect to the Redevelopment Agency for the preceding Fiscal Year, substantially
similar to that provided in the following tables and charts in the Official Statement:
(i) The Principal Taxpayers within each Project Area as set forth in Tables IC-1,
1 C-2, 2C, 3C and 4C; and
(ii) The Historical Taxable Values and Tax Increment Verification as set forth in
Tables 1 D-1, 1 D-2, 2D, 3D and 4D.
Such annual information and operating data described above may be included by specific
reference to other documents, including official statements of debt issues of the Redevelopment Agency
or related public entities, which have been submitted to each of the Repositories or the Securities and
Exchange Commission; provided, that if the documents included by reference is a final official statement,
it must be available from the Municipal Securities Rulemaking Board; and provided further, that the
Redevelopment Agency shall clearly identify each such other document so included by reference.
SECTION 5. Renortina of Sienificant Events.
(a) Pursuant to the provisions of this Section 5, the Redevelopment Agency shall give, or
cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if
material:
(i) principal and interest payment delinquencies.
(ii) non-payment related defaults.
(iii) modifications to rights of Bondholders.
(iv) optional, contingent or unscheduled bond calls.
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Bonds.
(v) defeasances.
(vi) rating changes.
(vii) adverse tax opinions or events adversely affecting the tax-exempt status of the
(viii) unscheduled draws on the Reserve Fund reflecting financial difficulties.
(ix) unscheduled draws on the credit enhancements reflecting financial difficulties.
(x) substitution of the credit or liquidity providers or their failure to perform.
(xi) release, substitution or sale of property securing repayment of the Bonds.
(xii) Significant amendments to the land use regulations or entitlements of the City of
Palm Desert within the Project Areas which would adversely affect development of property
therein.
(b) The Trustee shall, promptly upon obtaining actual knowledge of the occurrence of any of
the Listed Events contact the Disclosure Representative, inform such person of the event, and request that
the Redevelopment Agency promptly notify the Dissemination Agent in writing whether or not to report
the event pursuant to subsection (f) and promptly notify the Trustee in writing whether or not to report the
event to the Owners (unless notice to the Owners is required by the Indenture). For purposes of this
Disclosure Agreement, "actual knowledge" of the occurrence of such Listed Events shall mean actual
knowledge by the officer at the Trust Office of the Trustee with regular responsibility for the
administration of the Indenture.
(c) Whenever the Redevelopment Agency obtains knowledge of the occurrence of a Listed
Event, whether because of a notice from the Trustee pursuant to Section 5(b) or otherwise, the
Redevelopment Agency shall as soon as possible determine if such event would be material under
applicable federal securities laws.
(d) If the Redevelopment Agency determines that knowledge of the occurrence of a Listed
Event would be material under applicable federal securities laws, the Redevelopment Agency shall
promptly notify the Dissemination Agent and the Trustee in writing. Such notice shall instruct the
Dissemination Agent to file a notice of such occurrence with the Municipal Securities Rulemaking Board
and the State Repository, if any. Notwithstanding the foregoing, notice of Listed Events described in
subsections (a)(iv) and (a)(v) need not be given under this subsection any earlier than the notice (if any)
of the underlying event is given to Holders of affected Bonds pursuant to the Indenture.
(e) If in response to a request under subsection (b), the Redevelopment Agency determines
that the Listed Event is not material, the Redevelopment Agency shall so notify the Dissemination Agent
and the Trustee in writing and instruct the Dissemination Agent and the Trustee not to report the
occurrence.
SECTION 6. Termination of Reporting Oblisation. The obligations of the Redevelopment
Agency under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or
payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the
Redevelopment Agency shall give notice of such termination in the same manner as for a Listed Event
under Section 5(c).
234-06035\cda-1
4
SECTION 7. Dissemination Agent. The Redevelopment Agency 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 shall not be responsible in any manner for the content of
any notice or report prepared by the Redevelopment Agency pursuant to this Disclosure Agreement.
The initial Dissemination Agent shall be the MuniFinancial, Inc.
The Dissemination Agent may resign its duties hereunder at any time upon written notice to the
Redevelopment Agency.
SECTION 8. Amendment. Notwithstanding any other provision of this Disclosure Agreement,
the parities may amend this Disclosure Agreement (and the Trustee and the Dissemination Agent shall
agree to any amendment so requested by the Redevelopment Agency provided that neither the Trustee nor
the Dissemination Agent shall be obligated to enter into any such amendment that modifies or increases
its duties or obligations hereunder) only if:
(a) the amendment is made in connection with a change in circumstances that arises from a
change in legal requirements, change in law, or change in identity, nature, or status of the Redevelopment
Agency, or type of business conducted;
(b) this Disclosure Agreement, as amended, would have compiled with the requirements of
the Rule at the time of sale of the Bonds, after taking into account any amendments or interpretations of
the Rule, as well as any change in circumstances;
(c) the amendment does not materially impair the interests of the Owners, as determined by
parties unaffiliated with the Redevelopment Agency (such as, but without limitation, the Redevelopment
Agency's bond counsel) or by Owner's consent pursuant to Section 7.01 of the Indenture; and
(d) the annual financial information containing (if applicable) the amended operating data or
financial information will explain, in narrative form, the reasons for the amendment and the "impact" (as
that word is used in the letter from the staff of the Securities and Exchange Commission to the National
Association of Bond Lawyers dated June 23, 1995) of the change in the type of operating data or financial
information being provided.
SECTION 9. Additional Information.
(a) The Redevelopment Agency agrees to provide public information concerning the Bonds
and the Redevelopment Agency to any Holder or Beneficial Owner making a written request therefor.
(b) Nothing in this Disclosure Agreement shall be deemed to prevent the Redevelopment
Agency 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 Redevelopment Agency 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 Redevelopment Agency shall have no obligation under this Disclosure
Agreement to update such information or include it in any future Annual Report or notice of occurrence
of a Listed Event.
SECTION 10. Default. In the even to a failure of the Redevelopment Agency to comply with any
provision of this Disclosure Agreement, the Trustee shall, at the written direction of any Participating
234-06035\cda-1
Underwriter or the Owners of a majority in aggregate principal amount of Outstanding Bonds (but only to
the extent funds have been provided to it or it has been otherwise indemnified to its satisfaction from any
cost, liability, expense or additional charges of the Trustee whatsoever, including, without limitation, fees
and expenses of its attorneys), or any Owner may, take such actions as may be necessary and appropriate,
including seeking mandate or specific performance by court order, to cause the Redevelopment Agency,
the Trustee or the Dissemination Agent, as the case may be, to comply with its obligations under this
Disclosure Agreement; provided that any such action may be instituted only in the Federal or State Court
located in the County of Los Angeles, State of California and no remedy other than specific performance
may be sought or granted. A default under this Disclosure Agreement shall not be deemed an Event of
Default under the Indenture or the Loan Agreement, and the sole remedy under this Disclosure
Agreement in the event of a failure of the Redevelopment Agency, the Trustee or the Dissemination
Agent to comply with this Disclosure Agreement shall be an action to compel performance.
SECTION 11. Duties. Immunities and Liabilities of Dissemination Aeent. The Dissemination
Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the
Redevelopment Agency agrees to indemnify and save the Dissemination Agent and the Trustee, their
officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may
incur arising out of or in the exercise or performance of its 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 or Trustee's negligence or willful misconduct. The
Dissemination Agent may rely on and shall be protected in acting or refraining from acting upon any
direction from the Issuer or an opinion of nationally recognized bond counsel. The Dissemination Agent
and the Trustee shall be paid compensation by the Redevelopment Agency 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 perfonmance of its duties
hereunder. The Dissemination Agent and the Trustee shall have no duty or obligation to review any
information provided to them by the Redevelopment Agency hereunder and shall not be deemed to be
acting in a fiduciary capacity for the Financing Authority, the Redevelopment Agency, the Owners, or
any other party. The obligations of the Redevelopment Agency under this Section shall survive
resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any
right to commence any action against the Dissemination Agent seeking any remedy other than to compel
specific performance of this Disclosure Agreement. The Dissemination Agent shall not be liable under
any circumstances for monetary damages to any person for any breach of this Disclosure Agreement.
SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
Redevelopment Agency, the Participating Underwriter, the Dissemination Agent and Holders and
Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 13. Notices. Notices should be sent in writing to the following addresses. The
following information may be conclusively relied upon until changed in writing.
Redevelopment Agency: Palm Desert Redevelopment Agency
73-510 Fred Waring Drive
Palm Desert, California 92260
(760)346-0611
(760) 346-0574 Fax
Trustee: Wells Fargo Bank, National Association
700 South Flower Street, Suite 500
Los Angeles, California 90017-4104
(213) 630-6237
(213) 630-6215 Fax
234-06035\cda-I
Dissemination Agency: MuniFinancial, Inc.
27368 Via Industrial, Suite 10
Temecula, California 92590
(951) 587-3500
(951) 587-3510 Fax
SECTION 14. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
Date: , 2007
PALM DESERT REDEVELOPMENT AGENCY OF
an
Authorized Officer
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
in
Authorized Officer
MUNIFINANCIAL, INC.,
as Dissemination Agent
LIM
234-06035\cda-1
Authorized Officer
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Party: Palm Desert Redevelopment Agency
Name of Bond Issue: Palm Desert Financing Authority Tax Allocation (Housing Set -
Aside) Refunding Revenue Bonds Series 2007
Date of Issuance: , 2007
NOTICE 1S HEREBY GIVEN that the Palm Desert Redevelopment Agency (the
"Redevelopment Agency") has not provided an Annual Report with respect to the above -named Bonds as
required by Section 3 of the Continuing Disclosure Agreement dated , 2007, by and among the
Redevelopment Agency, the Trustee and the Dissemination Agent executed by the Dissemination Agent
for the benefit of the Holders and Beneficial Owners of the above -referenced bonds. The Redevelopment
Agency anticipates that the Annual Report will be filed by
Dated:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee, on behalf of the Redevelopment Agency
By:
Its:
cc: Executive Director, Palm Desert Redevelopment Agency
234-06035\cda-I
A-1
2007 Housing Proiect Loan A�reement,
with reference to
$
Palm Desert Financing Authority
Tax Allocation (Housing Set-Aside)
Refunding Revenue Bonds
Series2007
PG402-1059\925668v3.doc RWG DRAFT: 11122/2006
TABLE OF CONTENTS
ARTICLE I
Section 1.01
Section 1.02
ARTICLE II
Section 2.01
Section 2.02
Section 2.03
Scction 2.04
Section 2.05
Scction 2.06
Section 2.07
Section 2.08
Section 2.09
Section 2.10
ARTICLE lII
Section 3.01
Section 3.02
Section 3.03
Section 3.04
ARTICLE IV
Section 4.01
Section 4.02
Section 4.03
Section 4.04
Section 4.05
Section 4.06
Section 4.07
Section 4.08
Section 4.09
Section 4.10
Section 4.11
Section 4.12
PAGE
DEFINITIONS.................................................................................................. 2
Definitions................................................................................................... 2
Rules of Construction ................................................................................. 5
THE LOAN; APPLICATION OF LOAN PROCEEDS; PARITY DEBT....... 5
Authorization.............................................................................................. 5
Disbursement of Bond Proceeds ................................................................. 5
Repaymentof Loan ..................................................................................... 6
OptionalPrepayment . ................................................................................. 6
ReserveFund .............................................................................................. 7
Costs of Issuance Fund ............................................................................... 8
ProjectFund ................................................................................................ 8
ParityDebt .................................................................................................. 9
Issuance of Subordinate Debt ................................................................... 10
Validityof Loan ........................................................................................ 10
PLEDGE AND APPLICATION OF PLEDGED TAX REVENUES ............ 10
Pledge of Pledged Tax Revenues .............................................................. 10
Special Fund; Deposit of Pledged Tax Revenues ..................................... 10
Transfer of Pledged Tax Revenues From Special Fund ........................... 11
Investment of Moneys; Valuation of Investments .................................... 12
OTHER COVENANTS OF TI�E AGENCY ................................................. 12
Punctual Payment; Extension of Payments ............................................... 12
Limitation on Additional Indebtedness ..................................................... 12
Paymentof Claims .................................................................................... 12
Books and Accounts; Financial Statements .............................................. 13
Protection of Security and Rights ............................................................. 13
Payments of Taxes and Other Charges ..................................................... 13
Maintenance of Tax Revenues .................................................................. 13
Payment of Expenses; Indemnification .................................................... 14
TaxCovenants . ......................................................................................... 14
Redevelopment Activities ......................................................................... 15
HousingFund ............................................................................................ 15
Further Assurances .................................................................................... 16
ARTICLE V EVENTS OF DEFAULT AND REMEDIES ................................................. 16
Section 5.01 Events of Default and Acceleration of Maturities .................................... 16
Section 5.02 Application of Funds Upon Default .......................................................... 17
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Section5.03 No Waiver ................................................................................................. 18
Section 5.04 Agreement to Pay Attorneys' Fees and Expenses .................................... 18
Section 5.05 Remedies Not Exclusive ........................................................................... 18
Section 5.06 Conlrol of Remedies by Insurer ................................................................ 18
ARTICLE VI MISCELLANEOUS ....................................................................................... 19
Section 6.01
Scction 6.02
Section 6.03
Section 6.04
Section 6.05
Section 6.06
Section 6.07
Section 6.08
Section 6.09
Section 6.10
Section 6.11
Section 6.12
Section 6.13
Section 6.14
P6402-1059\925668v3.doc
Benefits Limited to Parties ........................................................................ 19
Successor Deemed Included in All References to Predecessor ................ 19
Discharge of Loan Agreement .................................................................. 19
Amendment .... ...... .......... .... ... ... ... .................... ...... ... .... .... ......... .. . ... ... ... .. .. 20
Waiver of Personal Liability ..................................................................... 20
Payment on Business Days ....................................................................... 20
Notices...................................................................................................... 20
[Bond Insurance ........................................................................................ 20
SuretyBond . ............................................................................................. 20
PartialInvalidity ........................................................................................ 20
Article and Section Headings and References .......................................... 20
Execution of Counterparts ........................................................................ 21
GoverningLaw ......................................................................................... 21
TheTrustee ............................................................................................... 21
3
2007 HOUSING PROJECT LOAN AGREEMENT
This Loan Agreement is made and entered into as of February 1, 2007, by and
among the Palm Desert Redevelopment Agency, a public body, corporate and politic, duly
organized and validly existing under the laws of the State of California (the "Agency"), the Palm
Desert Financing Authority, a joint powers authority duly organized and validly existing under
the laws of the State of California (the "Authority"), and Wells Fargo Bank, National
Association, a national banking association duly organized and validly existing under the laws of
the United States of America (the "Trustee").
RECITALS
A. The Palm Desert Redevelopment Agency is a redevelopment agency, a
public body, corporate and politic, duly created, established and authorized to transact business
and exercise its powers, all under and pursuant to the Redevelopment Law, and the powers of the
Agency include the power to borrow money for any of its corporate purposes.
B. The Agency has determined to incur a loan hereunder (the "Loan") for the
object and purpose of financing certain public capital improvements, including: (i) the
acquisition and rehabilitation of several multi-family housing units; (ii) the acquisition of land
for the purposes of expanding existing Agency-owned multi-family housing units and
constructing new multi-family low/moderate income housing units; and (iii) providing subsidies
to facilitate the development of low/moderate income housing units, pursuant to the
Redevelopment Law and the Marks-Roos Local Bond Pooling Act of 1985, Article 4, Chapter 5,
Division 7, Title 1 of the Government Code of the State of California (the "Bond Law"),
C. For the purpose of providing funds to make the Loan to the Agency, the
Authority has issued, concurrently with the execution and delivery of this Loan Agreement,
$ principal amount of its Tax Allocation (Housing Set-Aside) Refunding Revenue
Bonds, Series 2007 (the "Bonds") pursuant to the Bond Law and an Indenture, dated as of
February 1, 2007, between the Authority and the Trustee.
D. The Authority has determined that there will be significant public benefits
accruing from such Loan, consisting of demonstrable savings in effective interesl rates and
financing costs associated with the issuance of the Bonds pursuant to the Bond Law.
E. All acts and proceedings required by law necessary to make this Loan
Agreement, when executed by the Agency, the Trustee and the Authority, the valid, binding and
legal obligation of the Agency, the Trustee and the Authority, and to constitute this Loan
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 Loan
Agreement have been in all respects duly authorized.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto do hereby agree as follows:
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ARTICLE I
llEFINITIONS
Section 1.01 Definitions. Unless the context clearly requires or unless
otherwise defined herein, the capitalized terms in this Loan Agreement shall havc the respective
meanings which such terms are given in the Indenture. In addition, the following terms defined
in this Section 1.01 shall, for all purposes of this Loan Agreement, have the respective meanings
herein specified.
"Bonds" means the Palm Desert Financing Authority Tax Allocation (Housing
Set-Aside) Refunding Revenue Bonds, Series 2007.
"Costs of Issuance" means all expenses incurred in connection with the
authorization, issuance, sale and delivery of the Bonds and the making of the Loan pursuant to
the Loan Agreement, including but not limited to all compensation, fees and expenses (including
but not limited to fees and expenses for legal counsel) of the Authority and the Trustee,
compensation to any financial advisors or underwriters and their counsel, legal fees and
expenses, filing and recording costs, rating agency fees, credit enhancement fees (including
insurance, surety bonds and letters of credit), costs of preparation and reproduction of documents
and costs of printing.
"Costs of Issuance Fund" means the fund by that name established and held by
the Trustee pursuant to Section 2.06.
"Escrow Fund" means the fund by that name established under the Escrow
Agreement, dated as of even date herewith, by and among the Authority, the Agency and Wells
Fargo Bank, National Association, as escrow agent, relating to the refunding of the portion of the
Authority's Tax Allocation (Housing Set-Aside) Revenue Bonds, Series 1998, scheduled to
mature on .
"Event of Default" means any of the events described in Section 5.01.
["Financial Guarantv A�reement" means the Financial Guaranty Agreement by
and between the Agency and the Insurer providing for the issuance of the Surety Bond.]
"Housing Fund" means the Low and Moderate Income Housing Fund established
pursuant to Section 33334.3 of the Redevelopment Law and held by the Agency.
"Housing Set-Aside Revenues" means, for any Fiscal Year, that portion of the
Tax Revenues received by the Agency for such Fiscal Year which are required to be set aside
and deposited inlo the Housing Fund pursuant to Sections 33334.2, 33334.3 and 33334.6 of the
Redevelopment Law.
"Independent Redevelopment Consultant" means any consultant or firm of such
consultants appointed by or acceptable to the Agency, and who, or each of whom: (i) is judged
by the Agency to have experience in matters relating to the collection of Tax Revenues or
otherwise with respect to the financing of redevelopment projects; (ii) is in fact independent and
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not under the domination of the Agency; (iii) does not have any substantial interest, direct or
indirect, with the Agency, other than as original purchaser of any obligations of the Agency; and
(iv) is not connected with the Agency as an officer or employee of the Agency, but who may be
regularly retained to make reports to the Agency.
"Indenture" means the Indenture of Trust dated as of February 1, 2007, by and
between the Authority and the Trustee, authorizing the issuance of the Bonds, as originally
executed or as it may from time to time be supplemented, modified or amended.
"Loan" means the loan made by the Authority to the Agency pursuant to Section
2.01 plus the total amount of the underwriting discount on the purchase price of the Bonds.
"Loan AQreement" means this 2007 Housing Project Loan Agreement by and
between the Agency and the Authority, as originally executed or as it may from time to time be
amended, modified or supplemented.
"Maximum Annual Debt Service", as certified by the Agency to the Trustee,
means, as of the date of calculation, the largest amount obtained by totaling, for the current or
any future Bond Year, the sum of (i) the amount of interest payable on the Loan and all
outstanding Parity Debt in such Bond Year, assuming that principal thereof is paid as scheduled
and that any mandatory sinking fund payments are made as scheduled, and (ii) the amount of
principal payable on the Loan and on all outstanding Parity Debt in such Bond Year, including
any principal required to be prepaid by operation of mandatory sinking fund payments. For
purposes of such calculation, at the option of the Agency and specified to the Trustee in writing,
there shall be excluded a pro rata portion of each installment of principal of any Parity Debt,
together with the interest to accrue thereon, in the event and to the extent that the proceeds of
such Parity Debt are deposited in an escrow fund from which amounts may not be released to the
Agency unless the Pledged Tax Revenues for the current Fiscal Year at least equal 1 I S percent
of the amount of Maximum Annual Debt Service.
"1995 Bonds" means the outstanding Palm Desert Redevelopment Agency,
Project Area No. 1, As Amended (Added Territory Only) Tax Allocation (Housing Set-Aside)
Refunding Bonds, Series 1995, issued pursuant to an Indenture, dated as of August 1, 1995,
between the Agency and Bank of America National Trust and Savings Association, as trustee.
"1998 Loan" means the loan made by the Authority to the Agency pursuant to the
1998 Loan Agreement.
"1998 Loan AQreement" means the 1998 Housing Project Loan Agreement dated
as of January 1, 1998, by and among the Authority, the Agency and the Trustee relating to the
1998 Loan.
"2002 Loan" means the loan made by the Authority to the Agency pursuant to the
2002 Loan Agreement.
"2002 Loan A�reement" means the 2002 Housing Project Loan Agreement dated
as of August 1, 2002, by and among the Authority, the Agency and the Trustee relating to the
2002 Loan.
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"Paritv Debt" means the 1998 Loan, the 2002 Loan and any other loans, bonds,
notes, advances, or indehtedness payable from Pledged Tax Revenues on a parity with the Loan
issued or incurred pursuant to and in accordance with the provisions of Section 2.08.
"Paritv Debt Instrument" means the 1998 Loan Agreement, the 2002 Loan
Agreement and any other resolution, indenture of trust, trust agreement or other instrument
authorizing the issuance of any Parity Debt.
"Plan Limitations" means the limitations contained or incorporated in the
Redcvelopment Plans on (i) the aggregate principal amount of bonded indebtedness payable
from Tax Revenues which may be outstanding at any time, (ii) the aggregate amount of taxes
which may be divided and allocated to the Agency pursuant to the Redevelopment Plans, and
(iii) the period of time for establishing loans, advances and indebtedness payable from Tax
Revenues.
"PledQed Tax Revenues" means the Housing Set-Aside Revenues, excluding an
amount equal to the sum of all transfers of and payments from Housing Set-Aside Revenues
required for the 1995 Bonds.
"Project" means the financing of certain public capital improvements, including:
(i) the acquisition and/or rehabilitation of several multi-family housing units; (ii) the acquisition
of land for the purposes of expanding existing Agency-owned multi-family housing units and
constructing new multi-family low/moderate income housing units; and (iii) providing subsidies
to facilitate the development of low/moderate income housing units.
"Proiect Fund" means the fund by that name established and held by thc Trustee
pursuant to Section 2.07.
"Qualified Reserve Fund Credit Instrument" means an irrevocable standby or
direct-pay letter of credit or surety bond issued by a commercial bank or insurance company and
deposited with the Trustee pursuant to Section 2.05, provided that all of the following
requirements are met at the time of deposit with the Trustee: (i) either (a) the long-term credit
rating of such bank is within the highest rating category by Moody's or S&P, or the claims
paying ability of such insurance company is rated within the highest rating category by Moody's
or S&P, at the time of delivery of such letter of credit or surety bond or (b) the Authority shall
cause to be filed with the Trustee written evidence from Moody's and S&P that the delivery of
such letter of credit or surety bond will not, of itself, cause a reduction or withdrawal of any
rating then assigned to the Bonds; (ii) such letter of credit or surety bond has a term of at least 12
months; (iii) such letter of credit or surety bond has a stated amount at least equal to the portion
of the Rescrve Requirement with respect to which funds are proposed to be released pursuant to
Section 2.05; and (iv) the Trustee is authorized pursuant to the terms of such letter of credit or
surety bond to draw thereunder an amount equal to any deficiencies which may exist from time
to time with respect to deposits required pursuant to Section 3.03(a).
"Redevelopment Plans" means all redevelopment plans approved and adopted by
ordinance of the City pursuant to the Redevelopment Law, including any amendments thereof
made heretofore or hereafter pursuant to the Redevelopment Law.
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"Redevelopment Proiect Areas" means all of the territory within the project areas
described and defined in the Redevelopment Plans.
"Reserve Fund" means the fund by that name held by the Trustee pursuant to
Section 2.05.
"Reserve Reauirement", means the least of (i) Maximum Annual Debt Service,
(ii) 125 percent of average annual debt service on the Loan and all Outstanding Parity Debt, and
(iii) 10 percent of the proceeds of the Loan (i.e., the original principal amount of the Bonds) and
of the proceeds of any Parity Debt.
"Special Fund" means the fund by that name held by the Agency pursuant to
Section 3.02.
"Subordinate Debt" means any loans, advances or indebtedness issued or incurred
by the Agency in accordance with the requirements of Section 2.08, which are either: (i) payable
from, but not secured by a pledge of or lien upon, the Pledged Tax Revenues; or (ii) secured by a
pledge of or lien upon the Pledged Tax Revenues which is subordinate to the pledge of and lien
upon the Pledged Tax Revenues hereunder for the security of the Loan and any Parity Debt.
["Suretv Bond" means the Qualified Reserve Fund Credit Instrument issued by
the Insurer guaranteeing certain payments into the Reserve Fund with respect to the Bonds as
pt•ovided therein and subject to the limitations set forth therein.]
"Tax Revenues" means that portion of the taxes levied upon taxable property in
the Redevelopment Project Areas allocated and paid into a special fund of the Agency pursuant
to Article 6 of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the
California Constitution.
Section 1.02 Rules of Construction. All references herein to "Articles,"
"Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of
this Loan Agreement, and the words "herein," "hereof," "hereunder" and other words of similar
import refer to this Loan Agreement as a whole and not to any particular Article, Section or
subdivision hereof.
ARTICLE II
THE LOAN; APPLICATION OF LOAN PROCEEDS;
PARITY DEBT
Section 2.01 Authorization. The Authority hereby agrees to lend and the
Agency agrees to accept the Loan in the principal amount of $ under and subject to the
tcrms of this Loan Agreement, the Bond Law and the Redevelopment Law. This Loan
Agreement constitutes a continuing agreement to secure the full and final payment of the Loan,
subject to the covenants, agreements, provisions and conditions herein contained.
Section 2.02 Disbursement of Bond Proceeds. On the Closing Date, the Trustee
shall cause the proceeds of sale of the Bonds, in the amount of $ (representing the
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principal amount of the Bonds, less an underwriter discount of $ ,[plus/minus] an
original issue [premiumldiscount] of $ and less $ transferred to the Insurer for
the purposes described in (c) below) to be disbursed, in accordance with a Request of the
Authority and/or the Agency, as follows:
(a) $ shall be deposited in the Costs of Issuance Fund.
(b) $ shall be transferred to the Escrow Fund.
(c) The balance of the Bond proceeds shall be deposited in the
Project Fund.
(d) On the Closing Date, the Authority and the Agency shall cause the amount
of $_ and the amount of $_ to be paid to the Insurer for the costs of the premiums for the
Insurance Policy and the Surety Bond, respectively. The Reserve Requirement will be satisfied
by the Surety Bond, and no transfer of Loan proceeds to the Reserve Fund will be required.
Section 2.03 Repavment of Loan. The Agency shall, subject to prepayment as
provided in Section 2.04, repay the principal of the Loan in installments on October 1 in each of
the years and in the amounts, and shall pay interest on the unpaid principal balance of the Loan
due on each Interest Payment Date not later than the fifth Business Day preceding such Interest
Payment Date at the rates, as set forth in Exhibit A attached hereto and by this reference
incorporated herein. Such interest shall accrue from the Closing Date. Any installment of
principal or interest which is not paid when due shall continue to accrue interest from and
including the date on which such principal or interest is payable to but not including the date of
actual payment. The obligation of the Agency to repay the Loan is, subject to Section 3.01,
absolute and unconditional, and such payments shall not be subject to reduction whether by
offset or otherwise and shall not be conditional upon the performance or nonperformance by any
party to any agreement for any cause whatsoever.
In the event any unpaid principal installments of the Loan shall be prepaid
pursuant to Section 2.04 hereof, or in the event the Bonds shall be redeemed pursuant to Section
2.03(b) of the Indenture, the schedule of principal installments set forth in Exhibit A shall be
reduced as directed by the Agency to the Trustee.
Principal of and interest on the Loan shall be payable by the Agency to the
Trustee, as assignee of the Authority under the Indenture, in lawful money of the United States.
Payment of such principal and interest shall be secured, and amounts for the payment thereof
shall be deposited with the Trustee at the times, as set forth in Article III. Notwithstanding the
foregoing provisions of this Section 2.03, in lieu of payment of any installment of principal of
the Loan coming due and payable on October 1 in any year in which Bonds are subject to
mandatory sinking fund redemption under the Indenture, the Agency shall have the right to
purchase any of such Bonds in an amount not exceeding the amount thereof which is subject to
mandatory sinking fund redemption on such October 1, and tender such Bonds to the Trustee for
cancellation, provided that such tender shall be made before the preceding July 15.
Section 2.04 Optional Prepavment.
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(a) The Agency shall have the right to prepay principal installments of the
Loan, in any integral multiple of $5,000, such prepayment to be allocated among such principal
installments as the Agency may determine upon Request to the Authority and the Trustee
provided not less than 45 days prior to the prepayment date, on any Interest Payment Date on
which the Bonds are subject to redemption pursuant to Section 2.03(b) of the Indenture, by
depositing with the Trustee an amount sufficient to redeem a like aggregate principal amount of
Bonds, together with the amount of accrued interest and premium, if any, required to be paid
upon such redemption.
(b) Before making any prepayment pursuant to this Section, the Agency shall
give written notice to the Authority and the Trustee describing such event and specifying the date
on which the prepayment will be paid and the order thereof, which date shall be not less than 45
days from the date such notice is given; provided, that notwithstanding any such prepayment, the
Agency shall not be relieved of its obligations hereunder, including specifically its obligations
under this Article, until the Loan shall have been fully paid (or provision for payment thereof
shall have been made pursuant to Section 6.03).
(c) The Authority agrees that upon payment by the Agency to the Trustee of
such amount, the Authority shall take or cause to be taken any and all steps required under the
Indenture to redeem such Outstanding Bonds on the redemption date designated by the Agency;
provided, however, that such date shall be a date of redemption of Bonds, for which notice has
been timely given pursuant to the Indenture.
Section 2.05 Reserve Fund. There has heretofore been established a separate
fund known as the "Housing Projects Reserve Fund," held by the Trustee in trust for the benefit
of the Authority and the Owners of the Bonds and the registered owners of all other bonds issued
by the Authority in connection with any Parity Debt. The Agency hereby pledges and grants a
lien and a security interest in the Reserve Fund to the Trustee in order to secure the Agency's
payment obligations under Section 2.03 and Section 3.03(a). The amount on deposit in the
Reserve Fund shall be maintained at the Reserve Requirement at all times, except to the extent
required for the purposes set forth in this Section.
In the event that the Agency shall fail to deposit with the Trustee the full amount
required to be deposited pursuant to Section 3.03(a), the Trustee shall withdraw from the Reserve
Fund and transfer to the Interest Account and the Principal Account, in such order, an amount
equal to the difference between (i) the amount required to be deposited pursuant to Section
3.03(a) and (ii) the amount actually deposited by the Agency. In the event that the amount on
deposit in the Reserve Fund shall at any time be less than the Reserve Requirement, the Trustee
shall notify the Agency as soon as practicable of the amount required to be deposited therein to
restore the balance to the Reserve Requirement, such notice to be given by telephone, telefax or
other form of telecommunications promptly confirmed in writing, and the Agency shall
thereupon transfer to the Trustee the amount needed to restore the Reserve Fund to the Reserve
Requirement.
In the event that the amount on deposit in the Reserve Fund on the 15th calendar
day preceding any Interest Payment Date (other than the final Interest Payment Date) — provided
that the deposits reguired by Section 3.03(a) have been made — exceeds the Reserve
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Requirement, the Trustee shall withdraw from the Reserve Fund all amounts in excess of the
Reserve Requirement and shall (i) transfer such amounts to the Revenue Fund, (ii) if directed by
the Agency pursuant to a Written Request, apply such amounts toward the prepayment of the
Series 2007A Loan pursuant to Section 2.4 or the prepayment of any Parity Debt, or (iii) upon
receipt of prior Request of the Agency to pay such amounts to the Agency to be used for any
lawful purpose relating to the Redevelopment Project Areas, as specified in such Request of the
Agency. Notwithstanding the foregoing provisions of this paragraph, however, no amounts shall
be withdrawn from the Reserve Fund and transferred to the Agency pursuant to this paragraph
during any period in which an Event of Default shall have occurred and be continuing hereunder.
With lhe written consent of the Insurer (as long as the Insurance Policy is in full
force and effect) and the insurer of any Parity Debt (so long as the policy insuring such Parity
Debt is in full force and effect), the Reserve Requirement may be satisfied by crediting to the
Reserve Fund moneys or a Qualified Reserve Fund Credit Instrument or any combination
thereol�, which in the aggregate make funds available in the Reserve Fund an amount equal to the
Reserve Requirement. Upon the deposit with the Trustee of such Qualified Reserve Fund Credit
Instrument, the Trustee shall release moneys then on hand in the Reserve Fund to the Agency, to
be used for any lawful purpose relating to the Redevelopment Project Areas, in an amount equal
to the face amount of the Qualified Reserve Fund Credit Instrument.
If at any time the amount on deposit in, or credited to, the Reserve Fund includes
both cash and the Surety Bond, any draw on the Surety Bond shall be made only after all cash in
the Reserve Fund has been expended. If at any time the amount credited to the Reserve Fund
includes more than one Qualified Reserve Fund Credit Instrument, any draw on the Qualified
Reserve Fund Credit Instruments shall be made on a pro rata basis based on the relative amounts
of debt service of the applicable bonds covered by each Qualified Reserve Fund Credit
Instrument in such Fiscal Year.
Section 2.06 Costs of Issuance Fund. There is hereby established a fund to be
held by the Trustee known as the "Costs of Issuance Fund" into which shall be deposited a
portion of the proceeds of the Loan pursuant to Section 2.02(a). The moneys in the Costs of
Issuance Fund shall be used to pay Costs of Issuance from time to time upon receipt of a Request
of the Agency. On the 120th day after the Closing Date (or the first Business Day thereafter), or
upon the earlier receipt by the Trustee of a Request of the Agency stating that all Costs of
Issuance have been paid, the Trustee shall transfer all remaining amounts in the Costs of
Issuance Fund to the Revenue Fund.
Section 2.07 Proiect Fund. There is hereby established a fund to be known as
the "Project Fund", which shall be held and maintained by the Trustee. Amounts on deposit in
such fund shall be derived solely from the portion of the proceeds of the Loan transferred thereto
or from excess amounts transferred from the Reserve Fund and from earnings on the investment
of amounts therein pursuant to Section 3.04.
Except as provided in this Section, the moneys set aside and placed in the Project
Fund shall remain lherein until expended from time to time for the purpose of paying any portion
of the costs of the Project, and other costs related thereto, which other costs may include, but are
not limited to, (a) the repayment of any advances made by the City for the Project; and (b) to the
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extent not paid from the Costs of Issuance Fund, the necessary expenses in connection with the
issuance and sale of the Bonds.
Before any payment of money is made from the Project Fund, the Agency shall
file with the Trustee a Request of the Agency showing with respect to each payment of money to
be made:
(a) the name and address of the person to whom payment is due;
(b) the amount of money to be paid;
(c) the purpose for which the obligation to be paid was incurred; and
(d) that such amount has not been paid previously for such purpose from the
Project Fund.
Each such Request of the Agency shall state and shall be sufficient evidence to
the Trustee--
(i) that an obligation in the stated amount has been properly incurred under and
pursuant to this Loan Agreement and that such obligation is a proper charge against the Project
Fund; and
(ii) that there has not been filed with or served upon the Agency a stop notice or
any other notice of any lien, right to lien or attachment upon, or claim affecting the right to
receive payment of, any of the money payable to the person named in such Request of the
Agency which has not been released or will not be released simultaneously with the payment of
such obligation, other than liens accruing by mere operation of law.
Upon receipt of each such Request of the Agency, the Trustee shall pay the
amount set forth in such Request of the Agency as directed by the terms thereof within three
Business Days.
If any moneys deposited in the Project Fund remain therein after the full
accomplishment of [he objects and purposes for which the Loan was made, said moneys shall be
transferred to the Special Fund.
Section 2.08 Parity Debt. In addition to the Loan, the 1998 Loan and the 2002
Loan, the Agency may issue or incur Parity Debt in such principal amount as shall be determined
by the Agency. The Agency may issue and deliver any Parity Debt subject to the following
specific conditions which are hereby made conditions precedent to the issuance and delivery of
such Parity Debt issued under this Section 2.08:
(a) No Event of Default shall have occurred and be continuing, and the
Agency shall otherwise be in compliance with all covenants set forth in this Loan Agreement.
(b) The amount of Pledged Tax Revenues for the then current Fiscal Year, as
set forth in a Certificate of the Agency, based on assessed valuation of property in the
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Redevelopment Project Areas as evidenced in the written records of the County, shall be at least
equal to 120 percent of Maximum Annual Debt Service.
(c) The related Parity Debt Instrument shall provide that the balance of the
Reserve Fund shall be increased to the new Reserve Requirement after the incurrence of such
Parity Debt.
(d) The related Parity Debt Instrument shall provide that:
(1) With respect to any Parity Debt which bears current interest,
ir►terest on such Parity Debt shall not be payable on a date other than April 1 and October 1 of
any year; and
(2) The principal of such Parity Debt shall not be payable on any date
other than the date on which principal of the Loan is payable.
(e) The issuance of such Parity Debt shall not cause the Agency to exceed any
applicable Plan Limitations.
(f� The Agency shall deliver to the Trustee a Certificate of the Agency
certifying that the conditions precedent to the issuance of such Parity Debt set forth in
Paragraphs (a) through (e), above, have been satisfied.
Sec�ion 2.09 Issuance of Subordinate Debt. In addition to the Loan and any
Parity Debt, from time to time the Agency may issue or incur Subordinate Debt in such principal
amount as shall be determined by the Agency, provided that the issuance of such Subordinate
Debt shall not cause the Agency to exceed any applicable Plan Limitations.
Section 2.10 Validitv of Loan. The validity of the Loan shall not be dependent
upon the completion of the Project or upon the performance by any person of any obligation with
respect to the Project.
ARTICLE III
PLEDGE AND APPLICATION OF PLEDGED TAX REVENUES
Section 3.01 Pled�e of P1edQed Tax Revenues. The Loan and all Parity Debt
shall be equally secured by a first pledge of and lien on all of the Pledged Tax Revenues and all
of the moneys on deposit in the Special Fund, without preference or priority for series, issue,
number, dated date, sale date, date of execution or date of delivery. Except for the Pledged Tax
Revenues and other funds pledged hereunder, no funds or properties of the Agency shall be
plcdged to, or otherwise liable for, the payment of principal of or interest on or prepayment
premium, if any, on the Loan.
Section 3.02 Snecial Fund; Deposit of Pled�ed Tax Revenues. There has
heretofore been established a special fund of the Agency known as the "Housing Projects Special
Fund" (the "Special Fund"), held by the Agency as a separate fund apart from all other funds and
accounts of the Agency. The Agency shall deposit all Pledged Tax Revenues in the Special
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Fund promptly upon the receipt thereof. Except as may be otherwise provided in any Parity
Debt lnstrument, any Pledged Tax Revenues received during the Bond Year in excess of
amounts required to be transferred to the Trustee pursuant to Section 3.03 shall be released from
the pledge and lien hereunder and may be used for any lawful purposes of the Agency. Prior to
the payment in full of the principal of and interest and prepayment premium, if any, on the Loan
and all Parity Debt and the payment in full of all other amounts payable hereunder and under any
Parity Debt Instrument, the Agency shall not have any beneficial right or interest in the moneys
on deposit in the Special Fund, except only as provided in this Loan Agreement and in any Parity
Dcbt Instrument, and such moneys shall be used and applied as set forth herein and in any Parity
Debt Instrument.
Section 3.03 Transfer of Pled�ed Tax Revenues From Special Fund. In addition
to the transfers required to be made pursuant to any Parity Debt Instrument, the Agency shall
withdraw from the Special Fund and transfer to the Trustee the following amounts at the
following times and in the following order of priority:
(a) Interest and Principal Deposits. No later than the fifth Business Day
preceding each date on which the principal of or interest on the Loan or any Parity Debt shall
become due and payable, including but not limited to the principal amount of the Loan to be
prepaid hereunder together with any prepayment premium thereon, the Agency shall withdraw
from the Special Fund and transfer to the Trustee an amount which, together with the amounts
then held on deposit in the Interest Account, the Principal Account and the Revenue Fund, is
equal to the aggregate amount of such principal, interest and prepayment premium.
(b) Reserve Fund Deposits. In the event that the Trustee shall notify the
Agency pursuant to Section 2.05 that the amount on deposit in the Reserve Fund is less than the
Reserve Requirement, the Agency shall immediately withdraw from the Special Fund and
transfer to the Trustee for deposit in the Reserve Fund an amount of money necessary to
maintain the Reserve Requirement in the Reserve Fund (including repayment of any draw made
under a Qualified Reserve Fund Credit Instrument, [including the Surety Bond,] prior to
replenishing any cash in the Reserve Fund).
(c) Surnlus. Except as may be otherwise provided in any Parity Debt
Instrument, the Agency shall not be obligated to deposit in the Special Fund in any Bond Year an
amount of Pledged Tax Revenues which, together with other available amounts in the Special
Fund, exceeds the amounts required in such Bond Year pursuant to this Section 3.03; and all
Pledged Tax Revenues which are received by the Agency during any Bond Year in excess of the
amounts required to be deposited in the Special Fund in such Bond Year shall be released from
the pledge thereof and lien thereon which is established pursuant hereto. In the event that for any
reason whatsoever any amounts shall remain on deposit in the Special Fund on any October 2
after making all of the transfers theretofore required to be made pursuant to the preceding
Paragraphs (a) and (b) and pursuant to any Parity Debt Instrument, the Agency may withdraw
such amounts from the Special Fund, to be used for any lawful purposes of the Agency,
including but not limited to the payment of any Subordinate Debt or the payment of any amounts
due and owing to the United States pursuant to Section 4.09.
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Section 3.04 Investment of Monevs; Valuation of Investments. Subject to
Section 4.03 of the Indenture, all moneys in the Special Fund, the Project Fund, the Reserve
Fund and the Costs of Issuance Fund shall be invested in Permitted Investments. Absent any
prior written instruction from the Agency or the Authority, moneys in any fund held by the
Trustee hereunder or under the Indenture shall be invested in Permitted Investments described in
clausc D of the definition thereof. Investments of moneys in the Reserve Fund (not including
any Qualified Reserve Fund Credit Instrument) shall not have maturities extending beyond five
years. Obligations purchased as an investment of moneys in any fund or account established
hereunder shall be credited to and deemed to be part of such fund or account. The Agency or the
Trustee, as the case may be, may commingle any amounts in any of the funds and accounts held
hereunder with any other amounts held by the Agency or the Trustee for purposes of making any
investment, provided that the Agency and the Trustee shall maintain separate accounting
procedures for the investment of all funds and accounts held hereunder. All interest, profits and
other income received from the investment of moneys in any fund or account established
hereunder shall be credited to such fund or account. Notwithstanding anything to the contrary
contained in this Section 3.04, an amount of interest received with respect to any investmen�
equal to the amount of accrued interest, if any, paid as part of the purchase price of such
investment shall be credited to the fund or account from which such accrued interest was paid.
For the purpose of determining the amount in any fund or account established hereunder, any
investments credited to such fund shall be valued at least annually at the market value thereof.
ARTICLE IV
OTHER COVENANTS OF THE AGENCY
Section 4.01 Punctual Pavment; Extension of Pavments. The Agency shall
punctually pay or cause to be paid the principal of and interest and prepayment premium, if any,
on the Loan in strict conformity with the terms of this Loan Agreement, and it will faithfully
observe and perform all of the conditions, covenants and requirements of this Loan Agreement.
The Agency shall not directly or indirectly extend or assent to the extension of the maturity of
any installment of principal of or interest or prepayment premium, if any, on the Loan, and in
case the principal of or interest or premium, if any, on the Loan or the time of payment of any
such claims therefor shall be extended, such principal, interest, premium or claims for interest
shall not be entitled, in case of any Event of Default hereunder, to the benefits of this Loan
Agreement except for payment of all amounts which shall not have been so extended.
Section 4.02 Limitation on Additional Indebtedness. The Agency hereby
covenants that it shall not issue any bonds, notes or other obligations, enter into any agreement or
otherwise incur any indebtedness, which is in any case payable from all or any part of the
Pledged Tax Revenues, excepting only the Loan, any Parity Debt, any Subordinate Debt and any
other obligation permitted by this Loan Agreement.
Section 4.03 Pavment of Claims. The Agency shall pay and discharge, or cause
to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if
unpaid, might become a lien or charge upon the properties owned by the Agency or upon the
Pledged Tax Revenues or any part thereof, or upon any funds in the hands of the Trustee, or
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which might impair the security of the Loan. Nothing herein contained shall require the Agency
to make any such payment so long as the Agency in good faith shall contest the validity of said
claims.
Section 4.04 Books and Accounts; Financial Statements. The Agency shall
keep, or cause to be kept, proper books of record and accounts, separate from all other records
and accounts of the Agency and the City, in which complete and correct entries shall be made of
all transaclions relating to the Pledged Tax Revenues, the Special Fund, the Reserve Fund and
the Housing Fund. Such books of record and accounts shall at all times during business hours be
subject, upon prior written request, to the reasonable inspection of the Authority, the Trustee and
the Owners of not less than ten percent in aggregate principal amount of the Bonds then
Outstanding, or their representatives authorized in writing.
The Agency will cause to be prepared annually, within 180 days after the close of
each Fiscal Year so long as any of the Bonds are Outstanding, complete audited financial
statements with respect to such Fiscal Year showing the Pledged Tax Revenues, all
disbursements from the Special Fund and the financial condition of the Agency, as of the end of
such Fiscal Year. The Agency will furnish a copy of such statements, upon reasonable request,
to any Owner.
Section 4.05 Protection of Securitv and Ri�hts. The Agency will preserve and
protect the security of the Loan and the rights of the Trustee and the Owners with respect to the
Loan. From and after the Closing Date, the Loan shall be incontestable by the Agency. The
Loan and the provisions of this Loan Agreement are and will be the legal, valid and binding
special obligations of the Agency enforceable in accordance with their terms, and the Agency
shall at all times, to the extent permitted by law, defend, preserve and protect all the rights of the
Trustee and the Owners under this Loan Agreement against all claims and demands of all
persons whomsoever. The Agency's obligations to the Trustee under this Section 4.05 shall
survive the payment of the Bonds and the discharge of the Indenture, the removal or resignation
of the Trustee pursuant to the Indenture or the payment of the Loan and the discharge of this
Loan Agreement.
Section 4.06 Pavments of Taxes and Other Char�es. The Agency will pay and
discharge, or cause to be paid and discharged, all taxes, service charges, assessments and other
governmental charges which may hereafter be lawfully imposed upon the Agency or the
properties then owned by the Agency when the same shall become due. Nothing herein
contained shall require the Agency to make any such payment so long as the Agency in good
faith shall contest the validity of such taxes, assessments or charges. The Agency will duly
observe and comply with all valid requirements of any governmental authority relative to the
Redevelopment Plans.
Section 4.07 Maintenance of Tax Revenues. The Agency shall comply with all
requirements of the Redevelopment Law to insure the allocation and payment to it of the Tax
Revenues, including without limitation the timely filing of any necessary statements of
indebtedness with appropriate officials of the County and (in the case of supplemental revenues
and other amounts payable by the State) appropriate officials of the State. The Agency shall not
amend the Redevelopment Plans (except for the purpose of extending or eliminating the time
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�
limit on the establishment of loans, advances, and indebtedness, extending the time limit on the
effectiveness of the Redevelopment Plans, extending the time limit on the payment of
indebtedness, extending the time limit for the receipt of tax increment, or increasing the
limitation on the number of dollars of taxes to be allocated to the Agency), or enter into any
agreement with the County or any other governmental unit, which would have the effect of
reducing the amount of Pledged Tax Revenues available to the Agency for payment of the Loan,
unless the Agency shall first obtain (a) the Report of an Independent Redevelopment Consultant
stating that the amount of Pledged Tax Revenues for the then current Fiscal Year (calculated on
the assumption that such reduction of Tax Revenues was in effect throughout such Fiscal Year),
shall be at least equal to 115 percent of Maximum Annual Debt Service and (b), as long as the
Insurance Policy is in full force and effect, the written consent of the Insurer. Nothing herein is
intended or shall be construed in any way to prohibit or impose any limitations on the entering
into by the Agency of any such agreement, amendment or supplement which by its term is
subordinate to the payment of the Loan and all Parity Debt.
Section 4.08 Payment of Expenses; Indemnification. The Agency shall pay to
the Trustee from time to time all compensation for all services rendered under this Loan
Agreement and the Indenture, including but not limited to all reasonable expenses, charges, legal
and consulting fees and other disbursements and those of its attorneys, agents and employees,
incurred in and about the performance of its powers and duties hereunder and thereunder. Upon
the occurrence of an Event of Default, the Trustee shall have a first lien on the funds held by it
under the Indenture to secure the payment to the Trustee of all fees, costs and expenses,
including reasonable compensation to its experts, attorneys and counsel (including the allocated
costs and disbursements of in-house counsel to the extent the services of such counsel are not
duplicative of services provided by outside counsel) incurred in performing its duties under the
Indenture and this Loan Agreement.
The Agency further covenants and agrees to indemnify, defend and save the
Trustee and its officers, directors, agents and employees, harmless against any losses, expenses
and liabilities which it may incur arising out of or in the exercise and performance of its powers
and duties in accordance with the Indenture and the Loan Agreement, including the costs and
expenses of defending against any claim of liability, but excluding any and all losses, expenses
and liabilities which are due to the negligence or intentional misconduct of the Trustee, its
officers, directors, agents or employees. The obligations of the Agency under this paragraph
shall survive the resignation or removal of the Trustee under the Indenture, this Loan Agreement
and payment of the Loan and the discharge of this Loan Agreement.
Section 4.09 Tax Covenants.
(a) The Agency covenants that, in order to maintain the exclusion from gross
income for Federal income tax purposes of the interest on the Bonds, and for no other purpose,
the Agency will satisfy, or take such actions as are necessary to cause to be satisfied, each
provision of the Code necessary to maintain such exclusion. In furtherance of this covenant the
Agency agrees to comply with such written instructions as may be provided by Bond Counsel.
(b) The Agency covenants that no part of the proceeds of the Bonds shall be
used, directly or indirectly, to acquire any Investment Property which would cause the Bonds to
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become arbitrage bonds as that term is defined in Section 148 of the Code, or under applicable
Tax Regulations. In order to assure compliance with the rebate requirements of Section 148 of
the Code, the Agency further covenants that it will pay or cause to be paid to the United States
the amounts necessary to satisfy the requirements of Section 148(f) of the Code, and that it will
establish such accounting procedures as are necessary to adequately determine, account for and
pay ovcr any such amount required to be paid thereunder in a manner consistent with the
rcquirements of Section 148 of the Code, such covenants to survive the defeasance of the Bonds.
(c) The Agency covenants that it will not take any action or omit to take any
action, which action or omission, if reasonably expected on the date of initial execution and
delivery of the Bonds, would result in a loss of exclusion from gross income for purposes of
Federal income taxation, under Section 103 of the Code, of interest on the Bonds.
(d) The Agency covenants that it will not use or permit the use of any
property financed with the proceeds of the Bonds by any person (other than a state or local
governmental unit) in such manner or to such extent as would result in a loss of exclusion of the
interesl on the Bonds from gross income for Federal income tax purposes under Section 103 of
the Code.
(e) Except as provided below, the Agency covenants that none of the moneys
contained in any of the funds or accounts with respect to the Bonds shall be: (i) used in making
loans guaranteed by the United States (or any agency or instrumentality thereof�, (ii) invested
directly or indirectly in a deposit or account insured by the Federal Deposit lnsurance
Corporation, National Credit Union Administration or any other similar Federally chartered
corporation, or (iii) otherwise invested directly or indirectly in obligations guaranteed (in whole
or in part) by the United States (or any agency or instrumentality thereo�; provided, however,
that the above restrictions do not apply to: (a) the investment on moneys held in the Revenue
Fund or any other "bona fide debt service fund" as defined for purposes of Section 148 of the
Code, (b) investment in direct obligations of the United States Treasury, (c) investment in
obligations guaranteed by the Federal National Mortgage Association, Government National
Mortgage Association, or the Federal Home Loan Mortgage Corporation, (d) investment in
obligations issued pursuant to Section 21B(d)(3) of the Federal Home Loan Bank Act, as
amended by Section 511(a) of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989, (e) investments permitted under regulations issued pursuant to Section 149(b)(3)(B) of
the Code, or (n such other investments permitted under the Indenture as, in the opinion of Bond
Counsel, do not jeopardize the exclusion from gross income for Federal income tax purposes of
interest on the Bonds.
Section 4.10 Redevelopment Activities. The Agency shall ensure that all
activities undertaken by the Agency are undertaken and accomplished in conformity with all
applicable requirements of the Redevelopment Plans and the Redevelopment Law. The Agency
shall manage and operate all properties owned by the Agency in a sound and business-like
manner and in conformity with all valid requirements of any governmental authority, and will
keep such properties insured at all times in conformity with sound business practice.
Section 4.11 Housin� Fund. The Agency covenants and agrees to take no action
pursuant to Section 33334.2 of the Redevelopment Law which would reduce the amount of
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Housing Set-Asidc Revenues. The Agency further covenants and agrees to use the moneys in
the Housing Fund and Project Fund in accordance with Sections 33334.2 and 33334.3 of thc
Rcdevelopment Law, and to disburse, expend or encumber any "excess surplus" (as defined in
Section 33334.12 of the Redevelopment Law) in the Housing Fund at such times and in such
manner that the Agency shall not be subject to sanctions pursuant to subdivision (e) of said
Section 33334.12.
Section 4.12 Further Assurances. The Agency will adopt, make, execute and
deliver any and all such further resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this Loan
Agreement and for the better assuring and confirming unto the Trustee, the Authority and the
Owners of the Bonds of the rights and benefits provided in this Loan Agreement.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
Section 5.01 Events of Default and Acceleration of Maturities. The following
events shall constitute Events of Default hereunder:
(a) Failure by the Agency to pay the principal of or interest or prepayment
premium, if any, on the Loan or any Parity Debt when and as the same shall become due and
payable.
(b) Failure by the Agency to observe and perform any of the covenants,
agreements or conditions on its part contained in this Loan Agreement, other than as referred to
in the preceding Paragraph (a), for a period of 60 days after written notice specifying such failure
and requesting that it be remedied has been given to the Agency by the Trustee; provided,
however, that if the failure stated in such notice can be corrected, but not within such 60 day
period, such failure shall not constitute an Event of Default if corrective action is instituted by
the Agency within such 60 day period and thereafter is diligently pursued until such failure is
corrected.
(c) The filing by the Agency of a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other applicable law of the United States
of America, or if a court of competent jurisdiction shall approve a petition, filed with or without
the consent of the Agency, seeking reorganization under the federal bankruptcy laws or any other
applicable law of the United States of America, or if, under the provisions of any other law for
the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of
the Agency or of the whole or any substantial part of its property.
If an Event of Default has occurred and is continuing, the Authority or the Trustee
may, and at the written direction of the Owners of a majority in aggregate principal amount of
the Outstanding Bonds the Authority or the Trustee shall, (i) declare the principal of the Loan,
together with the accrued interest on all unpaid installments thereof, to be due and payable
immediately, and upon any such declaration the same shall become immediately due and
payable, anything in this Loan Agreement to the contrary notwithstanding, and (ii) subject to the
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receipt of indemnity as provided in the Indenture, exercise any other remedies available to the
Trustee at law or in equity. Immediately upon becoming aware of the occurrence of an Event of
Default, the Authority, or the Trustee as assignee of the Authority, shall give notice of such
Event of Dcfault to the Agency by telephone, telecopier or other telecommunication device,
promptly confirmed in writing. This provision, however, is subject to the condition that if, at any
time after the principal of the Loan shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been obtained or entered, the
Agency shall deposit with the Trustee a sum sufficient to pay all installments of principal of the
Loan matured prior to such declaration and all accrued interest thereon, with interest on such
ovcrdue installments of principal and interest at the net effective rate then borne by the
Outstanding Bonds, and the reasonable expenses of the Trustee (including but not limited to
attorneys fees), and any and all other defaults known to the Trustee (other than in the payment of
principal of and interest on the Loan due and payable solely by reason of such declaration) shall
have been made good or cured to the satisfaction of the Trustee or provision deemed by the
Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners
of a majority in aggregate principal amount of the Outstanding Bonds may, by written notice to
the Trustee and the Agency, rescind and annul such declaration and its consequences. However,
no such rescission and annulment shall exlend to or shall affect any subsequent defaull, or shall
impair or exhaust any right or power consequent thereon.
Section 5.02 Annlication of Funds Upon Default. All amounts received by the
Trustee pursuant to any right given or action taken by the Trustee under the provisions of this
Loan Agreement, shall be applied by the Trustee in the following order:
First, to the payment of the fees, costs and expenses of the Trustee, including
reasonable compensation to its agents, attorneys and counsel (including the allocated costs and
disbursements of in-house counsel to the extent the services of such counsel are not duplicative
of services provided by outside counsel); and
Second, to the payment of the whole amount of interest on and principal of the
Loan then due and unpaid, with interest on overdue installments of principal and interest to the
extent permitted by law at the net effective rate of interest then borne by the Outstanding Bonds;
provided, however, that in the event such amounts shall be insufficient to pay in full the full
amount of such interest and principal, then such amounts shall be applied in the following order
of priority:
(i) first, to the payment of all installments of interest on the Loan then due
and unpaid, on a pro rata basis in the event that the available amounts are insufficient to pay all
such interest in full,
(ii) second, to the payment of all installments of principal of the Loan then
due and payable, on a pro rata basis in the event that the available amounts are installments of
principal in full, and
(iii) third, to the payment of interest on overdue installments of principal and
interest, on a pro rata basis in the event that the available amounts are insufficient to pay all such
interest in full.
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Section 5.03 No Waiver. Nothing in this Article V or in any other provision of
this Loan Agreement, shall affect or impair the obligation of the Agency, which is absolute and
unconditional, to pay from the Pledged Tax Revenues and other amounts pledged hereunder, the
principal of and interest and premium, if any, on the Loan to the Trustee when due, as herein
provided, or affect or impair the right of action, which is also absolute and unconditional, of the
Trustee to institute suit to enforce such payment by virtue of the contract embodied in this Loan
Agreement.
A waiver of any default by the Trustee shall not affect any subsequent default or
impair any rights or remedies on the subsequent default. No delay or omission of the Trustee to
exercise any right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver of any such default or an acquiescence therein, and every power
and remedy conferred upon the Pledged Trustee by the Redevelopment Law or by this Article V
may be enforced and exercised from time to time and as often as shall be deemed expedient by
the Trustee.
If a suit, action or proceeding to enforce any right or exercise any remedy shall be
abandoned or determined adversely to the Trustee, the Agency and the Trustee shall be restored
to their former positions, rights and remedies as if such suit, action or proceeding had not been
brought or taken.
Section 5.04 A�reement to Pav Attornevs' Fees and Exnenses. In the event the
Agency or the Authority should default under any of the provisions hereof and the nondefaulting
party or the Trustee should employ attorneys or incur other expenses for the collection of
moneys or the enforcement or performance or observance of any obligation or agreement on the
part of the defaulting party herein contained, the defaulting party agrees that it will on demand
therefor pay to the nondefaulting party or the Trustee, as the case may be, the reasonable fees of
such attorneys and such other expenses so incurred (including the allocated costs and
disbursements of in-house counsel to the extent the services of such counsel are not duplicative
of services provided by outside counsel).
Section 5.05 Remedies Not Exclusive. No remedy herein confened upon or
reserved to the Trustee is intended to be exclusive of any other remedy. Every such remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting
and without regard to any other remedy conferred by the Redevelopment Law or any other law.
Section 5.06 Control of Remedies bv Insurer. Notwithstanding the provisions
of Section 5.01 and subject to any rights heretofore granted by the Authority or the Agency to
any insurer of Parity Debt, as long as the Insurance Policy is in full force and effect and the
lnsurer has not defaulted with respect to its payment obligations thereunder, upon the occurrence
and continuance of an Event of Default, the Insurer shall be entitled to control and direct the
enforcement of all rights and remedies granted to the Owners or the Trustee for the benefit of the
Owners under this Loan Agreement. Any acceleration of the Loan or annulment thereof
pursuant to Section 5.01 shall be subject to the prior written consent of the Insurer. No waiver of
a default shall be effective without the written consent of the Insurer.
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ARTICLE VI
MISCELLANEOUS
Section 6.01 Benefits Limited to Parties. Nothing in this Loan Agreement,
expressed or implied, is intended to give to any person other than the Agency, the Trustee and
the Authority, any right, remedy or claim under or by reason of this Loan Agreement. All
covenants, stipulations, promises or agreements in this Loan Agreement contained by and on
behalf of the Agency shall be for the sole and exclusive benefit of the Authority and of the
Trustee acting as trustee for the benefit of the Owners of the Bonds.
Section 6.02 Successor Deemed Included in All References to Predecessor.
Whenever in this Loan Agreement the Agency, the Authority, the Trustee or the Insurer is named
or referred to, such reference shall be deemed to include the successors or assigns thereof, and all
the covenants and agreements in this Loan Agreement contained by or on behalf of the Agency,
the Authority or the Trustee shall bind and inure to the benefit of the respective successors and
assigns thereof whether so expressed or not.
Section 6.03 Dischar�e of Loan A�reement. If the Agency shall pay and
discharge the indebtedness on the Loan or any portion thereof 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 prepayment premiums, if any, on the Loan or such portion thereof, as and when the same
become due and payable;
(b) by irrevocably depositing with the Trustee, in trust, at or before maturity,
cash in an amount which, together with the available amounts then on deposit in any of the funds
and accounts established pursuant to the Indenture or this Loan Agreement, in the opinion or
report of an Independent Accountant is fully sufficient to pay all principal of and interest and
prepayment premiums, if any, on the Loan or such portion thereof; or
(c) by irrevocably depositing with the Trustee or any other fiduciary, in trust,
non-callable Federal Securities in such amount as an Independent Accountant shall determine
will, together with the interest to accrue thereon and available moneys then on deposit in the
funds and accounts established pursuant to the Indenture or a Supplemental Indenture or this
Loan Agreement, be fully sufficient to pay and discharge the indebtedness on the Loan or such
portion thereof (including all principal, interest and prepayment premiums) at or before maturity;
then, at the election of the Agency but only if all other amounts then due and payable hereunder
shall have been paid or provision for their payment made, the pledge of and lien upon the
Pledged Tax Revenues and other funds provided for in this Loan Agreement and all other
obligations of the Trustee, the Authority and the Agency under this Loan Agreement with respect
to the Loan or such portion thereof shall cease and terminate, except only the obligation of the
Agency to pay or cause to be paid to the Trustee, from the amounts so deposited with the Trustee
or such other fiduciary, all sums due with respect to the Loan or such portion thereof, and to pay
all expenses and costs of the Trustee when and as such expenses and costs become due and
19
P6402-1059\925668v3.doc
payable. Notice of such election shall be filed with the Authority and the Trustee. Any funds
thereafter held by the Trustee hereunder, which are not required for said purpose, shall be paid
over to the Agency.
Section 6.04 Amendment. This Loan Agreement may be amended by the
parties hereto but only under the circumstances set forth in, and in accordance with, the
provisions of Section 5.08 of the Indenture. The Authority and the Trustee covenant that the
Indenture shall not be amended, nor shall the Authority agree or consent to any amendment of
the Indenture, without the prior written consent of the Agency (except that such consent shall not
be required in the event that an Event of Default shall have occurred and be continuing
hereunder).
Section 6.05 Waiver of Personal Liabilitv. No member, officer, agent or
employee of the Agency shall be individually or personally liable for the payment of the
principal of or interest on the Loan; but nothing herein contained shall relieve any such member,
officer, agent or employee from the performance of any official duty provided by law.
Section 6.06 Pavment on Business Days. Whenever in this Loan Agreement
any amount is required to be paid on a day which is not a Business Day, such payment shall be
required to be made on the Business Day immediately following such day, provided that interest
on such payment shall not accrue from and after such day.
Section 6.07 Notices. Any notice, request, complaint, demand or other
communication under this Loan Agreement shall be given in the same manner as provided in
Section 11.13 of the Indenture, which is hereby incorporated.
Section 6.08 fBond Insurance. [To come.J
Section 6.09 Suretv Bond.
(a) [to come�.
Section 6.10 Partial Invalidity. If any Section, paragraph, sentence, clause or
phrase of this Loan Agreement shall for any reason be held illegal, invalid or unenforceable,
such holding shall not affect the validity of the remaining portions of this Loan Agreement. The
Agency hereby declares that it would have adopted this Loan Agreement and each and every
other Section, paragraph, sentence, clause or phrase hereof and authorized the Loan irrespective
of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Loan
Agreement may be held illegal, invalid or unenforceable.
Section 6.11 Article and Section HeadinQs and References. The headings or
titles of the several Articles and Sections hereof, and any table of contents appended to copies
hereof, shall be solely for convenience of reference and shall not affect the meaning, construction
or effect of this Loan Agreement. All references herein to "Articles," "Sections" and other
subdivisions are to the corresponding Articles, Sections or subdivisions of this Loan Agreement;
the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to
this Loan Agreement as a whole and not to any particular Article, Section or subdivision hereof;
20
P6402-1OS9\925668v3.doc
and words of the masculine gender shall mean and include words of the feminine and neuter
genders.
Section 6.12 Execution of Countemarts. This Loan Agreement may be
executed in any number of counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall together constitute but one and the same instrument.
Section 6.13 Governing Law. This Loan Agreement shall be construed and
governed in accordance with the laws of the State.
Section 6.14 The Trustee. The Trustee is entering into this Loan Agreement
solely in its capacity as Trustee under the Indenture and all provisions of the Indenture relating to
the rights, privileges, powers and protections of the Trustee shall apply with equal force and
effect to all actions taken by the Trustee in connection with this Loan Agreement. The Trustee
shall be responsible only for the duties of the Trustee expressly set forth herein.
IN WITNESS WHEREOF, the AGENCY, the AUTHORITY and the TRUSTEE
have caused this Loan Agreement to be signed by their respective officers, all as of the day and
year first above written.
PALM DESERT REDEVELOPMENT AGENCY
:
PALM DESERT FINANCING AUTHORITY
:�
Executive Director
Chief Administrative Officer
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
:
Authorized Officer
21
P6402-1059\925668v3.doc
EXHIBIT A
SCHEDULE OF LOAN PAYMENTS*
Date Principal Interest Total
4/ 1 /2007
10/ 1/2007
4/ 1/2008
10/ 1/2008
4/ 1/2009
10/ 1/2009
4/1/2010
10/1/2010
4/ 1/2011
10/1/2011
4/ 1 /2012
10/1/2012
4/ 1/2013
10/1/2013
4/1/2014
10/1/2014
4/1/2015
10/1/2015
4/ 1/2016
10/1/2016
4/1/2017
10/1/2017
4/1/2018
10/1/2018
4/ 1/2019
10/1/2019
4/ 1/2020
10/1/2020
4/ 1 /2021
10/ 1 /2021
4/ 1 /2022
10/ 1/2022
4/ 1 /2023
10/ 1 /2023
4/ 1 /2024
10/1/2024
4/ 1 /2025
10/ 1/2025
4/ 1 /2026
10/ 1/2026
4/ 1/2027
10/ 1 /2027
TOTAL $
* Payable semiannually on the fifth Business Day preceding each Interest Payment Date
indicated on the leftmost column.
A-1
P6402-1059\925668v3.doc
ESCROW AGREEMENT
by and among
PALM DESERT FINANCING AUTHORITY
and
PALM DESERT REDEVELOPMENT AGENCY
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Escrow Agent
Dated as of February 1, 2007
Relating to the Refunding of
the portion of
Palm Desert Financing Authority
Tax Allocation (Housing Set -Aside) Revenue Bonds
Series 1998
consisting of
the serial bonds with the maturity dates of ,
[and the term bonds with the maturity date of October 1, 2027)
P6402.1059\932556.1 RWG DRAFT: 11/22/2006
TABLE OF CONTENTS
Page
Section1.
Definitions.....................................................................................................................2
Section 2.
Appointment of Escrow Agent..................................................................................... 2
Section3.
Escrow Fund................................................................................................................. 3
Section 4.
Deposit to Escrow Fund................................................................................................ 3
Section 5.
Investment of Escrow Fund.......................................................................................... 3
Section 6.
Reinvestment; Payment of Refunding Requirements................................................... 3
Section7.
Verification................................................................................................................... 4
Section 8.
Compliance with Agreement........................................................................................ 4
Section9.
Tax Covenant................................................................................................................ 4
Section10.
Notices........................................................................................................................ 4
Section 11.
Defeasance of Prior Bonds.......................................................................................... 5
Section12.
Nature of Lien............................................................................................................. 5
Section13.
Amendments............................................................................................................... 5
Section 14.
Compensation of Escrow Agent................................................................................. 5
Section 15.
Resignation or Removal of Escrow Agent; Appointment of Successor ..................... 6
Section 16.
Limitation of Powers and Duties................................................................................ 7
Section 17.
Indemnification...........................................................................................................7
Section 18.
Limitation of Liability................................................................................................. 8
Section19.
Termination................................................................................................................. 8
Section 20.
Governing Law........................................................................................................... 9
Section21.
Severability................................................................................................................. 9
Section 22.
Counterparts................................................................................................................ 9
SCHEDULE A REFUNDING REQUIREMENTS
SCHEDULE B ESCROW SECURITIES
EXHIBIT A FORM OF DEFEASANCE NOTICE
P6402.1059\932556.1
ESCROW AGREEMENT
This Escrow Agreement (this "Agreement") is made and entered into as of
February 1, 2007, by and among the Palm Desert Financing Authority, a joint powers authority
duly organized and existing pursuant to the laws of the State of California (the "Authority"), the
Palm Desert Redevelopment Agency, a public body corporate and politic organized and existing
pursuant to the laws of the State of California (the "Agency"), and Wells Fargo Bank, National
Association, a national banking association duly organized and existing under the laws of the
United States of America, as Escrow Agent (together with any successors and assigns, the
"Escrow Agent").
RECITALS:
A. The Authority previously issued its Tax Allocation (Housing Set -Aside)
Revenue Bonds, Series 1998 (the "Series 1998 Bonds"), pursuant to the Indenture of Trust, dated
as of January 1, 1998 (the "Prior Indenture"), by and between the Authority and First Trust of
California, National Association, as succeeded by Wells Fargo Bank, National Association, as
the trustee (the "Prior Bonds Trustee").
B. The Series 1998 Bonds are secured by revenues consisting of amounts
payable to the Authority by the Agency with respect to a loan (the "Prior Loan") pursuant to the
1998 Housing Project Loan Agreement, dated as of January 1, 1998 (the "Prior Loan
Agreement"), by and among the Agency, the Authority and the Prior Bonds Trustee.
C. The Agency and the Authority have determined to refund the portion of
the Series 1998 Bonds, consisting of the serial bonds with the maturity dates of
, [and the term bonds with the maturity date of October 1, 2027]
(collectively, the "Prior Bonds").
D. The Authority has determined to issue its Tax Allocation (Housing Set -
Aside) Refunding Revenue Bonds, Series 2007 (the "Series 2007 Bonds"), pursuant to the
Indenture of Trust, dated as of even date herewith (the "2007 Indenture"), by and between the
Authority and Wells Fargo Bank, National Association, as trustee (together with any successors
and assigns, the "2007 Trustee").
E. Proceeds of the Series 2007 Bonds will be used to make a loan (the
"Series 2007 Loan") to the Agency pursuant to the Loan Agreement, dated as of even date
herewith (the "2007 Loan Agreement"), by and among the Agency, the Authority and the 2007
Trustee.
F. Pursuant to the 2007 Loan Agreement, a portion of the proceeds derived
from the Series 2007 Loan will be deposited in escrow with the Escrow Agent and applied to the
purchase of noncallable direct obligations of, or noncallable obligations guaranteed by, the
United States of America.
P6402.1059\932556.1
1
G. In accordance with the Prior Indenture, if the Authority will pay or cause
to be paid, or will have made provisions to pay, or there will have been set aside in trust funds to
pay, to the holders of any portion of the Series 1998 Bonds, the principal and interest and
premium, if any, to become due thereon, then with respect to such portion of the Series 1998
Bonds the lien of the Prior Indenture will thereupon cease, terminate and become void and be
discharged and satisfied.
I. In order to provide for the proper and timely application of the moneys
deposited in said escrow to the payment of the Prior Bonds, it is necessary to enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
Section 1. Definitions. Unless the context clearly requires otherwise, capitalized
terms used in this Agreement shall have the meanings ascribed to them in the introductory
paragraph and the Recitals hereof. In addition, as used herein, the following terms shall have the
following meanings:
"Escrow Fund" means the Escrow Fund established and held by the Escrow
Agent pursuant to Section 3.
"Escrow Securities" means the Investment Securities set forth in Schedule B
hereto.
"Investment Securities" means noncallable direct obligations of the United States
of America, or bonds or other obligations which are noncallable and for which the full faith and
credit of the United States of America are pledged for the payment of principal and interest, to
mature or be withdrawable, as the case may be, not later than the time when needed for the
payment or redemption of the Prior Bonds in order to discharge the pledge and lien securing the
Prior Bonds.
"Refundinv, Requirements" means an amount sufficient to pay all installments of
principal and interest of the Prior Bonds on their earliest available optional redemption date, as
set forth in Schedule A attached hereto.
Section 2. Appointment of Escrow Agent. The Authority and the Agency hereby
appoint Wells Fargo Bank, National Association, as Escrow Agent under this Agreement for the
benefit of the holders of the Prior Bonds. The Escrow Agent hereby accepts the duties and
obligations of Escrow Agent under this Agreement and agrees that the irrevocable instructions to
the Escrow Agent herein provided are in a form satisfactory to it. The applicable and necessary
provisions of the Prior Indenture, including particularly redemption provisions set forth in
Article II thereof, are incorporated herein by reference. Reference herein to, or citation herein
of, any provisions of the Prior Indenture shall be deemed to incorporate the same as a part hereof
in the same manner and with the same effect as if the same were fully set forth herein.
P6402.1059\932556.1
2
Section 3. Escrow Fund. There is hereby created and established with the
Escrow Agent a special and irrevocable trust fund designated the "Escrow Fund" (the "Escrow
Fund") to be held by the Escrow Agent separate and apart from all other funds of the Agency,
the Authority or the Escrow Agent and used only for the purposes and in the manner provided in
this Agreement.
Section 4. Devosit to Escrow Fund. Upon the issuance of the Series 2007 Bonds,
the Authority and the Agency shall cause to be transferred to the Escrow Agent, for deposit in
the Escrow Fund, the following: (i) a portion of the sale proceeds of the Series 2007 Bonds, in
the amount of $ , and (ii) money transferred by the Agency from the Special Fund
(as defined in the Prior Loan Agreement) in the amount of $ (representing moneys
deposited in the Special Fund that would have been used to pay debt service on the Prior Bonds
on the next Interest Payment Date but for the refunding described herein). Moneys on deposit in
the Escrow Fund shall be held in irrevocable trust by the Escrow Agent and applied solely as
provided in this Escrow Agreement.
Section 5. Investment of Escrow Fund. The Escrow Agent shall upon receipt of
the moneys described in Section 4, immediately invest $ of such moneys in the Escrow
Securities described in Schedule B and deposit such Escrow Securities in the Escrow Fund, and
deposit the remaining $_ in the Escrow Fund to hold uninvested. The Escrow Agent is hereby
authorized and empowered to deposit uninvested monies held hereunder from time to time in
demand deposit accounts, without payment for interest thereon as provided hereunder,
established at commercial banks that are corporate affiliates of the Escrow Agent.
Notwithstanding the foregoing or any other provision of this Agreement to the
contrary, at the written request of the Agency and upon compliance with the conditions
hereinafter set forth, the Escrow Agent shall have the power to sell, transfer, request the
redemption of or otherwise dispose of some or all of the Escrow Securities in the Escrow Fund
and to substitute Investment Securities. The foregoing may be effected only if: (a) the
substitution of Investment Securities for the substituted Escrow Securities occurs simultaneously;
(b) the amounts of and dates on which the anticipated transfers from the Escrow Fund to the
Prior Bonds Trustee for the payment of the principal of, or interest on the Prior Bonds will not be
diminished or postponed thereby, as shown in the certification (described below) of an
independent certified public accountant; (c) the Escrow Agent shall receive the unqualified
opinion of counsel to the effect that the Agency has the right and power to effect such disposition
and substitution; and (d) the Escrow Agent shall receive from an independent certified public
accountant a certification that, immediately after such transaction, the principal of and interest on
the Investment Securities in the Escrow Fund will, together with other moneys available for such
purpose, be sufficient to pay the Refunding Requirements. Any cash received from the
disposition and substitution of Escrow Securities pursuant to this Section to the extent that, as
shown in such certification, such cash will not be required, in accordance with the Prior
Indenture and this Agreement, at any time for the payment when due as provided in Section 6,
shall be transferred to the Agency.
Section 6. Reinvestment; Pavment of Refunding Requirements. As the principal
of the Escrow Securities shall mature and be paid, and the investment income and earnings
P6402.1059\932556.1
3
thereon are paid, the Escrow Agent shall reinvest such moneys in Investment Securities in
accordance with the written instructions of the Agency. On the redemption date of the Prior
Bonds as set forth Schedule A, the Escrow Agent shall transfer an amount sufficient to pay the
Refunding Requirements from the Escrow Fund to the Prior Bonds Trustee. Such amounts shall
be applied by the Prior Bonds Trustee to the payment of the Refunding Requirements for the
equal and ratable benefit of the holders of the Prior Bonds.
Section 7. Verification. The Agency has caused schedules to be prepared relating
to the sufficiency of the anticipated receipts from the Escrow Securities to pay the Refunding
Requirements. The Agency shall furnish the Escrow Agent with the report of [Grant Thornton
LLP], verifying the mathematical accuracy of the computations contained in such schedules.
Section 8. Compliance with Agreement and Prior Indenture. The Authority and
the Agency hereby direct, and the Escrow Agent, in its capacities as escrow agent hereunder and
as the Prior Bonds Trustee, hereby agrees that the Escrow Agent will take all the actions required
to be taken by it hereunder, including the timely transfer of moneys for the payment of principal
and interest with respect to the Prior Bonds, in order to effectuate this Agreement. The liability
of the Escrow Agent for the payment of the Refunding Requirements, pursuant to this Section
and, in its capacity as Prior Bonds Trustee, the Prior Indenture, shall be limited to the
application, in accordance with this Agreement, of moneys and the Escrow Securities in the
Escrow Fund (including interest earnings thereon, if any) available for the purposes of and in
accordance with this Agreement.
Section 9. Tax Covenant. Notwithstanding any other provision of this
Agreement, the Agency and the Authority hereby covenant that no part of the proceeds of the
Series 2007 Bonds or of the moneys or funds held by the Escrow Agent hereunder shall be used,
and that it shall not direct the Escrow Agent to use any of such moneys or funds at any time,
directly or indirectly, in a manner that would cause any of the Series 2007 Bonds to be an
"arbitrage bond" under Section 148 of the Code and the regulations of the Treasury Department
thereunder proposed or in effect at the time of such use and applicable to obligations issued on
the date of issuance of the Series 2007 Bonds. None of the Authority, the Agency nor the
Escrow Agent shall, except as set forth in this Agreement, sell, transfer or otherwise dispose of
the Escrow Securities; provided that the Escrow Agent may effectuate the transfer of such
Escrow Securities to a successor escrow agent in accordance with the provisions of Section 15
relating to the transfer of rights and property to successor escrow agents.
Section 10. Notices. The Authority hereby instructs the Escrow Agent, in its
capacity as the Prior Bonds Trustee, to mail to the registered owners of the Prior Bonds, as soon
as practicable upon receipt of the deposit of moneys in the Escrow Fund pursuant to Section 4, a
notice substantially in the form set forth in Exhibit A attached hereto. The Authority also hereby
instructs the Escrow Agent, in its capacity as the Prior Bonds Trustee, to send redemption
notices, at least 30 days but no more than 60 days before each redemption date set forth in
Schedule A, to the registered owners of the applicable Prior Bonds, the Securities Depositories
and to one or more Information Services (as defined in the Prior Indenture) in the form and
manner prescribed by Section 2.03(d) of the Prior Indenture. The Escrow Agent shall provide
copies of the notices described in this Section 10 to MBIA Insurance Corporation, the insurer of
P6402.1059\932556.1
4
Prior Bonds.
Section 11. Defeasance of Prior Bonds. The Agency and the Authority represent
and agree that, concurrently with the initial deposit of the moneys and Escrow Securities
pursuant to Sections 4 and 5, (i) the Prior Bonds (i.e., the portion of the remaining outstanding
Series 1998 Bonds, consisting of the serial bonds with the maturity dates of
[, and the term bonds with the maturity date of October 1, 2027]) will no
longer be deemed to be outstanding and unpaid within the meaning and with the effect expressed
in the Prior Indenture, and (ii) all principal installments of the Prior Loan scheduled to be due on
October 1 in the years will be deemed paid and will no longer be deemed to be
outstanding within the meaning and with the effect expressed in the Prior Loan Agreement.
Section 12. Nature of Lien. The trust hereby created shall be irrevocable and the
holders of the Prior Bonds shall have an express lien on all moneys and Escrow Securities in the
Escrow Fund, including the interest earnings thereon, until paid out, used and applied in
accordance with this Agreement.
Section 13. Amendments. This Agreement is made pursuant to and in
furtherance of the Prior Indenture and for the benefit of the Agency, the Authority and the
holders from time to time of the Prior Bonds and it shall not be repealed, revoked, altered,
amended or supplemented without the written consent of all such holders and the written consent
of the Escrow Agent, the Authority and the Agency; provided, however, that the Agency, the
Authority and the Escrow Agent may, without the consent of, or notice to, such holders, enter
into such agreement supplemental to this Agreement as shall not materially adversely affect the
rights of such holders and as shall not be inconsistent with the terms and provisions of this
Agreement, for any one or more of the following purposes:
(a) To cure any ambiguity or formal defect or omission in this Agreement;
(b) To grant to, or confer upon, the Escrow Agent for the benefit of the
holders of the Prior Bonds, any additional rights, remedies, powers or authority that may
lawfully be granted to, or conferred upon, such holders or the Escrow Agent;
(c) To transfer to the Escrow Agent and make subject to this Agreement
additional funds, securities or properties; and
(d) To make any other change determined by the Authority and the Agency to
be not materially adverse to the holders of the Prior Bonds.
The Escrow Agent shall be entitled to rely exclusively upon an opinion of counsel
with respect to compliance with this Section, including the extent, if any, to which any change,
modification or addition affects the rights of the holders of the Prior Bonds, or that any
instrument executed hereunder complies with the conditions and provisions of this Section.
Section 14. Compensation of Escrow Agent. In consideration of the services
rendered by the Escrow Agent under this Agreement, the Agency agrees to and shall pay to the
P6402.1059\9325.56.1
5
Escrow Agent its proper fees and expenses in accordance with the agreement therefor reached by
the Escrow Agent and the Agency, including all reasonable expenses, charges, counsel fees and
other disbursements incurred by it or by its attorneys, agents and employees in and about the
performance of their powers and duties hereunder, from any moneys of the Agency lawfully
available therefor and the Escrow Agent shall have no lien whatsoever upon any of the moneys
or Escrow Securities in the Escrow Fund for the payment of such proper fees and expenses.
Section 15. Resinnation or Removal of Escrow Agent; Appointment of
Successor. The Escrow Agent at the time acting hereunder may at any time resign and be
discharged from the trusts hereby created by giving written notice to the Agency, the Authority
and the Prior Bonds Trustee (if different from the Escrow Agent) specifying the date when such
resignation will take effect, but no such resignation shall take effect unless a successor Escrow
Agent shall have been appointed by the holders of the Prior Bonds or by the Agency as
hereinafter provided and such successor Escrow Agent shall have accepted such appointment, in
which event such resignation shall take effect immediately upon the appointment and acceptance
of a successor Escrow Agent. The Escrow Agent may be removed at any time by an instrument
or concurrent instruments in writing, delivered to the Escrow Agent and to the Agency and the
Authority and signed by the registered holders of a majority in principal amount of each series of
the Prior Bonds. The Escrow Agent may also be removed at any time by the Agency with not
less than 30 days' written notice to the Escrow Agent, the Authority, the Prior Bonds Trustee (if
different from the Escrow Agent) and the registered holders of the Prior Bonds.
In the event the Escrow Agent hereunder shall resign or be removed, or be
dissolved, or shall be in the course of dissolution or liquidation, or otherwise become incapable
of acting hereunder, or in case the Escrow Agent shall be taken under the control of any public
officer or officers, or of a receiver appointed by a court, a successor Escrow Agent may be
appointed by the holders of a majority in principal amount of the Prior Bonds, by an instrument
or concurrent instruments in writing, signed by such holders, or by their attorneys in fact, duly
authorized in writing; provided, nevertheless, that in any such event, the Agency shall appoint a
temporary Escrow Agent to fill such vacancy until a successor Escrow Agent shall be appointed
by the holders of a majority in principal amount of each series of the Prior Bonds, and any such
temporary Escrow Agent so appointed by the Agency shall immediately and without further act
be superseded by the Escrow Agent so appointed by such holders. The Agency shall give
written notice of any such appointment made by it to the Authority and the Prior Bonds Trustee.
In the event that no appointment of a successor Escrow Agent or a temporary
successor Escrow Agent shall have been made by such holders or the Agency pursuant to the
foregoing provisions of this Section within 60 days after written notice of the removal or
resignation of the Escrow Agent has been given to the Agency, the holder of any of the Prior
Bonds or any retiring Escrow Agent may apply to any court of competent jurisdiction for the
appointment of a successor Escrow Agent, and such court may thereupon, after such notice, if
any, as it shall deem proper, appoint a successor Escrow Agent.
No successor Escrow Agent shall be appointed unless such successor Escrow
Agent shall be a corporation with trust powers organized under the banking laws of the United
P6402.1059\932556.1
6
States or any state, and shall have at the time of appointment capital and surplus of not less than
$75,000,000.
Every successor Escrow Agent appointed hereunder shall execute, acknowledge
and deliver to its predecessor and to the Agency, an instrument in writing accepting such
appointment hereunder and thereupon such successor Escrow Agent without any further act,
deed or conveyance, shall become fully vested with all the rights, immunities, powers, trusts,
duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the written
request of such successor Escrow Agent or the Agency execute and deliver an instrument
transferring to such successor Escrow Agent all the estates, properties, rights, powers and trusts
of such predecessor hereunder; and every predecessor Escrow Agent shall deliver all securities
and moneys held by it to its successor. Should any transfer, assignment or instrument in writing
from the Agency be required by any successor Escrow Agent for more fully and certainly vesting
in such successor Escrow Agent the estates, rights, powers and duties hereby vested or intended
to be vested in the predecessor Escrow Agent, any such transfer, assignment and instrument in
writing shall, on request, be executed, acknowledged and delivered by the Agency.
Any entity into which the Escrow Agent, or any successor to it in the trusts
created by this Agreement, may be merged or converted or with which it or any successor to it
may be consolidated, or any entity resulting from any merger, conversion, consolidation or tax-
free reorganization to which the Escrow Agent or any successor to it shall be a party, shall, if it
meets the qualifications set forth in the fifth paragraph of this Section, and if it is otherwise
satisfactory to the Agency, be the successor Escrow Agent under this Agreement without the
execution or filing of any paper or any other act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 16. Limitation of Powers and Duties. The Escrow Agent shall have no
power or duty to invest any funds held under this Agreement except as provided in Sections 5
and 6. The Escrow Agent shall have no power or duty to transfer or otherwise dispose of the
moneys held hereunder except as provided in this Agreement.
Section 17. Indemnification. To the extent permitted by law, the Agency hereby
assumes liability for, and hereby agrees (whether or not any of the transactions contemplated
hereby are consummated) to indemnify, protect, save and keep harmless the Escrow Agent and
its respective successors, assigns, agents, employees and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and
disbursements (including reasonable legal fees and disbursements) of whatsoever kind and
nature which may be imposed on, incurred by, or asserted against, the Escrow Agent at any time
(whether or not also indemnified against the same by the Agency or any other person under any
other agreement or instrument, but without double indemnity) in any way relating to or arising
out of the execution, delivery and performance of this Agreement, the establishment hereunder
of the Escrow Fund, the acceptance of the funds and securities deposited therein, the purchase of
any securities to be purchased pursuant thereto, the retention of such securities or the proceeds
thereof and any payment, transfer or other application of moneys or securities by the Escrow
Agent in accordance with the provisions of this Agreement; provided, however, that the Agency
shall not be required to indemnify the Escrow Agent against the Escrow Agent's own negligence
P6402.1059\932556.1
7
or willful misconduct or the negligence or willful misconduct of the Escrow Agent's employees.
In no event shall the Authority, the Agency or the Escrow Agent be liable to any person by
reason of the transactions contemplated hereby other than as set forth in this Section. The
indemnities contained in this Section shall survive the termination of this Agreement and
removal or resignation of the Escrow Agent.
Section 18. Limitation of Liabilitv. The Escrow Agent and its respective
successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in
tort, contract, or otherwise, in connection with the execution and delivery of this Agreement, the
establishment of the Escrow Fund, the acceptance of the moneys or any securities deposited
therein, the purchase of the securities to be purchased pursuant hereto, the retention of such
securities or the proceeds thereof, the sufficiency of the securities or any uninvested moneys held
hereunder to accomplish the payment and redemption of the Prior Bonds, or any payment,
transfer or other application of moneys or securities by the Escrow Agent in accordance with the
provisions of this Agreement or by reason of any non -negligent act, non -negligent omission or
non -negligent error of the Escrow Agent made in good faith in the conduct of its duties. The
recitals of fact contained in the Recitals of this Agreement shall be taken as the statements of the
Agency or the Authority, and the Escrow Agent assumes no responsibility for the correctness
thereof. The Escrow Agent makes no representation as to the sufficiency of the securities to be
purchased pursuant hereto and any uninvested moneys to accomplish the payment and
redemption of the Prior Bonds pursuant to the Prior Indenture or to the validity of this
Agreement as to the Agency or the Authority and, except as otherwise provided herein, the
Escrow Agent shall incur no liability in respect thereof. The Escrow Agent shall not be liable in
connection with the performance of its duties under this Agreement except for its own
negligence, willful misconduct or default, and the duties and obligations of the Escrow Agent
shall be determined by the express provisions of this Agreement. The Escrow Agent may
consult with counsel, who may or may not be counsel to the Agency, and in reliance upon the
written opinion or advice of such counsel shall have full authorization and protection in respect
of any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever
the Escrow Agent shall deem it necessary or desirable that a matter be proved or established
prior to taking, suffering, or omitting any action under this Agreement, such matter (except the
matters set forth herein as specifically requiring a certificate of a nationally recognized firm of
independent certified public accountants or an opinion of nationally recognized bond counsel)
may be deemed to be conclusively established by a written certification of the Agency or the
Authority, as applicable. Whenever the Escrow Agent shall deem it necessary or desirable that a
matter specifically requiring a certificate of a nationally recognized firm of independent certified
public accountants or an opinion of nationally recognized bond counsel be proved or established
prior to taking, suffering, or omitting any such action, such matter may be established only by
such a certificate or such an opinion. No provision of this Agreement shall require the Escrow
Agent to expend or risk its own funds or otherwise incur any financial liability in the
performance or exercise of any of its duties in accordance with this Agreement, or in the exercise
of its rights or powers.
Section 19. Termination. This Agreement shall terminate when moneys have
been transferred pursuant to Section 6 to the Prior Bonds Trustee sufficient to pay all Prior
Bonds. Upon such termination, all moneys remaining in the Escrow Fund after payment of any
P6402.1059\932556.1
8
amounts due the Escrow Agent hereunder shall be transferred to the Revenue Fund held under
the 2007 Indenture.
Section 20. Governing Law. This Agreement shall be governed by the law of the
State of California.
Section 21. Severability. If any one or more of the covenants or agreements
provided in this Agreement on the part of the Agency, the Authority or the Escrow Agent to be
performed should be determined by a court of competent jurisdiction to be contrary to law, such
covenant or agreement shall be deemed and construed to be severable from the remaining
covenants and agreements herein contained and shall in no way affect the validity of the
remaining provisions of this Agreement.
All the covenants, promises and agreements in this Agreement contained by or on
behalf of the Agency, the Authority or the Escrow Agent shall bind and inure to the benefit of
their respective successors and assigns, whether so expressed or not.
Section 22. Counterparts. This Agreement may be executed in several
counterparts, all or any of which shall be regarded for all purposes as one original and shall
constitute and be but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
P6402.1059\932556.1
9
(Escrow Agreement)
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be executed by their duly authorized officers and appointed or elected officials as of the date first
written above.
PALM DESERT FINANCING AUTHORITY
wo
Chief Administrative Officer
PALM DESERT REDEVELOPMENT AGENCY
wo
Executive Director
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Escrow Agent
LE
Authorized Officer
P6402.1059\932556.1
10
SCHEDULE A
REFUNDING REQUIREMENTS
Redemption Redemption Escrow
Date Principal Interest Premium Requirement
(1) Consists of the following Prior Bonds to be paid or redeemed on October 1, 2008:
Maturity
Date Interest Redemption
(October 1) Principal Rate Price
P6402.1059\932556.1
Schedule A-1
SCHEDULE B
ESCROW SECURITIES
Type of Maturity Par
Securitv Date Amount Rate Price Cost
P6402.1059\932556.1
Schedule B-1
EXHIBIT A
[FORM OF DEFEASANCE NOTICE]
PALM DESERT FINANCING AUTHORITY
Notice to the Holders of
Palm Desert Financing Authority
Tax Allocation (Housing Set -Aside) Revenue Bonds, Series 1998
consisting of
the serial bonds with maturity dates of
[, and
the term bonds with the maturity date of October 1, 2027]
CUSIP No.
NOTICE IS HEREBY GIVEN on behalf of the Palm Desert Financing Authority
(the "Authority"), that pursuant to Section 11.03 of the Indenture of Trust, dated as of January 1,
1998 (the "Indenture"), pertaining to the above -captioned Bonds (consisting of the serial bonds
with maturity dates of [, and the term bonds with the maturity date of
October 1, 2027], the lien of such Indenture has been discharged through the irrevocable deposit
in escrow of cash and Federal Securities.
DATED this _ day of .2007
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Escrow Agent
116402.1059\932556.1
Exhibit A