HomeMy WebLinkAboutSR - Revenue Bonds PA4/Res 06-77/Res FA-58/Res 530/PA4CITY OF PALM DESERT
PALM. DESERT FINANCING AUTHORITY
PALM DESERT REDEVELOPMENT AGENCY
STAFF REPORT
REQUEST: APPROVAL OF RESOLUTION NO. 06-77 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 REFUNDING REVENUE BONDS (PROJECT
AREA NO. 4), 2006 SERIES A, AND TAX ALLOCATION REVENUE
CAPITAL APPRECIATION BONDS (PROJECT AREA NO. 4), 2006
SERIES B
APPROVAL OF RESOLUTION NO. FA-58 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 REFUNDING
REVENUE BONDS (PROJECT AREA NO. 4), 2006 SERIES A, AND TAX
ALLOCATION REVENUE CAPITAL APPRECIATION BONDS (PROJECT
AREA NO. 4), 2006 SERIES B, AND AUTHORIZING CERTAIN OTHER
MATTERS RELATING THERETO
APPROVAL OF RESOLUTION NO. 530 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 TAX ALLOCATION
REFUNDING REVENUE BONDS (PROJECT AREA NO. 4), 2006 SERIES
A, AND TAX ALLOCATION REVENUE CAPITAL APPRECIATION BONDS
(PROJECT AREA NO. 4), 2006 SERIES B, AND AUTHORIZING CERTAIN
OTHER MATTERS RELATING THERETO
SUBMITTED BY: DAVE YRIGOYEN, DIRECTOR OF REDEVELOPMENT/HOUSING
DATE: JUNE 8, 2006
CONTENTS: (1)
CITY COUNCIL RESOLUTION NO. 06 77
(2)
PALM DESERT FINANCING AUTHORITY RESOLUTION NO. FA58
(3)
PALM DESERT REDEVELOPMENT AGENCY RESOLUTION NO.530
(4)
INDENTURE OF TRUST
(5)
PROJECT AREA NO. 4 LOAN AGREEMENT
(6)
ESCROW AGREEMENT
(7)
PRELIMINARY OFFICIAL STATEMENT
(8)
BOND PURCHASE AGREEMENT
(9)
CONTINUING DISCLOSURE AGREEMENT
Staff Report
Approval of Agency/PDFA Resolutions — PA#4 Tax Allocation Refunding Revenue Bonds
2006 Series A and B
Page 2 of 4
June 8, 2006
Recommendation:
By Minute Motion:
That the City Council approve Resolution No. 06-77 , making (i) findings of
significant public benefit in connection with the issuance and sale of two series
of bonds (the "Bonds") by the Palm Desert Financing Authority: (A) Tax
Allocation Refunding Revenue Bonds (Project Area No. 4), 2006 Series A (the
"Series 2006A Bonds"), and (B) Tax Allocation Revenue Capital Appreciation
Bonds (Project Area No. 4), 2006 Series B (the "Series 2006B Bonds"), and
(ii) findings pursuant to Sections 33679 and 33445 of the California Health and
Safety Code with respect to the projects to be funded by proceeds of the
Bonds;
2. That the Palm Desert Financing Authority approve Resolution No. FA-58 ,
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. 530,
approving and authorizing the execution and deliveryof 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 projects.
Backqround and discussion:
Staff recommends the issuance of two series of Bonds relating to the financing and refinancing of
projects for the Agency's Project Area No. 4. The Bonds will be issued as tax-exempt bonds. The
net proceeds of the Series 2006A Bonds will be used to refund a portion of certain Authority bonds
issued in 1998 to finance projects for the Project Area No. 4. The remaining portion of the net
proceeds of the Series 2006A Bonds, along with the net proceeds of the Series 2006E Bonds will be
used to pay all or a portion of the costs of certain Agency projects benefiting Project Area No. 4.
Based on current estimates by the Financing Advisor and the Underwriter, the sale of the two series
of Bonds is expected to generate approximately $16,300,000 of net proceeds to be available for
Agency projects. The proposed 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 repayment of the Bonds will be primarily secured by tax increments generated with respect to
Project Area No. 4. The Bonds will rank on a parity with the outstanding bonds previously issued for
Project Area No. 4. The Series 2006A Bonds will be current interest bonds. The Series 2006B
Bonds will be capital appreciation bonds.
Staff Report
Approval of Agency/PDFA Resolutions — PA#4 Tax Allocation Refunding Revenue Bonds
2006 Series A and B
Page 3 of 4
June 8, 2006
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 projects.
Staff is utilizing the following financing team:
Kenneth L. Dieker, D.B.A. 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
Wedbush Morgan Securities, Inc., Solana Beach, 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 Agreement
Pursuant to the Loan Agreement, the Authority agrees to lend the Agency funds that would be used
by the Agency to refund the 1998 bonds and fund capital projects for benefit to Project Area No. 4.
The Agency agrees to pay tax increment revenues to the Trustee, as the Authority's assignee, in
sufficient amounts to pay debt service on the Bonds.
Bond Purchase Agreement
This is an agreement between the Authority, the Agency and the Underwriter for 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 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
Staff Report
Approval of Agency/PDFA Resolutions — PA#4 Tax Allocation Refunding Revenue Bonds
2006 Series A and B
Page 4 of 4
June 8, 2006
Statement also includes information regarding the Authority, the Agency, and the Project Area. 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.
Continuing Disclosure Aareement
The Continuing Disclosure Agreement is between 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 Project Area No. 4. 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.
Escrow Aareement
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 1995 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.
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 ofA rriCla&qAffE) ION:
S mitted APPROVED DENIED
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City Manager/CAO/Executi�7e"L' Original on file with City Clerk's Office
VERIFIED BY "/Ohm—
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RESOLUTION NO. 06.77
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 REFUNDING REVENUE BONDS
(PROJECT AREA NO. 4), 2006 SERIES A, AND TAX
ALLOCATION REVENUE CAPITAL APPRECIATION
BONDS (PROJECT AREA NO. 4), 2006 SERIES B
RECITALS:
WHEREAS, the Palm Desert Financing Authority (the "Authority") has
proposed to sell and issue two series of bonds (collectively, "the Bonds"): (i) Tax
Allocation Refunding Revenue Bonds (Project Area No. 4), 2006 Series A, and (ii) Tax
Allocation Revenue Capital Appreciation Bonds (Project Area No. 4), 2006 Series B;
and
WHEREAS, proceeds of the Bonds are to be applied for the purpose of
making two loans to the Palm Desert Redevelopment Agency (the "Agency") for the
object and purpose of, among other things, assisting in (i) effecting a refunding of a
portion of the Authority's remaining outstanding Tax Allocation Revenue Bonds (Project
Area No. 4), Series 1998, and (ii) the financing of certain public capital improvements
(the "Projects") of benefit to Project Area No. 4, of the Agency (the "Project Area"),
including : (A) a sound attenuation wall along Fred Waring Drive, and (B)
undergrounding of utilities throughout the Project Area; and
WHEREAS, 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
WHEREAS, there has been made available in the office of the City Clerk
for two weeks prior to such public hearing for public inspection and copying, at a cost
not to exceed the cost of duplication, a summary report which includes all of the
following: (i) estimates of the amount of such taxes allocated to the Agency from the
Project Area proposed to be used to pay for the Projects, including interest payments;
(ii) facts supporting the determinations required to be made by the City Council pursuant
to California Health and Safety Code Section 33445; and (iii) the redevelopment
purpose for which such taxes are being used to pay for the installation and construction;
P6402.1057\893624.1
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.
Section 2. Approval of Financing,. The City Council hereby finds that the
financing and refinancing of public capital improvements described above through 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 Installation and Construction
of Certain Public Capital Improvements of Benefit to Project Area No. 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 public capital improvements are of benefit to the Project Area
and to the immediate neighborhood in which the Projects are located; (ii) the payment of
funds for the cost of such public capital improvements will assist in the elimination of
one or more blighting conditions inside the Project Area; (iii) the payment of funds for
the cost of such improvements 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 such improvements 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 installation and construction of the
above -described improvements from tax increment revenues of the Agency from the
Project Area.
Section 5. Other Acts. The officers of the City 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.
Section 6. Effective Date. This Resolution shall take effect immediately
upon adoption.
P6402.1057'\.893624.1 2
vote, to wit: APPROVED and ADOPTED this 8th day of June 2006 by the following
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
Rachelle D. Klassen, City Clerk
Jim Ferguson, Mayor
P6402.1057,.893624.1 3
RESOLUTION NO. 530
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 TAX ALLOCATION
REFUNDING REVENUE BONDS (PROJECT AREA NO. 4),
2006 SERIES A, AND TAX ALLOCATION REVENUE
CAPITAL APPRECIATION BONDS (PROJECT AREA NO.
4), 2006 SERIES B, AND AUTHORIZING CERTAIN
OTHER MATTERS RELATING THERETO
RECITALS:
WHEREAS, the Palm Desert Financing Authority (the "Authority") has
determined to sell and issue two series of bonds: (i) Tax Allocation Refunding Revenue
Bonds (Project Area No. 4), 2006 Series A (the "Series 2006A Bonds"), and (ii) Tax
Allocation Revenue Capital Appreciation Bonds (Project Area No. 4), 2006 Series B (the
"Series 2006B Bonds," and together with the Series 2006A Bonds, the "Bonds"); and
WHEREAS, proceeds of the Bonds are to be applied for the purpose of
making two loans (the "Loans") to the Palm Desert Redevelopment Agency (the
"Agency") pursuant to a certain Loan Agreement (as defined below) for the object and
purpose of, among other things, (i) assisting in the financing of certain public capital
improvements of benefit to Project Area No. 4, of the Agency, and (ii) effecting a
refunding of a portion of the Authority's remaining outstanding Tax Allocation Revenue
Bonds (Project Area No. 4), Series 1998;
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 Aareement. The Project Area No. 4 Loan Agreement (the
"Loan Agreement"), proposed to be entered into by and among the Authority, the
Agency and Wells Fargo Bank, National Association, as trustee (the "Trustee"), in the
form presented at this meeting and on file with the Secretary of the Agency (the
"Secretary") is hereby approved. Each of the Chairman and the Executive Director, or
either of them, or their designee (each, an "Authorized Officer"), is hereby authorized
and directed, for and in the name and on behalf of the Agency, 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).
P6402.1057\893646.1
Section 3. Escrow Agreement. The Escrow Agreement (Project Area No.
4), proposed to be entered into by and among the Agency, the Authority and the Escrow
Agent, in the form presented to this meeting and 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 officer's execution and delivery thereof).
Section 4. Continuing 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 presented at this meeting and 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 officer's execution and delivery thereof).
Section 5. Purchase Aareement. The Bond Purchase Agreement (the
"Purchase Agreement") proposed to be entered into by the Authority, the Agency and
Wedbush Morgan Securities, Inc. (the "Underwriter"), in the form presented at this
meeting and 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 his execution and delivery thereof).
Section 6. Requisitions. Each Authorized Officer, the Treasurer or any
deputy of such officers, acting singly, is hereby authorized and directed to execute one
or more requisitions authorizing the Trustee to pay costs relating to the incurrence of the
Loans and the issuance of the Bonds from the proceeds of the Bonds pursuant to the
Loan Agreement.
Section 7. 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.
P6402.1057\893646.1 2
Section 8. Effective Date. This Resolution shall take effect immediately
upon adoption.
APPROVED and ADOPTED this 8th day of June 2006 by the following
vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Jim Fergson, Chairman
ATTEST:
Rachelle D. Klassen, Secretary
P6402.1057M3646.1 3
RESOLUTION NO. FA- 58
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 REFUNDING
REVENUE BONDS (PROJECT AREA NO. 4), 2006
SERIES A, AND TAX ALLOCATION REVENUE CAPITAL
APPRECIATION BONDS (PROJECT AREA NO. 4), 2006
SERIES B, 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 (the "City') 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 two series of bonds: (i)
Tax Allocation Refunding Revenue Bonds (Project Area No. 4), 2006 Series A (the
"Series 2006A Bonds"), and (ii) Tax Allocation Revenue Capital Appreciation Bonds
(Project Area No. 4), 2006 Series B (the "Series 2006B Bonds," and together with the
Series 2006A Bonds, the "Bonds"); and
WHEREAS, proceeds of the Bonds are to be applied for the purpose of
making two loans to the Agency pursuant to a certain Loan Agreement (as defined
below) for the object and purpose of, among other things, (i) assisting in the financing of
certain public capital improvements of benefit to Project Area No. 4, of the Agency, and
(ii) effecting a refunding of a portion of the Authority's remaining outstanding Tax
Allocation Revenue Bonds (Project Area No. 4), Series 1998; and
WHEREAS, the City Council has made a finding, after a duly noticed
public hearing pursuant to Section 6586.5 of the California Government Code held on
the date hereof, that the issuance of the Bonds will result in significant public benefit;
P6402.1057893631.1
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 City Council Findinqs. 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
(defined in Section 4 below) relating to the Bonds, in the form presented at this meeting
and on file in the office of the Secretary of the Authority (the "Secretary"), is hereby
approved. The issuance of the Series 2006A Bonds in an aggregate principal amount
not exceeding $17,000,000, and the Series 2006B Bonds in an aggregate initial
principal amount not exceeding $7,000,000, 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 Officer's execution and delivery thereof).
Section 4.Armointment 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 5.1-oan Agreement. The Project Area No. 4 Loan Agreement (the
"Loan Agreement"), proposed to be entered into by and among the Agency, the
Authority and the Trustee, in the form presented at this meeting and 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 Officer's execution and delivery thereof).
Section 6.Escrow Agreement. The Escrow Agreement (Project Area No.
4) (the "Escrow Agreement"), proposed to be entered into by and among the Agency,
the Authority and the Escrow Agent, in the form presented to this meeting and 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
P6402.1057\893631.1 2
changes therein as the Authorized Officer executing the same may approve (such
approval to be conclusively evidenced by such officer's execution and delivery thereof.
Section 7. Preliminary Official Statement. The Preliminary Official
Statement relating to the Bonds (the "Preliminary Official Statement"), in the form
presented at this meeting and 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 of the Securities and Exchange Act of
1934. The distribution by Wedbush Morgan Securities, Inc. (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, for and in the name and on behalf of the Authority, 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. Purchase Agreement. The form of the Bond Purchase
Agreement as presented to this meeting by the Underwriter and the sale of the Bonds
pursuant thereto upon the terms and conditions set forth therein are hereby approved.
Subject to Section 12 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 12 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 each of the following:
(a) the aggregate initial principal amount of each series of Bonds,
which amount (i) with respect to the Series 2006A Bonds shall not
exceed $17,000,000, and (ii) with respect to the Series 2006B
Bonds shall not exceed $7,000,000;
(b) interest rates on the Bonds, provided that (i) the true interest cost
with respect to the Series 2006A Bonds shall not exceed 6.25
percent, and (ii) the true interest cost with respect to the Series
2006B Bonds shall not exceed 6.25 percent;
P6402.1057\893631.1 3
(d) the Underwriter's compensation (i.e., underwriter's discount) with
respect to the sale of the Bonds, provided that such compensation
(i) with respect to the Series 2006A Bonds shall not exceed
one percent of the aggregate principal amount of the Series 2006A
Bonds, and (ii) with respect to the Series 2006B Bonds shall not
exceed one percent of the aggregate initial principal amount of the
Series 2006B Bonds; and
(e) such provisions as may be required by the terms of the bond
insurance, if any, or debt service reserve surety bond(s), if any,
purchased in connection with the issuance of the Bonds.
The authorization and powers delegated to such officer by this Section 10
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 8th day of June 2006 by the following
vote, to wit:
Jim Ferguson, President
ATTEST:
Rachelle D. Klassen, Secretary
P6402.1057'\893631.1 4
Lc�'.J DRAFT # I
Oi/22/06
$
Palm Desert Financing Authority
Tax Allocation Revenue Bonds
(Project Area No. 4)
2006 Series A
$
Palm Desert Financing Authority
Tax Allocation Revenue Capital
Appreciation Bonds
(Project Area No. 4)
2006 Series B
RONn PURC'HASF. AGRF.F.MF.NT
. 2006
Palm Dcscrt Financing Authorit�
7�-� I 0 Frcd Waring Dri� c
Palm Dcscrt. California 92260-2�78
Ladics and Gcnticmcn:
Wcdbush Morgan Sccuritics Inc. (thc "Unc%rtiri�itei� "). offcrs to cntcr into this Purchasc
Agrccmcnt (thc "l'iu�clur.se A,��i�eement ") «ith thc Palm Dcscrt Financing Authorit� (thc "l'!YlCfYlClYl,��
Ai�tl�ui�ih�") "). a joint po«crs authoriri crc;atc;d b� a Joint E�crcisc of Po«crs Agrc;c;mcnt datc;d Ja�uian 26.
I 989 (thc ' Jl'A A,��i�eement ") bcri� e;e;n thc Ciri of Palm Dcscrt a��d thc Palm Dcscrt Re;dc� clopmcnt Agcnc� (thc
..Rec%velupment A,��encr'). «hich upon acccptancc and appro�al. «ill bc binding upon thc Financing
Authorit� and thc Undcn� ritcr. This offcr is madc subjcct to acccptancc b� thc Financing Authorit� and
appro� al b� thc Rcdc� clopmcnt Agcnc� b� c�ccution of this Purchasc Agrccmcnt and dcli� cr� of thc samc
to thc Undcn�ritcr on or bcforc I I:�9 p.m. (California timc) on thc datc hcrcof. and. if not so acccptcd and
appro� cd. «ill bc subjcct to «ithdra« al b� thc Undcn� ritcr upon noticc dcli� crcd to thc Financing
Authorit� at am timc prior to such acccptancc and appro� al.
Capitalizcd tcrms uscd in this Purchasc Agrccmcnt and not othcn� isc dcfincd hcrcin shall ha� c thc
respccti� c mcanings sct forth for such tcrms in thc 2006 Indcnturc (dcfincd bclo« ) and if not othcn� isc
dcfincd thcrcin. shall ha� c thc mcanings gi� cn to such tcrms as sct forth in thc Official Statcmcnt (dcfincd
bclo« ).
Section 1. Pw•chase and Sale of the 2006 Bonds. Upon thc tcrms and conditions and upon thc
basis of thc rcprescntations sct forth in this Purchasc Agrccmcnt. thc Undcn� ritcr agrccs to purchasc from
thc Financing Authorit� . and thc Financing Authorit� agrccs to scll and dcli� cr to thc Undcn� ritcr. all (but
not Icss than all) of thc `f aggrcgatc principal amount of thc Palm Dcscrt Financing Authorit�
Ta� Allocation Rc� cnuc Bonds (Projcct Arca No. �4) 2006 Scrics A(thc "( �1l1'PL'Y!1 �Yl1L'PL'.1'1 RUl9LL1'..� Al1C{
`f principal amount of Palm Dcscrt Financing Authorit� Ta� Allocation Rc� cnuc
Capital Apprcciation Bonds (Projcct Arca No. �4) 2006 Scrics B(thc "('apital Appi�eciatiun RuncLs.. and
togcthcr «ith thc Currcnt Intcrest Bonds. thc "?00< RuncLs ").
Thc 2006 Bonds shall bc datcd thc datc of dcli� cr� and shall ha� c thc maturitics. bcar intcrest at
thc ratcs per annum. ha� c thc � iclds and bc subjcct to mandator� sinking fiind redcmption all as sct forth on
S�hr.rl��lr. I attachcd hcrcto. Thc purchasc pricc for thc 2006 Bonds shall bc `f (calculatcd as
z ��t-o�,o � � r�-�
thc principal amount of thc 2006 Bonds. Icss an original issuc discount in thc amount of � and
Icss an Undcn� ritcr�s discount in thc amount of � ).
Section 2. Preliminary Official Statement. Thc Financing Authorit� has dcli� crcd to thc
Undcn� ritcr a Prcliminar� Official Statcmcnt. datcd Jul� _. 2006 (thc "l'i�eliminai��� Of'ficial .S'tatement ").
and «ill dcli� cr to thc Undcn� ritcr a final Official Statcmcnt datcd thc datc hcrcof as pro� idcd in Scction �
of this Purchasc Agrccmcnt (as amcndcd and supplcmcntcd from timc to timc pursuant to Scction 6(k) of
this Purchasc Agrccmcnt. thc "Of'ficial .S'raremenr "). Thc Financing Authorit� and thc Rcdc� clopmcnt
Agcnc� ha� c cach dcli� crcd to thc Undcn� ritcr a ccrtificatc pursuant to Sccuritics and E�changc
Commission Rulc I�c2-12 ("Rulc I�c2-12��) rclating to thc Prcliminar� Official Statcmcnt. in substantiall�
thc forms attachcd hcrcto as F�l,ihit A- I and F�hihit A-2, respccti� cl� .
Section 3. Description of the 2006 Bonds. Thc 2006 Bonds arc issucd pursuant to thc
Communit� Rcdc� clopmcnt La« of thc Statc of California. constituting Part I of Di� ision 2�4 of thc Hcalth
and Safct� Codc. commcncing «ith Scction >;000 (thc "Rec%velupment /,atir ..) and Rcsolution No.
adoptcd b� thc Financing Authorit� on . 2006 (thc "l'!YlCfYlClYl,�� Ai�tl�ui�ih� Re.suli�tiun ").
Thc 2006 Bonds shall bc pa�ablc and subjcct to rcdcmption as pro�idcd in thc 2006 Indcnturc (dcfincd
hcrcin) and as sct forth in thc Official Statcmcnt. Thc 2006 Bonds arc Icgal. � alid and binding limitcd
obligations of thc Financing Authorit�. and arc pa�ablc solcl� from and sccurcd b� a plcdgc of Rc�cnucs
(as dcfincd in thc 2006 Indcnturc) dcri� cd primaril� from loan pa� mcnts madc b� thc Rcdc� clopmcnt
Agcnc� pursuant to thc 2006 Loan Agrccmcnt (dcfincd hcrcin).
Thc 2006 Bonds shall bc substantiall� in thc form dcscribcd in. shall bc issucd and sccurcd undcr
thc pro� isions of. and shall bc pa� ablc as pro� idcd in. thc Indcnturc of Trust. datcd as of Jul� I. 2006 (thc
"?00< /nc%ntiu�e "). b� and bct«ccn thc Financing Authorit� and Wclls Fargo Bank. National Association
(thc "7i�i�.stee��). Thc Financing Authorit� is issuing thc 2006 Bonds to makc t«o loans. onc «ith respcct to
thc Currcnt Intcrest Bonds and onc «ith respcct to thc Capital Apprcciation Bonds (collccti�cl�. thc "?00<
/,uan.,� ..). to thc Palm Dcscrt Rcdc� clopmcnt Agcnc� (thc "Rec%velupment A,��encr �) pursuant to thc tcrms
of a Projcct Arca No. �4 Loan Agrccmcnt madc and c�ccutcd as of Jul� I. 2006 (thc "?00< /,uan
A,����eement") b� and among thc Financing Authorit�. thc Rcdc�clopmcnt Agcnc� and thc Trustcc. Thc
Rcdc� clopmcnt Agcnc� «ill appl� thc procccds of thc 2006 Loans to: (i) rcfinancc ccrtain outstanding
obligations of thc Rcdc� clopmcnt Agcnc� undcr a loan agrccmcnt datcd as of March I. 1998 (thc "l'i�iui�
/,uan A,��i�eement��): (ii) financc � arious rcdc� clopmcnt acti� itics «ithin Projcct Arca No. �4 locatcd in thc
Cit� of Palm Dcscrt (thc "l'i�ujecr Ai�ea"): and (iii) pa� thc costs associatcd «ith thc issuancc of thc 2006
Bonds.
Thc pa� mcnt of principal of and intcrest on thc 2006 Bonds «hcn duc «ill bc insurcd b�
municipal bond insurancc �polic�/policics� (thc "/Runcl/n.siu�ance l'ulic�'.. ..RUl9Ll�Yl.1'tll'CfYlCL' l'ulicie.s../) to
bc issucd b� (thc "Runcl /n.,�iu�ei� ..). simultancousl� «ith thc dcli� cn of thc 2006 Bonds.
Section 4. Public Offering. Thc Undcn� ritcr agrccs to makc a bona fidc public offcring of all thc
2006 Bonds at not in c�ccss of thc initial public offcring priccs or � iclds sct forth in S�hr.rl��lr. I attachcd
hcrcto. plus intcrest accrucd thcrcon. if applicablc. from thc datc of thc 2006 Bonds. Thc Undcn� ritcr
rescr� cs thc right to makc conccssions to dcalcrs and to changc such initial public offcring priccs or � iclds
as thc Undcn� ritcr rcasonabl� dccros ncccssar� in conncction «ith thc markcting of thc 2006 Bonds. Thc
Undcn� ritcr also rescr� cs thc right (i) to o� cr-allot or cffcct transactions that stabilizc or maintain thc
markct pricc of thc 2006 Bonds at a Ic� cl abo� c that «hich might othcn� isc prc� ail in thc opcn markct and
(ii) to discontinuc such stabilizing. if commcnccd. at am timc.
z ��t-o�,o � � r�-�
2
Section 5. Delivery of Official Statement. Thc Financing Authorit� shall dcli� cr to thc
Undcn� ritcr. as promptl� as practical but in no c� cnt latcr than thc Closing Datc (as dcfincd hcrcin). such
numbcr of copics of thc final Official Statcmcnt. as thc Undcn� ritcr ma� rcasonabl� rcqucst in ordcr to
compl� «ith thc Sccuritics and E�changc Commission Rulc I�c2-12(b) and thc rulcs of thc Municipal
Sccuritics Rulcmaking Board (thc "M.S'IZR ").
Thc Financing Authorit� hcrcb� authorizcs thc Undcn� ritcr to usc thc Official Statcmcnt and thc
information containcd thcrcin in conncction «ith thc offcring and salc of thc 2006 Bonds and ratifics and
confirms thc authorization of thc usc b� thc Undcn� ritcr prior to thc datc hcrcof of thc Prcliminar� Official
Statcmcnt. fiirnishcd to thc Undcn� ritcr b� thc Financing Authorit� in conncction «ith such offcring and
salc.
Thc Undcn� ritcr agrccs that from thc timc thc Official Statcmcnt bccomcs a� ailablc until thc
carlicr of (i) thc "l:�ncl uf'tl�e Ul9L%L'P117'!1!Yl,�� l'e��iucL " as dcfincd in Scetion 6(I) hcrcin. or (ii) thc timc «hcn
thc Official Statcmcnt is a� ailablc to am person from a nationall� rccognizcd municipal sccuritics
information rcpositor�. but in no casc Icss than 2� da� s follo« ing thc End of thc Undcn� riting Pcriod. thc
Undcn� ritcr shall scnd no latcr than thc nc�t busincss da� follo« ing a rcqucst for a cop� thcrcof. b� first
class mail or othcr cquall� prompt mcans. to am Potcntial Customcr. as dcfincd in Rulc I�c2-12. on
rcqucst. a singlc cop� of thc Official Statcmcnt. Thc Undcn� ritcr agrccs to filc as soon as rcasonabl�
practicablc a cop� of thc Official Statcmcnt «ith a nationall� rccognizcd municipal sccuritics information
rcpositor� and takc am and all actions ncccssar� to compl� «ith applicablc Sccuritics and E�changc
Commission rulcs and MSRB rulcs go� crning thc offcring. salc and dcli� cr� of thc 2006 Bonds to ultimatc
purchascrs.
At thc timc of pricing. thc Undcn� ritcr shall dcli� cr to thc Financing Authorit� a summar� of thc
ordcrs b� maturit� .
Section 6. Representations, Warranties and Covenants of the Financing Authority. Thc
Financing Authorit� rcprescnts. «arrants and co� cnants «ith thc Undcn� ritcr that:
(a) thc go� crning board of thc Financing Authoriri has b� thc Financing Authoriri Rcsolution
adoptc;d b� a majoriri of its mcmbcrs at a mc;c;ting dul� callc;d. noticc;d a��d conductc;d. at «hich a quonim «as
prescnt and acting throughout on . 2006. takcn all action ncccssan for thc c�ccution. dcli� cn and duc
perforn�ancc of thc 2006 Indcnturc. thc 2006 Loan Agrc;c;mcnt. thc Escro« Agrc;c;mcnt datc;d as of Jul� I. 2006
(thc "1::,�ci�uti,• A,��i�eement��). b� and a�nong thc Financing Authoriri. thc Re;dc�clopmcnt Agcnc� and Wclls Fargo
Ba��k. National Association. as cscro« bank (thc "l::sci�utir Rank��) rcgarding thc rcfiinding of `f
outstanding principal a�nount of Palm Dcscrt Financing Authoriri Ta� Rc�cnuc Bonds (Projcct Arc;a No. �4).
Scrics I 998 (thc "/'i�iui� Runcls��). thc Ta� Ccrtificatc of thc Financing Authoriri datc;d as of thc datc of thc initial
dcli� cn of thc 2006 Bonds (thc "7ax ('ei�tiJicate ") and this Purchasc Agre;e;mcnt (collccti� cl�. thc "l'!YlCfYlClYl,��
Ai�tl�ui�ih� A,��i�eement.s ..) a,�d thc authorization and appro� al of thc Prcliminan Official Statcmcnt a,�d thc
Official Statcmcnt: thc Financing Authoriri Rcsolution is in fiill forcc and cffcct a,�d has not bc;c;n a,ncndcd.
modific;d or rescindc;d: thc adoption of thc Fina��cing Authoriri Rcsolution constitutcs all ncccssan action to bc
takcn b� thc Financial Authoriri for thc c�ccution. issuancc and dcli� cn of thc 2006 Bonds a,�d thc c�ccution
dcli� cn and duc perforn�ancc of thc Financing Authoriri Agrc;c;mcnts:
(b) thc Financing Authoriri is and «ill bc on thc Closing Datc a joint c�crcisc of po«crs authoriri
dul� organizc;d and c�isting undcr thc la«s of thc Statc of California (thc ".S'tate ") and thc JPA Agrc;c;mcnt and
has all ncccssan po«cr and authoriri to adopt thc Financing Authoriri Rcsolution. to cntcr into and perforn� its
dutics undcr thc Financing Authoriri Agrc;c;mcnts: and. «hcn c�ccutc;d and dcli� crc;d b� thc respccti� c partics
thcrcto. thc Financing Authoriri Agrc;c;mcnts «ill c;ach constitutc Icgal. � alid a,�d binding obligation of thc
z ��t-o�,o � � r�-�
Financing Authoriri cnforcc;ablc in accordancc «ith its respccti� c tcrn�s. c�ccpt as cnforccmcnt ma� bc limitc;d b�
bankniptc�. insol�cnc�. rwrganization. moratorium or similar la«s or c;quitablc principlcs rclating to or affccting
crc;ditors� rights gcncrall�:
(c) this Purchasc Agrc;c;mcnt has bc;c;n dul� c�ccutc;d and dcli�crc;d b� thc Financing Authoriri. and
constitutcs. and upon thcir c�ccution and dcli�cn. thc Financing Authoriri Agrc;c;mcnts and thc 2006 Bonds «ill
constitutc. Icgal. � alid v�d binding obligations of thc Financing Authoriri cnforcc;ablc in accordancc «ith thcir
tcrn�s. c�ccpt as cnforcc;abiliri ma� bc limitc;d b� bankniptc�. insol�cnc�. moratorium or crc;ditors� rights
gcncrall� : and thc c�ccution and dcli� cn of thc Purchasc Agrc;c;mcnt doc;s not and thc c�ccution and dcli� cn of
thc Financing Authoriri Agrc;c;mcnts and thc 2006 Bonds and compliancc «ith thc pro� isions of c;ach thcrwf «ill
not conflict «ith or constitutc a brc;ach of or a dcfault undcr am applicablc la« or administrati� c rcgulation of thc
Statc or thc Unitc;d Statcs. or am applicablc judgmcnt. dccrc;c;. agrc;c;mcnt or othcr instnimcnt to «hich thc
Financing Authoriri is a part� or is othcn� isc subjcct:
(d) at thc timc of acccptancc hcrcof b� thc Financing Authorit�. and (unlcss an c� cnt occurs of
thc naturc dcscribcd in Scction 6(k)) at all timcs during thc period from thc datc of this Purchasc
Agrccmcnt to and including thc datc «hich is 2� da� s follo« ing thc End of thc Undcn� riting Pcriod for thc
2006 Bonds (as dctcrmincd in accordancc «ith Scction 6(j)). thc statcmcnts and information containcd in
thc Prcliminar� Official Statcmcnt as of its datc. and thc Official Statcmcnt as of its datc (c�cluding thc
information w�dcr thc captions "MUNICIPnI, Bc)NU INtiURnNCI:." and "UNUI:R\NRI I1NG." and containcd in
APPI:NUIX G—"DTC �NU I I II: BOOK-EN I RY SYS I I:M.�� And APPI:NUIX H—"SPI:CIMI:N MUNICIP�I, BONU
INSUR�NCI: Pc)I,ICY�� and APPI:NUIX I—"SPI:CIMI:N RI:sI:RVI: FUNU SURI:"I Y Pc)I,ICY��) arc truc. corrcct and
complctc in all matcrial respccts and such statcmcnts «ith respcct to thc Prcliminar� Official Statcmcnt do
not. and «ith respcct to thc Official Statcmcnt «ill not. omit to statc am matcrial fact ncccssar� to makc
such statcmcnts. in light of thc circumstanccs w�dcr «hich thc� ��crc madc. not mislcading:
(c) to thc bcst of its kno« Icdgc. thc Financing Authorit� is not in � iolation or brcach of or
dcfault undcr am applicablc constitutional pro� ision. la« or administrati� c rulc or rcgulation of thc Statc
of California or thc Unitcd Statcs of Amcrica. or am agcnc� or instrumcntalit� of cithcr of thcm. or am
applicablc judgmcnt or dccrcc. or am loan agrccmcnt. indcnturc. bond. notc. resolution. agrccmcnt or othcr
instrumcnt to «hich thc Financing Authorit� is a part� or is othcn� isc subjcct. «hich «ould constitutc a
dcfault undcr am of thc Financing Authorit� Agrccmcnts or thc 2006 Bonds. and no c� cnt has occurrcd
and is continuing «hich. «ith thc passagc of timc or thc gi� ing of noticc. or both «ould constitutc a
� iolation or a brcach of or a dcfault undcr am such loan agrccmcnt. indcnturc. bond. notc. resolution.
agrccmcnt or othcr instrumcnt to «hich thc Financing Authorit� is a part� or is othcn� isc subjcct:
(� at thc datc hcrcof and on thc Closing Datc. thc Financing Authorit� «ill bc in compliancc
in all respccts «ith thc matcrial co� cnants and agrccmcnts containcd in thc Financing Authorit� Agrccmcnts
and no c� cnt of dcfault and no c� cnt has occurrcd and is continuing «hich. «ith thc passagc of timc or
gi� ing of noticc. or both. «ould constitutc an c� cnt of dcfault thcrcundcr shall ha� c occurrcd and bc
continuing:
(g) to thc bcst kno« Icdgc of thc Financing Authorit� . aftcr duc im cstigation. othcr than as sct
forth in thc Official Statcmcnt or as thc Financing Authorit� has othcn� isc discloscd in «riting to thc
Undcn� ritcr. thcrc is no action. suit. procccding. inquir� or im cstigation. at la« or in cquit�. or b� or
bcforc am court. go�crnmcntal agcnc�. public board or bod�. pcnding or thrcatcncd against thc Financing
Authorit�. (i) «hcrcin an unfa� orablc dccision. ruling or finding «ould ad� crscl� affcct thc c�istcncc of thc
Financing Authorit� or thc titic of am official of thc Financing Authorit� to such person�s officc. or (ii)
sccking to restrain or cnjoin thc issuancc. salc or dcli� cr� of thc 2006 Bonds. or thc assignmcnt b� thc
Financing Authorit� of its rights undcr thc 2006 Indcnturc. or (iii) in am «a� contcsting or affccting thc
z ��t-o�,o � � r�-�
�4
� alidit� or cnforccabilit� of thc Financing Authorit� Agrccmcnts or thc 2006 Bonds. or (i� ) contcsting in
am «a� thc complctcncss or accurac� of thc Prcliminan Official Statcmcnt. or (� ) contcsting thc po«cr of
thc Financing Authorit� or its authorit� «ith respcct to thc 2006 Bonds or thc Financing Authorit�
Agrccmcnts. or (� i) contcsting thc c�clusion of intcrest on thc 2006 Bonds from gross incomc for fcdcral
and Statc incomc «hcrcin an unfa� orablc dccision. ruling or finding «ould matcriall� ad� crscl� affcct thc
� alidit� of thc Financing Authorit� Agrccmcnts or thc authorization. c�ccution. dcli� cr� or performancc b�
thc Financing Authorit� of thc 2006 Bonds or thc Financing Authorit� Agrccmcnts:
(h) thc Financing Authorit� «ill fiirnish such information. c�ccutc such instrumcnts and takc
such othcr action not inconsistcnt «ith la« in cooperation «ith thc Undcn� ritcr «hich thc Undcn� ritcr ma�
rcasonabl� rcqucst in ordcr for thc Undcn� ritcr to qualifi thc 2006 Bonds for offcr and salc undcr thc Bluc
Sk� or othcr sccuritics la« s and regulations of such statcs and othcr jurisdictions of thc Unitcd Statcs as thc
Undcn� ritcr ma� dcsignatc and to dctcrminc thc cligibilit� of thc 2006 Bonds for im cstmcnt undcr thc la« s
of such statcs and othcr jurisdictions: pro� idcd. ho«c� cr. that in no c� cnt shall thc Financing Authorit� bc
rcquircd to takc am action �� hidi «ould subjcct it to scr� icc of proccss in am _jurisdiction in «hich it is not
no« subjcct: - - -
(i) to thc bcst of kno« Icdgc of thc Financing Authorit�. all appro� als. conscnts and ordcrs of
am go� crnmcntal authorit� or agcnc� ha� ing jurisdiction in thc mattcr «hich «ould constitutc a condition
prcccdcnt to thc duc performancc b� thc Financing Authorit� of its obligations undcr thc Financing
Authorit� Agrccmcnts or thc 2006 Bonds ha� c bccn dul� obtaincd or madc. and arc. and «ill bc on thc
Closing Datc. in fiill forcc and cffcct:
(I) as uscd in this Purehasc Agrccmcnt. thc tcrm "l:�ncl uf'tl�e Ul9L%L'P117'!1!Yl,�� l'ei�iucf� for thc
2006 Bonds shall mcan thc carlicr of (i) thc Closing Datc unlcss thc Financing Authorit� shall ha� c bccn
notificd in «riting to thc contrar� b� thc Undcn� ritcr on or prior to thc Closing Datc or (ii) thc datc on
«hich thc End of thc Undcn� riting Pcriod for thc 2006 Bonds has occurrcd undcr Rulc I�c2-12. pro� idcd.
ho« c� cr. that thc Financing Authorit� ma� trcat as thc End of thc Undcn� riting Pcriod for thc 2006 Bonds
thc datc spccificd as such in a noticc from thc Undcn� ritcr stating thc datc «hich is thc End of thc
Undcn� riting Pcriod:
(k) if bct«ccn thc datc hcrcof and thc datc «hich is 2� da� s aftcr thc End of thc Undcn� riting
Pcriod for thc 2006 Bonds. an c� cnt occurs. or facts or conditions bccomc kno« n to thc Financing
Authorit� «hich. in thc rcasonablc opinion thc Cit� Attornc�. as Counscl to thc Financing Authorit� or
Lofton c�. Jcnnings. San Francisco. California (..l)i.sclu.siu�e ('ui�n.sel "). might or «ould causc thc
information containcd in thc Official Statcmcnt. as thcn supplcmcntcd or amcndcd. to contain an untruc
statcmcnt of a matcrial fact or to omit to statc a matcrial fact rcquircd to bc statcd thcrcin or ncccssar� to
makc such information thcrcin. in thc light of thc circumstanccs undcr «hich it «as madc. not mislcading in
am matcrial respcct. thc Financing Authorit� «ill notifi thc Undcn� ritcr. and if in thc opinion of thc
Undcn� ritcr such c� cnt rcquires thc prcparation and publication of a supplcmcnt or amcndmcnt to thc
Official Statcmcnt. thc Financing Authorit� «ill forth« ith prcparc and fiirnish to thc Undcn� ritcr (at thc
c�pcnsc of thc Financing Authorit� ) a rcasonablc numbcr of copics of an amcndmcnt of or supplcmcnt to
thc Official Statcmcnt (in thc form and substancc satisfactor� to thc Undcn� ritcr) «hich «ill amcnd or
supplcmcnt thc Official Statcmcnt so that it «ill not contain an untruc statcmcnt of a matcrial fact or omit
to statc a matcrial fact ncccssar� in ordcr to makc thc statcmcnts thcrcin. in thc light of thc circumstanccs
c�isting at thc timc thc Official Statcmcnt is dcli� crcd to prospccti� c purchascrs. not mislcading in am
matcrial respcct «ith respcct to thc information of thc Financing Authorit� . If such notification shall bc
subscqucnt to thc Closing Datc. thc Financing Authorit� shall forth« ith pro� idc to thc Undcn� ritcr such
Icgal opinions. ccrtificatcs. instrumcnts and othcr documcnts as thc Undcn� ritcr ma� rcasonabl� dccm
ncccssan to c� idcncc thc truth and accurac� of such supplcmcnt or amcndmcnt to thc Official Statcmcnt.
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For thc purposcs of this subscction. bct«ccn thc datc hcrcof and thc datc «hich is 2� da� s aftcr thc End of
thc Undcn� riting Pcriod for thc 2006 Bonds. thc Financing Authorit� «ill fiirnish such information «ith
respcct to itsclf as thc Undcn� ritcr ma� from timc to timc rcasonabl� rcqucst:
(I) if thc information containcd in thc Official Statcmcnt rclating to thc Financing Authorit� is
amcndcd or supplcmcntcd pursuant to Scction 6(k). at thc timc of such supplcmcnt or amcndmcnt thcrcto
and (unlcss subscqucntl� again supplcmcntcd or amcndcd pursuant to such subparagraph) at all timcs
subscqucnt thcrcto up to and including thc datc «hich is 2� da� s aftcr thc End of thc Undcn� riting Pcriod
for thc 2006 Bonds. thc portions of thc Official Statcmcnt so supplcmcntcd or amcndcd (including am
financial and statistical data containcd thcrcin). «ill not contain am untruc statcmcnt of a matcrial fact or
omit to statc a matcrial fact rcquircd to bc statcd thcrcin or ncccssar� to makc such information thcrcin. in
thc light of thc circumstanccs undcr «hich it «as madc. not mislcading:
(m) am ccrtificatc signcd b� am officcr of thc Financing Authorit� and dcli� crcd to thc
Undcn� ritcr pursuant to thc 2006 lndcnturc or this Purchasc Agrccmcnt or am documcnt contcmplatcd
thcrcb� shall bc dccmcd a rcprescntation and «arrant� b� thc Financing Authorit� to thc Undcn� ritcr as to
thc statcmcnts madc thcrcin and that such officcr shall ha� c bccn dul� authorizcd to c�ccutc thc samc:
(n) to thc bcst kno« Icdgc of thc Financing Authorit� . thcrc is no public � otc or rcfcrcndum
pcnding or proposcd. thc results of ��hich could matcriall� ad�crscl� affcct thc transactions contcmplatcd
b� thc Official Statcmcnt or thc FinZncing Authorit� Agrccmcnts or thc 2006 Bonds. or thc � alidit� or
cnforccabilit� of thc 2006 Bonds:
(o) thc Financing Authorit� «ill compl� «ith thc rcquircmcnts of thc ta� ccrtificatc c�ccutcd
b� thc Financing Authorit� in conncction «ith thc dcli� cr� of thc 2006 Bonds: and
(p) thc Financing Authorit� «ill appl� thc procccds from thc salc of thc 2006 Bonds for thc
purposcs spccificd in thc 2006 Indcnturc.
Section 7. Representations, Warranties and Covenants of the Redevelopment Agency. Thc
Rcdc� clopmcnt Agcnc� rcprescnts. «arrants and co� cnants «ith thc Undcn� ritcr that:
(a) thc Rcdc� clopmcnt Agcnc� is a public bod� corporatc and politic. organizcd and csisting
undcr thc la«s of thc Statc. including thc Rcdc�clopmcnt La«. «ith fiill right. po«cr and authorit� to
c�ccutc. dcli� cr and perform its obligations undcr thc 2006 Loan Agrccmcnt. thc Escro« Agrccmcnt. thc
Continuing Disclosurc Ccrtificatc Agrccmcnt among thc Rcdc�clopmcnt Agcnc�. thc Trustcc and
MuniFinancial. Inc.. as Disscmination Agcnt. datcd thc Closing Datc and substantiall� in thc form attachcd
to thc Official Statcmcnt as E�hibit F(thc "( �U191lYltllYl,�� l)i.sclu.siu�e A,��i�eement "). and to appro� c this
Purchasc Agrccmcnt (collccti� cl� . thc "Rec%velupment A,��encr A,��i�eement.s ..). and to carr� out all
transactions contcmplatcd b� cach of thc Rcdc� clopmcnt Agcnc� Agrccmcnts and thc Official Statcmcnt.
(b) thc Rcdc� clopmcnt Agcnc� has b� Rcsolution No. (thc "Rec%velupment A,��encr
Re.suh�tiun��) adoptc;d b� a majoriri of its mcmbcrs at a mc;c;ting dul� callc;d. noticc;d and conductc;d. at «hich a
quonim «as prescnt a��d acting throughout. on . 2006. takcn all action ncccssan to bc takcn b� it to
authorizc and appro� c thc c�ccution. dcli� cn of and thc performancc b� thc Rcdc� clopmcnt Agcnc� of thc
obligations containcd in thc Rcdc� clopmcnt Agcnc� Agrccmcnts: thc Rcdc� clopmcnt Agcnc� Rcsolution is
in fiill forcc and cffcct and has not bccn amcndcd. modificd or rescindcd: and thc adoption of thc
Rcdc� clopmcnt Agcnc� Rcsolution constitutcs all action ncccssar� to bc takcn b� thc Rcdc� clopmcnt
Agcnc� for thc c�ccution. dcli� cr� and duc performancc of thc Rcdc� clopmcnt Agcnc� Agrccmcnts:
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(c) «hcn c�ccutcd and dcli� crcd b� thc respccti� c partics thcrcto. cach of thc Rcdc� clopmcnt
Agcnc� Agrccmcnts «ill constitutc a Icgall� � alid and binding obligation of thc Rcdc� clopmcnt Agcnc�
cnforccablc in accordancc «ith thcir respccti�c tcrms. c�ccpt as cnforccmcnt ma� bc limitcd b� bankruptc�.
insolticnc�. rcorganization. moratorium or similar la«s or cquitablc principlcs rclating to or affccting
crcditors� rights gcncrall�: thc Rcdc�clopmcnt Agcnc� has complicd. and «ill at thc Closing bc in
compliancc in all matcrial respccts. «ith thc tcrms of thc Rcdc� clopmcnt Agcnc� Agrccmcnts:
(d) at thc timc of acccptancc hcrcof b� thc Rcdc� clopmcnt Agcnc� . and (unlcss an c� cnt
occurs of thc naturc dcscribcd in Scction 7(k)) at all timcs during thc period from thc datc of this Purchasc
Agrccmcnt to and including thc datc «hich is 2� da� s follo« ing thc End of thc Undcn� riting Pcriod for thc
2006 Bonds (as dctcrmincd in accordancc «ith Scction 7(j)). thc statcmcnts and information containcd in
thc Prcliminar� Official Statcmcnt as of its datc. and thc Official Statcmcnt as of its datc undcr thc captions
..Ti n: Ri:ui:vi:i.c�i>Mi:N r Ac�i:Ncv" and "Ti n: Piu�.ii:c r Aiii:n" and containcd in Ai�i�i:Nuix i3—
..RI:UI:VI:LOPMI:N I A(�I:NCY AUUI I I:U FINnNCInI, S I n I I:MI:N I S FOR I I II: FISCnI, YI:nR ENUI:U JUNI: �0.
200�" arc truc. corrcct and complctc in all ►natcrial respccts and such statcmcnts do not «ith respcct to thc
Prcliminar� Official Statcmcnt. and «ill not «ith respcct to thc Official Statcmcnt. omit to statc am
matcrial fact ncccssan to makc such statcmcnts. in light of thc circumstanccs undcr «hich thc� «crc madc.
not mislcading:
(c) to thc bcst of its kno« Icdgc. thc Rcdc� clopmcnt Agcnc� is not in � iolation or brcach of or
dcfault undcr am applicablc constitutional pro� ision. la« or administrati� c rulc or rcgulation of thc Statc
or thc Unitcd Statcs of Amcrica. or am agcnc� or instrumcntalit� of cithcr of thcm. or am applicablc
judgmcnt or dccrcc. or am loan agrccmcnt. indcnturc. bond. notc. resolution. agrccmcnt or othcr instrumcnt
to «hich thc Rcdc� clopmcnt Agcnc� is a part� or is othcn� isc subjcct. «hich «ould constitutc a dcfault
undcr am of thc Rcdc� clopmcnt Agrccmcnts. no c� cnt has occurrcd and is continuing «hich. «ith thc
passagc of timc or thc gi� ing of noticc. or both «ould constitutc a� iolation or a brcach of or a dcfault
undcr am such loan agrccmcnt. indcnturc. bond. notc. resolution. agrccmcnt or othcr instrumcnt to «hich
thc Rcdc� clopmcnt Agcnc� is a part� or is othcn� isc subjcct: and compliancc «ith thc pro� isions of thc
Rcdc� clopmcnt Agcnc� Agrccmcnts «ill not matcriall� conflict «ith or constitutc a brcach of or dcfault
undcr am applicablc constitutional pro� ision. la«. administrati� c rcgulation. court ordcr or conscnt dccrcc
or am applicablc judgmcnt or dccrcc or am loan agrccmcnt. notc. resolution. indcnturc. agrccmcnt or othcr
instrumcnt to «hich thc Rcdc� clopmcnt Agcnc� is a part� or ma� bc othcn� isc subjcct:
(� at thc datc hcrcof and on thc Closing Datc. thc Rcdc� clopmcnt Agcnc� «ill bc in
compliancc in all respccts «ith thc matcrial co� cnants and agrccmcnts containcd in thc Rcdc� clopmcnt
Agcncti Agrccmcnts and no c� cnt of dcfault and no c� cnt has occurrcd and is continuing «hich. «ith thc
passagc of timc or gi� ing of noticc. or both. «ould constitutc an c� cnt of dcfault thcrcundcr shall ha� c
occurrcd and bc continuing:
(g) to thc bcst kno« Icdgc of thc Rcdc� clopmcnt Agcnc� . aftcr duc im cstigation. othcr than as
sct forth in thc Official Statcmcnt or as thc Rcdc� clopmcnt Agcnc� has othcn� isc discloscd in «riting to thc
Undcn� ritcr. thcrc is no action. suit. procccding. inquir� or im cstigation. at la« or in cquit�. or b� or
bcforc am court. go�crnmcntal agcnc�. public board or bod�. pcnding or thrcatcncd against thc
Rcdc� clopmcnt Agcnc�. (i) «hcrcin an unfa� orablc dccision. ruling or finding «ould ad� crscl� affcct thc
c�istcncc of thc Rcdc� clopmcnt Agcnc� or thc titic of am official of thc Rcdc� clopmcnt Agcnc� to such
person�s officc. or (ii) in am «a� contcsting or affccting thc � alidit� or cnforccabilit� of thc Rcdc� clopmcnt
Agcnc� Agrccmcnts or thc 2006 Bonds. or (iii) contcsting in an� «a� thc co►nplctcncss or accurac� of thc
information in thc Prcliminar� Official Statcmcnt containcd undcr thc captions "TI II: RI:UI:vI:I,c�PMI:N I
Ac�i:Ncv" and "Ti n: Piic�.ii:c r Aiii:n" and containcd in Ai�i�i:Nuix B-"RI:UI:VI:LOPMI:N I A(�I:NCY
Auul i►:u FINnNc►n►. S I n I I:MI:N i s I c�R I I II: Flscn►. YI:nR ENu►:u JuN►: ;0. 200;." or (i� ) contcsting thc
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po« cr of thc Rcdc� clopmcnt Agcnc� or its authorit� «ith respcct to thc Rcdc� clopmcnt Agcnc�
Agrccmcnts: «hcrcin an unfa� orablc dccision. ruling or finding «ould matcriall� ad� crscl� affcct thc
� alidit� of thc Rcdc� clopmcnt Agcnc� Agrccmcnts or thc authorization. c�ccution. dcli� cr� or performancc
b� thc Rcdc� clopmcnt Agcnc� of thc Rcdc� clopmcnt Agcnc� Agrccmcnts:
(h) thc Rcdc� clopmcnt Agcnc� «ill fiirnish such information. c�ccutc such instrumcnts and
takc such othcr action not inconsistcnt «ith la« in cooperation «ith thc Undcn� ritcr «hich thc Undcn� ritcr
ma� rcasonabl� rcqucst in ordcr for thc Undcn� ritcr to qualifi thc 2006 Bonds for offcr and salc undcr thc
Bluc Sk� or othcr sccuritics la« s and regulations of such statcs and othcr jurisdictions of thc Unitcd Statcs
as thc Undcn� ritcr ma� dcsignatc and to dctcrminc thc cligibilit� of thc 2006 Bonds for im cstmcnt undcr
thc la« s of such statcs and othcr jurisdictions: pro� idcd. ho« c� cr. that in no c� cnt shall thc Rcdc� clopmcnt
Agcnc� bc rcquircd to takc am action «hich «ould subjcct it to scr� icc of proccss in am jurisdiction in
«hich it is not no« subjcct:
(i} to thc bcst of kno« Icdgc of thc Rcdc� clop►ncnt Agcnc� . all appro� als. conscnts and ordcrs
of am go� crnmcntal authorit� or agcnc� ha� ing jurisdiction in thc mattcr «hich «ould constitutc a
condition prcccdcnt to thc duc performancc b� thc Rcdc� clopmcnt Agcnc� of its obligations undcr thc
Rcdc� clopmcnt Agcnc� Agrccmcnts ha� c bccn dul� obtaincd or madc. and arc. and «ill bc on thc Closing
Datc. in fiill forcc and cffcct:
(I) as uscd in this Purehasc Agrccmcnt. thc tcrm "l:�ncl uf'tl�e Ul9L%L'P117'!1!Yl,�� l'ei�iucf� for thc
2006 Bonds shall mcan thc carlicr of (i) thc Closing Datc unlcss thc Rcdc� clopmcnt Agcnc� shall ha� c bccn
notificd in «riting to thc contrar� b� thc Undcn� ritcr on or prior to thc Closing Datc or (ii) thc datc on
«hich thc End of thc Undcn� riting Pcriod for thc 2006 Bonds has occurrcd undcr Rulc I�c2-12. pro� idcd.
ho« c� cr. that thc Rcdc� clopmcnt Agcnc� ma� trcat as thc End of thc Undcn� riting Pcriod for thc 2006
Bonds thc datc spccificd as such in a noticc from thc Undcn� ritcr stating thc datc «hich is thc End of thc
Undcn� riting Pcriod:
(k) if bct«ccn thc datc hcrcof and thc datc «hich is 2� da� s aftcr thc End of thc Undcn� riting
Pcriod for thc 2006 Bonds. an c� cnt occurs. or facts or conditions bccomc kno« n to thc Rcdc� clopmcnt
Agcnc� «hich. in thc rcasonablc opinion of thc Cit� Attornc�. as Counscl to thc Rcdc� clopmcnt Agcnc� or
Disclosurc Counscl. might or «ould causc thc information containcd in thc Official Statcmcnt. as thcn
supplcmcntcd or amcndcd. to contain an untruc statcmcnt of a matcrial fact or to omit to statc a matcrial
fact rcquircd to bc statcd thcrcin or ncccssar� to makc such information thcrcin. in thc light of thc
circumstanccs undcr ��hich it «as madc. not mislcading in am matcrial respcct. thc Rcdc�clopmcnt Agcnc�
�� ill notifi thc Undcn� ritcr. nnd if in thc opinion of thc Undcn� ritcr such c� cnt rcquires thc prcparation and
publication of a supplcmcnt or amcndmcnt to thc Official Statcmcnt. thc Rcdc� clopmcnt Agcnc� «ill
forth« ith prcparc and fiirnish to thc Undcn� ritcr (at thc c�pcnsc of thc Rcdc� clopmcnt Agcnc� ) a
rcasonablc numbcr of copics of an amcndmcnt of or supplcmcnt to thc Official Statcmcnt (in thc form and
substancc satisfactor� to thc Undcn� ritcr) «hich «ill amcnd or supplcmcnt thc Official Statcmcnt so that it
«ill not contain an untruc statcmcnt of a matcrial fact or omit to statc a matcrial fact ncccssar� in ordcr to
makc thc statcmcnts thcrcin. in thc light of thc circumstanccs c�isting at thc timc thc Official Statcmcnt is
dcli� crcd to prospccti� c purchascrs. not mislcading in am matcrial respcct «ith respcct to thc information
of thc Rcdc� clopmcnt Agcnc� . If such notification shall bc subscqucnt to thc Closing Datc. thc
Rcdc� clopmcnt Agcnc� shall forth« ith pro� idc to thc Undcn� ritcr such Icgal opinions. ccrtificatcs.
instrumcnts and othcr documcnts as thc Undcn� ritcr ma� rcasonabl� dccm ncccssar� to c� idcncc thc truth
and accurac� of such suppicmcnt or amcndmcnt to thc Official Statc►ncnt. For thc purposcs of this
subscction. bct«ccn thc datc hcrcof and thc datc «hich is 2� da� s aftcr thc End of thc Undcn� riting Pcriod
for thc 2006 Bonds. thc Rcdc� clopmcnt Agcnc� «ill fiirnish such information «ith respcct to itsclf as thc
Undcn� ritcr ma� from timc to timc rcasonabl� rcqucst:
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(I) if thc information containcd in thc Official Statcmcnt rclating to thc Rcdc� clopmcnt
Agcnc� is amcndcd or supplcmcntcd pursuant to Scction 7(k). at thc timc of such supplcmcnt or
amcndmcnt thcrcto Znd (unlcss subscqucntl� again supplcmcntcd or amcndcd pursuant to such
subparagraph) at all timcs subscqucnt thcrcto up to and including thc datc «hich is 2� da� s aftcr thc End of
thc Undcn� riting Pcriod for thc 2006 Bonds. thc portions of thc Official Statcmcnt so supplcmcntcd or
amcndcd (including am financial and statistical data containcd thcrcin). «ill not contain am untruc
statcmcnt of a matcrial fact or omit to statc a matcrial fact rcquircd to bc statcd thcrcin or ncccssar� to
makc such information thcrcin. in thc light of thc circumstanccs undcr «hich it «as madc. not mislcading:
(m) am ccrtificatc signcd b� am officcr of thc Rcdc� clopmcnt Agcnc� and dcli� crcd to thc
Undcn� ritcr pursuant to thc Rcdc� clopmcnt Agcnc� Agrccmcnts or this Purchasc Agrccmcnt or am
documcnt contcmplatcd thcrcb� shall bc dccmcd a rcprescntation and «arrant� b� thc Rcdc� clopmcnt
Agcnc� to thc Undcn� ritcr as to thc statcmcnts madc thcrcin and that such officcr shall ha� c bccn dul�
authorizcd to c�ccutc thc samc:
(n) to thc bcst kno« Icdgc of thc Rcdc� clopmcnt Agcnc� . thcrc is no public � otc or rcfcrcndum
pcnding or proposcd. thc results of «hich could matcriall� ad� crscl� affcct thc transactions contcmplatcd
b� thc Official Statcmcnt or thc Rcdc� clopmcnt Agcnc� Agrccmcnts or thc � alidit� or cnforccabilit� of thc
2006 Bonds: - -
(o) thc Rcdc� clopmcnt Agcnc� «ill appl� thc procccds from thc salc of thc 2006 Bonds for thc
purposcs spccificd in thc 2006 Loan Agrccmcnt:
(p) thc financial statcmcnts of thc Rcdc� clopmcnt Agcnc� containcd in thc Official Statcmcnt
as Appcndi� B fairl� prescnt thc financial positions and results of operations thcrcof as of thc datcs and for
thc periods thcrcin sct forth. and thc Rcdc� clopmcnt Agcnc� has no rcason to bclic� c that such financial
statcmcnts ha� c not bccn prcparcd in accordancc «ith gcncrall� acccptcd accounting principlcs consistcntl�
applicd: and
(q) thc Rcdc� clopmcnt Agcnc� is in compliancc «ith all of its prior continuing disclosurc
undcrtakings cntcrcd into pursuant to Rulc I�c2-12 and at or prior to thc Closing Datc. thc Rcdc� clopmcnt
Agcnc� shall ha� c dul� authorizcd. c�ccutcd and dcli� crcd thc Continuing Disclosurc Ccrtificatc
Agrccmcnt.
Section 8. Closing. At 8:00 A.M.. California timc. on . 2006. or on such carlicr or latcr
datc as ma� bc mutuall� agrccd upon b� partics hcrcto (thc "(7u.sin,�� l)ate "). thc Financing Authorit�. «ill
dcli� cr or causc to bc dcli� crcd to thc Undcn� ritcr thc dul� c�ccutcd Bonds through thc facilitics of Thc
Dcpositor� Trust Compam in Nc« York. Nc« York ("DTC��) b� thc initial dcposit «ith thc Trustcc (in
carc of DTC) through thc Fast Automatcd Sccuritics Transfcr S� stcm. and «ill dcli� cr or causc to bc
dcli� crcd at thc officcs of Richards. Watson c�. Gcrshon. A Profcssional Corporation ("Runcl ('ui�n.sel ") in
Los Angcics. California. or such othcr placc as shall ha� c bccn mutuall� agrccd upon b� thc partics. thc
othcr documcnts dcscribcd hcrcin: and thc Undcn� ritcr shall pa� thc purchasc pricc of cach Scrics of 2006
Bonds as sct forth in Sr.�tic,n I of this Purchasc Agrccmcnt. Icss thc prcmium for thc � Bond Insurancc
Polic� / Bond Insurancc Policics� in thc amount of � .«hich thc Undcn�ritcr «ill «irc dircctl� to
thc Bond Insurcr.
Thc 2006 Bonds shall bc issucd in fiill� rcgistcrcd form. It is anticipatcd that CUSIP idcntification
numbcrs «ill bc inscrtcd on thc 2006 Bonds. but ncithcr thc failurc to pro� idc such numbcrs nor am crror
z ��t-o�,o � � r�-�
y
«ith respcct thcrcto shall constitutc a causc for failurc or rcfiisal b� thc Undcn� ritcr to acccpt dcli� cr� of
thc 2006 Bonds in accordancc «ith thc tcrms of this Purchasc Agrccmcnt.
Section 9. Termination. Thc Undcn� ritcr shall ha� c thc right to tcrminatc thc obligations of thc
undcn� ritcrs undcr this Purchasc Agrccmcnt to purchasc. to acccpt dcli� cr� of and to pa� for thc 2006
Bonds b� notifi ing thc Financing Authorit� of its cicction to do so if. aftcr thc c�ccution hcrcof and prior to
thc Closing Datc: ( I) Icgislation (including am amcndmcnts thcrcto). resolution. rulc or rcgulation
(including am amcndmcnts thcrcto) shall bc introduccd in. considcrcd b� or bc cnactcd b� am
go� crnmcntal bod�. dcpartmcnt or political subdi� ision of thc Statc. or a dccision b� am court of
compctcnt jurisdiction «ithin thc Statc shall bc rcndcrcd «hich. in thc rcasonablc opinion of thc
Undcn� ritcr. «ould makc it impracticablc or inad� isablc to procccd «ith thc offcr. salc or dcli� cr� of thc
2006 Bonds on thc tcrms and in thc manncr contcmplatcd in thc Official Statcmcnt: (2) thc outbrcak or
dcclaration of «ar. institution of a policc action. cngagcmcnt in or escalation of militar� hostilitics b� or
against thc Unitcd Statcs. or am cscalation of am c�isting conflict or hostilitics in «hich thc Unitcd Statcs
is im ol� cd or thc occurrcnccs of am othcr national cmcrgcnc� or calamit� or crisis or am changc in
financial markcts resulting from thc forcgoing. «hich. in thc rcasonablc opinion of thc Undcn� ritcr. «ould
makc it impracticablc or inad� isablc to procccd «ith thc offcr. salc or dcli� cr� of thc 2006 Bonds on thc
tcrms and in thc manncr contcmplatcd in thc Official Statcmcnt: (�) thc dcclaration of a gcncral banking
moratorium b� fcdcral. Nc« York or California authoritics. or thc gcncral suspcnsion or matcrial limitation
of trading on am national sccuritics c�changc «hich matcriall� ad� crscl� affccts thc markct pricc of thc
2006 Bonds: (�4) thc imposition b� thc Nc« York Stock E�changc or othcr national sccuritics c�changc. or
am go� crnmcntal authorit� . of am matcrial restrictions not no« in forcc «ith respcct to thc 2006 Bonds or
obligations of thc gcncral charactcr of thc 2006 Bonds or sccuritics gcncrall�. or thc matcrial incrcasc of
am such restrictions no« in forcc. including thosc rclating to thc c�tcnsion of crcdit b�. or thc chargc to thc
nct capital rcquircmcnts of. thc Undcn� ritcr «hich. in thc rcasonablc opinion of thc Undcn� ritcr «ould
makc it impracticablc or inad� isablc to procccd «ith thc offcr. salc or dcli� cr� of thc 2006 Bonds on thc
tcrms and in thc manncr contcmplatcd in thc Official Statcmcnt: (�) Icgislation cnactcd (or resolution
passcd) b� or introduccd or pcnding Icgislation amcndcd in thc Congress or rccommcndcd for passagc b�
thc Presidcnt of thc Unitcd Statcs. or an ordcr. dccrcc or injunction issucd b� am court of compctcnt
jurisdiction. or an ordcr. ruling. rcgulation (final. tcmporar� or proposcd) issucd or madc b� or on bchalf of
thc Sccuritics and E�changc Commission. or am othcr go� crnmcntal agcnc� ha� ing jurisdiction of thc
subjcct mattcr. to thc cffcct that sccuritics of thc gcncral charactcr of thc 2006 Bonds. or thc 2006 Bonds.
including am or all undcrl� ing arrangcmcnts. arc not c�cmpt from rcgistration undcr thc Sccuritics Act of
19>;. as amcndcd. or that thc 2006 Indcnturc arc not c�cmpt from qualification undcr thc Trust Indcnturc
Act of 19 �9. as amcndcd. or that thc c�ccution. offcring or salc of obligations of thc gcncral charactcr of
thc 2006 Bonds. including am or all undcrl� ing arrangcmcnts. as contcmplatcd hcrcb� or b� thc Official
Statcmcnt. othcn� isc is or «ould bc in � iolation of thc fcdcral sccuritics la« s as amcndcd and thcn in cffcct:
(6) action b� or on bchalf of thc Statc or thc California Franchisc Ta� Board. «ith thc purposc or cffcct.
dircctl� or indircctl�. of imposing California personal incomc ta�ation upon such intcrest as «ould bc
rccci� cd b� thc O« ncrs of thc 2006 Bonds: (7) (i) Icgislation (including am amcndmcnt thcrcto) shall ha� c
bccn introduccd in or adoptcd b� cithcr Housc of thc Congress of thc Unitcd Statcs or rccommcndcd to thc
Congress or othcn� isc cndorscd for passagc b� thc Presidcnt of thc Unitcd Statcs. thc Trcasur� Dcpartmcnt
of thc Unitcd Statcs. thc Intcrnal Rc� cnuc or thc chairman or ranking minorit� mcmbcr of thc Committcc
on Financc of thc Unitcd Statcs Scnatc or thc Committcc on Wa� s and Mcans of thc Unitcd Statcs Housc
of Rcprescntati� cs. or Icgislation is proposcd for considcration b� cithcr such committcc b� am mcmbcr
thcrcof or prescntcd as an option for considcration b� cithcr such committcc b� thc staff of such committcc.
or b� thc staff of thc Joint Committcc on Ta�ation of thc Congress of thc Unitcd Statcs. or a bill to amcnd
thc Intcrnal Rc� cnuc Codc shall bc filcd in cithcr housc. or (ii) a dccision shall ha� c bccn rcndcrcd b� am
fcdcral or statc court. or (iii) an ordcr. filing. ruling or rcgulation shall ha� c bccn issucd or proposcd b� or
on bchalf of thc Trcasur� Dcpartmcnt of thc Unitcd Statcs or thc Intcrnal Rc� cnuc Scr� icc or am othcr
z ��t-o�,o � � r�-�
10
agcnc� of thc Unitcd Statcs. or (i� ) a rcicasc or official statcmcnt shall ha� c bccn issucd b� thc Presidcnt of
thc Unitcd Statcs or b� thc Trcasur� Dcpartmcnt of thc Unitcd Statcs or b� thc Intcrnal Rc� cnuc Scr� icc.
thc cffcct of «hich. in am such casc dcscribcd in clausc (i). (ii). (iii). or (i� ). «ould bc to imposc. dircctl�
or indircctl�. fcdcral incomc tatiation upon intcrest rccci�cd on obligations of thc gcncral charactcr of thc
2006 Bonds or upon incomc of thc gcncral charactcr to bc dcri�cd b� thc Financing Authorit�. othcr than
as imposcd on thc 2006 Bonds and incomc thcrcfrom undcr thc fcdcral ta� la« s in cffcct on thc datc hcrcof.
in such a manncr as in thc judgmcnt of thc Undcn� ritcr «ould makc it impracticablc or inad� isablc to
procccd «ith thc offcr. salc or dcli� cr� of thc 2006 Bonds on thc tcrms and in thc manncr contcmplatcd in
thc Official Statcmcnt: (8) thc «ithdra«al or do«ngrading or am noticc of an intcndcd or potcntial
do«ngrading of am rating of thc obligations of thc Financing Authorit� (including thc rating to bc issucd
«ith respcct to thc 2006 Bonds) b� a"nationall� rccognizcd statistical rating organization.�� as such tcrm is
dcfincd for purposcs of Rulc �4�6(g)(2) undcr thc Sccuritics Act of 19>;. as amcndcd «hich. in thc
rcasonablc opinion of thc Undcn� ritcr. «ould makc it impracticablc or inad� isablc to procccd «ith thc
offcr. salc or dcli� cr� of thc 2006 Bonds on thc tcrms and in thc manncr contcmplatcd in thc Official
Statcmcnt: (9) am c�cnt occurring. or information bccoming kno«n «hich. in thc rcasonablc judgmcnt of
thc Undcn� ritcr. makcs untruc in am matcrial respcct am statcmcnt or information containcd in thc
Official Statcmcnt. or has thc cffcct that thc Official Statcmcnt contains am untruc statcmcnt of a matcrial
fact or omits to statc a matcrial fact to bc statcd thcrcin or ncccssar� in ordcr to makc thc statcmcnts
thcrcin. in thc light of thc circumstanccs undcr «hich thc� «crc madc. not mislcading: (10) am changc or
dc� clopmcnt im ol� ing a prospccti� c changc in thc condition of thc Financing Authorit� . financial or
othcn� isc. or in thc operations of thc Financing Authorit� from thosc sct forth in thc Official Statcmcnt that
makcs thc 2006 Bonds. in thc rcasonablc judgmcnt of thc Undcn� ritcr. impracticablc or inad� isablc to
offcr. scll or dcli� cr thc 2006 Bonds on thc tcrms and in thc manncr contcmplatcd b� thc Official
Statcmcnt: ( I I)(i) trading gcncrall� shall ha� c bccn suspcndcd or matcriall� limitcd on or b�. as thc casc
ma� bc. am of thc Nc« York Stock E�changc or thc Nasdaq National Markct: (ii) trading of am sccuritics
of thc Financing Authorit� shall ha� c bccn suspcndcd on am c�changc or in am o� cr-thc-countcr markct:
(iii) a matcrial disruption in sccuritics sctticmcnt. pa� mcnt or cicarancc scr� iccs in thc Unitcd Statcs shall
ha� c occurrcd: or (i� ) am moratorium on commcrcial banking acti� itics shall ha� c bccn dcclarcd b�
Fcdcral or Nc« York Statc authoritics: or (12) thc purchasc of and pa� mcnt for thc 2006 Bonds b� thc
Undcn� ritcr. or thc resalc of thc 2006 Bonds b� thc Undcn� ritcr. on thc tcrms and conditions hcrcin
pro� idcd shall bc prohibitcd b� am applicablc la«. go� crnmcntal authorit�. board. agcnc� or commission.
Section 10. Closing Conditions. Thc Undcn� ritcn c�rcb� cntcrs into this Purchasc Agrccmcnt in
rcliancc upon thc rcprescntations and «arrantics of thc Financing Authorit� and thc Rcdc� clopmcnt Agcnc�
containcd hcrcin and thc rcprescntations and «arrantics to bc containcd in thc documcnts and instrumcnts
to bc dcli�crcd on thc Closing Datc and upon thc performancc b� thc Financing Authorit�. thc
Rcdc� clopmcnt Agcnc� and thc Trustcc of thcir respccti� c obligations both on and as of thc datc hcrcof and
as of thc Closing Datc. Accordingl�. thc obligations of thc Undcn�ritcr undcr this Purchasc Agrccmcnt to
purchasc. to acccpt dcli� cn of and to pa� for thc 2006 Bonds shall bc subjcct. at thc option of thc
Undcn� ritcr. to thc accurac� in all matcrial respccts of thc rcprescntations and «arrantics of thc Financing
Authorit� and thc Rcdc� clopmcnt Agcnc� containcd hcrcin as of thc datc hcrcof and as of thc Closing Datc.
to thc accurac� in all matcrial respccts of thc statcmcnts of thc officcrs and othcr officials of thc Financing
Authorit�. thc Rcdc�clopmcnt Agcnc� and thc Trustcc madc in am ccrtificatc or documcnt fiirnishcd
pursuant to thc pro� isions hcrcof. to thc performancc b� thc Financing Authorit�. thc Rcdc� clopmcnt
Agcnc� and thc Trustcc of thcir respccti� c obligations to bc performcd hcrcundcr and undcr thc Financing
Authorit� Agrccmcnts and thc Rcdc� clopmcnt Agcnc� Agrccmcnts. at or prior to thc Closing Datc. and
also shall bc subjcct to thc follo« ing additional conditions:
(a) thc Undcn� ritcr shall rccci� c. «ithin sc� cn busincss da� s aftcr thc datc hcrcof. copics of
thc Official Statcmcnt (including all information permittcd to ha� c bccn omittcd from thc Prcliminar�
z ��t-o�,o � � r�-�
II
Official Statcmcnt b� thc Rulc I�c2-12 and am amcndmcnts or supplcmcnts as ha� c bccn appro� cd b� thc
Undcn� ritcr). in such rcasonablc quantit� as thc Undcn� ritcr shall ha� c rcqucstcd:
(b) on thc Closing Datc. thc Financing Authorit� Agrccmcnts and thc Rcdc� clopmcnt Agcnc�
Agrccmcnts shall ha� c bccn dul� authorizcd. c�ccutcd and dcli� crcd b� thc partics thcrcto. all in
substantiall� thc forms hcrctofore submittcd to thc Undcn� ritcr. «ith onl� such changcs as shall ha� c bccn
agrccd to in «riting b� thc Undcn� ritcr. and such agrccmcnts shall bc in fiill forcc and cffcct: and thcrc
shall bc in fiill forcc and cffcct such resolutions of thc go� crning boards of thc Financing Authorit� and thc
Rcdc� clopmcnt Agcnc� as. in thc opinion of Bond Counscl. shall bc ncccssan or appropriatc in conncction
«ith thc transactions contcmplatcd hcrcb� :
(c) on thc Closing Datc. all ncccssar� action of thc Financing Authorit� rclating to thc
c�ccution and dcli� cn of thc 2006 Bonds «ill ha� c bccn takcn and «ill bc in fiill forcc and cffcct and «ill
not ha� c bccn amcndcd. modificd or supplcmcntcd:
(d) at or prior to thc Closing Datc. thc Undcn� ritcr shall ha� c rccci� cd thc follo« ing
documcnts. in cach casc satisfactor� in form and substancc to thc Undcn� ritcr:
(i) thc Financing Authorit� Agrccmcnts. thc Rcdc� clopmcnt Agcnc� Agrccmcnts and
thc Official Statcmcnt. cach dul� c�ccutcd and dcli� crcd b� thc respccti� c partics thcrcto. and ccrtificd
copics of thc Financing Authorit� Rcsolution and thc Rcdc� clopmcnt Agcnc� Rcsolution:
(ii) thc appro� ing opinion of Bond Counscl. datcd thc Closing Datc and addresscd to
thc Financing Authorit�. in substantiall� thc form attachcd to thc Official Statcmcnt as Appcndi� E.
togcthcr «ith a Icttcr of Bond Counscl. addresscd to thc Undcn� ritcr to thc cffcct that such opinion ma� bc
rclicd upon b� thc Undcn� ritcr to thc samc c�tcnt as if such opinion «crc addresscd to it:
(iii) thc supplcmcntal opinion of Bond Counscl. datcd thc Closing Datc and addresscd
to thc Undcn� ritcr. substantiall� to thc cffcct that: (A) this Purchasc Agrccmcnt has bccn dul� authorizcd.
c�ccutcd and dcli� crcd b� thc Financing Authorit� and is a� alid and binding agrccmcnt of thc Financing
Authorit�. cnforccablc in accordancc «ith its tcrms. c�ccpt as cnforccmcnt thcrcof ma� bc limitcd b�
bankruptc� . insol� cnc� or othcr la« s affccting thc cnforccmcnt of crcditors. rights and b� thc application of
cquitablc principlcs if cquitablc rcmcdics are sought: (B) thc 2006 Bonds arc not subjcct to thc rcgistration
rcquircmcnts of thc Sccuritics Act of 19>;. as amcndcd. and thc 2006 Indcnturc arc cach c�cmpt from
qualification undcr thc Trust Indcnturc Act of 19 �9. as amcndcd: (C) thc Continuing Disclosurc Ccrtificatc
Agrccmcnt has bccn dul� authorizcd. c�ccutcd and dcli�crcd b� thc Financing Authorit�: (D) thc statcmcnts
containcd in thc Official Statcmcnt undcr thc captions "TI II: 2006 Bc�NUs .. ..SI:�'UI�I I Y nNU Sc�UR�'I:s c�l
PnvMi:N r rc�ii ri n: Bc�Nus" and "Tnx Mn r ri:iis" and containcd in Appcndi� E. insofar as such
statcmcnts c�pressl� summarizc ccrtain pro� isions of thc 2006 Bonds. thc 2006 Indcnturc. and thc final
opinion of Bond Counscl conccrning ccrtain fcdcral ta� mattcrs rclating to thc 2006 Bonds. arc accuratc in
all matcrial respccts: and (E) that. on thc basis of thc information madc a� ailablc to thcm. no facts camc to
thcir attcntion in conncction «ith thc prcparation of thc Official Statcmcnt «hich causc thcm to bclic� c that
thc Official Statcmcnt as of its datc (c�cluding thcrcfrom financial cnginccring and statistical data.
forccasts. projcctions. cstimatcs. assumptions and c�pressions of opinions. statcmcnts rclating to DTC.
Ccdc c�. Co. and thc operation of thc book-cntn s� stcm and Appcndiccs A. B. C. F. G. H. I. and J as to all
of «hich no � ic« nccd bc c�presscd) containcd am untruc statcmcnt of a matcrial fact or omittcd to statc a
matcrial fact ncccssar� to makc thc statcmcnts thcrcin. in thc light of thc circumstanccs undcr «hich thc�
«crc madc. not mislcading in am matcrial respcct:
z ��t-o�,o � � r�-�
12
(i� ) an opinion of Bond Counscl «ith respcct to thc Prior Bonds. datcd thc Closing Datc
and addresscd to thc Financing Authorit� . thc Rcdc� clopmcnt Agcnc� and thc Undcn� ritcr. to thc cffcct
that all of thc liabilit� of thc Financing Authorit� «ith respcct to thc Prior Bonds has ccascd and bccn
complctch dischargcd (c�ccpt that thc holdcrs thcrcof shall bc cntiticd to thc pa� mcnt of thc principal.
intcrest and prcmium «ith respcct to thc Prior Bonds from monc� s dcpositcd in thc applicablc Escro«
Fund). and thc Prior Bonds «ill no longcr bc considcrcd outstanding undcr thc Trust Agrccmcnt pursuant
to «hich cach such Prior Bonds «crc issucd
(� ) thc opinion of thc Cit� Attornc�. as counscl to thc Financing Authorit�. datcd thc
Closing Datc and addressc;d to thc Financing Authoriri and thc Undcn�ritcr. in substantiall� thc forn� of
F�l,ihit R: - -
(�i) thc opinion of thc Cit� Attornc�. as counscl to thc Rcdc�clopmcnt Agcnc�. datcd
thc Closing Datc and addresscd to thc Financing Authorit� and thc Undcn� ritcr in substantiall� thc forn� of
F'�l,ihit C': - -
(� ii) thc opinion of Disclosurc Counscl. datcd thc Closing Datc and addresscd to thc
Financing Authorit� and thc Undcn� ritcr. to thc cffcct that. on thc basis of thc information madc a� ailablc
to thcm. no facts camc to thcir attcntion in conncction «ith thc prcparation of thc Official Statcmcnt «hich
causc thcm to bclic� c that thc Official Statcmcnt as of its datc (c�cluding thcrcfrom financial. cnginccring
and statistical data. forccasts. projcctions. cstimatcs. assumptions and c�pressions of opinions. statcmcnts
rclating to DTC. Ccdc c�. Co. and thc operation of thc book-cntn s� stcm. thc Bond Insurcr and thc Bond
Insurancc Polic� and thc appcndiccs (c�ccpt for Appcndi� F). as to all of «hich no � ic« nccd bc c�presscd)
containcd am untruc statcmcnt of a matcrial fact or omittcd to statc a matcrial fact ncccssar� to makc thc
statcmcnts thcrcin. in thc light of thc circumstanccs undcr «hich thc� «crc madc. not mislcading in am
matcrial respcct. thc 2006 Bonds arc not subjcct to thc rcgistration rcquircmcnts of thc Sccuritics Act of
19>;. as amcndcd. and thc 2006 Indcnturc arc cach c�cmpt from qualification undcr thc Trust Indcnturc
Act of 19 �9. as amcndcd. and thc Continuing Disclosurc Ccrtificatc Agrccmcnt pro� idcs a suitablc basis
for thc Undcn� ritcr. in conncction «ith thc Offcring (as dcfincd in Rulc I�c2-12) of thc 2006 Bonds to
makc a rcasonablc dctcrmination as rcquircd b� scction (b)(�) of such Rulc.
(� iii) thc opinion of counscl to Wclls Fargo Bank. National Association ("Well.s
l�cn�,��u "). datcd thc Closing Datc and addresscd to thc Undcn� ritcr and thc Financing Authorit�. to thc
cffcct that: (A) Wclls Fargo has bccn dul� incorporatcd as a national banking association. dul� organizcd
and � alidl� c�isting and in good standing undcr thc la« s of thc Unitcd Statcs of Amcrica and thc Statc.
ha� ing thc Icgal authoritti to cscrcisc trust po«crs in thc Statc and ha� ing fiill po«cr and authorit� to cntcr
into and to perform its dutics as Trustcc Fargo undcr thc 2006 Indcnturc and as Escro« Bank undcr thc
Escro« Agrccmcnt: (B) Wclls Fargo has dul� authorizcd. c�ccutcd and dcli�crcd thc cach of thc 2006
Indcnturc and thc Escro« Agrccmcnt. and b� all proper corporatc action has authorizcd thc acccptancc of
thc trusts of thc 2006 Indcnturc: (C) cach of thc 2006 Indcnturc and thc Escro« Agrccmcnt constitutcs a
Icgall� � alid and binding agrccmcnt of Wclls Fargo. cnforccablc against it in accordancc «ith its respccti� c
tcrms: (D) thc 2006 Bonds ha� c bccn � alidl� authenticatcd. rcgistcrcd and dcli� crcd b� Wclls Fargo. as
Trustcc: (E) no authorization. appro� al. conscnt or othcr ordcr of thc Statc or am othcr go� crnmcntal
authorit� or agcnc� «ithin thc Statc ha� ing jurisdiction o� cr Wclls Fargo. or. to such counscl�s kno« Icdgc
aftcr rcasonablc im cstigation. am othcr person or corporation. is rcquircd for thc � alid authorization.
c�ccution. dcli� cr� and performancc b� Wclls Fargo of thc 2006 Indcnturc or thc Escro« Agrccmcnt: and
(F} thc c�ccution and dcli� cr� of thc 200C Indcntur� and th� Escro« Agrcc►ncnt. and co►npliancc b� Wclls
Fargo «ith thc pro� isions of cach of thc 2006 Indcnturc and thc Escro« Agrccmcnt undcr thc
circumstanccs contcmplatcd thcrcb�. docs not and «ill not in am matcrial respcct conflict «ith or
constitutc on thc part of Wclls Fargo a brcach or dcfault undcr am agrccmcnts or othcr instrumcnt to «hich
z ��t-o�,o � � r�-�
I�
Wclls Fargo is a part� (and of «hich such counscl is a« arc aftcr rcasonablc im cstigation) or b� «hich it is
bound (and of «hich such counscl is a«arc aftcr rcasonablc imcstigation) or am c�isting la«. rcgulation.
court ordcr or conscnt dccrcc to «hich Wclls Fargo is subjcct:
(i�) a ccrtificatc of thc Financing Authorit� datcd thc Closing Datc. signcd b� a dul�
authorizcd official. in form and substancc satisfactor� to thc Undcn� ritcr. to thc cffcct that. to thc bcst of
such official's kno« Icdgc: (A) thc rcprescntations and «arrantics of thc Financing Authorit� containcd in
thc Purchasc Agrccmcnt arc truc and corrcct in all matcrial respccts on and as of thc Closing Datc «ith thc
samc cffcct as if madc on thc Closing Datc: (B) thc Financing Authorit� has complicd «ith thc
rcquircmcnts of thc Financing Authorit� Agrccmcnts rcquircd to bc complicd «ith on and as of thc Closing
Datc «ith respcct to thc 2006 Bonds: and (C) no c� cnt matcriall� ad� crscl� affccting thc Financing
Authorit� has occurrcd sincc thc datc of thc Official Statcmcnt:
(�) a ccrtificatc of thc Rcdc� clopmcnt Agcnc� datcd thc Closing Datc. signcd b� a
dul� authorizcd official. in form and substancc satisfacton to thc Undcn� ritcr. to thc cffcct that. to thc bcst
of such official�s kno« Icdgc: (A) thc rcprescntations and «arrantics of thc Rcdc� clopmcnt Agcnc�
containcd in thc Purchasc Agrccmcnt arc truc and corrcct in all matcrial respccts on and as of thc Closing
Datc «ith thc samc cffcct as if madc on thc Closing Datc: (B) thc Rcdc�clopmcnt Agcnc� has complicd
«ith thc rcquircmcnts of thc Rcdc� clopmcnt Agcnc� Agrccmcnts rcquircd to bc complicd «ith on and as of
thc Closing Datc: (C) no c� cnt matcriall� ad� crscl� affccting thc Rcdc� clopmcnt Agcnc� has occurrcd sincc
thc datc of thc Official Statcmcnt: and (D) that thc financial statcmcnts of thc Rcdc�clopmcnt Agcnc�
containcd in thc Official Statcmcnt fairl� prescnt thc financial positions and results of operations thcrcof as
of thc datcs and for thc periods thcrcin sct forth. and such officcr has no rcason to bclic� c that such
financial statcmcnts ha� c not bccn prcparcd in accordancc «ith gcncrall� acccptcd accounting principlcs
consistcntl� applicd:
(�i) a ccrtificatc of Wclls Fargo datcd thc Closing Datc. signcd b� a dul� authorizcd
official. in form and substancc satisfactor� to thc Undcn� ritcr. to thc cffcct that: (A) Wclls Fargo is a
national banking association organizcd and c�isting undcr and b� � irtuc of thc la«s of thc Unitcd Statcs.
ha� ing thc fiill po«cr and bcing qualificd to cntcr into and perform its dutics undcr thc 2006 Indcnturc and
thc Escro« Agrccmcnt and to authcnticatc and dcli� cr thc 2006 Bonds to thc Undcn� ritcr: (B) Wclls Fargo
is dul� authorizcd to cntcr into thc 2006 Indcnturc and thc Escro« Agrccmcnt and to c�ccutc and dcli� cr
thc 2006 Bonds to thc Undcn� ritcr pursuant to thc 2006 Indcnturc: (C) thc 2006 Bonds ha� c bccn dul�
authcnticatcd and dcli� crcd b� Wclls Fargo. as Trustcc: (D) thc c�ccution and dcli� cn of thc 2006
Indcnturc and thc Escro« Agrccmcnt and compliancc «ith thc pro� isions on thc part of Wclls Fargo
containcd in cach of thc 2006 Indcnturc and thc Escro« Agrccmcnt. «ill not conflict «ith or constitutc a
brcach of or dcfault undcr am la«. administrati� c rcgulation. judgmcnt. dccrcc. loan agrccmcnt. indcnturc.
notc. resolution. agrccmcnt or othcr instrumcnt to «hich Wclls Fargo is a part� or is othcn� isc subjcct
(c�ccpt that no rcprescntation or «arrant� is madc «ith respcct to am fcdcral or statc sccuritics or bluc sk�
la«s or rcgulations). nor «ill am such c�ccution. dcli�cr�. adoption or compliancc result in thc crcation or
imposition of am licn. chargc or othcr sccurit� intcrest or cncumbrancc of am naturc «hatsoc� cr upon am
of thc propertics or asscts hcld b� Wclls Fargo pursuant to thc licn crcatcd b� thc 2006 Indcnturc undcr thc
tcrms of am such la«. administrati�c rcgulation. judgmcnt. dccrcc. loan agrccmcnt. indcnturc. bond. notc.
resolution. agrccmcnt or othcr instrumcnt. c�ccpt as pro� idcd b� thc 2006 Indcnturc: and (E) to thc bcst of
thc kno« Icdgc of Wclls Fargo. it has not bccn scr� cd «ith am action. suit. procccding. inquir� or
imcstigation in la« or in cquit�. bcforc or b� am court. go�crnmcntal agcnc�. public board or bod�. nor is
am such action or othcr procccding thrcatcncd against it. affccting its c�istcncc. or thc titics of its officcrs
to thcir respccti� c officcs or sccking to prohibit. restrain. or cnjoining thc c�ccution and dcli� cn of thc
2006 Indcnturc. thc 2006 Bonds or thc Escro« or thc collcction of rc� cnucs to bc applicd to pa� thc
principal. prcmium. if am. and intcrest «ith respcct to thc 2006 Bonds. or thc plcdgc thcrcof. or in am «a�
z ��t-o�,o � � r�-�
I �4
contcsting or affccting thc � alidit� or cnforccabilit� of thc 2006 Indcnturc or thc Escro« Agrccmcnt or
contcsting its po«crs or its authorit� to cntcr into. adopt or perform its obligations undcr am of thc
forcgoing to «hich it is a part�. «hcrcin an unfa�orablc dccision. ruling or finding «ould matcriall�
ad� crscl� affcct thc � alidit� or cnforccabilit� of thc 2006 Indcnturc. thc 2006 Bonds or thc Escro«
Agrccmcnt or thc po«cr and authorit� of Wclls Fargo to cntcr into and perform its respccti�c dutics undcr
thc 2006 Indcnturc or thc Escro« Agrccmcnt and to authcnticatc and dcli� cr thc 2006 Bonds to thc
Undcn� ritcr:
(�ii) a ccrtificatc of thc Cit� signcd b� an authorizcd officcr of thc Cit� datcd thc
Closing Datc to thc cffcct that thc information rclating to thc Cit� in AI'1'I:NUIX C—"G►:Ni:iini.
INI c�RMn I Ic�N C��NCI:RNINc� I I II: C► I v c�i PnI.M DI:sI:R i" to thc Official Statcmcnt. as of its datc and as of
thc datc of thc Closing. is truc and corrcct in all matcrial respccts:
(�iii) a ccrtificatc of (thc "G'ei�ificatiun A,��enr "). indcpcndcnt ccrtificd
public accountants. datcd thc Closing Datc. to thc cffcct that it has � crificd thc accurac� of thc
mathcmatical computations of thc adcquac� of thc maturing principal amounts of thc Escro« Sccuritics
«ith respcct to thc Prior Bonds to bc hcld b� thc Escro« Bank. togcthcr «ith thc intcrest carncd and to bc
carncd thcrcon to makc fiill and timcl� pa� mcnt of all principal and intcrest duc «ith respcct to thc Prior
Bonds as arc thcn outstanding. and on thc spccificd datcs at thc thcn applicablc rcdcmption priccs:
(�i� ) c� idcncc of an insurcd rating of " �� b� Standard c�. Poor�s Ratings Scr� iccs. a
di� ision of thc McGra« Hill Companics and an uninsurcd rating of " ��bcing in fiill forcc and cffcct as
of thc Closing Datc:
(��) thc �Bond Insurancc Polic� / Bond lnsurancc Policics� and thc Rcscr�c Polic�
issucd b� thc Bond Insurcr:
(�� i) an opinion of Counscl to thc Bond Insurcr. datcd thc Closing Datc and addresscd
to thc Financing Authorit� and thc Undcn� ritcr to thc cffcct that (a) thc � Bond Insurancc Polic� / Bond
Insurancc Policics� and thc Rcscr� c Polic� dcscribcd in thc Official Statcmcnt arc cach Icgal. � alid and
binding obligations of thc Bond Insurcr cnforccablc in accordancc «ith its tcrms. and (b) thc statcmcnts in
thc Prcliminar� Official Statcmcnt and thc Official Statcmcnt undcr thc caption "MuNicii�ni. Bc�Nu
INSUR�NCI:�� and Containcd in APPI:NUIX H—"SPI:CIMI:N FIN�NCI�I, GU�R�N I Y INSUR�NCI: POI,ICY�� and
AI'1'I:NUIX I—"SPI:CIMI:N RI:sI:Rvl: FUNU SURI: I Y Pc�l,l�'Y" accuratcl� rcflcct and fairl� rcprescnt thc
information purportcd to bc sho«n thcrcin:
(�� ii) a ccrtificatc of Roscno« Spc� acck Group Inc. (thc "l�i.scal (�U19.1'11�1CfYl1 � t0 t�1C
cffcct that thc rcport of thc Fiscal Consultant datcd . 2006 (thc "Repui�t ") containcd in thc
Official Statcmcnt docs not contain am untruc statcmcnt of a matcrial fact or omittcd to statc a matcrial
fact ncccssar� to makc thc statcmcnts thcrcin. in thc light of thc circumstanccs undcr «hich thc� «crc
madc. not mislcading in am matcrial respcct. and conscnting to thc usc of thc Rcport in thc Prcliminar� and
Final Official Statcmcnts:
�(�� iii) a Icttcr of Lancc. Soll and Lunghard conscnting to thc inclusion of its rcport in thc
Prcliminar� Official Statcmcnt and thc Official Statcmcnt as APPI:NUIX B—"RI:UI:VI:LOPMI:N I A(�I:NCY
Auurri:u FiNnNcini. S rn ri:Mi:N rs rc�ii ri n: Fiscni. Yi:nii ENui:u JuNi: ;0. 200�:"�
(�i�) thc Ccrtificatc as to Arbitragc and thc Ccrtificatc Rcgarding Usc of Procccds of
thc Financing Authorit� in form and substancc acccptablc to Bond Counscl:
z ��t-o�,o � � r�-�
I�
filing:
(��) c�idcncc that thc fcdcral ta� information form 80�8-G has bccn prcparcd for
(��i) thc Noticcs of Salc rcquircd to bc dcli� crcd to thc California Dcbt and Im cstmcnt
Ad� isor� Commission pursuant to Scction 88��(g) and ���8 � of thc California Go� crnmcnt Codc: and
(��ii) thc Blankct Lcttcr of Rcprescntations of thc Financing Authorit� to thc Dcpositor�
Trust Compam. Nc« York. Nc« York. rclating to thc book-cntr� onl� s�stcm for thc 2006 Bonds: and
(��iii) such additional Icgal opinions. ccrtificatcs. instrumcnts or c� idcnccs thcrcof and
othcr documcnts as thc Disclosurc Counscl or Bond Counscl ma� rcasonabl� rcqucst to c� idcncc thc duc
authorization. c�ccution and dcli� cr� of thc 2006 Bonds and thc conformit� of thc 2006 Bonds and thc
2006 Indcnturc «ith thc tcrms of thc 2006 Bonds and as summarizcd in thc Official Statcmcnt.
All of thc opinions. I�tt�rs. ccrtificatcs. instru►ncnts and othcr documcnts Il1CI1t1011CC{ abo� c or
clsc«hcrc in this Purchasc Agrccmcnt «ill bc dccmcd to bc in compliancc «ith thc pro� isions hcrcof if and
onl� if thc� arc in form and substancc satisfactor� to thc Undcn� ritcr.
If thc Financing Authorit� shall bc unablc to satisfi thc conditions to thc Undcn� ritcr�s obligations
containcd in this Purchasc Agrccmcnt or if thc Undcn� ritcr. obligations shall bc tcrminatcd for am rcason
permittcd hcrcin. all obligations of thc Undcn� ritcn c�rcundcr ma� bc tcrminatcd b� thc Undcn� ritcr at. or
at am timc prior to. thc Closing Datc b� «rittcn noticc to thc Financing Authorit� and nonc of thc
Undcn� ritcr thc Financing Authorit� shall ha� c am fiirthcr obligations hcrcw�dcr. c�ccpt that thc
respccti� c obligations of thc partics sct forth in Sr.�tinn IO.
Section 11. Expenses. (a) Thc Undcn�ritcr shall bc undcr no obligation to pa�. and thc Financing
Authorit� shall pa� thc follo« ing c�pcnscs incidcnt to thc performancc of thc Financing Authorit� �s
obligations hcrcundcr: (i) thc fccs and disburscmcnts of Bond Counscl and Disclosurc CounscL (ii) thc cost
of printing and dcli� cring thc 2006 Bonds. thc Prcliminar� Official Statcmcnt and thc Official Statcmcnt
(and am amcndmcnt or supplcmcnt prcparcd pursuant to this Purchasc Agrccmcnt): (iii) thc fccs and
disburscmcnts of Dcl Rio Ad� isors. LLC. as Financial Ad� isor to thc Financing Authorit�. thc Trustcc and
its counscl. thc Fiscal Consultant. thc Vcrification Agcnt. accountants. ad� iscrs and of am othcr c�perts or
consultants rctaincd b� or for thc Financing Authorit�: and (i�) am othcr c�pcnscs and costs of thc
Financing Authorit� incidcnt to thc performancc of thcir respccti� c obligations in conncction «ith thc
authorization. issuancc and salc of thc 2006 Bonds. including out-of-pockct c�pcnscs and regulator�
c�pcnscs. and am othcr c�pcnscs ngrccd to b� thc partics.
(b) Thc Undcn� ritcr shall pa� all c�pcnscs incurrcd b� thcm in conncction «ith thc public offcring
and distribution of thc 2006 Bonds including. but not limitcd to: (i) all ad� crtising c�pcnscs in conncction
«ith thc offcring of thc 2006 Bonds: and (ii) all out-of-pockct disburscmcnts and c�pcnscs incurrcd b� thc
Undcn� ritcr in conncction «ith thc offcring and distribution of thc 2006 Bonds (including tra� cl and othcr
c�pcnscs. fccs of thc California Dcbt and Im cstmcnt Ad� ison Commission. CUSIP Scr� icc Burcau fccs
and am othcr fccs and c�pcnscs). c�ccpt as pro�idcd in (a) abo�c or as othcn�isc agrccd to b� thc
Undcn� ritcr and thc Financing Authorit� .
Section 12. Notices Am noticc or othcr communication to bc gi� cn to thc Financing Authorit� or
thc Financing Authorit� undcr this Purchasc Agrccmcnt ma� bc gi� cn b� d�li� cring thc sa►nc in «riting at
thc address of thc Financing Authorit� sct forth abo� c. and am noticc or othcr communication to bc gi� cn
to thc Undcn� ritcr w�dcr this Purchasc Agrccmcnt ma� bc gi� cn b� dcli� cring thc samc in «riting to thc
z ��t-o�,o � � r�-�
16
Undcn� ritcr: Wcdbush Morgan Sccuritics Inc.. 201 Lomas Santa Fc Dri� c. Suitc �00. Solano Bcach.
California 9207�: Attcntion: Mikc Ca�anaugh. Vicc Presidcnt.
Section 13. Parties in Interest. This Purchasc Agrccmcnt is madc solcl� for thc bcncfit of thc
Financing Authorit� and thc Undcn� ritcr (including thc succcssors or assigns of thc Undcn� ritcr) and no
othcr person shall acquirc or ha� c am right hcrcundcr or b� � irtuc hcrcof. All thc rcprescntations and
«arrantics of thc partics hcrcto containcd in this Purchasc Agrccmcnt shall rcmain operati� c and in fiill
forcc and cffcct. rcgardlcss of (a) am im cstigations madc b� or on bchalf of thc Undcn� ritcr or thc
Financing Authorit� or (b) dcli� cr� of and pa� mcnt for thc 2006 Bonds. Thc agrccmcnts containcd in
Sr.ctic,n IO hcrcin shall sur� i� c am tcrmination of this Purchasc Agrccmcnt.
Section 14. Severability. In thc c� cnt am pro� ision of this Purchasc Agrccmcnt shall bc hcld or
dccmcd to bc im alid. inoperati� c or uncnforccablc b� am court of compctcnt jurisdiction. such holding
shall not im alidatc or rcndcr uncnforccablc am othcr pro� ision hcrcof.
Section 15. Governing Law; Venue. This Purchasc Agrccmcnt shall bc go� crncd and intcrprctcd
c�clusi� cl� b� and construcd in accordancc «ith thc la« s of thc Statc applicablc to contracts madc and to
bc performcd in thc Statc. Am and all disputcs or Icgal actions or procccdings arising out of this Purchasc
Agrccmcnt or am documcnt rclatcd hcrcto shall bc filcd and maintaincd in a court of compctcnt jurisdiction
for mattcrs arising in Ri� crsidc Count�. California. B� c�ccution of and dcli� cn of this Purchasc
Agrccmcnt. thc partics hcrcto acccpt and conscnt to thc aforesaid jurisdiction.
Section 16. Execution in Counterparts. This Purchasc Agrccmcnt ma� bc c�ccutcd in am
numbcr of countcrparts. all of «hich takcn togcthcr shall constitutc onc agrccmcnt. and am of thc partics
hcrcto ma� c�ccutc thc Purchasc Agrccmcnt b� signing am such countcrpart.
Section 17. Entire Agreement. Thc partics agrcc that thc tcrms and conditions of this Purchasc
Agrccmcnt superscdc thosc of all prc� ious agrccmcnts bct«ccn thc partics. and that this Purchasc
Agrccmcnt contains thc cntirc agrccmcnt bct«ccn thc partics hcrcto. In thc c�cnt of a disputc bct«ccn thc
partics undcr this Purchasc Agrccmcnt. thc losing part� in such disputc shall pa� all rcasonablc costs and
c�pcnscs incurrcd b� thc prc� ailing part� in conncction thcrc« ith. including but not limitcd to attornc� s�
fccs.
z ��t-o�,o � � r�-�
17
Section 18. Effectiveness. This Purchasc Agrccmcnt shall bc cffccti� c as of thc datc sct forth
abo� c upon thc c�ccution of thc acccptancc hcrcof b� authorizcd officcrs of thc Financing Authorit� and
appro� al b� thc Rcdc� clopmcnt Agcnc� shall bc � alid and cnforccablc as of thc timc of such acccptancc
and appro� al.
Vcr� trul� �ours.
WEDBUSH MORGAN SECURITIES INC.
:
Acccptcd:
PALM DESERT FINANCING AUTHORITY
I�
�Namc�. �Titic�
Appro� c;d:
PALM DESERT REDEVELOPMENT AGENCY
I�
�Namc�. �Titic�
Mikc Ca�anaugh. Vicc Presidcnt
z ��t-o�,o � � r�-�
ix
SCHEDULEI
SINKING FUND PAYMENT DATES, AMOUNTS, RATES, YIELDS AND PRICES
Principal Intcrest
(n�tnhrr Il AttwuttL B�.tc: Yic,Irl Pri�c,
z��l-OGOI � p�-1
I�
EXHIBIT A-1
$
Palm Desert Financing Authority
Tax Allocation Revenue Bonds
(Project Area No. 4)
2006 Series A
$
Palm Desert Financing Authority
Tax Allocation Revenue Capital
Appreciation Bonds
(Project Area No. 4)
2006 Series B
FORM OF THE CERTIFICATE OF THE FIANCING AUTHORITY
REGARDING PRELIMINARY OFFICIAL STATEMENT
Thc undcrsigncd hcrcb� statcs and ccrtifics:
I. That hc is thc dul� appointcd. qualificd and acting E�ccuti� c Dircctor of thc Palm Dcscrt
Financing Authorit� (thc "Authorit� ��) and as such. is familiar «ith thc facts hcrcin ccrtificd and is
authorizcd and qualificd to ccrtifi thc samc:
2. That thcrc has bccn dcli� crcd to Wcdbush Morgan Sccuritics Inc. (thc "Undcn� ritcr �) of
thc captioncd Bonds. a Prcliminar� Official Statcmcnt. rclati� c to thc captioncd Bonds. datcd Junc _
2006 (including thc co� cr pagc and all appcndiccs thcrcto. thc "Prcliminar� Official Statcmcnt��). «hich thc
Financing Authorit�. dccros final as of its datc for purposcs of Rulc I�c2-12 promulgatcd undcr thc
Sccuritics E�changc Act of I 9��4. as amcndcd ("Rulc I�c2- I 2��). c�ccpt for information permittcd to bc
omittcd thcrcfrom b� Rulc I�c2-12: and
�. Thc Financing Authorit� hcrcb� appro� cs thc usc and distribution b� thc Undcn� ritcr of
thc Prcliminar� Official Statcmcnt.
Datcd: Junc .2006
PALM DESERT FINANCING AUTHORITY
I�
E�ccuti� c Dircctor
z ��t-o�,o � � r�-�
A-I-I
EXHIBIT A-2
$
Palm Desert Financing Authority
Tax Allocation Revenue Bonds
(Project Area No. 4)
2006 Series A
$
Palm Desert Financing Authority
Tax Allocation Revenue Capital
Appreciation Bonds
(Project Area No. 4)
2006 Series B
FORM OF THE CERTIFICATE OF THE REDEVELOPMENT AGENCY
REGARDING PRELIMINARY OFFICIAL STATEMENT
Thc undcrsigncd hcrcb� statcs and ccrtifics:
I. That hc is thc dul� appointcd. qualificd and acting E�ccuti� c Dircctor of thc Palm Dcscrt
Rcdc� clopmcnt Agcnc� (thc "Rcdc� clopmcnt Agcnc� ��) and as such. is familiar «ith thc facts hcrcin
ccrtificd and is authorizcd and qualificd to ccrtifi thc samc:
2. That thcrc has bccn dcli� crcd to Wcdbush Morgan Sccuritics Inc. (thc "Undcn� ritcr �) of
thc captioncd Bonds. a Prcliminar� Official Statcmcnt. rclati� c to thc captioncd Bonds. datcd Junc _
2006 (including thc co� cr pagc and all appcndiccs thcrcto. thc "Prcliminar� Official Statcmcnt��). «hich
«ith respcct to thc statcmcnts containcd undcr thc captions "TI II: RI:UI:vI:I,c�PMI:N I Ac�I:N�'Y" and "TI II:
Piic�.ii:c r Aiii:n" and containcd in Ai�i�i:Nuix 13-"RI:UI:VI:LOPMI:N I A(�I:NCY Auurr►:u FINnNCInI,
S I n I1:MI:N i s Fc�R I I II: Fisc'nl. YI:nR ENUI:U JUNI: 30. 200�" arc truc. corrcct and complctc in all matcrial
respccts and such statcmcnts do not omit to statc a matcrial fact ncccssar� to makc such statcmcnts. in light
of thc circumstanccs undcr «hich thc� «crc madc. not mislcading.
Datcd: Junc .2006
PALM DESERT REDEVELOPMENT AGENCY
:
E�ccuti� c Dircctor
z ��t-o�,o � � r�-�
A-2- I
EXHIBIT B
FORM OF OPINION OF FINANCING AUTHORITY COUNSEL
� Lcttcnc�;ad of Counscl to thc Financing Authoriri �
2006
Palm Dcscrt Financing Authoriri
Palm Dcscrt. California
Wcdbush Morgan Sccuritics Inc.
Sola��o Bc;ach. California
Rc: Palm Dcscrt Financing Authoriri Ta� Allocation Rc� cnucs Bonds
(Projcct Arc;a No. �4). 2006 Scrics
Ladics and Gcnticmcn:
Our officc has actc;d as counscl to thc Palm Dcscrt Financing Authoriri (thc "Financing Authoriri ��) in
conncction «ith thc issua��cc. salc a��d dcli� cn of � aggrcgatc principal amount of thc Palm Dcscrt
Financing Authorit� Ta� Allocation Rc�cnuc Bonds (Projcct Arca No. �4) 2006 Scrics A(thc "Currcnt
Intcrest Bonds��) and `f principal amount of Palm Dcscrt Financing Authorit� Ta� Allocation
Rc�cnuc Capital Apprcciation Bonds (Projcct Arca No. �4) 2006 Scrics B(thc "Capital Apprcciation
Bonds�� and togcthcr «ith thc Currcnt Intcrest Bonds. thc "2006 Bonds��).
In conncction «ith thc 2006 Bonds. «c ha� c rc� ic«c;d: (i) thosc documcnts rclating to thc c�istcncc.
organization and operation of thc Financing Authoriri :(ii) Rcsolution No. of thc Financing Authoriri adoptc;d
. 2006 (thc "Rcsolution��) authorizing thc issuancc. c�ccution and dcli� cn of thc 2006 Bonds: (iii) thc
Indcnturc of Trust datcd as of Jul� I. 2006 «ith respcct to thc 2006 Bonds (thc "2006 Indcnturc��). b� and
bct��ccn thc Financing Authorit� and Wclls Fargo Bank. National Association. as tnistc;c; (thc "Tnistui �): (i� )
thc Escro« Agrc;c;mcnt datc;d as of Jul� I. 2006 (thc "Escro« Agrccmcnt��). b� and among thc Financing
Authorit� . thc Rcdc� clopmcnt Agcnc� and Wclls Fargo Bank. National Association. as Escro« Bank: (� )
thc Projcct Arca No. �4 Loan Agrccmcnt madc and c�ccutcd as of Jul� I. 2006 (thc "2006 Loan
Agrccmcnt��). b� and among thc Financing Authorit�. thc Palm Dcscrt Rcdc�clopmcnt Agcnc� (thc
"Rcdc� clopmcnt Agcnc� ��) and thc Trustcc «ith respcct to thc loan of thc procccds of thc 2006 Bonds b�
thc Financing Authorit� to thc Rcdc�clopmcnt Agcnc�. onc «ith respcct to thc Currcnt Intcrest Bonds and
onc «ith respcct to thc Capital Apprcciation Bonds (collccti� cl�. thc "2006 Loans��): (� i) thc Purchasc
Agrc;c;mcnt. datc;d as of . 2006 (thc "Purchasc Agrc;c;mcnt��). bcri�c;c;n thc Financing Authoriri and
Wcdbush Morgan Sccuritics Inc.. as Undcn� ritcr. and appro� c;d b� thc Rc;dc� clopmcnt Agcnc� : and (� ii) thc
Prcliminan Official Statcmcnt. datc;d . 2006. (thc "Prcliminan Official Statcmcnt��). «ith such changcs
and a�ncndmcnts thcrcto as of thc datc of this opinion (thc "O�cial Statc►ncnt��). T7ic 2006 Indcnturc. thc Escro«
Agrc;c;mcnt. thc 2006 Loan Agrc;c;mcnt. thc 2006 Loans and thc Purchasc Agrc;c;mcnt arc collccti� cl� rcfcrrc;d to
hcrcin as thc "Financing Authoriri Agrc;c;mcnts.�� Am capitalizc;d tcrn� usc;d hcrcin and not othcn� isc dcfinc;d
shall ha� c thc mc;anings gi� cn to such tcrn�s as spccific;d in thc Official Statcmcnt.
z ��t-o�,o � � r�-�
B-I
Basc;d on thc forcgoing. «c arc of thc opinion that:
I. T7�c Financing Authoriri is a joint c�crcisc of po«cr authoriri dul� crc;atc;d. organizc;d and
c�isting undcr thc la«s of thc Statc of California pursuant to an Agrc;c;mcnt cntitic;d "Joint E�crcisc of Po«crs
Agrc;c;mcnt�� datc;d Ja�uian 26. 1989. bcri�c;c;n thc Ciri of Palm Dcscrt and thc Rc;dc�clopmcnt Agcnc�. and has
fiill Icgal right. po«cr. and authoriri to issuc thc 2006 Bonds.
2. T7�c Rcsolution appro� ing and authorizing thc issuancc. c�ccution. and dcli� cn of thc 2006
Bonds. and thc c�ccution and dcli� cn of thc Financing Authoriri Agrc;c;mcnts and thc Official Statcmcnt has bc;c;n
dul� adoptc;d. and is in fiill forcc and cffcct and has not bc;c;n modific;d. a�ncndc;d or rescindc;d.
�. T7�c Financing Authoriri has thc fiill Icgal right. po«cr and authoriri to c�ccutc. dcli�cr and
perforn� its obligations and dutics undcr thc 2006 Bonds and Financing Authoriri Agrc;c;mcnts. and thc Financing
Authoriri has complic;d «ith thc pro� isions of applicablc la« in all mattcrs rclating to thc transactions
contcmplatc;d b� thc 2006 Bonds and thc Financing Authoriri Agrc;c;mcnts.
�4. T7�c Financing Authoriri Agrc;c;mcnts ha� c c;ach bc;c;n dul� authorizc;d. c�ccutc;d and dcli� crc;d b�
thc Financing Authoriri. c;ach is in fiill forcc and cffcct and. assuming duc authorization. c�ccution. and dcli�cn
b� thc othcr partics thcrcto. constitutc Icgal. � alid and binding agrc;c;mcnts of thc Financing Authoriri cnforcc;ablc
against thc Financing Authoriri in accordancc «ith thcir respccti� c tcrn�s. subjcct in c;ach casc to la« s rclating to
bankniptc�. insol�cnc�. or othcr la«s affccting thc cnforccmcnt of crc;ditors� rights gcncrall� and to thc
application of c;quitablc principlcs if c;quitablc rcmc;dics are sought.
�. No appro�al. conscnt. or authorization of am go�crnmcntal or public agcnc�. authoriri. or
person is rc;quirc;d for thc c�ccution a,�d dcli� cn b� thc Financing Authoriri of thc Financing Authoriri
Agrc;c;mcnts or thc Official Statcmcnt. or thc perforn�ancc b� thc Financing Authoriri of its obligations thcrcundcr
or for thc issuancc. salc and dcli� cn of thc 2006 Bonds. c�ccpt as such appro� al. conscnt or authorization ma�
ha�c bc;c;n obtainc;d. and c�ccpt as ma� bc rc;quirc;d undcr Statc sccuritics or bluc sk� la«s in conncction «ith thc
purchasc and distribution of thc 2006 Bonds b� thc Undcn� ritcr.
6. T7�c c�ccution and dcli� cn of thc Financing Authoriri Agrc;c;mcnts b� thc Financing Authoriri.
and compliancc «ith thc pro� isions thcrwf. undcr thc circumstanccs contcmplatc;d thcrcb�. doc;s not in am
matcrial respcct conflict «ith or constitutc a brc;ach of. or dcfault undcr. am instnimcnt rclating to thc
organization. c�istcncc or operation of thc Financing Authoriri. or am commitmcnt. agrc;c;mcnt or othcr
instnimcnt to «hich thc Financing Authoriri is a part�. or b� «hich it is bound. or am c�isting la«. niling.
rcgulation. ordinancc. judgmcnt. ordcr or dccrc;c; to «hich thc Financing Authoriri is subjcct. «hich brc;ach or
dcfault has or ma� ha� c a matcrial ad� crsc cffcct on thc abilin of thc Financing Authoriri to perforn� its
obligations undcr thc Financing Authoriri Agrc;c;mcnts.
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7. To thc bcst of our kno« Ic;dgc. c�ccpt as othcn� isc disclosc;d in thc Official Statcmcnt. thcrc is no
action. suit. procc;c;ding. inquin or imcstigation. at la« or in c;quiri. or bcforc am court. public board or bod�
pcnding or thrc;atcnc;d against thc Financing Authoriri. challcnging thc crc;ation. organization. c�istcncc or po«crs
of thc Financing Authoriri. or challcnging thc capaciri of its officcrs. or thc �alidiri of thc 2006 Bonds. thc
Financing Authoriri Agrc;c;mcnts or thc transactions contcmplatc;d thcrcb�. or thc procc;c;dings takcn b� thc
Financing Authoriri in conncction «ith thc authorization. c�ccution or dcli� cn of thc 2006 Bonds or thc
Financing Authoriri Agrc;c;mcnts. «hcrcin am unfa� orablc dccision. niling or finding «ould ad� crscl� affcct thc
transactions contcmplatc;d thcrcb� or b� thc Official Statcmcnt. or «hich. in am «a�. «ould ad�crscl� affcct thc
� alidiri or cnforcc;abiliri of thc 2006 Bonds or thc Financing Authoriri Agrc;c;mcnts or. in am matcrial respcct.
thc abiliri of thc Financing Authoriri to perforn� its obligations thcrcundcr.
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EXHIBIT C
FORM OF OPINION OF REDEVELOPMENT AGENCY COUNSEL
� Lcttcnc�;ad of Counscl to thc Rc;dc� clopmcnt Agcnc� �
2006
Palm Dcscrt Financing Authoriri
Palm Dcscrt. California
Wcdbush Morgan Sccuritics Inc.
Sola��o Bc;ach. California
Rc: Palm Dcscrt Financing Authoriri Ta� Allocation Rc� cnucs Bonds
(Projcct Arc;a No. �4). 2006 Scrics
Ladics and Gcnticmcn:
Our officc has actc;d as counscl to thc Palm Dcscrt Rc;dc� clopmcnt Agcnc� (thc "Rc;dc� clopmcnt
Agcnc� ��) in conncction «ith thc issua��cc. salc a��d dcli� cn of � aggrcgatc principal amount of thc
Palm Dcscrt Financing Authorit� Ta� Allocation Rc�cnuc Bonds (Projcct Arca No. �4) 2006 Scrics A(thc
..( �1l1'PL'Y!1 �Yl1L'PL'.1'1 RUl9LL1'..�. Al1C{ � principal amount of Palm Dcscrt Financing Authorit� Ta�
Allocation Rc�cnuc Capital Apprcciation Bonds (Projcct Arca No. �4) 2006 Scrics B(thc "Capital
Apprcciation Bonds�� and togcthcr «ith thc Currcnt Intcrest Bonds. thc "2006 Bonds��).
In conncction «ith thc 2006 Bonds. «c ha� c rc� ic«c;d: (i) thosc documcnts rclating to thc c�istcncc.
orga��ization a��d operation of thc Rc;dc� clopmcnt Agcnc� :(ii) Rcsolution No. of thc Rc;dc� clopmcnt Agcnc�
adoptc;d . 2006 (thc "Rcsolution��) authorizing thc c�ccution a,�d dcli� cn of thc Rc;dc� clopmcnt
Agcnc� Agrc;c;mcnts (dcfincd bclo«): (iii) thc Escro« Agrc;c;mcnt datc;d as of Jul� I. 2006 (thc "Escro«
Agrccmcnt��). b� and among thc Financing Authorit�. thc Rcdc�clopmcnt Agcnc� and Wclls Fargo Bank.
National Association. as Escro« Bank: (i� ) thc Projcct Arca No. �4 Loan Agrccmcnt madc and c�ccutcd as
of Jul� I. 2006 (thc "2006 Loan Agrccmcnt��). b� and among thc Palm Dcscrt Financing Authorit� (thc
"Financing Authorit� ��). thc Rcdc� clopmcnt Agcnc� and Wclls Fargo Bank. National Association. as
Trustcc. «ith respcct to thc loan of thc procccds of thc 2006 Bonds b� thc Financing Authorit� to thc
Rcdc�clopmcnt Agcnc�. onc «ith respcct to thc Currcnt Intcrest Bonds and onc «ith respcct to thc Capital
Apprcciation Bonds (collccti� cl� . thc "2006 Loans��): (� ) thc Purchasc Agrc;c;mcnt. datc;d as of .
2006 (thc "Purchasc Agrc;c;mcnt��). bcri�c;c;n thc Financing Authoriri and Wcdbush Morgan Sccuritics Inc.. as
Undcn� ritcr. and appro� c;d b� thc Rc;dc� clopmcnt Agcnc� : a��d (� i) thc Prcliminan Official Statcmcnt. datc;d
. 2006. (thc "Prcliminan Official Statcmcnt��). «ith such changcs and a�ncndmcnts thcrcto as of thc
datc of this opinion (thc "Official Statcmcnt��): and thc Continuing Disclosurc Agrc;c;mcnt. datc;d . 2006
(thc "Continuing Disclosurc Agrc;c;mcnt��). b� and a�nong thc Rc;dc�clopmcnt Agcnc�. thc Tnistc;c; and
MuniFina��cial. Inc.. as disscmination agcnt. T7�c Escro« Agrc;c;mcnt. thc 2006 Loan Agrc;c;mcnt. thc 2006
Loans. thc Purchasc Agrc;c;mcnt and thc Continuing Disclosurc Agrc;c;mcnt arc collccti� cl� rcfcrrc;d to hcrcin as
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thc "Rc;dc� clopmcnt Agcnc� Agrc;c;mcnts.�� Am capitalizc;d tcrn� usc;d hcrcin and not othcn� isc dcfinc;d shall ha� c
thc mc;anings gi� cn to such tcrn�s as spccific;d in thc Official Statcmcnt.
Basc;d on thc forcgoing. «c arc of thc opinion that:
I. Thc Rcdc� clopmcnt Agcnc� is dul� organizcd and � alidl� c�isting undcr thc Constitution
and la« s of thc Statc of California.
2. Thc Rcsolution appro� ing and authorizing thc c�ccution and dcli� cn of thc
Rcdc� clopmcnt Agcnc� Agrccmcnts «as dul� adoptcd at a mccting of thc Rcdc� clopmcnt Agcnc� «hich
«as callcd and hcld pursuant to la« and «ith all public noticc rcquircd b� la« and at «hich a quorum «as
prescnt and acting throughout. and is in fiill forcc and cffcct and has not bccn amcndcd or rcpcalcd:
�. No matcrial litigation is pcnding. «ith scr� icc of proccss ha� ing bccn accomplishcd or. to
thc kno« Icdgc of thc Rcdc� clopmcnt Agcnc� . thrcatcncd. conccrning thc � alidit� of thc Rcdc� clopmcnt
Agcnc� Agrccmcnts. thc corporatc c�istcncc of thc Rcdc� clopmcnt Agcnc� . or thc titic of thc officcrs of thc
Rcdc� clopmcnt Agcnc� «ho «ill c�ccutc thc Rcdc� clopmcnt Agcnc� Agrccmcnts as to thcir respccti� c
officcs:
�4. Thc adoption of thc Rcsolution. thc c�ccution and dcli� cn of thc Rcdc� clopmcnt Agcnc�
Agrccmcnts. and compliancc b� thc Rcdc� clopmcnt Agcnc� «ith thc pro� isions of thc forcgoing. undcr thc
circumstanccs contcmplatcd thcrcb�. do not and «ill not in am matcrial respcct conflict «ith or constitutc
on thc part of thc Rcdc� clopmcnt Agcnc� a brcach or dcfault undcr am agrccmcnt or othcr instrumcnt to
«hich thc Rcdc�clopmcnt Agcnc� is a part� (and of «hich such counscl is a«arc aftcr rcasonablc
im cstigation) or b� «hich it is bound (and of «hich such counscl is a« arc aftcr rcasonablc im cstigation) or
b� am c�isting la«. rcgulation. court ordcr or conscnt dccrcc to «hich thc Rcdc�clopmcnt Agcnc� is
subjcct:
�. Thc Rcdc� clopmcnt Agcnc� Agrccmcnts cach ha� c bccn dul� authorizcd. c�ccutcd and
dcli� crcd b� thc Rcdc� clopmcnt Agcnc� and. assuming duc authorization. c�ccution and dcli� cr� b� thc
othcr partics thcrcto. constitutc Icgal. � alid and binding agrccmcnts of thc Rcdc� clopmcnt Agcnc�
cnforccablc in accordancc «ith thc respccti� c tcrms. subjcct to la« s rclating to bankruptc� . insol� cnc� or
othcr la« s affccting thc cnforccmcnt of crcditors. rights gcncrall� and thc application of cquitablc principlcs
if cquitablc rcmcdics are sought.
6. No authorization. appro� al. conscnt. or othcr ordcr of thc Statc of California or am othcr
go� crnmcntal authorit� or agcnc� «ithin thc Statc of California ha� ing jurisdiction o� cr thc Rcdc� clopmcnt
Agcnc� is rcquircd for thc � alid authorization. c�ccution. dcli� cr� and performancc b� thc Rcdc� clopmcnt
Agcnc� of thc Rcdc� clopmcnt Agcnc� Agrccmcnts. or for thc adoption of thc Rcsolution «hich has not
bccn obtaincd.
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7. To thc bcst of our kno« Ic;dgc. c�ccpt as othcn� isc disclosc;d in thc Official Statcmcnt. thcrc is no
action. suit. procc;c;ding. inquin or imcstigation. at la« or in c;quiri. or bcforc am court. public board or bod�
pcnding or thrc;atcnc;d against thc Rcdc� clopmcnt Agcnc� . challcnging thc crc;ation. organization. c�istcncc or
po« crs of thc Rcdc� clopmcnt Agcnc� . or challcnging thc capaciri of its officcrs. or thc � alidiri of thc
Rcdc�clopmcnt Agcnc� Agrc;c;mcnts or thc transactions contcmplatc;d thcrcb�. or thc procc;c;dings takcn b� thc
Rcdc� clopmcnt Agcnc� in conncction «ith thc authorization. c�ccution or dcli� cn of thc Rcdc� clopmcnt
Agcnc� Agrc;c;mcnts. «hcrcin am unfa� orablc dccision. niling or finding «ould ad� crscl� affcct thc transactions
contcmplatc;d thcrcb� or b� thc Official Statcmcnt. or «hich. in am «a�. «ould ad� crscl� affcct thc � alidiri or
cnforcc;abiliri of thc Rcdc� clopmcnt Agcnc� Agrc;c;mcnts or. in am matcrial respcct. thc abiliri of thc
Rcdc� clopmcnt Agcnc� to perforn� its obligations thcrcundcr.
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L&J DRAFT # 1
05/ 18/06
CONTINUING DISCLOSURE AGREEMENT
The Continuing Disclosure Agreement (the "Disclosure Agreement"*) is executed and delIN Bred
bv the Palm Desert RcdcN clopmcnt Agcncv (the "RedeN elopment Agency"*). Wells Fargo Bank. National
Association (the "Trustee"*) and MuniFinancial. Inc. (the "Dissemination Agent"*) in connection «ith the
issuance of the $ aggregate principal amount of Palm Desert Financing Authority Tax
Allocation Refunding RCN enue Bonds (Proiect Area No. 4) 2006 Series A and aggregate
principal amount of Palm Desert Financing Authority Tax Allocation RCN enue Capital Appreciation
Bonds (Proicct Area No. �4) 2006 Series B (the "Bonds"*). The Bonds are being executed and delIN Bred
pursuant to an Indenture of Trust dated as of Jule I. 2006 (the "Indenture"*). by and bet« een the Palm
Desert Financing Authority (the "Financing Authoritx "*) and the Trustee. The Financing Authority «ill
loan the proceeds of the Bonds to the RedeN elopment Agency pursuant to a Loan Agreement made and
entered into as of Jule I. 2006. The RedeN elopment Agency coN enants and agrees as folio« s:
SECTION 1. Purpose of this Disclosure Alrrcement. This Disclosure Agreement is being
executed and delIN Bred by the RedeN elopment Agency for the benefit of the Holders and Beneficial
O« ners of the Bonds and in order to assist the Participating Undcr« riter in complying «ith Securities and
Exchange Commission (-SEC-) Rule 15c2-12(b)(5). The RedeN elopment Agency ackno« ledges that the
Financing Authority has undertaken no responsibility «ith respect to am reports. notices or disclosures
proN ided or required under this Disclosure Agreement. and has no liability to any person. including the
o« ners of the Bonds. N\ ith respect to am reports. notices or disclosures.
SECTION 2. Definitions. In addition to the definitions set forth in the Indenture. iNhich apple to
am capitalized term used in this Disclosure Agreement unless other« ise defined in this Section. the
folio« ing capitalized terms shall haN e the folio« ing meanings:
"Annual Reportshall mean am annual report proN ided by the RedeN elopment Agency pursuant
to. and as described in. Sections 3 and 4 of this Disclosure Agreement.
"Beneficial ON\ncr shall mean am person «hick (a) has the po«er. dIrcctIv or Indirectly. to Note
or consent «ith respect to. or to dispose of o« nership of. am Bonds (including persons holding Bonds
through nominees. depositories or other intermediaries) or (b) is treated as the o« ner of am Bonds for
federal income tax purposes.
"Dissemination Agent"* shall mean MuniFinancial. Inc.. acting in its capacity as Dissemination
Agent hereunder. or am successor Dissemination Agent designated in «riting by the RedeN elopment
Agency and «hick has filed «ith the Trustee a «ritten acceptance of such designation.
"Fiscal Year— shall mean «ith respect to the RedeN elopment Agency. the period beginning on
Jule I of each year and ending on the nest succeeding June )0. or am t« elN e month or fift\ -t« o «eek
period thereafter selected by the RedeN elopment Agency «ith notice of such selection of change in fiscal
year to be proN ided as set forth herein.
"Holders"* shall mean either the registered o« ners of the Bonds. or. if the Bonds are registered in
the name of The Depository Trust Company or another recognized depositor. am applicable participant
in its depositor sv stem.
"Listed EN ent"* shall mean am of the eN ents listed in Section 5(a) of this Disclosure Agreement
06013 cda-1
"National Repositon' shall mcan any Nationally Recognized Municipal SCCLintles Information
Repository for purposes of the RUIc. A list of the current National Repositories approN ed by the S.E.C.
may be found at the S.E.C. «cbsitc: litto:HNNNNNN.sec.iyo\/info/municioal/nrms1r.litm.
"Participating Under« rites ' shall mcan Citigroup Global Markets. Inc.. as the original
undem riter of the Bonds rcquircd to comply «ith the RUIc in connection «ith offering of the Bonds.
"Repository"* shall mcan cach National Repository and cach State Repository. if any.
"Rulc shall mcan RUIc I5c2-12(b)(5) adopted by the Sccuritics and Exchange Commission
under the Sccuritics Exchange Act of 1934. as the same may be amended from time to time.
"State"* shall mcan the State of California.
"State Repository- shall mcan any public or pri\ ate repository or entity designated by the State as
a state repository for the purpose of the Rule and recognized as such by the Sccuritics and Exchange
Commission. As of the date of this Disclosure Agreement. there is no State Repository.
SECTION ). ProN ision of Annual Rcoorts.
(a) The RedeN clopment Agency shall. not later than six months after the end of the
RedeN clopment Agency "s Fiscal Year (« hich currently is June )0). commencing «ith the report for the
2005-06 Fiscal Year. proN ide to cach Repository an Annual Report «hick is consistent «ith 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 proN ided in Section 4 of this Disclosure Agreement: proN ided that the audited financial
statements of the RedeN clopment Agency may be submitted separately from the balance of the Annual
Report. The RedeN clopment Agency shall proN ide a «ritten certification «ith cach Annual Report
furnished to the Dissemination Agent and the Trustcc to the effect that such Annual Report constitutes the
Annual Report rcquircd to be furnished by the RedeN clopment Agency hcrcunder. The Dissemination
Agent and the Trustcc may conclusiN cly rcl\ upon such certification of the RedeN clopment Agency. If
the RedeN clopment Agency "s Fiscal Year changes. it shall gIN e notice of such change in the same manner
as for a Listed EN cnt under Section 5(c).
(b) If the Dissemination Agent is other than the RedeN clopment Agency. then not later than
fifteen (15) Business Days prior to said date. the RedeN clopment Agency shall proN ide the Annual Report
to the Dissemination Agent. If the Dissemination Agent is unable to N crifv that an Annual Report has
been proN ided to the Repositories by the date rcquircd in subsection (a). the Dissemination Agent shall
send a notice to the Municipal Sccuritics 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:
(1) determine cach year prior to the date for pro\ iding the Annual Report the name
and address of cach Repository:
(11) file the Annual Report «ith cach Repository by the date rcquircd therefor by
Section )(a) and file anv notice of a listed EN ent. if requested by the RedeN clopment Agency. as soon as
practicable folio« ing receipt from the RedeN clopment Agency of such notice: and
(111) if the Dissemination Agent is other than the RedeN clopment Agency. file a report
«ith the RedeN clopment Agency certifying that the Annual Report has been proN ided pursuant to this
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Disclosure Agreement. stating the date it «as proN ided and listing all the Repositories to «hick it «as
proNided.
SECTION 4. Content of Annual Rcoorts. The Redex clopment Agency "s Annual Report shall
contain or incorporate by reference the follo« ing:
(a) The audited financial statements of the RedeN clopment Agency. presented in accordance
«ith generally accepted accounting principles as promulgated to apple to goN ernmental entities Commission
from time to time. If the audited financial statements of the RedeN clopment Agency are not aN ailable by the
time the Annual Report is required to be filed as described aboN c. 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 «hcn the\
become Mailable.
(b) Unless other« Ise pro\ ided in the audited financial statements filed on or prior to the
annual filing deadline for Annual Reports pro\ ided in Section ) abo\ c. financial information and
operating data «ith respect to the Rcdc\ clopment Agency for the preceding Fiscal Year. substantially
similar to that pro\ idcd in the follo« ing tables and charts in the Official Statement:
(1) Table 4—"Palm Desert RedeN clopment Agency Pro _.ect Area No. 4—Principal
Taxpa\ crs...
and
(ii) Table 6—"Palm Desert RedeN clopment Agency —Historical and Current Values:
(iii) Table 7—"Palm Desert RedeN elopment Agency —Tax ReN enues ReceIN ed:"* and
(c) The percent by «hich Tax Re\ enues ha\ e pro\ ided co\ erage for Maximum Annual Debt
Ser\ ice for the most current completed Fiscal Year.
(d) The outstanding principal amount of Bonds. the calculation of the ReserN e Requirement
and the balance in the ReserN e Fund for the preceding Fiscal Year.
Such annual information and operating data described aboN e may be included by specific
reference to other documents. including official statements of debt issues of the Rcdc\ clopment Agency
or related public entities. «hick haN e been submitted to each of the Repositories or the Securities and
Exchange Commission: provic/eJ that if the documents included by reference is a final official statement.
it must be aN ailable from the Municipal Securities Rulemaking Board: and proviclec/ f ether. that the
RedeN clopment Agency shall clearly identify each such other document so included by reference.
SECTION 5. Reoortinl; of Significant EN ents.
(a) Pursuant to the proN isions of this Section 5. the RedeN clopment Agency shall giN c. or
cause to be gIN en. notice of the occurrence of am of the follo« ing eN ents «ith respect to the Bonds. if
material:
(1) principal and interest payment delinquencies.
(ii) non-payment related defaults.
(iii) modifications to rights of Bondholders.
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Bonds.
(IN ) optional. contingent or unscheduled bond calls.
(�) defeasances.
(N i) rating changes.
(N ii) adN erse tax opinions or eN ents adN ersely affecting the tax-exempt status of the
(N iii) unscheduled dra«s on the ReserN e Fund reflecting financial difficulties.
(is) unscheduled dra«s on the credit enhancements reflecting financial difficulties.
W substitution of the credit or liquidity proN iders or their failure to perform.
(xi) release. substitution or sale of property securing repayment of the Bonds.
(sir) Significant amendments to the land use regulations or entitlements of the City of
Palm Desert «ithin the Proiect Area «hich «ould ad\ ersely affect dc\ clopment of property
therein.
(b) The Trustee shall. promptl\ upon obtaining actual kno« ledge of the occurrence of am of
the Listed E\ ents contact the Disclosure Representati\ e. inform such person of the e\ ent. and request that
the Rcdc\ clopment Agency promptly notify the Dissemination Agent in «riting «nether or not to report
the e\ ent pursuant to subsection (f) and promptly notify the Trustee in «riting «nether or not to report the
c\ cnt to the O« ncrs (unless notice to the O« ners is required by the Indenture). For purposes of this
Disclosure Agreement. "actual kno\\ ledge of the occurrence of such Listed E\ ents shall mean actual
kno« ledge by the officer at the Trust Office of the Trustee «ith regular responsibility for the
administration of the Indenture.
(C) WheneN er the RedeN clopment Agency obtains kno« ledge of the occurrence of a Listed
EN ent. «nether because of a notice from the Trustee pursuant to Section 5(b) or other« ise. the
RedeN clopment Agency shall as soon as possible determine if such eN ent «ould be material under
applicable federal securities la«s.
(d) If the RedeN clopment Agency determines that kno« ledge of the occurrence of a Listed
EN ent «ould be material under applicable federal securities la« s. the RedeN clopment Agency shall
promptly notify the Dissemination Agent and the Trustee in iNriting. Such notice shall instruct the
Dissemination Agent to file a notice of such occurrence «ith the Municipal Securities Rulemaking Board
and the State Repository. if am . Not« ithstanding the foregoing. notice of Listed EN ents described in
subsections (a)(IN ) and (a)(N ) need not be gIN en under this subsection am earlier than the notice (if am )
Of the Underlying eN ent is gIN en to Holders of affected Bonds pursuant to the Indenture.
(c) If in response to a request under subsection (b). the RedeN clopment Agency determines
that the Listed EN ent is not material. the RedeN clopment Agency shall so notify the Dissemination Agent
and the Trustee in «riting and instruct the Dissemination Agent and the Trustee not to report the
occurrence.
SECTION 6. Termination of Rcoortiny, Obliiyation. The obligations of the RedeN clopment
AgcnC\ under this Disclosure Agreement shall terminate upon the legal defeasance. prior redemption or
payment in frill of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds. the
RedeN clopment Agency shall gIN e notice of such termination in the same manner as for a Listed EN ent
under Section 5(c).
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4
SECTION 7. Dissemination Alrcnt. The RedeN clopment 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. «ith or «ithout appointing a successor
Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of
anv notice or report prepared by the RedeN clopment Agency pursuant to this Disclosure Agreement.
The initial Dissemination Agent shall be the MuniFinancial. Inc.
The Dissemination Agent may resign its duties hcrcundcr at any time upon «ritten notice to the
RedeN clopment Agency.
SECTION 8. Amendment. Not« ithstanding any other proN ision of this Disclosure Agreement.
the parities may amend this Disclosure Agreement (and the Trustcc and the Dissemination Agent shall
agree to any amendment so requested by the RedeN clopment Agency proN ided that neither the Trustcc nor
the Dissemination Agent shall be obligated to enter into any such amendment that modifies or increases
its duties or obligations hcrcundcr) only if:
(a) the amendment is made in connection «ith a change in circumstances that arises from a
change in legal requirements. change in la«. or change in identity. nature. or status of the RedeN clopment
Agency. or type of business conducted:
(b) this Disclosure Agreement. as amended. «ould haN e compiled «ith the requirements of
the Rule at the time of sale of the Bonds. after taking into account an. amendments or interpretations of
the RUIc. as Nell as any change in circumstances:
(c) the amendment does not materially impair the interests of the O« ners. as determined by
parties unaffiliated «ith the Rcdc\ clopment Agency (such as. but «ithout limitation. the Rcdc\ clopment
Agency "s bond counsel) or bv O« ner"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 «ill explain. in narratIN e form. the reasons for the amendment and the "impact"* (as
that Nord is used in the letter from the staff of the SCCUCIties and Exchange Commission to the National
Association of Bond La« y ers dated June 2 ). 1995) of the change in the type of operating data or financial
information being proN ided.
SECTION 9. Additional Information.
(a) The RedeN clopment Agency agrees to proN ide public information concerning the Bonds
and the RedeN clopment Agency to any Holder or Beneficial O« ner making a «ritten request therefor.
(b) Nothing in this Disclosure Agreement shall be deemed to preN ent the RedeN clopment
Agency from disseminating an other information. using the mcans of dissemination set forth in this
Disclosure Agreement or any other means of communication. or including an other information in an
Annual Report or notice of occurrence of a Listed E\ ent. in addition to that «hick is rcquircd by this
Disclosure Agreement. If the RedeN clopment Agency chooses to include any information in any Annual
Report or notice of occurrence of a Listed EN ent in addition to that «hick is specifically rcquircd by this
Disclosure Agreement. the RedeN clopment Agency shall haN e 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 EN ent.
06013 cdrl
SECTION 10. Default. In the cN en to a failure of the RedeN clopment Agency to comply «ith an
proN ision of this Disclosure Agreement. the Trustee shall. at the «ritten direction of any Participating
Under« riter or the O« ners of a majority in aggregate principal amount of Outstanding Bonds (but onl\ to
the extent fiends haN e been proN ided to it or it has been other« ise indemnified to its satisfaction from an
cost. liability. expense or additional charges of the Trustcc «hatsoeN er. including. «ithout limitation. fees
and expenses of its attorne s). or any O« ner may. take such actions as may be necessary and appropriate.
including seeking mandate or specific performance by court order. to cause the RedeN clopment Agency.
the Trustcc or the Dissemination Agent. as the case may be. to comply «ith its obligations under this
Disclosure Agreement: proN ided that any such action may be instituted only in the Federal or State Court
located in the Count\ 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 EN ent of
Default under the Indenture or the Loan Agreement. and the sole remed-V under this Disclosure
Agreement in the cN ent of a failure of the RedeN clopment Agency. the Trustcc or the Dissemination
Agent to comply «ith this Disclosure Agreement shall be an action to compel performance.
SECTION 11. Duties. Immunities and Liabilities of Dissemination Alrcnt. The Dissemination
Agent shall haN e only such duties as are specifically set forth in this Disclosure Agreement. and the
RedeN clopment Agency agrees to indenuilf-v and saN e the Dissemination Agent and the Trustcc. their
officers. directors. employees and agents. harmless against any loss. expense and liabilities «hich it may
incur arising out of or in the exercise or performance of its po« ers and duties hcrcundcr. including the
costs and expenses (including attorne s fees) of defending against any claim of liability. but cscluding
liabilities due to the Dissemination Agents or Trustcc"s negligence or «illful misconduct. The
Dissemination Agent may rely on and shall be protected in acting or refraining from acting upon an
direction from the Issuer or an opinion of nationally recognized bond counsel. The Dissemination Agent
and the Trustcc shall be paid compensation by the RedeN clopment Agency for its sen ices proN ided
hcrcundcr in accordance «ith its schedule of fees as amended from time to time and all expenses. legal
fees and adN ances made or incurred bv the Dissemination Agent in the performance of its duties
hcrcundcr. The Dissemination Agent and the Trustcc shall haN e no dut\ or obligation to reN ic« an
information proN ided to them by the RedeN clopment Agency hcrcundcr and shall not be deemed to be
acting in a fiduciary capacity for the Financing Authority. the RedeN clopment Agency. the O«ners. or
any other party. The obligations of the RedeN clopment Agcnc\ under this Section shall sure IN e
resignation or remoN al of the Dissemination Agent and payment of the Bonds. No person shall haN e an
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
anv 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
RedeN clopment Agency. the Participating Under« riter. the Dissemination Agent and Holders and
Beneficial O« ners from time to time of the Bonds. and shall create no rights in any other person or cntit,\.
SECTION I ). Notices. Notices should be sent in «riting to the folio« ing addresses. The
folio« ing information may be conclusiN cly relied upon until changed in «riting.
RedeN clopment Agency: Palm Desert RedeN clopment Agency
7 )-� 10 Fred Waring DrIN e
Palm Desert. California 92260
(760) 3 46-061 1
(760) 3) 46-0; 74 Fax
06013 cdrl
6
Dissemination Agency MuniFinancial. Inc.
27 368 Via Industrial. Suite 10
Temecula. California 92�90
(909) 587-3)500
(909) 587-3)510 Fax
Trustee: Wells Fargo Bank. National Association
700 South Flo«cr Street. Suite 500
Los Angeles. California 90017-4104
(21 )) 6)0-62)7
(2 I )) 6 )0-6215 Fax
SECTION 14. CoUnteroarts. This Disclosure Agreement may be CXCCuted in seNcral
counterparts. each of «hick shall be an original and all of «hich shall constitute but one and the same
instrument.
Date: Jule .2006
PALM DESERT REDEVELOPMENT AGENCY OF
la
Authorized Officer
06013 cdrl
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Palm Desert RedeN clopment Agency
Name of Bond Issue: Palm Desert Financing Authority Tax Allocation Refunding RCN cnuc Bonds
(Proicct Area No. 4) 2006 Series A and Palm Desert Financing Authority Tax
Allocation RCN cnuc Capital Appreciation Bonds (Proicct Area No. 4) 2006
Series B
Date of Issuance: Jule . 2006
NOTICE IS HEREBY GIVEN that the Palm Desert RedeN clopment Agency (the
"RedeN clopment Agency") has not proN ided an Annual Report «ith respect to the aboN c-named Bonds as
required by Section 3 of the Continuing Disclosure Agreement dated Jule 2006. by and among the
RedeN clopment Agency. the Trustee and the Dissemination Agent CXCCuted by the Dissemination Agent
for the benefit of the Holders and Beneficial O« ners of the aboN c-referenced bonds. The RedeN clopment
Agency anticipates that the Annual Report «ill be filed by
Dated:
MUNIFINANCIAL. INC.. on behalf of the Palm Desert
RedeN clopment Agency
By:
Its:
06013 cda-1
A-1
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Palm Desert Financing Authority
Name of Bond Issue: Palm Desert Financing Authority Tax Allocation Refunding RCN cnuc Bonds
(Proicct Area No. 4) 2006 Series A and Palm Desert Financing Authority Tax
Allocation RCN cnuc Capital Appreciation Bonds (Proicct Area No. 4) 2006
Series B
Date of Issuance: Jule . 2006
NOTICE IS HEREBY GIVEN that the Palm Desert Financing Authority (tile "Financing
Authority") has not proN ided an Annual Report «ith respect to the aboN c-named Bonds as required by
Section 3 of the Continuing Disclosure Agreement dated Jule 2006 CXCCuted by the Financing
Authority for the benefit of the Holders and Beneficial O« ners of the aboN c-referenced bonds. The
Financing Authority anticipates that the Annual Report «ill be filed by
Dated:
PALM DESERT FINANCING AUTHORITY
By:
Its:
06013 pos-1
A-1
ESCROW AGREEMENT
(PROJECT AREA NO. 4)
by and among
PALM DESERT FINANCING AUTHORITY
and
PALM DESERT REDEVELOPMENT AGENCY
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Escrow Agent
Dated as of July 1, 2006
Relating to the Refunding of
the portion of
Palm Desert Financing Authority
Tax Allocation Revenue Bonds
(Project Area No. 4)
Series 1998
maturing on
116402.1057\991692.1 RWG DRAFT: ;/I0/2006
TABLE OF CONTENTS
Pam
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.
[Reserved].................................................................................................................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
Section20.
Governing Law........................................................................................................9
Section21.
Severability..............................................................................................................9
Section22.
Counterparts............................................................................................................9
SCHEDULE
A REFUNDING REQUIREMENTS
SCHEDULE
B ESCROW SECURITIES
EXHIBIT
A FORM OF DEFEASANCE NOTICE
116402.1057\991692.1
ESCROW AGREEMENT
(Project Area No. 4)
This Escrow Agreement (Project Area No. 4) (this "Agreement") is made and
entered into as of July 1, 2006, 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 has heretofore issued its Palm Desert Financing Authority
Tax Allocation Revenue Bonds (Project Area No. 4), Series 1998 (the "Series 1998 Bonds"),
pursuant to the Indenture of Trust, dated as of March 1, 1998 (the "Prior Indenture"), by and
between the Authority and First Trust of California, National Association, as the prior trustee, 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
Loan Agreement (Project Area No. 4), dated as of March 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 maturing on (the "Prior Bonds").
D. The Authority has determined to issue its Tax Allocation Refunding
Revenue Bonds (Project Area No. 4) 2006 Series A (the "Series 2006A Bonds"), pursuant to the
Indenture of Trust, dated as of even date herewith, by and between the Authority and Wells
Fargo Bank, National Association, as trustee (together with any successors and assigns, the
-2006 Trustee").
E. Proceeds of the Series 2006A Bonds will be used to make a loan (the
"Series 2006A Loan") to the Agency pursuant to the Loan Agreement, dated as of event date
herewith (the -2006 Loan Agreement"), by and among the Agency, the Authority and the 2006
Trustee.
F. Pursuant to the 2006 Loan Agreement, a portion of the proceeds derived
from the Series 2006A 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.
116402.1057\991692.1
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.
"Refunding-, Reauirements" 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 A,-,ent. 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.
116402.1057\991692.1
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. Deposit to Escrow Fund. Upon the issuance of the Series 2006A
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 2006A
Bonds, in the amount of $ and (ii) money to be released from the Reserve Fund in
the amount of $ . 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, upon receipt of the
moneys described in Section 4, shall immediately invest $ of such moneys in the
Escrow Securities, to deposit such Escrow Securities in the Escrow Fund and to 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
thereon are paid, the Escrow Agent shall reinvest such moneys in Investment Securities in
116402.1057\991692.1
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
verifying the mathematical accuracy of the computations contained in
such schedules.
Section 8. Compliance with A,-,reement 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 2006A 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 2006A 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 2006A 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 14
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 the redemption date set forth in
Schedule A (i.e., October 1, 2007), to the registered owners of the 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(e) of the Prior Indenture. The Escrow Agent shall
116402.1057\991692.1
4
provide copies of the notices described in this Section 10 to MBIA Insurance Corporation, the
insurer of Prior Bonds.
Section 11. Defeasance of Prior Bonds. The Agency and the Authority represent
and agree that, concurrently with the initial deposit of the Escrow Securities pursuant to Section
5, (i) the Prior Bonds 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 or after (including any interest thereon) 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 A,-,ent. In consideration of the services
rendered by the Escrow Agent under this Agreement, the Agency agrees to and shall pay to the
116402.1057\991692.1
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. Resin(nation or Removal of Escrow A(-Yent, Ap_ vointment 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
116402.1057\991692.1
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
116402.1057\991692.1
7
shall not be required to indemnify the Escrow Agent against the Escrow Agent's own negligence
or willful misconduct or the negligence or willful misconduct of the Escrow Agent's employees.
In no event shall the Authority, the 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 Liability. 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
116402.1057\991692.1
8
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
amounts due the Escrow Agent hereunder shall be released to the Agency.
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.
116402.1057\991692.1
9
(11"
Sc/'oir Af,Ti-eeinenl)
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
Chief Administrative Officer
PALM DESERT REDEVELOPMENT AGENCY
Executive Director
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Escrow Agent
Authorized Officer
116402.1057\991692.1
10
SCHEDULE A
REFUNDING REQUIREMENTS
Redemption Redemption Escrow
Date Principal Interest Premium Requirement
October 1, 2006
April 1, 2007
October 1, 2007
* Consists of the folloxN ing Prior Bonds to be paid or optionalIN redeemed on October I. 2007:
MaturitN
Date
(October 1)
Interest
Principal Rate
116402.1( 57\991692.1
Schedule A-1
Redemption
Price
SCHEDULE B
ESCROW SECURITIES
116402.1057\991692.1
Schedule 13-1
EXHIBIT A
[FORM OF DEFEASANCE NOTICE]
PALM DESERT FINANCING AUTHORITY
Notice to the Holders of
Palm Desert Financing Authority
Tax Allocation Revenue Bonds
(Project Area No. 4)
Series 1998
maturing on October 1,
CUSIP No.
NOTICE IS HEREBY GIVEN on behalf of the Palm Desert Financing Authority
(the "Authority"), that pursuant to Section 10.03 of the Indenture of Trust, dated as of March 1,
1998 (the "Indenture"), pertaining to the above -captioned Bonds with the maturity dates of
, the lien of such Indenture has been discharged through the irrevocable
deposit in escrow of cash and Federal Securities.
DATED this day of , 2006
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Escrow Agent
116402.1057\991692.1
Exhibit A
Indenture of Trust
with reference to
$ $
Palm Desert Financing Authority Palm Desert Financing Authority
Tax Allocation Refunding Revenue Bonds Tax Allocation Revenue
(Project Area No. 4) Capital Appreciation Bonds
2006 Series A (Project Area No. 4)
2006 Series B
i��,a���.i��s� x�six�.: izwc nizni� r: si�-�i�oo�,
TABLE OFCONTENTS
Pa��e
ARTICLE I DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS;
EQUALSECURITY ........................................................................................... 2
Section1.01. Definitions .................................................................................................2
Section 1.02. Rules of Construction .............................................................................. 10
Section 1.03. Authorization and Purpose of Bonds ....................................................... 10
Section 1.04. Equal Security ......................................................................................... 10
ARTICLE II ISSUANCE OF BONDS ................................................................................... 1 1
Section2.01. Designation ............................................................................................. 1 1
Section 2.02. Terms of Bonds ....................................................................................... 1 1
Section 2.03. Redemption of Bonds .............................................................................. 13
Section 2.04. Form of Bonds ........................................................................................ 15
Section 2.05. Execution of Bonds ................................................................................. 16
Section 2.06. Transfer of Bonds ................................................................................... 16
Section 2.07. Exchange of Bonds ................................................................................. 16
Section 2.08. Temporary Bonds .................................................................................... 17
Section 2.09. Registration Books .................................................................................. 17
Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen ............................................ 17
ARTICLE III DEPOSIT AND APPLICATION OF PROCEEDS OF BONDS;
ISSUANCEOF BONDS ................................................................................... 18
Section 3.01. Issuance of Bonds ................................................................................... 18
Section 3.02. Loan Funds; Application of Proceeds of Sale of Bonds ............................ 18
Section 3.03. Validity of Bonds .................................................................................... 18
ARTICLE IV REVENUES; FLOW OF FUNDS ...................................................................... 18
Section 4.01. Pledge of Revenues; Assi�nment of Rights .............................................. 18
Section 4.02. Receipt, Deposit and Application of Revenues ......................................... 19
Section 4.03. Investments ............................................................................................. 20
Section 4.04. Valuation and Disposition of Investments ................................................ 21
ARTICLE V COVENANTS OF THE AUTHORITY ............................................................. 21
Section 5.01. Punctual Payment .................................................................................... 21
Section 5.02. Extension of Payment of Bonds ............................................................... 21
Section 5.03. Against Encumbrances ............................................................................ 22
Section 5.04. Power to Issue Bonds and Make Pledge and Assignment ......................... 22
Section 5.05. Accounting Records and Financial Statements ......................................... 22
Section 5.06. No Additional Indebtedness ..................................................................... 22
Section 5.07. Tax Covenants ........................................................................................ 22
Section 5.08. Loan Agreement ...................................................................................... 23
Section 5.09. Further Assurances .................................................................................. 24
i��,-u��.i��s� x�six�.; �
ARTICLE VI THE TRUSTEE ...............................................................................................
Section 6.01. Appointment of Trustee .........................................................................
Section 6.02. Acceptance of Trusts .............................................................................
Section 6.03. Fees, Charges and Expenses of Trustee .................................................
Section 6.04. Notice to Owners of Default ..................................................................
Section 6.05. Intervention by Trustee ..........................................................................
Section 6.06. Removal of Trustee ...............................................................................
Section 6.07. Resignation by Trustee ..........................................................................
Section 6.08. Appointment of Successor Trustee ........................................................
Section 6.09. Merger or Consolidation ........................................................................
Section 6.10. Concerning any Successor Trustee ........................................................
Section 6.1 1. Appointment of Co-Trustee ...................................................................
Section 6.12. Indemnification; Limited Liability of Trustee ..........................................
ARTICLE VII MODIFICATION AND AMENDMENT OF THE INDENTURE ...............
Section 7.01. Amendment Hereof ...............................................................................
Section 7.02. Effect of Supplemental Indenture ...........................................................
Section 7.03. Endorsement or Replacement of Bonds After Amendment .....................
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES ...............................................
Section 8.01. Events of Default ...................................................................................
Section 8.02. Remedies Upon Event of Default ...........................................................
Section 8.03. Application of Revenues and Other Funds After Default ........................
Section 8.04. Power of Trustee to Control Proceedings ..............................................
Section 8.05. Appointment of Receivers .....................................................................
Section8.06. Non-Waiver ..........................................................................................
Section 8.07. Limitation on Rights and Remedies of Owners .......................................
Section 8.08. Termination of Proceedings ...................................................................
25
25
25
28
29
29
29
29
29
30
30
30
31
31
31
32
32
33
33
34
35
35
36
36
36
37
ARTICLE IX BOND INSURANCE ....................................................................................37
ARTICLE X BOOK-ENTRY SYSTEM ...........................................................................
Section 10.01 Book-Entry System; Limited Obligation of Authority ...........................
Section 10.02 Representation Letter ...........................................................................
Section 10.03 Transfers Outside Book-Entry System ..................................................
Section 10.04 Payments to the Nominee .....................................................................
Section 10.05 Initial Depository and Nominee ............................................................
ARTICLE XI MISCELLANEOUS ....................................................................................
Section 1 1.O l. Limited Liability of Authority ..............................................................
Section 1 1.02. Benefits of Indenture Limited to Parties ...............................................
Section 1 1.03. Discharge of Indenture ........................................................................
Section 1 1.04. Successor Is Deemed Included in All References to Predecessor..........
Section 1 1.05. Content of Certificates .........................................................................
Section 1 1.06. Execution of Documents by Owners ....................................................
Section 1 1.07. Disqualified Bonds ..............................................................................
i��,-t���.i��s� x�six�.: ii
37
37
38
38
38
39
39
39
39
39
40
40
41
41
Section 1 1.08
Section 1 1.09
Section 1 1.10
Section 1 l.l 1
Section 1 1.12
Section 1 1.13
Section 1 1.14
Section 1 1.15
Waiver of Personal Liability ................................................................... 41
PartialInvalidity .................................................................................... 42
Destruction of Cancelled Bonds ............................................................. 42
Fundsand Accounts .............................................................................. 42
Payment on Business Days .................................................................... 42
Notices.................................................................................................. 42
UnclaimedMoneys ................................................................................ 43
GoverningLaw ..................................................................................... 44
EXHIBIT A FORM OF SERIES 2006A BOND
EXHIBIT B FORM OF SERIES 2006B BOND
i��,-u��.i��s� x�six�.; u�
Indenture of Trust
This Indenture of Trust (this "Indenture") is made and entered into as of July 1, 2006, 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 (the "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. A Redevelopment Plan for Project Area No. 4 of the Agency (the "Project
Area") has been duly approved and adopted by the City.
C. 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 of the
Agency.
D. For the purpose of aiding in the financing and refinancing of redevelopment
projects for the Project Area, the Authority has made two loans (the "Loans") to the Agency
under and pursuant to the Project Area No. 4 Loan Agreement, dated as of July l, 2006
(the "Loan Agreement") by and among the Authority, the Agency and the Trustee.
E. To provide the moneys required to make the Loans under the Loan
Agreement, the Authority has determined to issue its Tax Allocation Refunding Revenue Bonds
(Project Area No. 4), 2006 Series A, in the aggregate principal amount of $ (the
"Series 2006A Bonds"), and its Tax Allocation Revenue Capital Appreciation Bonds (Project
Area No. 4), 2006 Series B, in the aggregate initial principal amount of $ (together
with the Series 2006A Bonds, the "Bonds"), pursuant to and secured by this Indenture in the
manner provided herein.
F. 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
i��,-u��.i��s� x�six�.; -1-
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
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.O l. Definitions. The following terms shall for all purposes of this
Indenture and of any Supplemental Indenture and of any certificate, opinion, request or other
documents herein mentioned have the meanings ascribed thereby. In addition, the terms defined
in Section 1.O l of the Loan Agreement and not otherwise defined in this Section 1.O l shall have
the meanings ascribed thereby in the Loan Agreement.
"Accreted Value" means, with respect to any Series 2006B Bond, as of any date of
calculation, the sum of the Initial Principal Amount thereof and the interest accrued thereon to
such date of calculation, compounded from the Closing Date at the stated yield to maturity
thereof on each April 1 and October 1, assuming in any such semiannual period that such
Accreted Value increases in equal daily amounts on the basis of a 360-day year of twelve 30-day
months
"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�7� 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.
"Authoritv 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.
i��,a���. i��s� x�s i x�. ; -2-
"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 the
first Bond Year shall begin on the Closing Date and extend to and include October 1, 2006.
"Bonds" means the Series 2006A Bonds and the Series 2006B Bonds.
"Business Dav" means any day other than (i) a Saturday or Sunday or (ii) any
other day on which the New York Stock Exchange or banks are authorized or obligated by law or
executive 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.
"C�" means the City of Palm Desert, a charter 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.
"Countv" means the County of Riverside.
"Debositorv" 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
definition 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, Inc., its successors and assigns.
i��,-u��.i��s� x�six�.; -3-
"Indenture" means this Indenture of Trust, as may from time to time be
supplemented, modified or amended by any Supplemental Indenture pursuant to the provisions
hereof.
"Indeoendent 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, l Oth 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 Kenny S&P, 55 Water Street, 45 Floor,
New York, New York 10041, Attention: Notification Department; 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.
"Initial Princioal Amount," with respect to any Series 2006B Bond, means the
initial principal amount thereof as of the Closing Date.
"Insurance Pavin�� A��ent" means
successors under the Insurance Policy.
, or �ts
"Insurance Policv" means the municipal bond insurance policy issued by the
Insurer insuring the payment when due of the principal of and interest on the Bonds.
"Insurer" means
"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
October 1, 2006.
"Loan A��reement" means the Project Area No. 4 Loan Agreement, dated as of
July l, 2006, by and among the Authority, the Agency and the Trustee relating to the Loans, as
may from time to time be supplemented, modified or amended.
Fund.
Loan Funds" means the Series 2006A Loan Fund and the Series 2006B Loan
i��,-u��. i��s� x�s i x�. ; -4-
"Loans" means the Series 2006A Loan and the Series 2006B Loan.
"Maturitv Amount," with respect to any Series 2006B Bond, means the Accreted
Value thereof at maturity.
"Moodv's" means Moody's Investors Service, its successors and assigns.
"Nominee" means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to Article X.
"Outstandin��," when used as of any particular time with reference to Bonds,
means (subject to the provisions of Section 1 1.07) 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 1 1.03, and (iii) Bonds in lieu of or in substitution for which
other Bonds shall have been executed, issued and delivered pursuant to this Indenture.
"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,
and CATS and TIGRS) 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
America" 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 itsel�:
U.S. Export-Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of
beneficial ownership
i��,-u��.i��s� x�six�.; -5-
2. Farmers Home Administration (FmHA)
Certificates of beneficial ownership
3. Federal Financin�� Bank
4. Federal Housin�� Administration Debentures (FHA)
5. General Services Administration
Participation certificates
6. Government National Mort��a��e 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. Deaartment of Housin�� 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
itsel�:
Federal Home Loan Bank Svstem
Senior debt obligations
2. Federal Home Loan Mort��a��e Corooration (FHLMC or
"Freddie Mac")
Participation Certificates
Senior debt obligations
3. Federal National Mort��a��e Association (FNMA or "Fannie
Mae")
Mortgage-backed securities and senior debt obligations
i��,a���. i��s� x�s i x�. ; -6-
4. Student Loan Marketin�� Association (SLMA or "Sallie
Mae")
Senior debt obligations
5. Resolution Fundin�� 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
Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933,
and having a rating by S&P of AAAm-G; AAAm; or AAm.
E. Certificates of deposit secured at all times by collateral described in
A and/or 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 those of the Trustee and its affiliates.
G. Investment agreements, including guaranteed investment contracts,
forward purchase agreements and reserve 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 which are approved by the Insurer and
which provide for the transfer of securities from a dealer bank or securities firm (seller/borrower)
to the Trustee or third party custodian, as the case may be (buyer/lender), and the transfer of cash
from the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or
securities firm will repay the cash plus a yield to the Trustee 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.
i��,-u��. i��s� x�s i x�. ; -7-
M. Medium-term notes issued by corporations organized and operating
within the United States or by depository institutions licensed by the United States or any state
and operating within the United States. Such notes shall have a minimum credit rating of "Aa3"
by Moody's and "AA-" by S&P at time of purchase, and shall mature within three years or less.
N. 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).
"Principal Amount" means, as of any date of calculation, with respect to (i) any
Series 2006A Bond, the principal amount thereof, and (ii) any Series 2006B Bond, the Accreted
Value thereof.
"Proiect Area" means, unless the context clearly requires otherwise, the territory
within the project area described and defined in the Redevelopment Plan approved and adopted by
the City by its Ordinance No. 724.
"Ratin�� A��encv" means Fitch, Moody's or S&P.
"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).
"Redeveloament Law" means the Community Redevelopment Law, being
California Health and Safety Code Section 33000, et se�., and all future acts supplemental thereto
or amendatory thereof.
"Redeveloament Plan" means the Redevelopment Plan for the Project Area,
approved and adopted by the City by its Ordinance No. 724 and includes any amendment of the
Redevelopment Plan heretofore or hereafter made pursuant to law.
"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
i��,-u��. i��s� x�s i x�. ; -8-
examination or investigation 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.
"Rearesentation 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.
"Reauest" 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 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 Deaositories" means The Depository Trust Company, 55 Water Street,
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
designate in a Certificate of the Authority delivered to the Trustee.
"Series 2006A Bonds" means the Palm Desert Financing Authority Tax Allocation
Refunding Revenue Bonds (Project Area No. 4), 2006 Series A.
"Series 2006A Loan" means the Series 2006A Loan, as defined in the Loan
Agreement, made by the Authority to the Agency.
"Series 2006A Loan Fund" means the fund by that name established and held by
the Trustee pursuant to Section 3.02.
"Series 2006B Bonds" means the Palm Desert Financing Authority Tax Allocation
Revenue Capital Appreciation Bonds (Project Area No. 4), 2006 Series B.
"Series 2006B Loan" means the Series 2006B Loan, as defined in the Loan
Agreement, made by the Authority to the Agency.
"Series 2006B Loan Fund" means the fund by that name established and held by
the Trustee pursuant to Section 3.02.
i��,-u��. i��s� x�s i x�. ; -9-
"State" means the State of California.
"Supolemental 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 Re��ulations" means temporary and permanent regulations promulgated under
or with respect to Section 103 and Sections 141 through 150, inclusive, of the Code.
"Trust Office" means the corporate trust office of the Trustee at the address set
forth in Section 1 1.13 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 Wedbush Morgan Securities, Inc.
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 Puroose 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
authorizes the issuance of the Bonds pursuant to the Bond Law and this Indenture for the purpose
of providing funds to make the Loans to the Agency pursuant to the Loan Agreement.
Section 1.04. E�ual 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
i��,-u��.i��s� x�six�.; -10-
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 Series 2006A Bonds shall be designated the Palm
Desert Financing Authority Tax Allocation Refunding Revenue Bonds (Project Area No. 4), 2006
Series A, and shall be issued in the original aggregate Principal Amount of $ . The
Series 2006B Bonds shall be designated the Palm Desert Financing Authority Tax Allocation
Revenue Capital Appreciation Bonds (Project Area No. 4), 2006 Series B and shall be issued in
the aggregate Initial Principal Amount of $ .
Section 2.02. Terms of Bonds. (a) The Series 2006A Bonds shall be issued in
fully registered form without coupons in denominations of $5,000 or any integral multiple thereof,
so long as no Series 2006A Bond shall have more than one maturity date. The Series 2006A
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 Principal
(October 1) Amount Rate (October 1) Amount
(to come)
Interest
Rate
Each Series 2006A 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; arovided.. however, that if, at the time of registration of
any Series 2006A Bond interest with respect to such Series 2006A Bond is in default, such Series
2006A Bond shall bear interest from the Interest Payment Date to which interest has been paid or
made available for payment with respect to such Series 2006A Bond.
Interest on the Series 2006A Bonds shall be payable on each Interest Payment
Date to the person 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; arovided,
however, that at the written request of the Owner of at least $1,000,000 in aggregate principal
amount of Outstanding Series 2006A Bonds filed with the Trustee prior to any Record Date,
interest on such Series 2006A 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
i��,-u��.i��s� x�six�.; -1 1-
designated in such written request (unless and until such request has been revoked in writing).
Payments of defaulted interest with respect to the Series 2006A 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 Series 2006A 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 Series 2006A Bonds shall be payable in lawful money of the United States
of America.
(b) The Series 2006B Bonds shall be issued in fully registered form in any
denominations of Initial Principal Amount but shall reflect denominations of $5,000 Maturity
Amount or any integral multiple thereof. No Series 2006B Bond shall have more than one
maturity date. The Series 2006B Bonds shall be dated the Closing Date, shall mature on October
1 in each of the years and in the Maturity Amounts set forth in the following schedule. The Series
2006B Bonds shall be delivered on the Closing Date in the aggregate Initial Principal Amounts set
forth below. Interest on the Initial Principal Amount of the Series 2006B Bonds shall accrue and
compound at the yield to their maturity set forth below (such interest being equal to the difference
between the Maturity Amounts and the Initial Principal Amounts thereo�:
Maturity
Date Maturity
(October 1) Amount
Initial Initial Principal Yield to
Principal Amount per $5,000 Maturity
Amount Maturitv Amount Date
Interest on each Series 2006B Bond shall be compounded semi-annually at the
yield set forth above from the Closing Date on each April 1 and October 1, commencing October
1, 2006, until maturity or earlier redemption thereof, computed using a year of 360 days of twelve
30-day months and shall be payable (i) at maturity as part of the Maturity Amount, or (ii) at
redemption as part of the Accreted Value to the redemption date. The Maturity Amount, or the
Accreted Value and redemption premium (if any), as applicable, with respect to any Series 2006B
Bond shall be paid upon presentation and surrender thereof, at maturity or the prior redemption
thereof, at the Trust Office, in lawful money of the United States of America.
i��,-u��. i��s� x�s i x�. ; -12-
Section 2.03. Redemption of Bonds.
(a) Series 2006A Bonds.
(1) Redemption from Ootional Loan Preoavment. In the event that the
Agency shall exercise its option to prepay principal installments of the Series 2006A Loan
pursuant to Section 2.04(a) of the Loan Agreement, the Revenues derived from such prepayment
shall be applied to the redemption of the Series 2006A Bonds maturing on or after October 1,
20_, as a whole, or in part among maturities as designated in writing by the Authority and by lot
within a maturity, 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 a
percentage of the principal amount of Series 2006A Bonds to be redeemed), plus accrued interest
thereon to the date of redemption:
Redemption
Redemption Dates Price
October 1, 20_ and April 1, 20_ 10_%
October 1, 20_ and April 1, 20_ 10_
October 1, 20 and thereafter 100
The Authority shall provide written notice to the Trustee of any
redemption pursuant to this Section 2.03(a)(1) at least 45 but not more than 90 days prior to the
date fixed for such redemption.
(2) Mandatory Sinkin�� Fund Redemotion. The Series 2006A Bonds
maturing on October l, 20_ and October l, 20_ shall also be subject to mandatory redemption
by lot, on October 1 in each year commencing October 1, 20_ and October 1, 20_,
respectively, 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
tables; provided, however.. that (i) in lieu of redemption thereof on October 1 in any year, the
Series 2006A Bonds may be purchased by the Agency pursuant to Section 2.03 of the Loan
Agreement and tendered to the Trustee for cancellation no later than the preceding July 15, and
(ii) if some but all of the Series 2006A Bonds of a maturity have been redeemed pursuant to
Paragraph (a) above, the total amount of all future sinking fund payments with respect to the
Series 2006A Bonds of such maturity shall be reduced by the aggregate principal amount of such
Series 2006A Bonds so redeemed, to be allocated among such sinking fund payments on a pro
rata basis.
Series 2006A Bonds Maturin�� October l. 20
Sinking Fund
Redemption Date Principal Amount
P6-1113.111�7 x7� I x7.: -1 �-
(October 1) to be Redeemed
TMaturity.
Series 2006A Bonds Maturin�� October l, 20
Sinking Fund
Redemption Date Principal Amount
(October 1) to be Redeemed
TMaturity.
(b) Series 2006B Bonds.
(1) Oational Redemption. In the event that the Agency shall exercise
its option to prepay installments of the Series 2006B Loan pursuant to Section 2.04(b) of the
Loan Agreement, the Revenues derived from such prepayment shall be applied to the redemption
of the Series 2006B Bonds maturing on or after October 1, 20_, as a whole, or in part among
maturities as designated in writing by the Authority and by lot within a maturity, in integral
multiples of $5,000 of Maturity Amount, on any April 1 or October 1 on or after October l,
20_, at the followin� respective redemption prices (expressed as a percentage of the Accreted
Value of the called Series 2006B Bonds on the date fixed for redemption):
Redemption
Redemption Dates Price
October 1, 20_ and April 1, 20_ 10_%
October 1, 20_ and April 1, 20_ 10_
October 1, 20 and thereafter 100
The Authority shall provide written notice to the Trustee of any
redemption pursuant to this Section 2.03(b)(1) at least 45 but not more than 90 days prior to the
date fixed for such redemption.
(2) No Mandatory Sinkin�� Fund Redemption. The Series 2006B
Bonds are not subject to mandatory sinking fund redemption prior to maturity.
(c) General Redemption Provisions.
(1) Notice of Redemption. The Trustee on behalf and at the expense of
the Authority shall mail (by first class mail) notice of any redemption to the respective Owners of
i��,-u��.i��s� x�six�.; -14-
any Bonds designated for redemption at their respective addresses appearing on the Registration
Books and, by such means acceptable to the following institutions, to the Securities Depositories
and to one or more Information Services, at least 30 but not more than 60 days prior to 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 series designation of the Bonds, the Bond numbers (but only if less than all
of the Outstanding Bonds of such series are to be redeemed) and the maturity or maturities of the
Bonds of such series (in the event of redemption of all of such Bonds of such maturity or
maturities in whole) to be redeemed, and shall require such Bonds be then surrendered at the
Trust Office of the Trustee in Los Angeles, California (or such other location as designated by the
Trustee) for redemption at the redemption price, giving notice also that further interest on such
Bonds will not accrue from and after the redemption date.
(2) Selection of Bonds for Redemption. With respect to the
redemption of Bonds of either series, whenever provision is made in this Indenture for the
redemption of less than all of such Bonds of any maturity, the Trustee shall select the Bonds to be
redeemed from all Bonds of such series and 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 selecting Series 2006A Bonds within a maturity for redemption,
all Series 2006A Bonds shall be deemed to be comprised of separate $5,000 principal amount
portions and such portions shall be treated as separate bonds which may be separately redeemed.
For purposes of selecting Series 2006B Bonds within a maturity for redemption, all Series 2006B
Bonds shall be deemed to be comprised of separate $5,000 Maturity Amount portions and such
portions shall be treated as separate bonds which may be separately redeemed.
(3) 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 series, tenor and maturity date, of authorized denominations in
aggregate Principal Amount or Maturity Amount, as the case may be, equal to the unredeemed
portion of the Bond to be redeemed.
(4) 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 Series 2006A Bonds, the Trustee's certificate
of authentication, and the form of assignment to appear thereon 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
i��,-u��.i��s� x�six�.; -15-
Indenture. The Series 2006B Bonds, the Trustee's certificate of authentication, and the form of
assignment to appear thereon shall be substantially in the respective forms set forth in Exhibit B
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 or Exhibit B., as applicable, 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 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, be
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
the same series and of like tenor, maturity and a�gregate 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 aggre�ate Principal Amount or Maturity Amount, as applicable, of Bonds of the
same series and 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
i��,-u��.i��s� x�six�.; -16-
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 of
the Trustee in Los Angeles, California (or such other location designated by the Trustee), and the
Trustee shall authenticate and deliver in exchange for such temporary Bonds definitive Bonds of
like series, term, maturity and aggregate Principal Amount or Maturity Amount, as applicable, 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. Re��istration 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
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 series, tenor, maturity
and aggregate Principal Amount or Maturity Amount, as applicable, 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 series and tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if
any such Bond shall have 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
i��,-u��.i��s� x�six�.; -17-
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 the Series 2006A Bonds and the Series 2006B
Bonds in the respective aggregate Initial Principal Amounts 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. Loan Funds; Application of Proceeds of Sale of Bonds. (a) The
Trustee shall establish and maintain a separate fund to be known as the "Series 2006A Loan
Fund." Upon the receipt of payment for the Series 2006A Bonds on the Closing Date, the
Trustee shall deposit the proceeds of sale thereof in the amount of $ in the Series
2006A Loan Fund. The Trustee shall disburse all amounts in the Series 2006A Loan Fund
pursuant to Section 2.02 of the Loan Agreement.
(b) The Trustee shall establish and maintain a separate fund to be known as the
"Series 2006B Loan Fund." Upon the receipt of payment for the Series 2006B Bonds on the
Closing Date, the Trustee shall deposit the proceeds of sale thereof in the amount of
$ in the Series 2006B Loan Fund. The Trustee shall disburse all amounts in the
Series 2006B Loan Fund pursuant to Section 2.02 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 Loans, 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.
ARTICLE IV
REVENUES; FLOW OF FUNDS
Section 4.01. Pled��e of Revenues; Assi��nment 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 be
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
series, 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
i��,-u��. i��s� x�s i x�. ; -18-
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 thereot�. 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. Deaosit and Aoolication of Revenues.
(a) Deaosit 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 Interest Account to equal the amount of interest coming due and payable on
such Interest Payment Date on all Outstanding Series 2006A 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 Series 2006A Bonds on the next succeeding Interest
Payment Date. All moneys in the Interest Account shall be used and withdrawn by the Trustee
solely for the purpose of paying the interest on the Series 2006A Bonds as it shall become due
and payable (including accrued interest on any Series 2006A 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 Series
2006A Bonds, shall be withdrawn therefrom by the Trustee and transferred to the Agency to be
used for any lawful purposes of the Agency.
i��,-u��.i��s� x�six�.; -19-
(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 Principal Amount of the Bonds subject to mandatory sinking fund redemption on such
date pursuant to Section 2.03(a)(2). All moneys in the Principal Account shall be used and
withdrawn by the Trustee solely for the purpose of paying the Principal Amount of the Bonds
(i) at the maturity thereof or (ii) upon mandatory sinking fund redemption thereof. 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 Loans 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
Amount 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 (and
promptly confirmed in writing, as to any such direction given orally); 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.
The Trustee shall be entitled to rely conclusively 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.O1 which embody legal conclusions (e.g., the
i��,-u��. i��s� x�s i x�. ; -20-
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 Disaosition 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 l, 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 shall not
have been so extended. Nothing in this Section 5.02 shall be deemed to limit the right of 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.
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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. Accountin�� 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 transactions 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 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
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(� of the Code, and that it will
i��,-u��. i��s� x�s i x�. ; -22-
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 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 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 thereo�, (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 21 B(d)(3 ) of the Federal Home Loan Bank Act, as amended by Section 51 1(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 (� 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
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
affected Bonds then Outstanding to such amendment or modification, provided, however, that no
i��,-u��.i��s� x�six�.; -23-
such amendment or modification shall (a) extend the maturity of or reduce the amount of interest
or principal payments on a Loan, or otherwise alter or impair the obligation of the Agency to pay
the principal, interest or prepayment premiums on a 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 the 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 the better assuring and confirming unto the Owners of the Bonds the rights and benefits
provided in this Indenture.
i��,-u��. i��s� x�s i x�. ; -24-
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 shall 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 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. Acceatance 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 an opinion of counsel as full and complete protection for any action
taken or suffered by it hereunder.
(c) The Trustee shall 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 the
i��,-u��.i��s� x�six�.; -25-
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, telegram, facsimile transmission, electronic
mail 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.
(� 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 liberty 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
i��,-u��. i��s� x�s i x�. ; -26-
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
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 action referred to in Section 6.05, Section 8.02 or the 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
current 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.
i��,-u��.i��s� x�six�.; -27-
(p) 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.
(�l)
the Loan Agreement.
(r)
The Trustee in its capacity as Trustee is authorized and directed to execute
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 and/or directions pursuant to this Indenture provided, however, that: (i) subsequent
to such facsimile transmission of written instructions and/or directions the Trustee shall forthwith
receive the originally executed instructions and/or directions, (ii) such originally executed
instructions and/or directions shall be signed by a person as may be designated and authorized to
sign for the party signing such instructions and/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 Exoenses of Trustee. The Trustee shall be
entitled to payment and reimbursement for reasonable fees for its services rendered hereunder and
all 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
incurred 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.
i��,-u��.i��s� x�six�.; -28-
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.
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(1), 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. Resi��nation 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 class mail, postage prepaid, to the Bond Owners at their
respective addresses set forth on the Registration Books.
Section 6.08. Appointment 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.
i��,-u��. i��s� x�s i x�. ; -29-
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 6.1 1. Appointment of Co-Trustee. [t 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 6.1 1 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.
i��,-u��.i��s� x�six�.; -30-
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 Liabilitv 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 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 a majority 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 [ndenture 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
P6-1113.111�7 x7� I x7.: -� 1-
(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 ofthis 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 of
the Owners of a majority in aggregate Principal Amount of the 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 Suaalemental 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, shall 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 Reolacement 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.
i��,-u��.i��s� x�six�.; -32-
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.
Section 8.01. Events of Default. The following events shall be Events 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 ag�regate 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.
P6-1113.I�>>7 x7�Ix7.: -��-
Section 8.02. Remedies Uaon 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 instaliments 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 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 principal 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 extend 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
i��,-u��.i��s� x�six�.; -34-
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. Application of Revenues and Other Funds After Default. All
amounts received by the Trustee pursuant to any right given or action taken by the Trustee under
the provisions of this Indenture 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 such 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 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 of 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 the 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
i��,-u��.i��s� x�six�.; -35-
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 pled�ed 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 subsequent default or breach of duty or contract, or impair any rights
or remedies on any such subsequent default or breach. No delay or omission of the Trustee or
any Owner 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 Ri��hts and Remedies of Owners. No Owner shall
have the right to institute any suit, action or proceeding at law or in equity, for any remedy under
or upon this Indenture, unless (i) such Owner shall have previously given to the Trustee written
notice of the occurrence 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
i��,-u��.i��s� x�six�.; -36-
any manner whatever by the 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.
ARTICLE IX
BONDINSURANCE
(to come)
ARTICLE X
BOOK-ENTRY SYSTEM
Section 10.01 Book-Entry Svstem; Limited Obli��ation 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
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
i��,-u��.i��s� x�six�.; -37-
notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial
interests in the Bonds to be redeemed in the event the Bonds are redeemed in part, or (iv) the
payment to any Participant or any other person, other than an Owner as shown in the registration
books kept by the Trustee, of any amount with respect to principal of, premium, if any, or interest
due with respect to the Bonds. The 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 registerin� 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 et�ective to satisfy and dischar�e
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 determined to substitute a new
nominee in place of the Nominee, and subject to the provisions herein with respect to Record
Dates, the word Nominee in this Indenture shall refer to such new nominee of the Depository.
Section 10.02 Reoresentation Letter. In order to qualify the Bonds for the
Depository's book entry system, the Authority has heretofore 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
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 10.04 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
i��,-u��.i��s� x�six�.; -38-
and all notices with respect to such Bond shall be made and given, respectively, as provided in the
Representation Letter or as otherwise instructed by the Depository.
Section 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 1 1.O l. 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, payable 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 1 1.02. 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 1 1.03. 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 become due and payable;
i��,-u��.i��s� x�six�.; -39-
(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) 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 (includin� 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 1 1.03 and
the payment of the Trustee's and the Insurer's expenses and costs, shall be paid over to the
Authority.
Section 1 1.04. Successor Is 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 1 1.05. 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.
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,
i��,-u��. i��s� x�s i x�. ; -40-
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 erroneous, 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 relates 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 Authority, 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 1 1.06. 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 1 1.06.
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 1 1.07. 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 1 1.08. 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 from
the performance of any official duty provided by law.
i��,-u��.i��s� x�six�.; -41-
Section 1 1.09. 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 1 1.10. 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 incurred in connection with the microfilming or the required permanent
recording, if any, related thereto.
Section 1 1.1 1. 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 1 1.12. 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 1 1.13. Notices. Any notice, request, complaint, 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
i��,-u��. i��s� x�s i x�. ; -42-
effective either (i) upon transmission by telecopy or other form of telecommunication, (ii) 48
hours after deposit in the United States mail, postage prepaid, or (iii) in the case of personal
delivery to any person, upon actual receipt. The Authority, the Agency or the Trustee may, by
written notice to the other parties, from time to time modify the address or number to which
communications are to be given hereunder.
If to the Authority: Palm Desert Financing Authority
7;-510 Fred Waring Drive
Palm Desert, California 92260
Attention: Chief Administrative Officer
Facsimile: (760) 340-0574
If to the Agency: Palm Desert Redevelopment Agency
7;-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 Insurer:
Attention:
Facsimile:
The Authority, the Agency, the Trustee and the Insurer may designate any further
or different addresses to which subsec�uent notices, certificates or other communications shall be
sent. Notices to the Insurer shall be governed by Section 9.02.
Section 1 1.14. 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
i��,-u��.i��s� x�six�.; -43-
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 1 1.15. Governin�� Law. This Agreement shall be construed and governed
in accordance with the laws of the State of California.
i��,-u��. i��s� x�s i x�. ; -44-
IN 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 Indenture 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
i��,-u��.i��s� x�six�.; -45-
EXHIBIT A
[FORM OF SERIES 2006A 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 VALUE 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 REFUNDING REVENUE BOND
(PROJECT AREA NO. 4)
2006 SERIES A
RATE OF
INTEREST
MATURITY DATE
ORIGINAL ISSUE
DATE
E�
CUSIP
REGISTERED OWNER
PRINCIPAL AMOUNT:
October 1, 20
CEDE & CO.
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 Series 2006A Bond
(unless this Series 2006A 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 Series 2006A Bond is
authenticated on or prior to September 15, 2006, in which event it shall bear interest from the
i��,-u��.i��s� x�six�.; A-1
Original Issue Date identified above; arovided, however, that if, at the time of authentication of
this Series 2006A Bond, interest is in default on this Series 2006A Bond, this Series 2006A 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 October l, 2006 (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 trust office of Wells Fargo Bank, National Association (the
"Trustee") in Los Angeles, California or such other 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 Series 2006A Bond is one of a duly authorized series of bonds of the Authority
designated the Palm Desert Financing Authority Tax Allocation Refunding Revenue Bonds
(Project Area No. 4), 2006 Series A(the "Series 2006A Bonds"), limited in principal amount to
$ . The Authority has issued another series of bonds designated the Palm Desert
Financing Authority Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 4),
2006 Series B(the "Series 2006B Bonds," and together with the Series 2006A Bonds, the
"Bonds"), limited in initial principal amount to $ , concurrently with the issuance of the
Series 2006A Bonds. Both the Series 2006A Bonds and the Series 2006B Bonds are secured by
an Indenture of Trust, dated as of July 1, 2006 (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
Local 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 lien 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
i��,-u��. i��s� x�s i x�. ; A-2
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 Series 2006A Bonds have been issued for the purpose of making a loan (the "Series
2006A Loan") to the Palm Desert Redevelopment Agency (the "Agency") to finance and
refinance certain public capital improvements with respect to a redevelopment project known and
designated as Project Area No. 4. The Series 2006A Loan has been made by the Authority to the
Agency pursuant to a Project Area No. 4 Loan Agreement, dated as of July l, 2006 (the "Loan
Agreement"), by and among the Agency, the Authority and the Trustee.
The Series 2006A Bonds maturing on or after October l, 20_ are subject to redemption
prior to their respective maturity dates as a whole, or in part among maturities as designated by
the Authority and by lot within a maturity, from prepayments of the Series 2006A 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 a percentage of
the principal amount of Series 2006A Bonds to be redeemed), plus accrued interest thereon to the
date of redemption:
Redemption Dates Redemption Price
October 1, 20_ and April 1, 20_ %
October 1, 20_ and April 1, 20_
October 1, 20 and thereafter 100
The Series 2006A Bonds maturing on October 1, 20_ and October 1, 20_ are also
subject to mandatory sinking fund redemption by lot, on October 1 in each year commencing
October 1, 20_ and October 1, 20_, respectively, 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 set forth in the Indenture; arovided,
however, that in lieu of redemption thereof, such Series 2006A Bonds may be purchased by the
Agency pursuant to the Loan Agreement.
The Trustee on behalf and at the expense of the Authority shall mail (by first class mail)
notice of any redemption to the respective owners of any Series 2006A Bonds designated for
redemption, at their respective addresses appearing on the registration books maintained by the
Trustee, and by such means as acceptable to the following institutions, 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
mailed nor any defect therein shall affect the validity of the proceedings for the redemption of
such Series 2006A 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 Series 2006A Bonds of such maturity or maturities
in whole, the Trustee shall designate such maturities or the maturity in whole without referencing
i��,-u��. i��s� x�s i x�. ; A-3
each individual number) of the Series 2006A Bonds to be redeemed, and shall require that such
Series 2006A Bonds be then surrendered at the Trust Office for redemption at the redemption
price, giving notice also that further interest on such Series 2006A 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 Series 2006A Bond may be exchanged at the Trust Office for a like aggregate
Principal Amount and maturity of fully registered Series 2006A Bonds of other authorized
denominations.
This Series 2006A Bond is transferable by the Registered Owner hereof, in person or by
the Registered 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 Series 2006A Bond. Upon such transfer a new fully
registered Series 2006A Bond or Series 2006A 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 Series 2006A Bond during the 15-day period preceding the selection of Series
2006A Bonds for redemption or any Series 2006A 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
Series 2006A 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
Series 2006A 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 Series 2006A Bond without the express written consent of the Owner of such
Series 2006A Bond, (b) reduce the percentage of Series 2006A 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 Series 2006A 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 Series
2006A 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 Series 2006A 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.
i��,-u��. i��s� x�s i x�. ; A-4
IN WITNESS WHEREOF, the Authority has caused this Series 2006A Bond to be
executed in its name and on its behalf by the manual or facsimile signatures of its President and
Secretary all as of the Original Issue Date identified above.
PALM DESERT FINANCING
AUTHORITY
:
Attest:
Secretary
STATEMENT OF INSURANCE
[to come]
President
i��,-u��. i��s� x�s i x�. ; A-5
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Series 2006A Bonds described in the within-mentioned Indenture and
registered on the Bond Registration Books.
Date:
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By
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 Series 2006A 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 Series 2006A 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.
i��,-u��. i��s� x�s i x�. ; A-6
EXHIBIT B
[FORM OF SERIES 2006B 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 VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
No.
Maturity Amount: $
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION REVENUE CAPTIAL APPRECIATION BOND
(PROJECT AREA NO. 4)
2006 SERIES B
YIELD TO
MATURITY MATURITY DATE ORIGINAL ISSUE CUSIP
DATE
October 1, 20
REGISTERED OWNER: CEDE & CO.
INITIAL PRINCIPAL AMOUNT:
MATURITY 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"),
in lawful money of the United States of America, either the Maturity Amount identified above on the
Maturity Date or the Accreted Value, plus any applicable redemption premium, upon redemption prior
to maturity. "Accreted Value," with respect to any Series 2006B Bond, means as of any date of
calculation, the sum of the Initial Principal Amount thereof and the interest accrued thereon to such date
of calculation, compounded from the Original Issue Date at the stated Yield to Maturity thereof on each
April 1 and October 1, commencing October 1, 2006. Interest on each Series 2006B Bond shall be
i��,-u��. i��s� x�s i x�. ; B-1
computed using a year of 360 days of twelve 30-day months and shall be payable (i) at maturity as part
of the Maturity Amount, or (ii) at redemption as part of the Accreted Value to the redemption date.
The Maturity Amount, or the Accreted Value and redemption premium (if any), as applicable, with
respect to any Series 2006B Bond shall be paid upon presentation and surrender thereof, at maturity or
the prior redemption thereof, at the corporate trust office of Wells Fargo Bank, National Association
(the "Trustee") in Los Angeles, California or such other location as the Trustee shall designate (the
"Trust Office").
This Series 2006B Bond is one of a duly authorized series of bonds of the Authority designated
the Palm Desert Financing Authority Tax Allocation Revenue Capital Appreciation Bonds (Project Area
No. 4), 2006 Series B(the "Series 2006B Bonds"), limited in initial principal amount to $ .
The Authority has issued another series of bonds designated the Palm Desert Financing Authority Tax
Allocation Refunding Revenue Bonds (Project Area No. 4), 2006 Series A(the "Series 2006A Bonds,"
and together with the Series 2006B Bonds, the "Bonds"), limited in principal amount to $ ,
concurrently with the issuance of the Series 2006B Bonds. Both the Series 2006A Bonds and the
Series 2006B Bonds are secured by an Indenture of Trust, dated as of July 1, 2006 (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 Local
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 lien 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 Series 2006B Bonds have been issued for the purpose of making a loan (the "Series 2006B
Loan") to the Palm Desert Redevelopment Agency (the "Agency") to finance certain public capital
improvements with respect to a redevelopment project known and designated as Project Area No. 4.
The Series 2006B Loan has been made by the Authority to the Agency pursuant to a Project Area No. 4
Loan Agreement, dated as of July l, 2006 (the "Loan Agreement"), by and among the Agency, the
Authority and the Trustee.
i��,-u��. i��s� x�s i x�. ; B-2
The Series 2006B Bonds maturing on or after October l, 20_ are subject to redemption prior
to their respective maturity dates as a whole, or in part among maturities as designated by the Authority
and by lot within a maturity, from prepayments of the Series 2006B Loan made at the option of the
Agency pursuant to the Loan Agreement, on any April 1 or October 1 on or after October 1, 20_, at
the following respective redemption prices (expressed as a percentage of the Accreted Value of the
called Series 2006B Bonds on the date fixed for redemption):
Redemption Dates
October 1, 20_ and April 1, 20
October 1, 20_ and April 1, 20
October 1, 20 and thereafter
Redemption Price
10_%
10_
100
The Trustee on behalf and at the expense of the Authority shall mail (by first class mail) notice
of any redemption to the respective owners of any Series 2006B Bonds designated for redemption, at
their respective addresses appearing on the registration books maintained by the Trustee, and by such
means as acceptable to the following institutions, 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 mailed nor any defect therein shall affect the
validity of the proceedings for the redemption of such Series 2006B 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 Series 2006B 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 Series 2006B Bonds to be redeemed, and
shall require that such Series 2006B Bonds be then surrendered at the Trust Office for redemption at the
redemption price, giving notice also that further interest on such Series 2006B 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 Series 2006B Bond may be exchanged at the Trust Office for a like aggregate Maturity Amount and
maturity of fully registered Series 2006B Bonds of other authorized denominations.
This Series 2006B Bond is transferable by the Registered Owner hereof, in person or by the
Registered 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 Series 2006B Bond. Upon such transfer a new fully registered Series
2006B Bond or Series 2006B Bonds, of authorized denomination or denominations, for the same
aggregate Maturity 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 Series 2006B
Bond during the 15-day period preceding the selection of Series 2006B Bonds for redemption or any
Series 2006B 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.
i��,a���. i��s� x�s i x�. ; B-3
The Indenture and the rights and obligations of the Authority and of the owners of the Series
2006B 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 Series 2006B 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 Series 2006B Bond without
the express written consent of the Owner of such Series 2006B Bond, (b) reduce the percentage of
Series 2006B 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 Series 2006B 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 Series 2006B 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 Series 2006B 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 Series 2006B Bond to be executed in
its name and on its behalf by the manual or facsimile signatures of its President and Secretary all as of
the Original Issue Date identified above.
PALM DESERT FINANCING AUTHORITY
:
Attest
Secretary
President
STATEMENT OF INSURANCE
[to come]
i��,-u��. i��s� x�s i x�. ; B-4
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Series 2006B 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 Series 2006B 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: 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.
NOTE: The signature(s) on this Assignment must
correspond with the name(s) as written on the face
of the within Series 2006B Bond in every
particular without alteration or enlargement or any
change whatsoever.
i��,-u��. i��s� x�s i x�. ; B-5
Proiect Area No. 4 Loan A��reement
with reference to
$
Palm Desert Financing Authority
Tax Allocation Refunding Revenue Bonds
(Project Area No. 4)
2006 Series A
Palm Desert Financing Authority
Tax Allocation Revenue
Capital Appreciation Bonds
(Project Area No. 4)
2006 Series B
i��,a���.i��s� x�sixi.: izwc nizni� r: si�-�i�oo�,
TABLE OFCONTENTS
Pa��e
ARTICLE I DEFINITIONS ..................................................................................................2
Section 1.01. Definitions ............................................................................................... 2
Section 1.02. Rules of Construction .............................................................................. 6
ARTICLE II THE LOANS; APPLICATION OF LOAN PROCEEDS; PARITY DEBT.........6
Section 2.01. Authorization ........................................................................................... 6
Section 2.02. Disbursement and Application of Loan Proceeds ...................................... 6
Section 2.03. Repayment of Loans ................................................................................ 7
Section 2.04. Optional Prepayment ............................................................................... 8
Section2.05. Reserve Fund ........................................................................................... 9
Section 2.06. Costs of Issuance Fund ........................................................................... 10
Section2.07. Project Fund ........................................................................................... 10
Section2.08. Parity Debt ............................................................................................ 12
Section 2.09. Issuance of Subordinate Debt ................................................................. 12
Section 2.10. Validity of Loans ................................................................................... 12
ARTICLE III PLEDGE AND APPLICATION OF TAX REVENUES .................................. 13
Section 3.01. Pledge of Tax Revenues ......................................................................... 13
Section 3.02. Special Fund; Deposit of Tax Revenues ................................................. 13
Section 3.03. Transfer of Tax Revenues From Special Fund ........................................ 13
Section 3.04. Investment of Moneys; Valuation of Investments ................................... 14
ARTICLE IV OTHER COVENANTS OF THE AGENCY .................................................... 14
Section 4.01. Punctual Payment; Extension of Payments ............................................. 14
Section 4.02. Limitation on Additional Indebtedness ................................................... 15
Section 4.03. Payment of Claims ................................................................................. 15
Section 4.04. Books and Accounts; Financial Statements ............................................ 15
Section 4.05. Protection of Security and Rights ........................................................... 15
Section 4.06. Payments of Taxes and Other Charges ................................................... 16
Section 4.07. Taxation of Leased Property .................................................................. 16
Section 4.08. Disposition of Property .......................................................................... 16
Section 4.09. Maintenance of Tax Revenues ............................................................... 16
Section 4.10. Payment of Expenses; Indemnification ................................................... 17
Section 4.1 1. Tax Covenants ....................................................................................... 17
Section 4.12. Redevelopment of Project Area ............................................................. 18
Section 4.13. Low and Moderate Income Housing Fund ............................................. 19
Section 4.14. Annual Review of Tax Revenues ............................................................ 19
Section 4.15. Further Assurances ................................................................................ 19
ARTICLE V EVENTS OF DEFAULT AND REMEDIES .................................................... 19
Section 5.01. Events of Default and Acceleration of Maturities ................................... 19
Section 5.02. Application of Funds Upon Default ........................................................ 20
Section5.03. No Waiver ............................................................................................. 21
Section 5.04. Agreement to Pay Attorneys' Fees and Expenses .................................... 21
Section 5.05. Remedies Not Exclusive ........................................................................ 22
i��,-u��.i��s� x�sixi.; -�-
Section 5.06. Control of Remedies by Insurer .............................................................. 22
ARTICLE VI MISCELLANEOUS ........................................................................................ 22
Section 6.01. Benefits Limited to Parties ..................................................................... 22
Section 6.02. Successor is Deemed Included in All References to Predecessor ............ 22
Section 6.03. Discharge of Loan Agreement ................................................................ 22
Section6.04. Amendment ........................................................................................... 23
Section 6.05. Waiver of Personal Liability ................................................................... 23
Section 6.06. Payment on Business Days ..................................................................... 23
Section6.07. Notices ..................................................................................................24
Section 6.08. Bond Insurance ...................................................................................... 24
Section6.09. Surety Bond . ......................................................................................... 24
Section 6.10. Partial Invalidity ..................................................................................... 24
Section 6.1 l. Article and Section Headings and References ......................................... 24
Section 6.12. Execution of Counterparts ..................................................................... 24
Section 6.13. Governing Law ...................................................................................... 24
Section6.14. The Trustee ........................................................................................... 24
EXHIBIT A— Schedule of Series 2006A Loan Payments
EXHIBIT B— Schedule of Series 2006B Loan Payments
i��,-t���.i��s� x�sixi.; -ii-
Proiect Area No. 4 Loan A��reement
This Project Area No. 4 Loan Agreement is made and entered into as ofJuly l,
2006, 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 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. A Redevelopment Plan for Project Area No. 4 of the Agency (the "Project
Area") has been duly approved and adopted by the City.
C. The Agency has determined to incur two loans (the "Loans") hereunder for
the object and purpose of assisting in the financing of public capital improvements and
redevelopment activities for the benefit of the Project Area, 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").
D. Concurrently with the execution and delivery of this Loan Agreement, the
Authority has issued its Tax Allocation Refunding Revenue Bonds (Project Area No. 4), 2006
Series A, in the principal amount of $ and its Tax Allocation Revenue Capital
Appreciation Bonds (Project Area No. 4), 2006 Series B, in the initial principal amount of
$ (together, the "Bonds"), pursuant to the Bond Law and an Indenture of Trust, dated
as of July l, 2006 (the "Indenture"), by and between the Authority and the Trustee, for the
purpose of providing funds to make the Loans to the Agency.
E. The Authority has determined that there will be significant public benefits
accruing from such borrowing, consisting of demonstrable savings in effective interest rates and
financing costs associated with the issuance of the Bonds pursuant to the Bond Law.
F. The Agency and the Authority have determined that all acts and
proceedings required by law necessary to make this Loan Agreement, when executed by the
Agency, the Authority and Trustee, the valid, binding and legal obligation of the Agency 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.
i��,-u��.i��s� x�sixi.:
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.O l. Definitions. Unless the context clearly requires or unless otherwise
defined herein, the capitalized terms in this Loan Agreement shall have the respective meanings
which such terms are given in the Indenture. In addition, the following terms defined in this
Section 1.O l shall, for all purposes of this Loan Agreement, have the respective meanings herein
specified.
"Additional Revenues" means, as of the date of calculation, the amount of Tax
Revenues which, as shown in the Report of an Independent Redevelopment Consultant, are
estimated to be receivable by the Agency within the Fiscal Year following the Fiscal Year in
which such calculation is made as a result of increases in the assessed valuation of taxable
property in the Project Area due to either (i) construction which has been completed but which is
not then reflected on the tax rolls, or (ii) transfer of ownership or any other interest in real
property which has been recorded but which is not then reflected on the tax rolls. For purposes of
this definition, the term "increases in the assessed valuation" means the amount by which the
assessed valuation of taxable property in the Project Area is estimated to increase above the
assessed valuation of taxable property in the Project Area (as reported by an appropriate of�icial
of the County) as of the date on which such calculation is made.
"Bonds" means the Series 2006A Bonds and the Series 2006B Bonds.
"Costs of Issuance" means all expenses incurred in connection with the
authorization, issuance, sale and delivery of the Bonds and the making of the Loans pursuant to
this 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 any 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 (Project Area No. 4), 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
a portion of the Authority's Tax Allocation Revenue Bonds (Project Area No. 4), Series 1998.
i��,-u��.i��s� x�sixi.; 2
"Event of Default" means any of the events described in Section 5.01.
"Indenture" means the Indenture of Trust, dated as of July 1, 2006, by and
between the Authority and the Trustee, authorizing the issuance of the Bonds, as may from time
to time be supplemented, modified or amended.
"Indeaendent Redeveloament 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
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.
"Loans" means the Series 2006A Loan and the Series 2006B Loan.
"Loan A��reement" means this Project Area No. 4 Loan Agreement, as may from
time to time be amended, modified or supplemented.
"Maximum Annual Debt Service" 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 Loans 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 Loans 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, 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 Tax Revenues for
the current Fiscal Year (as evidenced in the written records of the County), plus at the option of
the Agency the Additional Revenues, at least equals 1 15 percent of the amount of Maximum
Annual Debt Service.
" 1998 Loan" means the loan made by the Authority to the Agency pursuant to the
1998 Loan Agreement.
"1998 Loan A��reement" means the Project Area No. 4 Loan Agreement, dated as
of March l, 1998, by and among the Agency, the Authority and First Trust of California, National
Association, as prior trustee (as succeeded by Wells Fargo Bank, National Association, as
trustee).
"Paritv Debt" means the 1998 Loan, the 2001 Loan and any other loans, bonds,
notes, advances, or indebtedness payable from Tax Revenues on a parity with the Loans, issued or
i��,a���.i��s� x�sixi.:
incurred pursuant to and in accordance with the provisions of Section 2.09.
"Paritv Debt Instrument" means the 1998 Loan Agreement, the 2001 Loan
Agreement and any resolution, indenture of trust, trust agreement or other instrument authorizing
the issuance of any Parity Debt.
"Pass-Throu��h A��reements" means, collectively, the agreements heretofore
entered into or approved by the Agency pursuant to Section 33401 of the Redevelopment Law
with (i) the Desert Sands Unified School District, (ii) the Desert Community College District, (iii)
the Coachella Valley Mosquito Abatement District, (iv) the Coachella Valley Recreation and Park
District, (v) the Coachella Valley Water District, (vi) the Coachella Valley Resource Conservation
Center and (vii) the Riverside County Superintendent of Schools District (sic).
"Plan Limitations" means the limitations contained or incorporated in the
Redevelopment Plan 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 Plan, and (iii) the
period of time for establishing loans, advances and indebtedness payable from Tax Revenues.
"Proiect Fund" means the fund by that name established and held by the 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: (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 Reserve 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).
"Redeveloament Fund" means the Project Area No. 4 Redevelopment Fund
heretofore established and held by the Agency.
"Redeveloament Proiect" means the undertaking of the Agency pursuant to the
Redevelopment Plan and the Redevelopment Law for the redevelopment of the Project Area.
i��,-u��.i��s� x�sixi.; 4
"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 Loans and all outstanding Parity Debt, and
(iii) 10 percent of the proceeds of the Loans (i.e., the original Principal Amount of the Bonds) and
of the proceeds of any Parity Debt. The amount of the Reserve Requirement on any date is
subject to confirmation by the Authority to the Trustee upon the Trustee's written request. At the
Closing Date, the Reserve Requirement shall be $ .
"Series 2006A Bonds" means the Palm Desert Financing Authority Tax Allocation
Refunding Revenue Bonds (Project Area No. 4), 2006 Series A.
"Series 2006A Loan" means the loan made by the Authority to the Agency
pursuant to Section 2.01(a) from the proceeds of the Series 2006A Bonds in the initial principal
amount of $ .
"Series 2006B Bonds" means the Palm Desert Financing Authority Tax Allocation
Revenue Capital Appreciation Bonds (Project Area No. 4), 2006 Series B.
"Series 2006B Loan" means the loan made by the Authority to the Agency
pursuant to Section 2.01(b) from the proceeds of the Series 2006B Bonds in the initial principal
amount of $ .
"Saecial 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 2.09, which are either: (i) payable
from, but not secured by a pledge of or lien upon, the Tax Revenues; or (ii) secured by a pledge
of or lien upon the Tax Revenues which is subordinate to the pledge of and lien upon the Tax
Revenues hereunder for the security of the Loans and any Parity Debt.
"Suretv Bond" means the Qualified Reserve Fund Credit Instrument issued by the
Insurer guaranteeing certain payments into the Reserve Fund as provided therein and subject to
the limitations set forth therein.
"Tax Revenues" means that portion of the taxes levied upon taxable property in
the Project Area, 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, exclusive of amounts placed into the Low and Moderate Income Housing Fund of
the Agency pursuant to Sections 33334.2 and 33334.3 of the Redevelopment Law, and excluding
amounts payable to affected taxing agencies pursuant to the Pass-Through Agreements or
pursuant to Section 33607.5 or 33607.7 of the Redevelopment Law.
i��,-u��.i��s� x�sixi.; 5
"2001 Loan" means the loan made by the Authority to the Agency pursuant to the
2001 Loan Agreement.
"2001 Loan A��reement" means the Project Area No. 4 Loan Agreement dated as
of November l, 2001, by and among the Agency, the Authority and BNY Western Trust
Company, as prior trustee (as succeeded by Wells Fargo Bank, National Association, as trustee).
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 LOANS; APPLICATION OF LOAN PROCEEDS;
PARITY DEBT
Section 2.01. Authorization. (a) The Authority hereby agrees to lend to the
Agency, from the proceeds of the sale of the Series 2006A Bonds deposited in the Series 2006A
Loan Fund established under the Indenture, the principal amount of $ under
and subject to the terms of this Loan Agreement, the Bond Law and the Redevelopment Law.
(b) The Authority hereby agrees to lend to the Agency, from the proceeds of
the sale of the Series 2006B Bonds deposited in the Series 2006B Loan Fund established under
the Indenture, the initial principal amount of $ under and subject to the terms
of this Loan Agreement, the Bond Law and the Redevelopment Law.
(c) This Loan Agreement constitutes a continuing agreement to secure the full
and final payment of the Loans, subject to the covenants, agreements, provisions and conditions
herein contained.
Section 2.02. Disbursement and Application of Loan Proceeds.
(a) On the Closing Date, the Authority shall cause to be deposited into the
Series 2006A Loan Fund the amount of $ which shall be held by the Trustee and
which shall be disbursed as follows:
(i) The Trustee shall transfer the amount of $ to the
Series 2006A Account of the Costs of Issuance Fund.
(ii) The Trustee shall transfer the amount of $ to the
Escrow Fund.
P6-1113.I11�7 x7� I x I.; 6
E�
$
On the Closing Date, the Authority shall also cause the amount of
and the amount of $ to be paid to the Insurer for the costs of a
portion of the premiums for the Insurance Policy and the Surety Bond.
The Trustee may, in its discretion, establish a temporary fund or
account to facilitate or account for the foregoing transfers.
(b) On the Closing Date, the Authority shall cause to be deposited into the
Series 2006B Loan Fund the amount of $ which shall be held by the Trustee and
which shall be disbursed as follows:
(i) The Trustee shall transfer the amount of $
2006B Account of the Costs of Issuance Fund.
the Project Fund.
(ii) The Trustee shall transfer the remaining amount of $
to the Series
to
On the Closing Date, the Authority shall also cause the amount of
$ and the amount of $ to be paid to the [nsurer for the costs of a portion
of the premiums for the Insurance Policy and the Surety Bond.
The Trustee may, in its discretion, establish a temporary fund or account to
facilitate or account for the foregoing transfers..
Section 2.03. Reaavment of Loans. The Agency shall, subject to prepayment as
provided in Section 2.04(a), repay the principal of the Series 2006A 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 Series 2006A Loan due on each Interest Payment Date not later than the fifth
Business Day preceding such Interest Payment Date in the amounts 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. In the event any unpaid principal installments of the Series
2006A Loan shall be prepaid pursuant to Section 2.04(a), or in the event the Series 2006A Bonds
shall be redeemed pursuant to Section 2.03(a)(1) of the Indenture, the schedule of principal
installments set forth in Exhibit A hereto shall be reduced as directed by the Agency to the
Trustee.
The Agency shall, subject to prepayment as provided in Section 2.04(b), repay the
Series 2006B Loan in installments on October 1 in each of the years and in the amounts set forth
(iii) The Trustee shall transfer the remaining amount of
to the Project Fund.
i��,-u��.i��s� x�sixi.; 7
in Exhibit B attached hereto and by this reference incorporated herein. Interest on the Series
2006B Loan shall accrue in the same manner as the interest accrues on the Series 2006B Bonds
pursuant to the Indenture. The installments payable on the Series 2006B Loan on each October 1
set forth in Exhibit B correspond with the aggregate Maturity Amount of Series 2006B Bonds
coming due and payable on such date. Any installment of the Series 2006B Loan which is not
paid when due shall continue to accrue interest from and including the date on which such
installment is payable to but not including the date of actual payment. In the event any unpaid
installments of the Series 2006B Loan shall be prepaid pursuant to Section 2.04(b), or in the event
the Series 2006B Bonds shall be redeemed pursuant to Section 2.03(b)(1) of the Indenture, the
schedule of installments set forth in Exhibit B hereto shall be reduced as directed by the Agency to
the Trustee.
The obligation of the Agency to repay the Loans 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.
Principal of and interest on the Loans 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 Loans coming due and payable on October 1 in any year in
which any Bonds are subject to mandatory sinking fund redemption, 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 l, and tender such Bonds for
cancellation, provided that such tender shall be made before the preceding July 15.
Section 2.04. Oational Preaavment.
(a) The Agency shall have the right to prepay principal installments of the
Series 2006A 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 date on which the
Series 2006A Bonds are subject to redemption pursuant to Section 2.03(a)(1) of the Indenture, by
depositing with the Trustee an amount sufficient to redeem a like aggregate principal amount of
Series 2006A Bonds together with the amount of accrued interest and premium, if any, required
to be paid upon such redemption.
(b) The Agency shall have the right to prepay installments of the Series 2006B
Loan on any date on which the Series 2006B Bonds are subject to redemption pursuant to Section
2.03(b)(1) of the Indenture and effect a corresponding redemption of the Series 2006B Bonds.
Such prepayment shall be allocated among such installments of the Series 2006B Loan as the
i��,-u��.i��s� x�sixi.; 8
Agency may determine upon Request to the Authority and the Trustee provided not less than 45
days prior to the prepayment date; provided that such prepayment shall cause redemption of
Series 2006 Bonds in integral multiples of $5,000 Maturity Amount. To effect such prepayment,
the Agency shall deposit with the Trustee no later than the redemption date an amount sufficient
to redeem the called Series 2006B Bonds (which amount shall include the Accreted Value of the
called Series 2006B Bonds as of the date of redemption and the applicable redemption premium,
if any).
(c) 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 with respect to a Loan hereunder, including
specifically its obligations under this Article, until such Loan shall have been fully paid (or
provision for payment thereof shall have been made pursuant to Section 6.3).
(d) 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 of the applicable series on the redemption date
designated by the Agency; provided, however, that such date shall be a date of redemption of
such Bonds, for which notice has been timely given pursuant to the Indenture.
Section 2.05. Reserve Fund. Pursuant to the 1998 Loan Agreement, there has
heretofore been established a separate fund known as the "Project Area No. 4 Reserve Fund,"
which shall continue to be 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) on or before the 1 Sth calendar day preceding
any Interest Payment Date, 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.
i��,-u��.i��s� x�sixi.; 9
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 required by Section 3.3(a) have been made — exceeds the Reserve Requirement,
the Trustee shall withdraw from the Reserve Fund all amounts in excess of the Reserve
Requirement and apply such amounts toward the prepayment of the Loans pursuant to Section
2.4 or the prepayment of any Parity Debt, unless the Trustee shall have received prior Request of
the Agency to pay such amounts to the Agency to be used for any lawful purpose relating to the
Project Area, 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 the written consent of the Insurer (as long as the Insurance Policy is in full
force and effect) and of the insurer of any Parity Debt (so long as the policy 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 thereof, which in the
aggregate make funds available in the Reserve Fund in 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 Project Area, 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 the Surety Bond and one or more other Qualified Reserve Fund Credit Instruments
issued by entities other than the issuer of the Surety Bond, any draw on the Surety Bond shall be
made on a pro rata basis with draws on such other Qualified Reserve Fund Credit Instruments,
based on the relative amounts of debt service covered by the Surety Bond and the debt service
covered by such other Qualified Reserve Fund Credit Instruments 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" and two accounts therein known as
the "Series 2006A Account" and the "Series 2006B Account." A portion of the proceeds of the
Series 2006A Loan shall be deposited in the Series 2006A Account pursuant to Section 2.02(a).
A portion of the proceeds of the Series 2006B Loan shall be deposited in the Series 2006B
Account pursuant to Section 2.02(b). The moneys in each account of the Costs of Issuance Fund
shall be used to pay Costs of Issuance of the related series of Bonds from time to time upon
receipt of a Request of the Agency. On the 90th 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
accounts of the Costs of Issuance Fund to the Revenue Fund.
Section 2.07. Proiect Fund. There is hereby established a fund to be known as
i��,-u��.i��s� x�sixi.: 10
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 Loans transferred thereto
and from earnings on the investment of amounts therein.
Except as provided in this Section, the moneys set aside and placed in the Project
Fund shall remain therein until expended from time to time for the purpose of paying any portion
of the costs of the Redevelopment Project, and other costs related thereto, which other costs may
include, but are not limited to, (a) the cost of improvements and other costs which may not benefit
the Redevelopment Project exclusively but which are necessary to the redevelopment of the
Project Area and the disposition of land therein; (b) the repayment of any advances made by the
City for the Redevelopment Project; and (c) to the 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:
(e) 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
(� 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
i��,-u��.i��s� x�sixi.: 1 1
accomplishment of the objects and purposes for which the Loans were made, said moneys shall be
transferred to the Special Fund.
Section 2.08. Paritv Debt. From time to time, the Agency may issue or incur
additional Parity Debt in such principal amount as shall be determined by the Agency, 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 Tax Revenues for the then current Fiscal Year, as set forth
in a Certificate of the Agency, assuming a tax rate of one percent of assessed value and based on
assessed valuation of property in the Project Area as evidenced in the written records of the
County, shall be at least equal to 125 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 effective 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,
interest 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 Loans is payable.
(e) The issuance of such Parity Debt shall not cause the Agency to exceed any
applicable Plan Limitations.
(� 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.
Section 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 Loans. The validity of the Loans shall not be dependent
upon the completion of the Redevelopment Project or upon the performance by any person of any
obligation with respect to the Redevelopment Project.
i��,-u��.i��s� x�sixi.: 12
ARTICLE III
PLEDGE AND APPLICATION OF TAX REVENUES
Section 3.01. Pled��e of Tax Revenues. The Loans and all Parity Debt shall be
equally secured by a first pledge of and lien on all of the 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 Tax Revenues and other funds
pledged hereunder, no funds or properties of the Agency shall be pledged to, or otherwise liable
for, the payment of principal of or interest on or prepayment premium, if any, on the Loans.
Section 3.02. Saecial Fund; Deaosit of Tax Revenues. The Agency has
heretofore established a special fund known as the "Special Fund", which shall be held by the
Agency as a separate fund apart from all other funds and accounts of the Agency. The Agency
shall deposit all Tax Revenues in the Special Fund promptly upon the receipt thereof. Except as
may be otherwise provided in any Parity Debt Instrument, any 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 Loans 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 any Parity Debt Instrument, and such moneys shall be used and
applied as set forth herein and in any Parity Debt Instrument.
Section 3.03. Transfer of Tax Revenues From Soecial 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 Deaosits. No later than the third Business Day
preceding each date on which the principal of or interest on the Loans or any Parity Debt shall
become due and payable, including but not limited to the principal amounts of the Loans 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 Deaosits. 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 any
P6-1113.I11�7 x7� I x I.; 1 �
Qualified Reserve Fund Credit Instrument, including the Surety Bond, prior to replenishing any
cash in the Reserve Fund).
(c) Sur lus. 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 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. All 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 April 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 4.1 1.
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 clause D
of the definition thereof. 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
investment ec�ual 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,
i��,-u��.i��s� x�sixi.: 14
on the Loans 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 Loans, and in case the
principal of or interest or premium, if any, on the Loans 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 Tax
Revenues, excepting only the Loans, any Parity Debt, and any Subordinate Debt, and any other
obligations 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 Tax
Revenues or any part thereof, or upon any funds in the hands of the Trustee, or which might
impair the security of the Loans. 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
transactions relating to the Redevelopment Project, the Tax Revenues, the Special Fund, the
Reserve Fund, the Low and Moderate Income Housing Fund and the Redevelopment 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 a series of 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 Tax Revenues, all disbursements from
the Special Fund, the Project Fund and the Redevelopment Fund and the financial condition of the
Redevelopment Project, including the balances in all funds and accounts relating to the
Redevelopment Project, 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 Loans and the rights of the Trustee and the Owners with respect to the
Loans. From and after the Closing Date, the Loans shall be incontestable by the Agency. The
Loans and the provisions of this Loan Agreement are and will be the legal, valid and binding
i��,-u��.i��s� x�sixi.: 15
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
Authority, 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 Loans 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 in the Project Area, 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 Project or any part thereof.
Section 4.07. Taxation of Leased Prooertv. All ad valorem property taxes derived
by the Agency pursuant to Section 33673 of the Redevelopment Law with respect to the lease of
property for redevelopment shall be treated as Tax Revenues for all purposes of this Loan
Agreement, and shall be deposited by the Agency in the Special Fund promptly upon receipt.
Section 4.08. Disaosition of Proaertv. The Agency will not participate in the
disposition of any land or real property in the Project Area, to anyone which will result in such
property becoming exempt from taxation because of public ownership or use or otherwise (except
property dedicated for public right-of-way and except property planned for public ownership or
use by the Redevelopment Plan in effect on the date of this Loan Agreement) so that such
disposition shall, when taken together with other such dispositions, aggregate more than ten
percent of the land area in the Project Area, unless such disposition is permitted as hereinafter
provided in this Section 4.08. If the Agency proposes to participate in such a disposition, it shall
thereupon appoint an Independent Redevelopment Consultant to report on the effect of said
proposed disposition. If the Report of the Independent Redevelopment Consultant concludes that
the security of the Loans or the rights of the Authority, the Owners and the Trustee hereunder
will not be materially impaired by said proposed disposition, the Agency may thereafter make such
disposition. If such Report concludes that such security will be materially impaired by such
proposed disposition, the Agency shall disapprove said proposed disposition.
Section 4.09. 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 of�icials of the State. The Agency shall not
amend the Redevelopment Plan or any of the Pass-Through Agreements, or enter into any
agreement with the County or any other governmental unit, which would have the effect of
i��,-u��.i��s� x�sixi.: 16
reducing the amount of Tax Revenues available to the Agency for payment of the Loans, unless
the Agency shall first obtain (i) the Report of an Independent Redevelopment Consultant stating
that the amount of 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), plus at the
option of the Agency the Additional Revenues, shall be at least equal to 1 15 percent of Maximum
Annual Debt Service, and (ii), 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 Loans and all Parity Debt.
Section 4.10. Pavment 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 this 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 Loans and the discharge of this Loan Agreement.
Section 4.1 1. 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
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
i��,-u��.i��s� x�sixi.: 17
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(� 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 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 interest 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 thereo�, (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 21 B(d)(3) of the Federal Home Loan Bank Act, as amended by
Section 51 1(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 (� 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 4.12. Redeveloament of Proiect Area. The Agency shall ensure that all
activities undertaken by the Agency with respect to the redevelopment of the Project Area, are
undertaken and accomplished in conformity with all applicable requirements of the
Redevelopment Plan and the Redevelopment Law. The Agency shall manage and operate all
properties owned by the Agency and comprising any part of the Redevelopment Project 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.
i��,-u��.i��s� x�sixi.: 18
Section 4.13. Low and Moderate Income Housin�� Fund. The Agency covenants
and agrees to use the moneys in the Low and Moderate Income Housing Fund in accordance with
Sections 33334.2 and 33334.3 of the Redevelopment Law, and further covenants and agrees to
disburse, expend or encumber any "excess surplus" (as defined in Section 33334.12 of the
Redevelopment Law) in the Low and Moderate Income 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 4.14. Annual Review of Tax Revenues. The Agency hereby covenants
that it will annually cause an Independent Redevelopment Consultant to review the total amount
of Tax Revenues remaining available to be received by the Agency under the Redevelopment
Plan's cumulative tax increment limitation, as well as future cumulative annual debt service with
respect to the Loans and all Parity Debt. The Agency will not accept Tax Revenues greater than
such annual debt service in any year, if such acceptance will cause the amount remaining under the
tax increment limit to fall below remaining cumulative annual debt service with respect to the
Loans and all Parity Debt, except for the purpose of depositing such revenues in escrow for the
payment of such debt service or for the prepayment or redemption of the Loans or any Parity
Debt. Once it is determined that Tax Revenues available to be received by the Agency under the
aforementioned tax increment limitation in an upcoming year will not exceed 1 10 percent of
aggregate remainin� debt service on the Loans and all outstanding Parity Debt, the Agency shall
escrow all current and future Tax Revenues and use such amounts solely for the purpose of
paying (or prepaying) debt service on the Loans and all Parity Debt.
Section 4.15. 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 Loans 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
i��,-u��.i��s� x�sixi.; 19
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 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 Default
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 Loans 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 Loans matured prior to such
declaration and all accrued interest thereon, with interest on such overdue 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 Loans 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 extend to or shall affect any subsequent default, or shall impair or exhaust any right or power
consequent thereon.
Section 5.02. Application of Funds Uoon 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
i��,-u��.i��s� x�sixi.: 20
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
Loans then due and unpaid, with interest on overdue installments of principal, and such 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 Loans then due
and unpaid, on a pro rata basis in the event that the available amounts are insuf�icient to pay all
such interest in full,
(ii) second, to the payment of all installments of principal of the Loans 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.
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 Tax Revenues and other amounts pledged hereunder, the principal
of and interest and premium, if any, on the Loans 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 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, the Authority 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 Expenses. In the event the
Agency or the Authority should default under any of the provisions hereof and the nondefaulting
i��,-u��.i��s� x�sixi.: 21
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 conferred 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 5.1 and subject to any rights heretofore granted by the Authority or the Agency to any
insurer of Parity Debt, as long as Insurance Policy is in full force and effect and the Insurer 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 Loans 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 [nsurer.
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, the
Insurer 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, the Trustee
acting as trustee for the benefit of the Owners of the Bonds and the Insurer so long as the
Insurance Policy remains in full force and effect.
Section 6.02. Successor is 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, the Trustee or the Insurer 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
i��,-u��.i��s� x�sixi.: 22
discharge the indebtedness on the Loans 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 Loans 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 Loans 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 this Loan Agreement, be fully sufficient to pay
and discharge the indebtedness on the Loans 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 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 Loans 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 Loans or such portion thereof, and to pay all expenses
and costs of the Trustee when and as such expenses and costs become due and 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 Loans; but nothing herein contained shall relieve any such member, officer,
agent or employee from the performance of any of�icial duty provided by law.
Section 6.06. Pavment on Business Days. Whenever in this Loan Agreement any
P6-1113.I11�7 x7� I x I.; 2�
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 1 1.13 of the Indenture, which is hereby incorporated.
Section 6.08. Bond Insurance. As long as the Insurance Policy is in full force and
effect with respect to the Bonds, the Agency shall, on an annual basis, furnish the Insurer with
copies of its audited financial statements and its annual budget; and shall deliver to the Insurer a
copy of the disclosure document, if any, circulated with respect to any Parity Debt.
Section 6.09. Suretv Bond. [to come]
Section 6.10. Partial Invaliditv. 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, para�raph, sentence, clause or phrase hereof and authorized the Loans 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 6.1 1. Article and Section Headin��s 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 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; and words of the
masculine gender shall mean and include words of the feminine and neuter genders.
Section 6.12. Execution of Counteroarts. 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. Governin�� 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.
i��,-u��.i��s� x�sixi.: 24
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
:
Executive Director
PALM DESERT FINANCING AUTHORITY
:
Chief Administrative Officer
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
:
Authorized Officer
i��,-u��.i��s� x�sixi.: 25
EXHIBIT A
SCHEDULE OF SERIES 2006A LOAN PAYMENTS%
Datc Principal Intcrest Total
Pa� ablc scmiannuall� on thc (ifth Busincss Da� prcccding cach Intcrest Pa� mcnt Datc
PG-lO3.1O�7 x7� I x I. � A- I
. ■ : :
SCHEDULE OF SERIES 2006B LOAN PAYMENTS
Datc Total Pa� mcnt
Pa� ablc on thc (ifth Busincss Da� prcccding cach Octobcr I st
PG-lO3.IO�7 x7� I x I.; B- I
i.�,.� uiinr r a;
c �;/2 ;/c �6
PRELIMINARY OFFICIAL STATEMENT DATED JUNE , 2006
NEW ISSUE — BOOK—ENTRY ONLY
INSURED RATINGS: Sc�'.P:
UNINSURED RATINGS: Sc�'.P:
(Scc "Rn I INGS" hcrcin)
bi du� opiiiioii o/Kic•l�cu•rls, litdsoii c� (irnsl�oii. . I/'ro/i�ssioiicd ('oi/�oizdioii. Los. lii�;rlrs, ('cdi/imiici. /3oiid ('o�utsrl. bcisrd oii cttisiiii�; lcnr cuid
ci.s.s�u��iii�; complicuicr u id� crriciiii corriicuii.s .sri_/in•d� iii du� doc�u�u�iii.s prrtciiiiiii�; io du� ?00G .Srrir.s /3oiirls cuid rrq��irrmriiis o/ du� /iiirnicd Krrrinu� ('�xlr
o/ ! I�SG, cis cu�u�iidrd (du� ..( •�xlr ..1. cis drscribrd l�rrriii. iiiirrrsi oii d�c ?00G .Srrirs /3oiirls is iioi iiu•h�drd iii �;ross iiiconu� o/ du� ouiu�ns du�rro%/in'./i�drizd
iiicomr ici.t p�u/�o.sr.s. /ii du� opiiiioii o/ /3oiid ('o�ucsrl. iiiirrr.si oii ilu� ?00G .Srrir.s /3oiirls i.s iioi irrcdrd ci.s cui iirm o/ ici.t prr/i�rriicr iii ccdc�dcdiii�; du�
/i�drizd cdirnicdirr miiiim�u�� ici.tciblr iiicomr o/ iiidirid��cd.s cuid coi/�oizdioics. /iiirrr.si oii d�r ?00G .Srrir.s /3oiirls mcrt' br .s��bjrci io crriciiii_/i�drizd ici.tr.s
imposrd oii coi��oizdioiis, iiu•h�diii�; d�r coi��oizdr ed�rnicdirr miiiinnu�� �ci.� oii ci por�ioii o/ d�cd iii�rrrs�. bi d�r./iu•d�rr opiiiioii o/73oiid ('o�uisrl. iii�rrrs� oii
du� ?00G .Srrir.s /3oiirls i.s cttrmpi_/i•om prnsoiicd iiicomr ici.tr.s impo.srd bt' du� .Sicdr o/ ('cdi/imiici. .Srr .. I.�� M.� I n.its" lu�rriii.
$ *
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION REFUNDING
REVENUE BONDS
(PROJECT AREA NO. 4)
2006 SERIES A
$ *
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION REVENUE CAPITAL
APPRECIATION BONDS
(PROJECT AREA NO. 4)
2006 SERIES B
Da�tcd: Da�tc of Dcli� cn
Dur. October 1, a�s sho�� n on thc insidc co� cr pa�;;c
l7�i.s corrr pci�;r coiiiciiics crriciiii iii/inmcdioii_/in• q��ick rr/i�rriicr oidt'. /i i.s not ci .s�u�u��cu1' o/ d�i.s i.s.s�u�. /in'r.sions cu•r cidri.srd io rrcid d�r riiiiix�
O/%icicd .S�cdrmrii� �o ob�ciiii iii/bimcdioii rssrii�icd �o d�r mcdciii�; o/cui iii/bin�rd iimrsm�rii� dreisioii.
Ilic Palm I k�rt I inancing nuthorih I thc "I inancing /�uthorit� ";I is issuing `� * principal amowit ot� Palm I k�rt I inancing nuthorit�
I as /�llocation Retimcling Rc� enuc 13oncls I Project /�rca No. -I;I 2OOG Scrics /� I thc "Cwrent Intcrest 13oncls"1 ancl `� * principal �unowit ot� Palin
Ik�rt Financing nuthorih Ias nllocation Rc�enuc Capital /�ppreciation 13oncls IProject /�rca No. -1;12OOG Scrics 13 Ithc "2OOG 13 Capital /�ppreciation
13oncls" ancl togethcr ��ith thc Cturcnt Intcrest 13oncls. thc "2c)c)G Scrics 13oncls"1 to makc t��o loans. onc ��ith res}�ct to cach �rics ot�2c)c)G Scrics 13oncls
icoll�cti��l�. th� "2c�c�G Lov�s..) to th� Palm Ih�scrt Recic�elopment �lgenc� ithc "Recic�elc�pment �lgenc�"J pw-stkmt to thc tenns ot�a Project nrca No. -I
Loan /�grcement cl�itecl as ot�.luh I. 2c)c)G Ithc "2c)c)G Loan /�grcement";I b� ancl among thc Financing /�uthorih. thc Recic�clopment /�genc� ancl \Nclls
Fargo 13ank. National /�ssociation Ithc "Inistcc";I. Ilic Recic�clopment /�genc� ��ill apph thc proccecls ot� Qic 2OOG Loans to: li;l retinancc ccriain
outst<<„a�„�_ <>r>>�_����<»,� <>ra,� ii�a�� ��<>��,,,�„� n�_�„�, ��,a�r a loan agrcement cl�itecl as ot� March I. 1998 I thc "1'rior Loan ngrcement";I: I ii;l tinancc � arious
recic�clopment acti� itics ��ithin thc Palm Ik�ri Recic�clopment /�genc� Project /�rca No. -I I thc "Project /�rca";Y. ancl I iiil pa) thc costs associatecl ��ith thc
issikmcc ot�thc 2OOG Scrics 13oncls. Scc "1'i..�� c�� Fi�.��c��.... I hc 2OOG Scrics 13oncls arc issuccl pursuant to an Inclenturc ot� l rust. clatecl as ot�.luh I.
2culG ithc "2culG Inclentw-c..l. b� ancl l�t��cen thc Financine nuthorih ancl thc I nistcc.
Ilic 2e)e)G Scrics 13oncls ��ill l� issuccl in book-entn timn. initialh registcrecl in thc namc ot�Cecic c�, Co. as nomincc ot�thc Ikpositon Inist
Compam. Nc�� York. Nc�� York j••U I C..;I. ��ho ��ill act as �ctuitics cic}x>siton �irr thc 2OOG Scrics 13oncls. Incli� icltkil pttrcha�s o��thc 2OOG Scrics 13oncls
��ill l� in book-entn �<»,,, <»,�,. <<„a �„ a�„<»„�„����<»,� <>e i>> ��.c�c�c� <>r am integral multiplc thcrcot���ith res}�ct to thc Cwrent Intcrest 13oncls ancl lii;l
`��.e)e)e) Matwih nmowit las cletinecl hcrcinl or am integral multiplc thcrcot���ith res}�ct to thc Capital nppreci�dion 13oncls. Nw-cha�rs ��ill not recci�c
ph�sical ccriiticates reprc�nting thcir intcrests in thc 2OOG Scrics 13oncls. 1'rincipal ot: intcrest on ancl reclemption premiwn. it�am. on thc Cwrent Intcrest
13oncls ancl nccretecl Valuc ot�thc Capital nppreciation 13oncls ��ill l� paicl b� thc I nistcc clirecth to U"I C. ��hich in twii is obligatecl to remit such principal.
intcrest. /�ccretecl Valuc ancl reclemption premiwn. it�am. to U"I C Pariicip�mts tirr sub�yucnt clisbw-�ment to thc 13eneticial O��iicrs ot�thc applicablc 2e)e)G
Scricsl3oncls. Scenrri.�ni�G—..UIC.��niiu.l3cx��;—I:�iizti(hi.tiStisn.�i...
Intcrest on thc Cwrent Intcrest 13oncls ��ill l� pa�ablc on cach /�pril I ancl Octol�r I ot�cach �car. conmicncing Octol�r I. 2e)e)G at thc res}�cti�c
rates �t timh on thc insicic co�cr pagc. ancl principal ot�thc Cwrent Intcrest 13oncls is pa�ablc on /�pril I ot�cach �car. commencing Octol�r I. 2e) in thc
amowits �t timh on thc insicic co�cr pagc. I hc Capital nppreciation 13oncls ��ill accretc in �aluc irom thc Uatc ot� Ikli�en at thc res}�cti�c nccretecl
Valuc Ratc �t timh on thc insicic co�cr pagc. compowulecl �miann�kill�. on npril I ancl (ktol�r I ot�cach �car. commencing Octol�r I. 2e)e)G to thc
res}�cti�c matwih cl�ites thcrcoC No pa)ments ��ill l� macic on thc Capital nppreciation 13oncls prior to thc res}�cti�c matwih cl�itc thcrcoC
Thc Currcnt Intcrest &mds a�re subjcct to optiona�l amd sinkin;; a�ccount rcdcmption a�s dcscribcd hcrcin. Scr "TttN:200G SN:tttNs &��ns—
Current Interest &mds—Kedenrption 1'�oizsions." The Ca�pita�l Apprecia�tion Bonds a�re subject to optiona�l redemption a�s described herein. Sc�c
"—Ca�pita�l Apprecia�tion Bonds—Redenrption 1'�oizsions.,,
For a cliscussion of�somc of�thc risks associateci ��ith thc pw-chau� ol�thc 2c)c)G Scrics 13c>ncis. �c "Ct.tz t.�n Rtst;s tc,13c,�rnun.n�.r,s.
Ilic 2e)e)G Scrics 13oncls are s}�cial obligations ot�thc Financing /�uthorih pa�ablc irom ancl �cw-ecl b� Rc�enucs las cletinecl hcrcin;l. consisting
primarih ot�amowits pa�ablc b� thc Recic�clopment /�genc� wulcr thc 2e)e)G Loan /�grcemenL I hc 2e)e)G Loan /�grcement is �cw-ecl b� ancl pa�ablc irom
tas increment rc�enucs cicri�ecl irom pro}�ri� in thc Project /�rca ancl allocatecl to thc Recic�clopment /�genc� ptu-sikmt to thc Recic�clopment L<i��. Il�c
Recic�clopment ngenc� ma�. pw-sikmt to thc tenns ot�thc 2e)e)G Loan ngrcement ancl thc 2e)e)G Inclentw-c �cw-c ��aa���<»,��� <>r>>�_����<»,� <», a parih ��ith thc
2OOG Loans. No timcls or pro}�riics ot�thc Recic�clopment /�genc�. othcr than thc Ias Rc�enucs �cw-c pa�ment ot�thc 2OOG Loan /�grcemenL Scc
..��:c�� �ziiti .��i�Scx �zc��.sc�� P.�ti�i�.�i �c��z i�u.13c��i�s—Parih IkbtanclSuYxrrclinatclkbt...
Ilic scheclulecl pa�ment ot� thc principal ancl nccretecl Valuc ot� ancl intcrest on thc 2c)c)G Scrics 13oncls ��hen cluc ��ill hc g�kirantcecl wulcr a
tinancial g�kiranh insw-ancc polic� to l� issuccl concwrenth ��ith thc cicli�en ot�thc 2c)c)G Scrics 13oncls b�
�Insttrcr Logo�
I�I II: 2c)c)G SI:RII:S 13ONUS nRl: NO"I n UI:131 OF I�I II: CI IY OF PnI,M UI:SI:R I I I I II:'•CI I Y..I. I�I II: S"I n l�l: OF CnI,IFORNIn I I�I II:
..�Inll:..l OR nNY OF IIS POI,II ICnI, SUI3UIVISIONS. O"IIII:R I�IInN I�III: FINnNCING nU"IIIORIIY. nNU NONI: OF IIII: CIIY. I�III:
Slnll: OR nNY OF IIS POI,II1Cnl, SUI3UIVISIONS. O"IIII:R I�IInN I�III: FINnNCING nU"I�IIORIIY. IS I,Inl31,1: I�III:RI:FOR. I�III: 2c)c)G
LOnNS nRl: NO"I n UI:131 O1 I�I II: I INnNCING nU"I I IORI IY OR I I II: S"I n l l: OR nNY O1 I I S POI,I I1Cnl, SUI3UIVISIONS. nNU NONI: O1
I�III: I INnNCING nU"I�IIORIIY OR I�III: S"Inl�l: OR nNY O1 I�IS POI,II1Cnl, SUI3UIVISIONS. IS I,Inl31,1: IIII:RI:1OR. NONI: O1 IIII:
MI:M131:RS OF I I II: FINnNCING nU"I I IORI I Y. I�I II: CI IY COUNCII,. I I II: RI:UI:VI:LOPMI:N�I nGI:NCY OR nNY PI:RSONS I:XI:CU"I ING
I�I II: 2c)c)G SI:RII:S 13ONUS OR I I II: 2c)c)G LOnN nGRI:I:MI:N l nRl: I,Inl31,1: PI:RSONnI,I,Y \NI I I I RI:SPI:C I IO "I�I II: 2c)c)G SI:RII:S 13ONUS
OR I�I II: 2c)c)G LOnNS. I�I II: O131,IGn 11ONS OF I I II: RI:UI:VI:LOPMI:N I nGI:NCY \NI I�I I RI:SPI:C I IO "I I II: 2c)c)G LOnNS nRl: PnYnl3l,l:
SOI,I:I,Y FROM I�III: InX RI:VI:NUI:S InS UI:FINI:U III:RI:INI nS SI:I FORIII IN IIII: 2c)c)G LOnN nGRI:I:MI:N�I. NI:I�IIII:R IIII:
FINnNCING nU"I�I IORI I Y NOR I I II: RI:UI:VI:LOPMI:N I nGI:NCY I InS "I nXING PO\NI:R.
Ilic 2c)c)G Scrics 13oncls arc ot�tcrecl ��hen. as ancl it�issuccl b� thc Financing /�uthorih ancl recci�ecl b� thc l lncicr��ritcr. subject to thc appro�al as
to thcir legalih b� Richarcls. Watson �, Gcrshon. n Protessional Co��oration Los nngcles. Caliti>mia. 13onc1 Coun�L Ccrtain legal mattcrs ��ill hc pas�cl
u}xm tirr thc Financing /�uthorih b� thc Cih /�ttomc� ancl b� Lotton c�, .Icnnings. San Francisco. Caliti>mia. Uisclosw-c Cowi�l. It is anticipatecl that thc
2OOG Scrics 13oncls in Yx>ok-entn onh timn ��ill l� a�ailablc tirr cicli�en throueh thc tiicilitics ot�U I C in Nc�� York. Nc�� York on or about .luh . 2OOG.
WEDBUSH MORGAN SECURITIES INC.
Datcd: . 2006
* Prcliminan. subject to changc.
OG013 pu�-2
$ *
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION REFUNDING
REVENUE BONDS
(PROJECT AREA NO. 4)
2006 SERIES A
$ *
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION REVENUE CAPITAL
APPRECIATION BONDS
(PROJECT AREA NO. 4)
2006 SERIES B
Matw•ity Schedule
$
Maturit� Pricc
Datc Principal Intcrest or
(Octobcr I ) Amount* Ratc Yicld
`f
`f
`f
Maturit� Datc
(Octobcr I )
* Cw•rent Interest Bonds, 2006 Series A
CUSIP Maturit� Pricc CUSIP
No.+ Datc Principal Intcrest or No.+
(696617) (Octobcr I ) Amount* Ratc Yicld (696617)
*- `%� Tcrm Bonds duc Octobcr I. 20 - Pricc: `%�-CUSIP No.+ 696617
*- `%� Tcrm Bonds duc Octobcr I. 20 - Pricc: `%�-CUSIP No.+ 696617
*- `%� Tcrm Bonds duc Octobcr I. 20 - Pricc: `%�-CUSIP No.+ 696617
$ * Capital Appreciation Bonds, 2006 Series B
Issuc Yicld to Accrctcd Valuc CUSIP No.+
Amount* Maturit� at Maturit� (696617)
+ Cop�right 2ciclG. nmcrican 13ankcrs nssociation. Cl1SIP cl�ita hcrcin is pro�iclecl b� Stancl�ircl ancl Poor's. Cl1SIP Scr�icc 13w-cau. a
cli�ision ot� lhc McGra��-I lill Companics. Inc. Iliis cl�ita is not intenclecl to crcatc a cl�itaba� ancl cicws not �r�c in am ��a� as a
substitutc tirr thc CUSIP Scr�icc. CUSII' numl�rs arc pro�iclecl tirr con�enicncc ot� retcrencc onh. Nonc ot� thc Financing
nuthorih. thc Recic�clopment ngenc� or thc Unclen�ritcr takc am res}x>nsibilih ti>r thc accw-ac� ot�such CUSII' numl�rs. Ilic
CUSII' numl�r tirr a s}�citic matwih is subject to l�ing changecl attcr thc issikmcc ot�thc 2c)c)G Scrics 13oncls as a result ot��arious
sub�yucnt actions inclucling. but not limitecl to. a retiincling in ��holc or in part ot�such matwih.
* Prcliminan. subject to changc.
o�,01 � po�-�
No dcalcr. brokcr. salcsperson or othcr person has bccn authorizcd to gi� c am information or to
makc am rcprescntations in conncction «ith thc offcr or salc of thc 2006 Scrics Bonds b� thc Financing
Authorit�. thc Rcdc� clopmcnt Agcnc� or thc Undcn� ritcr. othcr than thosc containcd in this Official
Statcmcnt. and. if gi� cn or madc. such othcr information or rcprescntations must not bc rclicd upon as ha� ing
bccn authorizcd b� thc Financing Authorit� and thc Rcdc� clopmcnt Agcnc� . T7�is Official Statcmcnt docs
not constitutc an offcr to scll or thc solicitation of an offcr to bu�. nor shall thcrc bc am salc of thc 2006
Scrics Bonds b� am person in am jurisdiction in «hich it is unla«fiil for such person to makc such an offcr.
solicitation or salc.
T7�c information sct forth h�r�in has b��n fiirnishcd b� th� Financing Authorit�. th� R�d��clopm�nt
Agcnc� and thc Cit� and includcs information «hich has bccn obtaincd from othcr sourccs «hich arc
bclic� cd to bc rcliablc. T7�c information and c�pressions of opinion containcd hcrcin are subjcct to changc
«ithout noticc and ncithcr thc dcli� cr� of this Official Statcmcnt nor am salc madc hcrcundcr shall undcr am
circumstanccs crc;atc am implication that thcrc has bccn no changc in thc affairs of thc Financing Authorit�
and thc Rcdc� clopmcnt Agcnc� sincc thc datc hcrcof.
Am statcmcnt madc in this Official Statcmcnt in� ol� ing am forccast or mattcr of cstimatcs or
opinion. «hcthcr or not c�pressl� so statcd. is intcndcd solcl� as such and not as a rcprescntation of fact.
Ccrtain statcmcnts includcd or incorporatcd b� rcfcrcncc in this Official Statcmcnt constitutc "for«ard-
looking statcmcnts�� «ithin thc mcaning of thc Unitcd Statcs Pri� atc Sccuritics Litigation Rcform Act of
199�. Scction 2 I E of thc Unitcd Statcs Sccuritics E�changc Act of 19 ��. as amcndcd. and Scction 27A of
thc Unitcd Statcs Sccuritics Act of 19>;. as amcndcd (thc "Sccuritics Act��). Such statcmcnts arc gcncrall�
idcntifiablc b� thc tcrminolog� uscd. such as "plan.�� "c�pcct.�� "cstimatc.�� "budgct�� or othcr similar «ords.
Such for«ard-looking statcmcnts includc. but arc not limitcd to. ccrtain statcmcnts containcd in thc
information undcr thc caption "Ti n: Piu�.ii:c r Aiii:n" and containcd in APPI:NUIX A—"RI:Pc�R I c�F I111:
FISCnI, CONSU1,"I nN l .��
Thc achic�cmcnt of ccrtain results or othcr c�pcctations containcd in such fon�ard-looking
statcmcnts in� ol� cs kno« n and unkno« n risks. unccrtaintics and othcr factors «hich ma� causc actual
results. performancc or achic� cmcnts dcscribcd to bc matcriall� diffcrcnt from am firturc results.
performancc or achic�cmcnts c�presscd or implicd b� such fon�ard-looking statcmcnts. Thc Financing
Authorit� and thc Rcdc� clopmcnt Agcnc� docs not plan to issuc am updatcs or rc� isions to thosc
for«ard-looking statcmcnts if or «hcn thcir c�pcctations. or c� cnts. conditions or circumstanccs on «hich
such statcmcnts arc bascd occur.
T7�c Undcn� ritcr has pro� idcd thc follo« ing scntcncc for inclusion in this Official Statcmcnt: T7�c
Undcn� ritcr has rc� ic�� cd thc information in this Official Stntcmcnt in accordancc i� ith. and as pnrt of. its
responsibilitics to im cstors undcr thc fcdcral sccuritics la«s as applicd to thc facts and circumstanccs of this
tra��saction. but thc Undcn� ritcr docs not guara��t� thc accurac� or complctcncss of such information.
T7�c 2006 Scrics Bonds ha�c not bccn rcgistcrcd undcr thc Sccuritics Act of 19>;. as amcndcd. in
rcliancc upon an c�cmption from thc rcgistration rcquircmcnts containcd in such Act. Thc 2006 Scrics
Bonds ha� c not bccn rcgistcrcd or qualificd undcr thc sccuritics la« s of am statc.
In conncction «ith thc offcring of thc 2006 Scrics Bonds. thc Undcn� ritcr ma� o� crallot or cffcct
transactions that stabilizc or maintain thc markct pricc of thc 2006 Scrics Bonds at a Ic� cl abo� c that «hich
might othcn� isc prc� ail in thc opcn markct. Such stabilizing. if commcnccd. ma� bc discontinucd at am
t1111C. TI1C Undcn� ritcr mati offcr and scll thc 2006 Scrics Bonds to ccrtnin dcalcrs and othcrs at priccs lo« cr
than thc public offcring priccs sct forth on thc insidc co� cr pagc hcrcof and said public offcring priccs ma� bc
changcd from timc to timc b� thc Undcn� ritcr.
o�,o � � r�,�-�
PALM DESERT FINANCING AUTHORITY
PALM DESERT REDEVELOPMENT AGENCY
and
CITY OF PALM DESERT
Riverside County, California
FINANCING AUTHORITY COMMISSION
Jim Fcrguson. l'i�e.sic%nt
Richard S. Kcll� . G �ce l'i�e.sic%nt
Jc;an M. Bcnson. ('ummi.,�.,�iunei�
Buford A. Critcs. ('ummi.s.siunei�
Robcrt A. SpicgcL ('ummi.s.siunei�
REDEVELOPMENT AGENCY BOARD AND CITY COUNCIL
Jim Fcrguson. ('l�aii�man Mm�ui�
Richard S. Kcll� . G �ce ( 7urii�man Mm�ui� l'i�u 7em
Je;an M. Bcnson. Memhei� ('ui�ncilmemhei�
Buford A. Critcs. Memhei� ('ui�ncilmemhei�
Robcrt A. Spicgcl. Memhei� ('ui�ncilmemhei�
FINANCING AUTHORITY, REDEVELOPMENT AGENCY AND CITY STAFF
Carlos L. Ortcga. ('ih� Mana,��ei� l::reci�tive l)ii�ec7ui�
Justin McCarth�. A.,�.,�i.,�ranr ('ih� Mana,��ei� Rec%velupment
Shcila R. Gilligan. A.,�.,�i.,�tant ('ih�Mana,��ei� ('ummi�nih�.5'eivice.s
Paul S. Gibson. l'!YlCfYlCL' l)ii�ectui� 7i�ea.siu�ei�
Da� id L. Yrigo� cn. l)ii�ec7ui� uf'Rec%velupment in Hui�.sin,��
Da� id J. En� in. ('ih� Auui�ne��
Rachcllc Klasscn. ('ih� (7ei�k
Arla Scott..S'eniui• l'!YlCfYlClCf�AYlCf�l�.st
Vcronica Tapia. Rec%velupment Accui�ntant
SPECIAL SERVICES
Richards. Watson c�. Gcrshon
Los Anglcs. California
�(1/�Ll � �(111Yl.1'L'�
Wclls Fargo Bank. National Association
Los Angcics. California
7rr�.stee ancl 1::,�ci�uu• A,��ent
Roscno« Spc� acck Group Inc.
Santa Ana. California
I�i.scrrl ('un.sirltant
Lofton c�. Jcnnings
San Francisco. California
l)i.sclu.stu'e ('utin.sel
Dcl Rio Ad� isors. LLC
Modcsto. California
l�lYlCfYlClCf� AL%Vl.1'Ul'
G'Ll7flCCf!!Ul9 A��L'Y!1
OG013 pu�-3
TABLE OF CONTENTS
INTRODUCTION ...............................
Gcncral: Authorit� for Issuancc.....
Purposc .........................................
ThcCit� ........................................
Thc Financing Authorit� ...............
Thc Rcdc� clopmcnt Agcnc� ..........
Thc Projcct Arca ...........................
Sccurit� for thc 2006 Scrics Bonds
Bond Insurancc .............................
Rcport of thc Fiscal Consultant......
Ccrtain Risks to Bondholdcrs ........
Continuing Disclosurc ...................
Additional I nformation ..................
PLAN OF FINANCE ............
Rcfiinding of Prior Bonds
Rcdc� clopmcnt Projccts ..
ESTIMATED SOURCES AND USES OF
FUNDS............................................
PAG E
;
i
6
F
THE 2006 SERIES BONDS ..................................7
Tcrms Applicablc to Both Scrics of 2006
Scrics Bonds .............................................7
Currcnt Intcrest Bonds .....................................7
Capital Apprcciation Bonds .............................9
Rcdcmption Proccdures .................................10
DEBT SERVICE SCHEDULE
SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS....
Rc�cnucs and Loan Agrccmcnts.....
Ta� Rc� cnucs and Subordinatc Ta�
Rc� cnucs ..................................
Ta� Allocation Financing ...............
Rcdc� clopmcnt Plzn Limitations ....
SB I 206 .........................................
Allocation of Ta�cs ........................
Rcscr� c Fund .................................
Parit� Dcbt and Subordinatc Dcbt...
In� cstmcnt of Funds .......................
BOND INSURANCE.
LIMITATIONS ON TAX REVENUES
Articic XIII A of Statc Constitution
12
.. l �4
.. I �4
I �4
I�
I�
17
17
ix
19
20
20
20
20
PAG E
Articic XII I B of thc Statc Constitution:
Appropriation Limitations .......................22
Articics XIII C and XIII D of thc Statc
Constitution ............................................ 2 �
Ta�ation of Unitar� Propert� ........................ 2�
Propert� Ta� Collcction Proccdures .............. 2�
Propert� Ta� Administrati� c Costs ............... 2�4
Housing Sct-Asidc ........................................ 2�
Ccrtification of Rcdc� clopmcnt Agcnc�
Indcbtcdncss ........................................... 2�
Ta� Sharing Agrccmcnts and Pa� mcnts ........ 26
Limitation of Ta� Rc� cnucs from
Ccrtain Incrcascd Ta� Ratcs .................... 27
Ballot Initiati� cs and Lcgislati� c Mattcrs ...... 27
THE FINANCING AUTHORITY ...................... 28
THE REDEVELOPMENT AGENCY ................. 28
Authorit�. Mcmbcrs and Pcrsonncl ............... 28
Po« crs .......................................................... 29
Rcdc� clopmcnt Agcnc� Financcs ................. �0
THE PROJECT AREA ....................................... � I
Gcncral......................................................... ; I
Rcdc� clopmcnt Plan Limits .......................... � I
Controls. Land Usc and Building
Rcstrictions ............................................. �2
Summar� of Dc� clopmcnt ............................ > ;
Principal Ta�pa� crs ...................................... ;;
Ta� Ratcs ..................................................... ;�4
Historical. Currcnt and Projcctcd Ta�
Rct cnucs ................................................ ; i
Dcbt Scr� icc Co� cragc Projcctions ............... �8
Asscssmcnt Appcals ..................................... �9
Ta� Lc� ics. Collcctions and
Dclinqucncics ......................................... �40
CERTAIN RISKS TO BONDHOLDERS ........... �41
Accurac� of Assumptions ............................. �41
Rcduction of Ta� Rc� cnucs .......................... �4 I
Rcductions in Unitar� Valucs ........................ �42
Appcals to Asscsscd Valucs .......................... �42
Rcduction in Inflation Ratc ...........................�42
Bankruptc� and Forcclosurc .......................... �4 �
Dclinqucncics ............................................... �4 �
Statc Budgct ................................................. �4;
Natural Disastcrs .......................................... �4�
Hazardous Substanccs ................................... �46
o�,o � � r�,�-�
iii
Loss of Ta� E�cmption ........................
Risk of Ta� Audit .................................
Sccondan Markct ................................
TAX MATTERS ........................................
APPROVAL OF LEGAL PROCEEDINGS
ABSENCE OF MATERIAL LITIGATION
Gcncral................................................
Othcr Mattcrs .......................................
FINANCIAL ADVISOR ............................
�46
�46
�47
�47
�tx
�49
�49
�49
�49
CONTINUING DISCLOSURE ................
VERIFICATION OF MATHEMATICAL
COMPUTATIONS ..........................
UNDERWRITING ..................................
Currcnt Intcrest Bonds .......................
Capital Apprcciation Bonds ...............
RATINGS...............................................
FINANCIAL STATEMENTS ..................
MISCELLANEOUS ................................
Cit� Location Map .............................................................................................................................. � i
ProjcctArca Map ............................................................................................................................. � ii
TablcI- Prior Bonds ........................................................................................................................... 6
Tablc 2- Summar� of Rcdc� clopmcnt Plan Limit Amcndmcnts .......................................................... �2
Tablc;- Land Uses b� Catcgon ........................................................................................................ ;2
Tablc�4 - Principal Ta�pa� crs ............................................................................................................. ;�4
Tablc �- Brcakdo« n of Ta� Ratc ....................................................................................................... ; i
Tablc 6- Historical and Currcnt Rc� cnucs .......................................................................................... �6
Tablc 7- Projcction of Incrcmcntal Ta�ablc Valuc and Ta� Incrcmcnt Rc�cnuc ................................... �7
Tablc 8- Dcbt Scr� icc Co� cragc Projcctions ....................................................................................... �8
Tablc 9 - Asscssmcnt Appc;als ............................................................................................................ ;9
Tablc 10 - Outstanding Appcals b� thc Top Tcn Ta�pa�crs ................................................................. �40
APPENDIX A- REPORT OF THE FISCAL CONSULTANT ...................................................... A-I
APPENDIX B- REDEVELOPMENT AGENCY AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE �0. 200� ............................................. B-I
APPENDIX C- GENERAL INFORMATION CONCERNING THE CITY OF PALM DESERT .. C-I
APPENDIX D- SUMMARY OF CERTAIN PROVISIONS OF THE 2006 INDENTURE ............ D-I
APPENDIX E- PROPOSED FORM OF BOND COUNSEL OPINION .........................................E-I
APPENDIX F- FORM OF CONTINUING DISCLOSURE AGREEMENT ................................... F-I
APPENDIX G- DTC AND THE BOOK-ENTRY ONLY SYSTEM .............................................. G-I
APPENDIX H— SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY ........................ H-I
APPENDIX I— SPECIMEN RESERVE FUND SURETY POLICY .............................................. H-I
APPENDIX J— TABLE OF ACCRETED VALUES .......................................................................I-I
�49
�0
�0
�0
�0
�I
�I
;2
o�,o � � r�,�-�
i�
City Location Map
o�,o � � r�,�-�
Project Area Map
o�,o � � r�,�-�
�i
$ * $ *
PALM DESERT FINANCING AUTHORITY PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION REFUNDING TAX ALLOCATION REVENUE CAPITAL
REVENUE BONDS APPRECIATION BONDS
(PROJECT AREA NO. 4) (PROJECT AREA NO. 4)
2006 SERIES A 2006 SERIES B
INTRODUCTION
I�9l.1' !Yl1PUL%1lC!!U/9 CU/91CflYl.1' U/9/1� a hi�ief�.siunnuo�r uf'cei7ain uf't/�e tei�m.s uf't/�e ?00< .S'ei�ie.s Runcls
hein,�� uffei'ecL ancl a fiill i'evietir .sl�ut�lcl he mac% uf'tl�e entii'e Of'ficial .S'tatement incltaltn,�� tl�e cuvei' pa,��e. tl�e
tah/e uf'cuntent.s anc/ t/�e appenc/ice.s fui' a mui'e cump/ete c%.sci'iptiun uf't/�e tei'nzs uf't/�e ?00< .S'ei'ie.s Runcls.
A�� .1'1Cf1L'/77L'Yl1.1' CU/91CflYlL'L% !Y! 1�1l.1' !Yl1PUL%11C1lU/9 CfPL' L�1lCf�l f!L'L% !Y! 1�1L'!P L'Y!1lPL'h' %71' PL'fL'PL'YlCL' lU 1�1L' L'Y!1lPL' i)f f!ClCf�
.S�1Cf1L'/77L'Yl1. RL'fL'PL'YlCL'.1' lU. CfYlL% .1'1l/77/77CO7L'.1' Uf �)/'UVl.17UYl.1' Uf CfYl1' U1�1L'/' L%UCtI/77L'Yl1.1' PL'fC/7'L'L% lU �1L'PL'!Y! L%U /9U1
pt�ipui7 tu he cumplete ancl .st�c% i'efei'ence.s ai'e yt�alifiecl in tl�eii' entii'eh� h�� i�efei�ence tu tl�e cumplete
�)l'UVl.1YUli.1' Uf .1'11C�1 L%UCtIl77L'1i1.1'. . .
General; Authority for Issuance
T7�c purposc of this Official Statcmcnt. including thc co� cr pagc and thc appcndiccs hcrcto. is to
fiirnish information in conncction «ith thc salc and dcli�cn b� thc Palm Dcscrt Financing Authorit� (thc
"Financing Authorit� ��) of `f * aggrcgatc principal amount of Palm Dcscrt Financing Authorit� Ta�
Allocation Bonds Rcfi�nding Rc� cnuc Bonds (Projcct Arca No. �4) 2006 Scrics A(thc "Currcnt Intcrest
Bonds��) and `f * principal amount of Palm Dcscrt Financing Authorit� Ta� Allocation Rc� cnuc
Capital Apprcciation Bonds (Projcct Arc;a No. �4) 2O06 Scrics B(thc "Capital Apprcciation Bonds" and
togcthcr «ith thc Currcnt Intcrest Bonds. thc "2006 Scrics Bonds��).
T7�c 2006 Scrics Bonds arc issucd pursuant to thc pro� isions of thc Mark-Roos Local Bond Pooling
Act of 198�. consisting of Articic �4 of Chaptcr � of Di� ision 7 of Titic I(commcncing «ith Scction 6�8�4) of
thc California Go�crnmcnt Codc (thc "Bond La«��). T7�c 2006 Scrics Bonds «ill bc issucd pursuant to an
Indcnturc of Tnist. datcd as of Jul� I. 2006 (thc "2006 Indcnturc��). b� and bct«ccn thc Financing Authorit�
a��d Wclls Fargo Bank. National Association (thc "Tnistcc��).
Pw•pose
Thc procccds of thc 2006 Scrics Bonds «ill bc uscd b� thc Financing Authorit� to makc t«o
loans. onc «ith respcct to cach scrics of 2006 Scrics Bonds (thc "2006 Scrics A Loan�� and thc "2006
Scrics B Loan�� and collccti� cl�. thc "2006 Loans��) to Palm Dcscrt Rcdc� clopmcnt Agcnc� (thc
"Rcdc� clopmcnt Agcnc� ��) pursuant to a Projcct Arca No. �4 Loan Agrccmcnt madc and cntcrcd into as of
Jul� I. 200 � b� and among thc Financing Authorit�. thc Rcdc� clopmcnt Agcnc� and thc Trustcc (thc
..2006 Loan Agrccmcnt��).
T7�c Rcdc� clopmcnt Agcnc� «ill appl� thc procccds of thc 2006 Loans to: (i) rcfinancc all
outstanding obligations of thc Rcdc� clopmcnt Agcnc� undcr a loan agrccmcnt datcd as of March I. I 998 (thc
"Prior Loan Agrccmcnt��): (ii) financc � arious rcdc� clopmcnt acti� itics «ithin thc Palm Dcscrt
Rcdc� clopmcnt Agcnc� Projcct Arca No. �4 (thc "Projcct Arc;a��): and (iii) pa� thc costs associatcd «ith thc
issuanCc of thc 2006 Scrics Bonds. Scc "P1.�1N OF FIN�INC1:.�� "ES"17M� I�I:U SOURCI:S �NU UsI:S OF FUNUS..
and "TIII: PRc�.il:�`I ARI:n—Summar� of Dc�clopmcnt.�� T7�c 2006 Scrics Bonds «ill maturc in thc �cars and
amounts and bcar intcrest at thc ratcs sct forth on thc insidc co� cr pagc.
* Prcliminan. subject to changc.
o�,01 � po�-�
The City
T7�c Cit� of Palm Dcscrt (thc "Cit� ��) is locatcd in thc Coachclla Vallc� and is appro�imatcl� mid-
«a� bct«ccn thc citics of Indio and Palm Springs. I 17 milcs cast of Los Angcics. I 18 milcs northcast of
San Dicgo and � I� milcs southcast of San Francisco. According to thc Statc Dcpartmcnt of Financc. thc
Cit� population as of Januan I. 2006 «as appro�imatcl� �4�.� �9. The Series 2006 Bonds are not an
obligation of the City. For ccrtain information rcgarding thc Cit�. scc Ai�i�i:Nuix C—"Gi:Ni:iini.
INFORMn llON CONCI:RNING I I II: CI IY OF PnI,M DI:SI:R I.��
The Financing Authority
T7�c Financing Authorit� is a joint c�crcisc of po« crs agcnc� organizcd undcr thc la« s of thc Statc of
California (thc "Statc��) and composcd of thc Cit� and thc Rcdc� clopmcnt Agcnc� . T7�c Financing Authorit�
«as formcd pursuant to a Joint E�crcisc of Po«crs Agrccmcnt. datcd Januar� 26. 1989 b� and bct«ccn thc
Cit� and thc Rcdc� clopmcnt Agcnc� to assist in thc financing of public capital impro� cmcnts. Scc "TI II:
FINnNCING AU"I I IORI"I Y.��
The Redevelopment Agency
T7�c Rcdc� clopmcnt Agcnc� «as acti� atcd b� thc Cit� in 197�4 and is authorizcd to c�crcisc thc
po«crs grantcd b� thc Communit� Rcdc�clopmcnt La« of thc Statc of California (constituting Part I of
Di� ision 2�4 of thc Hcalth and Safct� Codc of thc Statc of California. commcncing «ith Scction >;000) (thc
"Rcdc�clopmcnt La«") and. b� an ordinancc. thc Cit� Council of thc Cit� (thc "Cit� Council") dcclarcd
itsclf to bc thc Rcdc� clopmcnt Agcnc� . Although thc Rcdc� clopmcnt Agcnc� is an cntit� distinct from thc
Cit�. ccrtain Cit� personncl pro� idc staff support for thc Rcdc� clopmcnt Agcnc� . Scc "TI II:
RI:UI:VI:LOPMI:N�I AGI:NCY...
The Project Area
T7�c Projcct Arca «as formall� cstablishcd «ith thc adoption b� thc Cit� Council of a rcdc� clopmcnt
plan for appro�imatcl� 2.260 acres b� Ordinancc No. 72�4. adoptcd on Jul� 19. 199 �. as amcndcd (thc
..Rcdc� clopmcnt Plan��). Scc "Ti u: Piic�.ii:c r Aiii:n."
Secw•ity for the 2006 Series Bonds
�n.rA!locntioi7 Fii7cn7cii7�;. Thc Rcdc� clopmcnt La« pro� idcs a mcans for financing rcdc� clopmcnt
projccts bascd upon an allocation of propert� ta�cs collcctcd «ithin a projcct arc;a. Subjcct to thc morc
dctailcd discussion containcd undcr thc caption "SI:CURI I Y nNU Sc�URCI:s c�F PnYMI:N�i Fc�R I111: Bc�NUs."
thc ta�ablc � aluation of a projcct arc;a last cqualizcd prior to adoption of thc rcdc� clopmcnt plan. or basc roll.
is cstablishcd and. c�ccpt for am period during «hich thc ta�ablc � aluation drops bclo« thc basc � car Ic� cl.
or as ma� othcn� isc bc agrccd to among ta�ing agcncics. thc ta�ing agcncics thcrc;aftcr rccci� c thc ta�cs
produccd b� thc Ic� � of thc thcn currcnt ta� ratc upon thc basc roll. Ta�cs collcctcd upon am incrc;asc in
ta�ablc � aluation o� cr thc basc roll (c�ccpt such portion gcncratcd b� ratcs Ic� icd to pa� � otcr-appro� cd
bondcd indcbtcdncss aftcr Januar� I. 1989 for thc acquisition or impro� cmcnt of rc;al propert� ). gcncrall�
rcfcrrcd to as ta� incrcmcnt rc� cnucs. arc allocatcd to a rcdc� clopmcnt agcnc� and ma� bc plcdgcd b� a
rcdc� clopmcnt agcnc� to thc rcpa� mcnt of am indcbtcdncss incurrcd in financing or rcfinancing a
rcdc�clopmcnt projcct. Scc "SI:CURIIY �NU Sc)URCI:S c)F P�YMI:N�I Fc)R IIII: Bc)NUS.. Rcdc�clopmcnt
agcncics thcroscl� cs ha� c no authorit� to Ic� � propert� ta�cs and must look spccificall� to thc allocation of
ta�cs dcscribcd abo� c.
o�,o � � r�,�-�
Am firturc dccrc;asc in thc ta�ablc �aluation in thc Projcct Arc;a or in thc applicablc ta� ratcs «ill
rcducc thc Ta� Rc� cnucs and Subordinatc Ta� Rc� cnucs allocatcd to thc Rcdc� clopmcnt Agcnc� from thc
Projcct Arc;a and conscqucntl� ma� ha� c an ad� crsc impact on thc abilit� of thc Rcdc� clopmcnt Agcnc� to
pa� dcbt scr� icc on thc 2006 Scrics Bonds. Scc "CI:R I �IN RISKS "I O BONUI IOI,UI:RS ..
Plecl�;e of �nx Revei7ues. Thc 2006 Scrics Bonds arc limitcd obligations of thc Rcdc� clopmcnt
Agcnc� pa�ablc solcl� from and sccurcd solcl� b� a plcdgc of Rc� cnucs consisting primaril� of amounts paid
b� thc Rcdc� clopmcnt Agcnc� to thc Financing Authorit� pursuant to thc 2006 Loan Agrccmcnt and ccrtain
othcr fiinds hcld b� thc Tnistcc pursuant to thc 2006 Indcnturc. Thc Rcdc� clopmcnt Agcnc� is obligatcd
undcr thc 2006 Loan Agrccmcnt madc and cntcrcd into as of No� cmbcr I. 2001 (thc "2001 Loan
Agrccmcnt��) and undcr a Loan Agrccmcnt madc and cntcrcd into as of March I. 1998 (thc "1998 Loan
Agrccmcnt�� and togcthcr «ith thc 2006 Loan Agrccmcnt and thc 2001 Loan Agrccmcnt. thc "Parit� Loan
Agrccmcnts��) to pa� from Ta� Rc� cnucs (dcfincd bclo« ) thc amounts sct forth in thc Parit� Loan
Agrccmcnts. Scc "SI:CURI I Y �NU SOURCI:S OF P�YMI:N I FOR I I II: BONUS .. -
T7�c obligations of thc Rcdc� clopmcnt Agcnc� undcr thc 2006 Loan Agrccmcnt arc on a parit� «ith
thc loan obligations undcr thc 2001 Loan Agrccmcnt and thc 1998 Loan Agrccmcnt (collccti� cl� «ith thc
2006 Parit� Loans. thc "Parit� Loans��). Thc 2001 Loan sccures rcpa� mcnt of `f outstanding
principal amount of Palm Dcscrt Financing Authorit� Ta� Allocation Bonds (Projcct Arc;a No. �4). Scrics
2001 (thc "Scrics 2001 Bonds��). «hich «crc issucd pursuant to an Indcnturc of Tnist datcd as of
No� cmbcr I. 2001 (thc "2001 Indcnturc��) b� and bct« ccn thc Financing Authorit� and thc Tnistcc. T7�c
1998 Loan sccures rcpa� mcnt of `f Outstanding principal amount of Palm Dcscrt Financing
Authorit� Ta� Allocation Bonds (Projcct Arc;a No. �4). Scrics 1998 (thc "Scrics 1998 Bonds��). «hich «crc
issucd pursuant to an Indcnturc ofTnist datcd as of March I. 1998 (thc "1998 Indcnturc��) b� and bct«ccn thc
Financing Authorit� and thc Tnistcc. No fiinds or propertics of thc Rcdc� clopmcnt Agcnc� . othcr than thc
Ta� Rc� cnucs sccurc pa� mcnt obligations undcr thc Parit� Loan Agrccmcnts.
T7�c Rcdc� clopmcnt Agcnc� has plcdgcd for thc rcpa� mcnt of thc 2006 Loans. thc 2001 Loan and
thc I 998 Loan monics allocatcd or paid to thc Rcdc� clopmcnt Agcnc� dcri� cd from: (a) that portion of ta�cs
Ic� icd upon asscssablc propert� «ithin thc Projcct Arca allocatcd to thc Rcdc� clopmcnt Agcnc� pursuant to
thc Rcdc� clopmcnt La« and thc Constitution of thc Statc of California (thc "Statc��). and (b) rcimburscmcnts.
sub� cntions. including pa� mcnts to thc Rcdc� clopmcnt Agcnc� «ith respcct to personal propert� «ithin thc
Projcct Arc;a pursuant to thc Go� crnmcnt Codc of thc Statc. or othcr pa� mcnts madc b� thc Statc «ith respcct
to am propert� ta�cs that «ould othcn� isc bc duc on rcal or personal propert� but for an c�cmption of such
propert� from such ta�cs (collccti� cl� . thc "Ta� Rc� cnucs��). Ta� Rc� cnucs do not includc (�) amounts
pa� ablc to thc Unitcd Statcs undcr Scction 1�48 of thc Codc. (� ) ta�cs allocatcd to thc Rcdc� clopmcnt Agcnc�
that arc rcquircd b� Scctions >;>>�4.2 or >;>>�4.6 of thc Rcdc�clopmcnt La« to bc uscd b� thc
Rcdc� clopmcnt Agcnc� for incrc;asing and impro� ing thc suppl� of lo« and modcratc incomc housing. and
(z) amounts pa�ablc b� thc Rcdc�clopmcnt Agcnc� undcr Scction >;607.� ofthc Rcdc�clopmcnt La« unlcss
such amounts ha� c bccn subordinatcd to thc pa� mcnt of dcbt scr� icc on thc Parit� Bonds (dcfincd bclo« ).
SCC "SI:CURI I Y �NU SOURCI:S OF P�YMI:N�I FOR I�I II: BONUS... ..LIMI I � I1ONS ON T�X RI:VI:NUI:S�� And
..CI:RInIN RISKS"IO BONUIIOI,UI:RS ..
T7�c Projcct Arca has a�� aggrcgatc Basc Ycar Valuc that «as cstablishcd bascd on thc asscsscd �aluc
for 1992-9 � Fiscal Ycar. «hich «as last cqualizcd prior to thc cffccti� c datc of thc ordinancc appro� ing thc
rcdc� clopmcnt plan and thc amcndmcnt thcrcto. Scc "LIMI I n I Ic�Ns c�N TnX RI:vI:Nul:s—Rcdc� clopmcnt
Plan Limitations�� and "Ti u: Piic�.ii:c r Aiii:n—Rcdc� clopmcnt Plan—Ilec%velupmenr l'lan /,imit.s...
Reserve Fui7c1. As additional sccurit� for thc pa� mcnt of thc Parit� Loans b� thc Rcdc� clopmcnt
Agcnc� . a Rcscr� c Fund is cstablishcd undcr thc 1998 Loan Agrccmcnt in an amount cqual to thc Rcscr� c
Rcquircmcnt (as dcfincd hcrcin). Amounts on dcposit in thc Rcscr� c Fund «ill bc uscd for thc pa� mcnt of
dcbt scr� icc on thc Parit� Bonds in thc c� cnt that amounts on dcposit in thc applicablc Intcrest Account or thc
o�,o � � r�,�-�
Principal Account hcld undcr thc respccti� c Indcnturc arc insufficicnt thcrcfor. Scc "SI:�'URI I Y nNU
Sc�UR�'I:s c�F PnYMI:NI Fc�R I111: Bc�NUs—Rcscr�c Fund�� and APPI:NUIX I—"SPI:CIMI:N RI:sI:Rvl: FUNU
SURI � I Y POI,ICY...
On thc datc of issuancc of thc 2006 Scrics Bonds. thc Rcdc� clopmcnt Agcnc� «ill purchasc «ith a
portion of thc procccds from thc salc of thc 2006 Scrics Bonds. �a rescr� c fiind surct� polic� in thc amount of
`f / ri�o rescr�c fiind surct� policics in thc aggrcgatc amount of `f � to bc issucd
b� (thc "Bond Insurcr �) for dcposit into thc Rcscr� c Fund. «hich togcthcr «ith thc �
on dcposit thcrcin «ill cqual thc Rcscr� c Rcquircmcnt of � .
THE 2006 SERIES 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 LOANS ARE NOT A DEBT OF THE FINANCING
AUTHORITY OR THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS. AND NONE OF THE
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 2006 SERIES
BONDS OR THE 2006 LOAN AGREEMENT ARE LIABLE PERSONALLY WITH RESPECT TO THE
2006 SERIES BONDS OR THE 2006 LOANS. THE OBLIGATIONS OF THE REDEVELOPMENT
AGENCY WITH RESPECT TO THE 2006 LOANS ARE PAYABLE SOLELY FROM THE TAX
REVENUES (AS DEFINED HEREIN) AS SET FORTH IN THE 2006 LOAN AGREEMENT. NEITHER
THE FINANCING AUTHORITY NOR THE REDEVELOPMENT AGENCY HAS TAXING POWER.
Bondlnsurance
Pa� mcnt of thc principal and intcrest on thc 2006 Scrics Bonds «hcn duc «ill bc insurcd b� a
Financial Guarant� Insurancc Polic� (thc "Insurancc Polic� ��) to bc issucd simultancousl� «ith thc c�ccution
a,�d dcli� cn of thc 2006 Scrics Bonds b� thc Bond Insurcr. Scc "Bc)NU INSUR�NCI:�� and APPI:NUIX H-
"SPI:CIMI:N FINnNCInI, GUnRnN�I Y INSURnNCI: POI,ICY.��
Report of the Fiscal Consultant
Includcd as Appcndi� A to this Official Statcmcnt is a rcport (thc "Rcport of thc Fiscal Consultant��)
prcparcd b� Roscno« Spc� acck Group Inc. (thc "Fiscal Consultant��) «hich. among othcr things. anal� zcs thc
Ta� Rc� cnucs gcncratcd from ta�ablc propert� «ithin thc Projcct Arc;a and plcdgcd to thc rcpa� mcnt of thc
Bonds. Thc findings �nd projcctions in thc Rcport of thc Fiscal Consultnnt are subjcct to a nwnbcr of
assumptions that should bc rc� ic« cd and considcrcd b� prospccti� c im cstors. No assuranccs can bc gi� cn
that thc projcctions and c�pcctations discusscd in thc Rcport of thc Fiscal Consultant «ill bc achic� cd.
Actual results ma� diffcr matcriall� from thc projcctions dcscribcd thcrcin. Scc APPI:NUIX A—"RI:Pc�I�i c�l
n u: Fiscni. Cc�Nsui, rnN�r."
Certain Risks to Bondholders
Im cstmcnt in thc 2006 Scrics Bonds im ol� cs risk. For a discussion of ccrtain considcrations
rcic� ant to an im cstmcnt in thc 2006 Scrics Bonds. scc "CI:R I nIN RISKS I c) Bc)NUI Ic)I,UI:RS ..
o�,o l � p�,�-�
�4
Continuing Disclosure
T7�c Rcdc� clopmcnt Agcnc� has agrccd to pro� idc. or causc to bc pro� idcd. to cach nationall�
rccognizcd municipal sccuritics information rcpositor� or thc Municipal Sccuritics Rulcmaking Board and
am public or pri�atc rcpositor� or cntit� dcsignatcd b� thc Statc as a statc rcpositor� for purposcs of Rulc
I�c2-12(b)(�) adoptcd b� thc Sccuritics and E�changc Commission ccrtain annual financial information and
operating data and. in a timcl� manncr. noticc of ccrtain matcrial c� cnts. Thcsc co� cnants ha� c bccn madc in
ordcr to assist thc Undcn� ritcr in compl� ing «ith thc Sccuritics and E�changc Commission Rulc
I�C2-12(b)(�). SCC "CON I INUING DISCLOSURI:�� And APPI:NUIX F-"FORM OF CON�I INUING DISCLOSURI:
Ac�RI:I:MI:N i�� for a dcscription of thc spccific naturc of thc annual rcport and noticcs of matcrial c� cnts and a
summar� dcscription of thc tcrms of thc disclosurc agrccmcnt pursuant to «hich such rcports arc to bc madc.
T7�c Rcdc� clopmcnt Agcnc� has nc� cr failcd to compl� in all matcrial respccts «ith am prc� ious
undcrtakings «ith rcgard to said Rulc to pro� idc annual rcports or noticcs of matcrial c� cnts.
Additional 1 nformation
T7�is Official Statcmcnt contains summarics of thc 2006 Scrics Bonds. thc sccurit� for thc 2006
Scrics Bonds. thc 2006 Indcnturc. thc 2006 Loan Agrccmcnt. thc Rcdc� clopmcnt La«. thc Rcdc� clopmcnt
Agcnc� . thc Projcct Arca and ccrtain othcr information rcic� ant to thc issuancc of thc 2006 Scrics Bonds. All
rcfcrcnccs hcrcin to thc 2006 Indcnturc arc qualificd in thcir cntirct� b� rcfcrcncc to thc complctc tc�t thcrcof
and all rcfcrcnccs to thc 2006 Scrics Bonds arc fiirthcr qualificd b� rcfcrcncc to thc form thcrcof containcd in
thc applicablc 2006 Indcnturc. Thc auditcd financial statcmcnts of thc Rcdc� clopmcnt Agcnc� for thc Fiscal
Ycar cndcd Junc �0. 200� arc includcd in APPI:NUIX B. T7�c proposcd form of Icgal opinion of Bond
Counscl for thc 2006 Scrics Bonds is sct forth in Ai�i�i:Nuix E. Scc Ai�i�i:Nuix D—��SuMMniiv c�r Ci:iirniN
PRc�vlslc�Ns c�F I1 II: 2006 INUI:N I�uRI:" for dcfinitions of ccrtain «ords and tcrms uscd hcrcin. All capitalizcd
tcrms uscd in this Official Statcmcnt and not othcn� isc dcfincd hcrcin ha� c thc samc mcanings as in thc
applicablc 2006 Indcnturc. T7�c information sct forth hcrcin and in thc Appcndiccs hcrcto has bccn fiirnishcd
b� thc Rcdc� clopmcnt Agcnc� and thc Cit� and includcs information «hich has bccn obtaincd from othcr
sourccs «hich arc bclic� cd to bc rcliablc but is not guarantccd as to accurac� or complctcncss b� thc
Financing Authorit� or thc Undcn� ritcr and is not to bc constnicd as a rcprescntation b� thc Undcn� ritcr.
Copics of documcnts rcfcrrcd to hcrcin and information conccrning thc 2006 Scrics Bonds arc a� ailablc upon
«rittcn rcqucst from thc of thc Rcdc� clopmcnt Agcnc�. 7�-� I 0 Frcd Waring Dri� c. Palm
Dcscrt. California 92260-2�78: tcicphonc: (760) ��46-061 I. Thc Rcdc� clopmcnt Agcnc� ma� imposc a
chargc for cop� ing. mailing and handling.
PLAN OF FINANCE
Refunding of Prior Bonds
T7�c Financing Authorit� «ill loan thc procccds of thc 2006 Bonds to thc Rcdc� clopmcnt Agcnc� .
T7�c Rcdc� clopmcnt Agcnc� «ill usc a portion of thc procccds of thc 2006 Scrics A Loan to prcpa� ccrtain
amounts duc «ith respcct to thc Prior Loan Agrccmcnt. T7�c Financing Authorit� «ill usc thosc prcpaid loan
amounts to rcfiind ccrtain of thc Palm Dcscrt Financing Authorit� Ta� Allocation Rc� cnuc Bonds (Projcct
Arca No. �4). Scrics 1998 in thc outstanding principal amount of `f (thc "Prior Bonds"). Such
procccds of thc 2006 Scrics A Bonds «ill bc dcpositcd in an cscro« fiind (thc "Escro« Fund��) to bc hcld b�
Wclls Fargo Bank. National Association. as cscro« bank (thc "Escro« Bank��) pursuant to an Escro«
Agrccmcnt datcd as of Jul� I. 2006 (thc "Escro« Agrccmcnt��). b� and among thc Financing Authorit�. thc
Rcdc� clopmcnt Agcnc� and thc Escro« Bank. Follo« ing thc rcfiinding of thc Prior Bonds `f
principal amount of Scrics 1998 Bonds «ill rcmain outstanding.
o�,o � � r�,�-�
Thc amounts dcpositcd undcr thc Escro« Agrccmcnt «ill bc hcld b� thc Escro« Bank and
in� cstcd in noncallablc dircct obligations of thc Unitcd Statcs of Amcrica. or bonds or othcr obligations
«hich arc nocallablc and for «hich thc fiill faith and crcdit of thc Unitcd Statcs of Amcrica arc plcdgcd
for thc pa� mcnt of principal and intcrest. to maturc or bc �� ithdra«ablc. as thc casc ma� bc. not latcr than
thc timc «hcn nccdcd for thc pa� mcnt or rcdcmption of thc Prior Bonds in ordcr to dischargc thc plcdgc
of thc licn sccuring thc Prior Bonds (collccti� cl�. "Escro« Sccuritics��). Thc principal of and intcrest on
such Escro« Sccuritics. «hcn rccci� cd. «ill bc sufficicnt to pa� thc principal or rcdcmption pricc of.
including prcmium. and intcrest on thc Prior Bond upon rcdcmption thcrcof. Upon dcli� cr� of thc 2006
Bonds. thc Prior Bonds «ill bc irrc� ocabl� callcd for rcdcmption on . Scc also "VI:I�II Icn I Ic�N
c�r Mn i i n:Mn ricni. Cc�Mi>u rn ric�Ns .. -
Thc Prior Bonds to bc rcfiindcd consist of thc follo« ing:
Maturit� Datc
(Octobcr I )
2006
2007
2oox
2009
2oi�
Amount
`� I Oi.000
I 10.000
I I �.000
I 2 �.000
I . > ; 0.000
Table 1
$1,785,000
Palm Desert Financing Authority
Tax Allocation Revenue Bonds
(Project Area No. 4), Series 1998
Dated Date: March 1, 1998
Intcrest
Ratc
�.00`%�
� .00
� .00
�4.�4�
�t.xo
CUSIP
(6966 I 7)+
GU7
GV�
GW�
GX I
GY9
Pa� mcnt or
Rcdcmption Datc
(Octobcr I )
20
20
20
20
20
Rcdcmption
Pricc
`%�
+ Cop�right 2ciclG. nmcric<m 13ankcrs nssociation. Cl1SIP cl�ita hcrcin is pro�iclecl b� Stancl�ircl ancl Poor's. Cl1SIP Scr�icc 13w-cau. a
cli�ision ot� llic McGra��-I lill Companics. Inc. Iliis cl�ita is not intenclecl to crcatc a cl�itaba� ancl cicws not �nc in am ��a� as a
substitutc tirr thc Cl1SIP Scr�icc. C11S11' numl�rs arc pro�iclecl tirr comenicncc ot�retcrencc onh. Nonc ot�thc nuthorih. thc Cih
or thc l lnclen�ritcr takc am responsibilih tirr thc accw-ac� ot�such numl�rs. . . .
Redevelopment Projects
A portion of thc rcmaining procccds of thc 2006 Scrics A Loan and thc 2006 Scrics B Loan «ill bc
uscd b� thc Rcdc� clopmcnt Agcnc� to financc ccrtain rcdc� clopmcnt acti� itics «ithin thc Projcct Arc;a. Scc
..Ti u: Piic�.ii:c r Aiii:n—Summan of Dc� clopmcnt—Ilec%velupmenr A,��encr l'i�uject.s."
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
o�,o � � r�,�-�
6
ESTIMATED SOURCES AND USES OF FUNDS
T7�c anticipatcd sourccs and uscs of fiinds rclating to thc 2006 Scrics Bonds arc as follo« s:
2006 Scrics Bonds
Currcnt Intcrest Bonds Cauital Auurcciation Bonds Total
Sow•ces:
Principal Amount of thc 2006 Scrics Bonds `f * `f *
�/'h�.s: Nct Original Issuc Prcmium�
�/,e.,�.s: Original Issuc Discount�
Tc�rni. Sc�uiici:s y� ,y;
Uses:
Dcposit to Projcct Fund' �' `f `I�
Dcposit to Escro« Fund
Dcposit to Costs of Issuancc Fund','
Dcposit to Rcscr� c Fund "' '"
Undcn�ritcr�s Discount
Tc�rni. U�i:� y� y�
* Prcliminan. subject to changc.
��� Io bc usecl to tinancc recic�clopment acti�itics in thc Project /�rca. Scc "Ilu. 1'�zc�i�.c�i /��z�..�—Summar� ot�
I )c� clopmenL" . .
''' Incl«cles thc tces ancl espenses ot� 13onc1 Cottnscl. Uisclosttrc Cotmscl ancl Cottn�l to thc Recic�clopment /�genc�.
tces ancl es}�n�s ot� thc I rustcc. thc Financial ncl� isor. thc Fiscal Consultant ancl thc Vcritication ngent. printing
costs, rating agenc� tces, boncl insurancc ancl rescr�c tiincl sw-ch premiums, ancl othcr costs rclatecl to thc issikmcc ot�
thc 2ciclG Scrics 13oncls.
''' Represents thc amount ot�thc rescr�c tiincl sw-ch polic�.
THE 2006 SERIES BONDS
Terms Applicable to Both Series of 2006 Series Bonds
T7�c 2006 Scrics Bonds «ill bc datcd thc datc of issuancc and dcli�cn. issucd in fiill� rcgistcrcd
form. «ithout coupons. and. «hcn issucd «ill bc rcgistcrcd in thc namc of Ccdc c�. Co.. as nomincc for Thc
Dcpositor� Tnist Compam. Nc« York. Nc« York ("DTC��). as rcgistcrcd o«ncr ofall 2006 Scrics Bonds.
O« ncrship intcrests in thc 2006 Scrics Bonds ma� bc purchascd in book-cntr� form onl� . Purchascrs «ill not
rccci� c ccrtificatcs rcprescnting thcir intcrests in thc 2006 Scrics Bonds purchascd. Pa� mcnts of principal
and Accrctcd Valuc of thc intcrest on thc 2006 Scrics Bonds. as applicabic «ill bc paid b� thc Tnistcc to
DTC. «hich is obligatcd in turn to rcmit such principal. Accrctcd Valuc and intcrest. as applicablc to its DTC
Participants for subscqucnt disburscmcnt to thc bcncficial o« ncrs of thc 2006 Scrics Bonds. Scc APPI:NUIX
G—"DTC nNU I111: Bcx�K-EN�I1�Y ONI,Y SYSII:M.�� O«ncrship ma� bc changcd onl� upon thc rcgistration
books maintaincd b� thc Tnistcc as pro� idcd in thc 2006 Indcnturc.
Cw•rent Interest Bonds
(�ei7ernl. Thc 2006 Scrics A Bonds (thc "Currcnt Intcrest Bonds��) «ill bc issucd onl� in fiill�
rcgistcrcd form in dcnominations of `f �.000 and am intcgral multiplc thcrcof and shall maturc on thc datcs
and in thc principal amounts and bcar intcrest at thc ratcs as sct forth on thc insidc co� cr of this Official
Statcmcnt. Intcrest on thc Currcnt Intcrest Bonds shall bc pa�ablc scmiannuall� on April I and Octobcr I of
c;ach � car. commcncing I. 2006 (cach. an "Intcrest Pa� mcnt Datc��).
o�,o � � r�,�-�
Intcrest on thc Currcnt Intcrest Bonds «ill bc pa�ablc on c;ach Intcrest Pa�mcnt Datc to thc person
«hosc namc appc;ars on thc Rcgistration Books as thc O« ncr thcrcof as of thc closc of busincss on thc
Rccord Datc. such intcrest to bc paid b� chcck or draft of thc Tnistcc mailcd b� first class mail. postagc
prcpaid. on c;ach Intcrest Pa� mcnt Datc to thc O« ncr at thc address of such O« ncr as it appc;ars on thc
Rcgistration Books on such Rccord Datc: pi�uvic%cL l�utirevei�. that at thc «rittcn rcqucst of thc O« ncr of at
Icast `f I.000.000 in aggrcgatc principal amount of Outstanding 2006 Scrics A Bonds filcd «ith thc Tnistcc
prior to am Rccord Datc. intcrest on such 2006 Scrics A Bonds shall bc paid to such O« ncr on c;ach
succccding Intcrest Pa� mcnt Datc b� «irc transfcr of immcdiatcl� a� ailablc fiinds to an account in thc Unitcd
Statcs dcsignatcd in such «rittcn rcqucst (unlcss and until such rcqucst has bccn rc� okcd in «riting).
Redemptioi7 Provisioi7s.
Rcdcmution for Outional Loan Prcua� mcnt. If thc Rcdc� clopmcnt Agcnc� c�crciscs its option to
prcpa� principal installmcnts of thc 2006 Scrics T«o loans pursuant to thc 2006 Loan Agrccmcnt. thc
Rc� cnucs dcri� cd from such prcpa� mcnt «ill bc applicd to thc rcdcmption of thc Currcnt Intcrest Bonds
maturing on or aftcr Octobcr I. 20 . as a«holc. or in part among maturitics as dcsignatcd in «riting b� thc
Financing Authorit� and b� lot «ithin a maturit�. in intcgral multiplcs of `f�.000 principal amount. on am
Intcrest Pa� mcnt Datc on or aftcr Octobcr I. 20_. at thc follo« ing respccti� c rcdcmption priccs (c�presscd
as a perccntagc of thc principal amount of Currcnt Intcrest Bonds to bc rcdccmcd). plus accnicd intcrest
thcrcon to thc datc of rcdcmption:
Rcdcmption
Rcdcmution Datcs Pricc
Octobcr I. 20_ and April I. 20_ 10_`%�
Octobcr I. 20_ and April I. 20_ 10_
Octobcr I. 20 and thcrc;aftcr 100
T7�c Financing Authorit� is rcquircd to pro� idc «rittcn noticc to thc Tnistcc of am Rcdcmption for
Optional Loan Prcpa� mcnt at Ic;ast �4� but not morc than 90 da�s prior to thc datc fi�cd for such rcdcmption.
Mandator� Sinkin� Fund Rcdcmution. T7�c Currcnt Intcrest Bonds maturing on Octobcr I. 20 .
Octobcr I. 20_ and Octobcr I. 20_ arc also bc subjcct to mandator� rcdcmption b� lot. on Octobcr I in
c;ach �car commcncing Octobcr I. 20 . Octobcr I. 20 and Octobcr I. 20_. respccti�cl�. from sinking
fi�nd pa� mcnts madc b� thc Financing Authorit� into thc Principal Account. at a rcdcmption pricc cqual to
thc principal amount thcrcof to bc rcdccmcd. «ithout prcmium. plus accnicd intcrest to thc datc of
rcdcmption. in thc aggrcgatc respccti� c principal amounts and on Octobcr I in thc respccti� c� cars as sct
forth bclo« :
Currcnt Intcrest Bonds Maturin� Octobcr I. 20
Sinking Fund
Rcdcmption Datc Principal Amount
(Octobcr I ) to bc Rcdccmcd*
Matwih.
OG013 pu�-3
Currcnt Intcrest Bonds Maturin� Octobcr I. 20
Sinking Fund
Rcdcmption Datc Principal Amount
(Octobcr I ) to bc Rcdccmcd*
+
Matwih.
Currcnt Intcrest Bonds Maturin� Octobcr I. 20
Sinking Fund
Rcdcmption Datc Principal Amount
(Octobcr I ) to bc Rcdccmcd*
+Final M��t�uit�.
Purchasc in Licu of Rcdcmution. In licu of Mandator� Sinking Fund redcmption of thc Currcnt
Intcrest Bonds on Octobcr I in am � car. thc Currcnt Intcrest Bonds ma� bc purchascd b� thc Rcdc� clopmcnt
Agcnc� pursuant to thc 2006 Loan Agrccmcnt and tcndcrcd to thc Tnistcc for canccllation no latcr than thc
prcccding Januan I�. and (ii) if somc but all of thc Currcnt Intcrest Bonds of a maturit� ha� c bccn rcdccmcd.
thc total amount of all firture sinking fiind pa� mcnts «ith respcct to thc Currcnt Intcrest Bonds of such
maturit� shall bc rcduccd b� thc aggrcgatc principal amount of such Currcnt Intcrest Bonds so rcdccmcd. to
bc allocatcd among such sinking fiind pa� mcnts on a pi�u i�ata basis.
Capital Appreciation Bonds
(�ei7ernl. Thc 2006 Scrics B Bonds (thc "Capital Apprcciation Bonds") «ill bc issucd in amounts
sho« n on thc insidc co� cr (thc "Initial Principal Amount��) and «ill ha� c a� aluc on thc statcd maturit� datc
thcrcof cqual to `f �.000 or am intcgral multiplc thcrcof (thc "Accrctcd Valuc��). T7�c Capital Apprcciation
Bonds of c;ach maturit� «ill accrctc in �aluc from thcir Datc of Dcli�cr� and «ill maturc on datcs. all as
indicatcd on thc insidc co� cr of this Official Statcmcnt. compoundcd scmi-annuall� on April I and Octobcr I
of c;ach �c;ar. commcncing I. 2006 until maturit� or c;arlicr rcdcmption datc. Such compounding
«ill bc calculatcd on thc basis ofa �60-da� �carcompriscd oft«cl�c �0-da� months. and thc Accrctcd Valuc
shall bc pa�ablc onl� at maturit�. �Thc Accrctcd Valuc on am datc othcr than April I and Octobcr I ofam
�car shall bc calculatcd b� straight-linc intcrpolation�. No payments with respect to the Capital
Appreciation Bonds will be made prior to the respective matw•ity dates thereof. Scc A►�►�►:Nu►x J—
"Tn131,1: c�l AccRI: i�l:u Vnl,ul:s—Capital Apprcciation Bonds�� for thc Accrctcd Valucs as of c;ach April I a��d
Octobcr I for cach Maturit� Amount. Such Tablc of Accrctcd Valucs is prescntcd for illustrati� c purposcs
onl� . Am Accrctcd Valuc dctcrmincd in accordancc «ith tcrms of thc applicablc 2006 Indcnture shall
control o� cr am diffcrcnt Accrctcd Valuc dctcrmincd b� rcfcrcncc to such Tablc.
o�,o � � r�,�-�
y
Redemptioi7 Provisioi7s.
Outional Rcdcmution. In If thc Rcdc� clopmcnt Agcnc� c�crciscs its option to prcpa� principal
installmcnts of thc 2006 Scrics B Loan pursuant to thc 2006 Loan Agrccmcnt. thc Rc� cnucs dcri� cd from
such prcpa� mcnt shall bc applicd to thc rcdcmption of thc Capital Apprcciation Bonds maturing on or aftcr
Octobcr I. 20 . as a«holc. or in part among maturitics as dcsignatcd in «riting b� thc Financing Authorit�
and b� lot «ithin a maturit�. in intcgral multiplcs of `f �.000 of Maturit� Amount. on am Octobcr I or April I
on or aftcr Octobcr I. 20 . at thc follo« ing respccti� c rcdcmption priccs (c�presscd as a perccntagc of thc
Accrctcd Valuc of thc callcd 2006 Scrics B Bonds on thc datc fi�cd for rcdcmption):
Rcdcmption
Rcdcmution Datcs Pricc
Octobcr I. 20_ and April I. 20_ 10_`%�
Octobcr I. 20_ and April I. 20_ 10_
Octobcr I. 20 and thcrc;aftcr 100
T7�c Financing Authorit� is rcquircd to pro� idc «rittcn noticc to thc Tnistcc of am Rcdcmption for
Optional Loan Prcpa� mcnt at Ic;ast �4� but not morc than 90 da�s prior to thc datc fi�cd for such rcdcmption.
No Mandaton Sinkin� Fund Rcdcmution. T7�c Capital Apprcciation Bonds arc not subjcct to
mandator� sinking fiind redcmption prior to maturit� .
Redemption Procedw•es
Notice of Redemptioi7. T7�c Tnistcc on bchalf and at thc c�pcnsc of thc Financing Authorit� «ill
mail (b� first class mail) noticc of am rcdcmption to thc respccti�c O«ncrs of am 2006 Scrics Bonds
dcsignatcd for rcdcmption at thcir respccti� c addresscs appc;aring on thc Rcgistration Books and. b� such
mc;ans acccptablc to thc follo« ing institutions. to thc Sccuritics Dcpositorics and to onc or morc Information
Scr� iccs. at Icast �0 but not morc than 60 da� s prior to thc datc fi�cd for rcdcmption: pro� idcd. ho« c� cr. that
ncithcr failurc to rccci�c am such noticc so mailcd nor am dcfcct thcrcin «ill affcct thc �alidit� of thc
procccdings for thc rcdcmption of such 2006 Scrics Bonds or thc ccssation of thc accnial or accrction of
intcrest thcrcon. Such noticc is rcquircd to statc thc datc of thc noticc. thc rcdcmption datc. thc rcdcmption
placc and thc rcdcmption pricc and shall dcsignatc thc CUSIP numbcrs. thc scrics dcsignation of thc 2006
Scrics Bonds. thc 2006 Scrics Bond numbcrs (but onl� if Icss than all of thc Outstanding Bonds of such scrics
arc to bc rcdccmcd) and thc maturit� or maturitics of thc 2006 Scrics Bonds of such scrics (in thc c� cnt of
rcdcmption of all of such Bonds of such maturit� or maturitics in «holc) to bc rcdccmcd. and require such
Bonds to bc surrcndcrcd at thc Tnist Officc of thc Tnistcc in Los Angcics. California (or such othcr location
as dcsignatcd b� thc Tnistcc) for rcdcmption at thc rcdcmption pricc. gi� ing noticc also that fiirthcr intcrest
on such 2006 Scrics Bonds «ill not accnic or accrctc. as applicablc. from and aftcr thc rcdcmption datc.
.Selectioi7 of Boi7ds for Redemptioi7. If Icss than all of thc 2006 Scrics Bonds of a scrics and a
maturit� arc callcd for rcdcmption. thc Tnistcc «ill scicct thc 2006 Scrics Bonds to bc rcdccmcd from all
2006 Scrics Bonds of such scrics and maturit� not prc� iousl� callcd for rcdcmption. b� lot in am manncr
«hich thc Tnistcc in its solc discrction dccros appropriatc undcr thc circumstanccs.
Pnrtin! Redemptioi7 of Boi7ds. In thc c� cnt onl� a portion of am 2006 Scrics Bond is callcd for
rcdcmption. thcn upon surrcndcr of such 2006 Scrics Bond thc Financing Authorit� is rcquircd to c�ccutc and
thc Tnistcc is rcquircd to authcnticatc and dcli�cr to thc O«ncr thcrcof. at thc c�pcnsc of thc Financing
Authorit�. a nc« 2006 Scrics Bond or 2006 Scrics Bonds of thc samc scrics. tcnor and maturit� datc. of
authorizcd dcnominations in aggrcgatc Principal Amount or Maturit� Amount. as thc casc ma� bc. cqual to
thc unrcdccmcd portion of thc 2006 Scrics Bond to bc rcdccmcd.
o�,o � � r�,�-�
10
Effect of Redemptioi7. From and aftcr thc datc fi�cd for rcdcmption. if fiinds a�ailablc for thc
pa� mcnt of thc principal of. intcrest on and prcmium. if am. or Accrctcd Valuc. as applicablc. on thc 2006
Scrics Bonds so callcd for rcdcmption shall ha� c bccn dul� pro� idcd. such 2006 Scrics Bonds so callcd «ill
cc;asc to bc cntiticd to am bcncfit undcr thc 2006 Indcnturc othcr than thc right to rccci� c pa� mcnt of thc
rcdcmption pricc. and no intcrest shall accnic thcrcon from and aftcr thc rcdcmption datc spccificd in such
noticc.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
o�,o � � r�,�-�
II
DEBT SERVICE SCHEDULE
T7�c follo« ing tablc sho« s schcdulcd scmiannual dcbt scn icc on thc 2006 Scrics Bonds. «ithout rcgard to am optional rcdcmption. Scc also
"PRc�,il:�`I ARI:n—Dcbt Scr� icc Co� cragc Projcctions—Tablc 7.��
N
Pa� ment I )atc
Octol�r 1.2OOG
npril I. 2c�c�7
Octol�r 1.2OO7
npril I. 2c�c�x
Octol�r 1.2OO8
npril I. 2c�c���
c)ctol�r 1.2c1c19
npril I. 2c� I c�
Octol�r 1.2OIO
npril I. 2c11 I
Octol�r 1.2OI I
npril I. 2c112
Octol�r 1.2O12
npril I. 2c11 ;
Oclol�r 1.2OI i
/�})Il� �, Z(J� i
Oclol�r I, 2(JI-I
npril I. 2c11 �
Octol�r 1.2OI�
npril I. 2c11 G
Octol�r 1.2OIG
npril I. 2c117
Octol�r 1.2O17
n��,;� i. zc�ix
Octol�r 1.2O18
npril I. 2c119
Octol�r 1.2O19
npril I. 2c�2c�
Octol�r 1.2O2O
npril I. 2c121
Octol�r 1.2O21
npril I. 2c122
Octol�r 1.2O22
npril I. 2c12 ;
Oclol�r 1.2O2i
npril I . 2c 12-I
2cicu� scrics I3onas
Cwrent Intcrest 13oncls Canital /�nnreciation 13oncls I otal
1998 Scrics 13oncls 2OOI Scrics 13oncls 1'rincipal* Intcrest 1'rincipal* Intcrest Ucbt Scr�icc
���
Pa� ment I )atc
Octol�r 1.2O2-I
npril I. 2c12�
Octol�r 1.2O2i
npril I. 2c12G
Octol�r 1.2O2G
npril I. 2c127
Octol�r 1.2O27
np,;� �.2c�2x
Octol�r 1.2O28
npril I. 2c129
Octol�r 1.2O29
npril I. 2c�;c�
c)ctol�r 1.2c1;c1
npril I. 2c1; I
Oclol�r 1.2Oil
npril I. 2c1;2
Oclol�r 1.2Oi2
npril I. 2c1; ;
Oclohr,r 1.2Oii
npril I . 2c 1;-I
Oclol�r 1.2Oi-I
npril I. 2c1;;
Oclol�r 1.2Oii
npril I. 2c1;G
Octol�r 1.2O;G
npril I. 2c1;7
Oclol�r 1.2Oi7
n��,;� i. zc�;x
c)ctol�r 1.2c);x
npril I. 2c1;9
Octol�r 1.2O;9
npril I. 2cuc�
Octol�r 1.2(�-IO
npril I. 2cJ-� I
Ic�I.V.
* Prcliminan. subject to changc.
2cicu� scrics I3onas
Cwrent Intcrest 13oncls Canital /�nnreciation 13oncls I otal
1998 Scrics 13oncls 2OOI Scrics 13oncls 1'rincipal* Intcrest 1'rincipal* Intcrest Ucbt Scr�icc
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
Revenues and Loan Agreements
T7�c 2006 Scrics Bonds are sccurcd b� a first licn on and plcdgc of thc Rc� cnucs. «hich arc dcfincd
in thc 2006 Indcnturc to includc (i) all amounts pa�ablc b� thc Rcdc� clopmcnt Agcnc� as pa� mcnts or
prcpa� mcnts for thc 2006 Loans pursuant to thc 2006 Loan Agrccmcnt. thc 2001 Loan pursuant to thc 2001
Loan Agrccmcnt and thc 1998 Loan pursuant to thc 1998 Loan Agrccmcnt: (ii) am procccds of thc Parit�
Bonds originall� dcpositcd «ith thc Tnistcc and all monc�s dcpositcd and hcld from timc to timc in thc fiinds
and accounts cstablishcd undcr thc 2006 Indcnturc: and (iii) incomc and gains «ith respcct to thc im cstmcnt
of amounts on dcposit in thc fiinds and accounts cstablishcd undcr thc 2006 Indcnturc. othcr than amounts
pa�ablc to thc Unitcd Statcs of Amcrica pursuant to thc ta� co�cnants containcd in thc 2006 Indcnturc. Thc
primar� sccurit� for thc 2006 Scrics Bonds. thcrcforc. consists of amounts pa�ablc b� thc Rcdc�clopmcnt
Agcnc� undcr thc 2006 Loan Agrccmcnt. amounts hcld in thc Rcscr� c Fund and amounts hcld b� thc Tnistcc
undcr thc 2006 Indcnturc. Thc 2QQ6 Loans are sccurcd b� a first plcdgc of and licn on thc Tati Rc� cnucs on a
parit� «ith thc plcdgc of and licn of thc 2001 Loan and thc 1998 Loan. as morc fiill� dcscribcd undcr "—Ta�
Rc� cnucs and Subordinatc Ta� Rc� cnucs-7ax Reveni�e.s.�� T7�c Rcdc� clopmcnt Agcnc� ma�. pursuant to thc
tcrms of thc 2006 Loan Agrccmcnt. thc 2006 Indcnturc. thc 2001 Loan Agrccmcnt. thc 2001 Indcnturc. thc
1998 Loan Agrccmcnt and thc 1998 Indcnturc. issuc additional obligations sccurcd b� Ta� Rc� cnucs on a
parit� «ith thc 2006 Loans. Scc "—Parit� Dcbt and Subordinatc Dcbt.��
Tax Revenues and Subordinate Tax Revenues
�n.r Reveizues. T7�c 2006 Scrics Bonds arc and «ill bc cquall� sccurcd b� a first plcdgc of. sccurit�
intcrest in and licn on all of thc Ta� Rc� cnucs dcri� cd b� thc Rcdc� clopmcnt Agcnc� from thc Projcct Arca
and monc� s hcld pursuant to thc 2006 Indcnturc. and on a pariri «ith thc 200 � Bonds. thc 1998 Bonds a,�d
am Parit� Dcbt (dcfincd bclo« ) at am timc issucd b� thc Rcdc� clopmcnt Agcnc� . E�ccpt for thc Ta�
Rc� cnucs and such monc� s. no othcr fiinds or propertics of thc Rcdc� clopmcnt Agcnc� is plcdgcd to. or
othcn� isc liablc for. thc pa� mcnt of principal of or intcrest or rcdcmption prcmium (if am ) on thc 2006
Scrics Bonds. Undcr thc 2006 Indcnturc. thc Rcdc� clopmcnt Agcnc� ma� incur additional loans. ad� anccs
or indcbtcdncss issucd or incurrcd b� thc Rcdc� clopmcnt Agcnc� on a parit� «ith thc 2006 Scrics Bonds. thc
200 � Bonds and thc 1998 Bonds ("Parit� Dcbt��). «hich Parit� Dcbt shall bc cquall� sccurcd. on a parit� «ith
thc 2006 Scrics Bonds. thc 200 � Bonds and thc 1998 Bonds. b� a plcdgc of. sccurit� intcrest in and licn on all
of thc Ta� Rc� cnucs. Scc "—Parit� Dcbt and Subordinatc DCbt.�� SCC Also APPI:NUIX D-"SUMMnRY O1
CI:R I nIN PROVISIONS OF I I II: 2006 INUI:N�I URI:...
"Tati Rc� cnucs�� is dcfincd in thc 2006 Loan Agrccmcnt to mcan monics allocatcd or paid to thc
Rcdc� clopmcnt Agcnc� dcri� cd from (i) that portion of ta�cs Ic� icd upon ta�ablc propert� «ithin thc Projcct
Arca allocatcd and paid into thc Spccial Fund of thc Rcdc� clopmcnt Agcnc� pursuant to Articic 6 of Chaptcr
6 of thc Rcdc� clopmcnt La« and Scction 16 of Articic XVI of thc Constitution of thc Statc. c�clusi� c of
amounts laccd in thc Lo« and Modcratc Incomc Housing Fund of thc Rcdc� clopmcnt Agcnc� pursuant to
Scctions >;>>�4.2 and >;>>�4.6 ofthc Rcdc�clopmcnt La«. and c�cluding amounts pa�ablc to affcctcd ta�ing
agcncics pursuant thc Pass-Through Agrccmcnts or pursuant to Scction >;607.� or >;607.7 of thc
Rcdc� clopmcnt La« .
T7�c Rcdc� clopmcnt Agcnc� �s rcccipt of Ta� Rc� cnucs «ith respcct to thc Projcct Arc;a is subjcct to
ccrtain limitations (thc "Plan Limitations��) containcd in thc Rcdc� clopmcnt Plan on thc dollar amount of
tn�cs ��hich ma� bc di� idcd and allocatcd to thc Rcdc� clopmcnt Agcnc� pursuant to thc Rcdc� clopmcnt
Plan. as such limitation is prescribcd b� Scction >;>; �.�1 ofthc Rcdc�clopmcnt La«. Scc "LiMrrnric�Ns c�N
Tnx Ri:vi:Nui:s."
o�,01 � po�-�
I �4
Pursuant to thc 2006 Loan Agrccmcnt. thc Rcdc� clopmcnt Agcnc� co� cnants to compl� «ith all
rcquircmcnts of thc Rcdc� clopmcnt La« to insurc thc allocation and pa� mcnt to it of thc Ta� Rc� cnucs. and
fiirthcr co� cnants not to cntcr into am agrccmcnt «ith thc Count� or am othcr go� crnmcntal unit «hich
«ould ha� c thc cffcct of rcducing thc amount of Ta� Rc� cnucs a� ailablc to thc Rcdc� clopmcnt Agcnc� for
pa� mcnt of thc 2006 Scrics Bonds. unlcss in thc «rittcn opinion of an Indcpcndcnt Rcdc� clopmcnt
Consultant �filcd «ith thc Tnistcc.� such rcduction «ill not ad�crscl� affcct thc intcrests hcrcundcr of or thc
sccurit� grantcd hcrcundcr to thc Bond O« ncrs.
T7�c Rcdc� clopmcnt Agcnc� has no po« cr to Ic� � and collcct propert� ta�cs. and am propert� ta�
limitation. Icgislati� c mc;asurc. � otcr initiati� c or pro� isions of additional sourccs of incomc to ta�ing
agcncics ha� ing thc cffcct of rcducing thc propert� ta� ratc. could reducc thc amount of Ta� Rc� cnucs that
«ould othcn�isc bc a�ailablc to pa� dcbt scr�icc on thc 2006 Scrics Bonds and. conscqucntl�. thc principal
of. and intcrest on. thc 2006 Scrics Bonds. Likc« isc. broadcncd propert� ta� c�cmptions or succcssfiil
asscssmcnt appc;als could ha�c a similar cffcct. Scc "LiMrrnric�Ns c�N Tnx Ri:vi:Nui:s" and "Ci:iirniN
RISKS "IO BONUI IOI,UI:RS ..
THE 2006 SERIES 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 LOANS ARE NOT A DEBT OF THE FINANCING
AUTHORITY OR THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS. AND NONE OF THE
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 2006 SERIES
BONDS OR THE 2006 LOAN AGREEMENT ARE LIABLE PERSONALLY WITH RESPECT TO THE
2006 SERIES BONDS OR THE 2006 LOANS. THE OBLIGATIONS OF THE REDEVELOPMENT
AGENCY WITH RESPECT TO THE 2006 LOANS ARE PAYABLE SOLELY FROM THE TAX
REVENUES (AS DEFINED HEREIN) AS SET FORTH IN THE 2006 LOAN AGREEMENT. NEITHER
THE FINANCING AUTHORITY NOR THE REDEVELOPMENT AGENCY HAS TAXING POWER.
Tax Allocation Financing
T7�c Rcdc� clopmcnt La« pro� idcs a mcans for financing rcdc� clopmcnt projccts bascd upon an
allocation of ta�cs collcctcd «ithin a projcct arc;a. T7�c ta�ablc � aluation of a projcct arc;a last cqualizcd prior
to adoption of thc rcdc� clopmcnt plan. or basc roll. is cstablishcd and. c�ccpt for am period during «hich thc
ta�ablc � aluation drops bclo« thc basc � car Ic� cl and for ccrtain c�ccptions dcscribcd bclo«. thc ta�ing
agcncics thcrc;aftcr rccci� c thc ta�cs produccd b� thc Ic� � of thc thcn currcnt ta� ratc upon thc basc roll.
Ta�cs collcctcd upon am incrcasc in ta�ablc � aluation o� cr thc basc roll (c�ccpt such portion gcncratcd b�
ratcs Ic� icd to pa� bondcd indcbtcdncss appro� cd b� thc � otcrs on or aftcr Januar� I. 1989. for thc
acquisition or impro� cmcnt of rc;al propert� ) arc allocatcd to a rcdc� clopmcnt agcnc� and ma� bc plcdgcd b�
a rcdc� clopmcnt agcnc� to thc rcpa� mcnt of am indcbtcdncss incurrcd in financing or rcfinancing a
rcdc� clopmcnt projcct. Ta� Rc� cnucs consist of a portion of such ta�cs. Rcdc� clopmcnt agcncics
thcroscl� cs ha� c no authorit� to Ic� � propert� ta�cs and must look spccificall� to thc allocation of ta�cs
produccd as indicatcd abo� c.
Redevelopment Plan Limitations
T7�c Statc Lcgislaturc has in thc past cnactcd Icgislation altcring spcnding limitations or establishing
minimum fiinding pro� isions for particular acti� itics. T7�c Rcdc� clopmcnt Agcnc� cannot prcdict «hcthcr
thc Statc Lcgislaturc «ill cnact othcr Icgislation rcquiring additional or incrcascd firture shifts of ta�
incrcmcnt rc� cnucs to thc Statc and/or to schools. «hcthcr through an arrangcmcnt similar to thc local
o�,o � � r�,�-�
I�
Count� Education Rc� cnuc Augmcntation Funds (thc "ERAF��) or b� othcr arrangcmcnts. and. if so. thc
cffcct of such Icgislation on firturc Ta� Rc� cnucs. A dcscription of such Icgislation is summarizcd bclo« .
AB 1290. Pursuant to Scction >;607.7 ofthc Statc Hcalth and Safct� Codc addcd b� Asscmbl� Bill
("AB") 1290 (Statutcs of 199 �). Chaptcr 9�42) a rcdc� clopmcnt plan amcndmcnt for am rcdc� clopmcnt plan
adoptcd prior to Januan I. 199�4 that incrc;ascs thc limitation on thc numbcr of dollars to bc allocatcd to thc
rcdc�clopmcnt agcnc� or thc timc limit on thc cstablishing of loans. ad�anccs and indcbtcdncss. must bcgin
making statuton pa� mcnts to affcctcd ta�ing cntitics that do not ha� c c�isting prc-AB 1290 ta� sharing
agrccmcnts. Thcsc pa� mcnts arc to bcgin oncc am of thc original rcdc� clopmcnt plan limitations «ould
ha� c takcn cffcct. T7�c first limit cncountcrcd or to bc cncountcrcd in thc Projcct Arc;a is thc dcbt
cstablishmcnt limit.
T7�c AB 1290 pa� mcnts arc computcd using thc incrcasc in rc� cnuc. if am. o� cr thc amount of
rc� cnuc gcncratcd b� a projcct arc;a in thc � car that thc dcbt cstablishmcnt limit «ould ha� c bccn rc;achcd. In
cffcct. thc �car in «hich thc dcbt cstablishmcnt limit is mct bccomcs a nc« "basc �car� for purposcs of
calculating pa� mcnts. AB 1290 pa� mcnts arc paid from rc� cnucs resulting from thc gro«th in thc nc« ta�
basc �car. �Scc APPI:NUIX A—"RI:Pc�RI c�F I111: Fls�'nl, Cc�NSUI,InN�I�� for a dctailcd discussion of thc
formulas upon «hich calculation of thc AB 1290 pa� mcnts is bascd. �
Among othcr amcndmcnts to thc La«. AB 1290 limits thc timc for: (i) cstablishing indcbtcdncss in a
projcct arc;a to thc latcr of 20 � cars from thc datc of adoption of thc rcdc� clopmcnt plan or Januar� I. 200�4:
(ii) thc lifc of c�isting rcdc� clopmcnt plans to thc latcr of �40 � c;ars from thc datc of adoption or Ja�uian I.
2009: (iii) pa� ing indcbtcdncss «ith ta� incrcmcnt bc� ond 10 � cars aftcr thc c�piration of thc rcdc� clopmcnt
plan. c�ccpt to fiind dcfcrrcd Lo« and Modcratc Incomc Housing Fund (thc "Housing Sct-Asidc��)
rcquircmcnts and to rcpa� indcbtcdncss incurrcd prior to Januar� I. 199�4. Thc timc limits imposcd b�
AB 1290 appl� indi� iduall� to c;ach plan as «cll as to spccific tcrritor� addcd b� amcndmcnts to a
rcdc� clopmcnt plan. - - -
For a summan of thc plan amcndmcnts and limitations. scc "TI II: PRc�.il:c i ARI:n—Rcdc� clopmcnt
Plan Limits—Tablc I.�� For additional Icgislation affccting plan limits. scc "—.S'R ?/ /�� and "—.S'R lOJ<."
.SB 211. Scnatc Bill 21 I(Chaptcr 7�41. Statutcs of 2001) ("SB 2 I I") «as adoptcd b� thc California
Lcgislaturc and bccamc la« on Januar� I. 2002. Among othcr things. SB 21 I authorizcs a rcdc� clopmcnt
agcnc� that adoptcd a rcdc� clopmcnt plan prior to Januan I. 199�4. to amcnd that plan in accordancc «ith
spccificd proccdures to c�tcnd its cffccti� cncss and recci� c ta� incrcmcnt rc� cnucs «ith respcct to thc plan
for not morc than I 0� cars if ccrtain spccificd findings arc madc. If a plan is so amcndcd. thc rcquircmcnt for
allocating ta� incrcmcnt rc� cnucs to lo« and modcratc incomc housing is incrc;ascd from 20`%� to �0`%�.
Ho«c� cr. such climination also triggcrs statutor� ta� sharing «ith thosc ta�ing cntitics that do not ha� c ta�
sharing agrccmcnts for thc period commcncing in thc � car thc climinatcd plan limit «ould ha� c takcn cffcct.
Ta� sharing «ill bc calculatcd bascd on thc incrcasc in asscsscd �aluation aftcr thc �car in «hich thc timc
limit «ould ha� c othcn� isc bccomc cffccti� c. SB 21 I also allo« s rcdc� clopmcnt agcncics to amcnd
rcdc�clopmcnt plans to climinatc thc timc limit for thc cstablishmcnt of loans. ad�anccs and indcbtcdncss
«ithin projcct arc;as. Ho« c� cr. such an amcndmcnt «ould also rcquirc a rcdc� clopmcnt agcnc� to bcgin
making statutor� ta� sharing pa� mcnts to affcctcd ta�ing cntitics. Scc "—AR l?J0." On March I I. 200�4. thc
Cit� Council adoptcd Ordinancc No. 106 � climinating thc timc limit to incur dcbt «ithin thc Projcct Arc;a.
Scc "Ti u: Piu�.ii:c r Aiii:n—Rcdc� clopmcnt Plan Limits Tablc I�� for a summar� of thc plan amcndmcnt and
limitations.
.SB IO;IS. Scnatc Bill 10�4� (Chaptcr 260. Statutcs of 200 �) ("SB 10�4�") «as cnactcd as part of thc
Statc Fiscal Ycar 200 �-0�4 budgct Icgislation and requircd redc� clopmcnt agcncics Statc« idc to contributc
`f I�� million to thc ERAF in ordcr to rcducc thc amount of Statc fiinding for schools. (Scc also "CI:RInIN
o�,o � � r�,�-�
16
RISKS Ic) Bc)NUlic)I,UI:RS—Statc Budgct—/�i.scrr/ r'eco� ?00�-0-i��). In accordancc «ith SB 10�4�. thc
Rcdc� clopmcnt Agcnc� transfcrrcd `f to thc Count� b� thc Ma� l0. 200�4 dc;adlinc.
In addition. SB 10�4� amcndcd thc Rcdc� clopmcnt La« to permit rcdc� clopmcnt agcncics to usc a
simplificd mcthodolog� to amcnd thc rcdc� clopmcnt plans to c�tcnd b� onc � car thc cffccti� cncss of thc plan
a,�d thc timc during «hich a rcdc� clopmcnt agcnc� ma� rcpa� dcbt «ith ta� incrcmcnt rc� cnucs. and
permittcd a rcdc� clopmcnt agcnc� to dcduct thc amount of ERAF pa� mcnts in Fiscal Ycar 200 �-0�4 and in
prior � cars from thc amount of thc cumulati� c ta� incrcmcnt rc� cnucs for a projcct arc;a. On Dcccmbcr 9.
200�4. thc Cit� Council adoptcd Ordinancc No. 108� c�tcnding b� onc � c;ar thc c�piration datc of thc
Rcdc� clopmcnt Plan and thc timc limit to rcpa� dcbt in thc Projcct Arc;a. Scc "TI II: PRc�,il:�`I ARI:n—
Rcdc� clopmcnt Plan Limits—Tablc I.��
SB 1206
Scnatc Bill 1206 ("SB 1206"). introduccd b� thc Chair of thc Scnatc Committcc on Local
Go� crnmcnt in Januan 2006. «ould amcnd scctions of thc Rcdc� clopmcnt La« to. among othcr things.
rc� isc thc conditions that charactcrizc a blightcd arc;a: standardizc thc standards for mcrgcrs of projcct arc;as:
and prohibit a rcdc� clopmcnt agcnc� from cstablishing am bondcd indcbtcdncss to bc paid «ith ta�
incrcmcnt rc� cnucs aftcr thc I I th fiscal � c;ar in «hich such agcnc� rccci� cs ta� incrcmcnt rc� cnucs unlcss thc
rcdc� clopmcnt agcnc� finds that both significant blight rcmains «ithin thc projcct arc;a ancl that thc blight
cannot bc climinatcd «ithout thc issuancc ofthc bondcd indcbtcdncss. In its currcnt form. SB 1206 docs not
contain am cffccti� c datcs for thc application of thcsc pro� isions. T7�c Cit� is unablc to prcdict «hcthcr this
Icgislation «ill bc cnactcd in its currcnt form. or at all.
Allocation of Taxes
A.1' �)PUVlL%L'L% in tl�e Rec%velupment l'�CfYl. CfYlLl �)1ll'.1'1lCfYl1 tu Ai�ticle < uf' ('lurptei� < uf' tl�e
Rec%velupment �,Cf11' �CU177/77L'Y!C!Yl,�� tiritl� .S'ectiun ��<i0 uf' tl�e ('alifui�nia Healtl� ancl .krfeh� ('uc%) ancl
.S'ectiun l< uf'Ai7icle XG% uf'tl�e .S'tate ('U19.1'1l1111lU19. 1Cf�L'.1' �L'V!L'L% 1l�)Ul9 1Cf�CfJ7�L' pi�upei�h� in tl�e l'i�ujec7 Ai�ea
eac% ��eai' h�� ui�.fui� tl�e henefit uf'tl�e .S'tate. Ilivei'.sic% ('ut�nh� (tl�e "('ut�nh��). tl�e ('ih�. an�� cli.sti'ict ui� utl�ei'
piihlic cuipui�atiun (l�ei�ein cullectivel�� i�efei�i�ecl tu a.s ..taxin,�� a,��encie.s') fui� eac% l�i.scal }''eco� he,��lYlY!!Yl,��
Cff1L'l' 1�1L' L'ffL'C1NL' L%Cf1L'.1' Uf 1�1L' Ul'LllYlCfYlCL' Cf�J�JPUVlYl��� 1�1L' PL'L%L'VL'�U�Jl77L'Y!1 �J�CfYl.1' CfYlL% CfYl1' Cfl77L'Y!Lll77L'Yl1.1' CfL%LllYl���
tei'i'itui��' I�9L'PL'IU CO"L' L%N!L%L'L%C(.1' fU��U}1'.1':
I. To othcr ta�in� a�cncics: T7�at portion of thc ta�cs «hich «ould bc produccd b� thc ratc
upon «hich thc ta� is Ic� icd c;ach � car b� or for c;ach of said ta�ing agcncics upon thc total sum of thc
asscsscd � aluc of thc ta�ablc propert� in thc Projcct Arca as sho« n upon thc asscssmcnt roll uscd in
conncction «ith thc ta�ation of such propert� b� such ta�ing agcnc� last cqualizcd prior to thc cffccti� c datc
of thc applicablc ordinancc adopting thc rcdc� clopmcnt plan or amcnding thc rcdc� clopmcnt plan to add
propert� into thc Projcct Arca. shall bc allocatcd to. and «hcn collcctcd shall bc paid into thc fiinds of thc
respccti� c ta�ing agcncics as ta�cs b� or for said ta�ing agcncics on all othcr propert� arc paid: and
2. To thc Rcdc� cloumcnt A�cnc� : E�ccpt for ta�cs «hich arc attributablc to a ta� ratc Ic� � b�
a ta�ing agcnc� for thc purposc of producing rc� cnucs to rcpa� bondcd indcbtcdncss appro� cd b� thc � otcrs
of thc ta�ing agcnc� on or aftcr Januan I. I 989. «hich shall bc allocatcd to and «hcn collcctcd shall bc paid
to thc respccti� c ta�ing agcnc� and c�ccpt for statutor� pass-through pa� mcnts. that portion of thc Ic� icd
ta�cs c;ach � car in c�ccss of thc amounts pro� idcd for in paragraph ( I) abo� c. shall bc allocatcd to. and «hcn
collcctcd. shall bc paid into a spccial fiind of thc Rcdc� clopmcnt Agcnc� to pa� thc principal of and intcrest
on bonds. loans. monc� s ad� anccd to. or indcbtcdncss (« hcthcr fiindcd. rcfiindcd. assumcd. or othcn� isc)
incurrcd b� thc Rcdc� clopmcnt Agcnc� to financc or rcfinancc. in «holc or in part. projccts and programs for
thc Projcct Arc;a. Whcn said bonds. loans. ad� anccs. and indcbtcdncss. if am. and intcrest thcrcon. ha� c bccn
o�,o � � r�,�-�
17
paid. all monc� s thcrcaftcr rccci� cd from ta�cs upon thc ta�ablc propert� in thc Projcct Arc;a. shall bc paid
into thc fiinds of thc respccti� c ta�ing agcncics as ta�cs on all othcr propert� arc paid.
Thc portion of ta�cs di� idcd and allocatcd to thc Rcdc� clopmcnt Agcnc� from thc Projcct Arca
pursuant to paragraph (2) abo�c shall not c�cccd a total of `f600 million c�ccpt b� amcndmcnt of thc
Rcdc� clopmcnt Plan. This limit docs not appl� to. includc or prc� cnt thc Rcdc� clopmcnt Agcnc� from
incurring dcbt to bc paid from thc Housing Sct-Asidc. or am amounts rcquircd to fiilfill thc
Rcdc� clopmcnt Agcnc� �s obligations undcr scction >>�41 � of thc Rcdc� clopmcnt La« .
Thc Rcdc� clopmcnt Agcnc� is authorizcd to makc plcdgcs of thc portion of ta�cs mcntioncd in
paragraph (2) abo� c as to spccific ad� anccs. loans and indcbtcdncss as appropriatc in carr� ing out thc
Rcdc� clopmcnt Plan in thc Projcct Arca. subjcct to thc limitations on allocation of ta�cs. dcbt crcation.
and bondcd indcbtcdncss containcd in thc Statc Hcalth and Safct� Codc and othcr applicablc la«s.
Undcr thc pro� isions of thc Rcdc� clopmcnt Plan. thc Rcdc� clopmcnt Agcnc� shall not cstablish
or incur loans. ad� anccs. or indcbtcdncss to financc in «holc or in part acti� itics in thc Projcct Arca
bc� ond thc datcs for thc arcas indicatcd in "Ti n: Piu�,ii:c r Aiii:n—Rcdc� clopmcnt Plan—Ilec%velupmenr
l'lan /,imit.s—Tablc I.�� Loans. ad� anccs. or indcbtcdncss ma� bc rcpaid o� cr a period of timc bc� ond said
timc limits. Thcsc limits. ho« c� cr. shall not prc� cnt thc Rcdc� clopmcnt Agcnc� from incurring dcbt to
bc paid from thc Housing Fund cstablishcd pursuant to Scction >;>>�4 � of thc Rcdc� clopmcnt La« and
thc Rcdc� clopmcnt Plan. or establishing morc dcbt in ordcr to fiilfill thc Rcdc� clopmcnt Agcnc� �s
obligations undcr Scction >>�41 � of thc Rcdc� clopmcnt La« and thc Rcdc� clopmcnt Plan. This limit
shall not prc� cnt thc Rcdc� clopmcnt Agcnc� from rcfinancing. rcfiinding or restructuring indcbtcdncss
aftcr thc timc limit if thc indcbtcdncss is not incrcascd and thc timc during «hich thc indcbtcdncss is to bc
rcpaid is not c�tcndcd bc� ond thc timc limits containcd in thc Rcdc� clopmcnt Plan.
T7�c Rcdc� clopmcnt Agcnc� ma� not rccci� c and shall not rcpa� indcbtcdncss «ith thc procccds
from propert� ta�cs rccci� cd pursuant to Scction >;670 of thc Rcdc� clopmcnt La« and thc Rcdc� clopmcnt
Plan bc� ond thc datcs for thc arc;as indicatcd in Tablc I. c�ccpt to rcpa� dcbt to bc paid from thc Housing
Fund cstablishcd pursuant to thc Scction >;>>�4. � of thc Rcdc� clopmcnt La« and thc Rcdc� clopmcnt Plan. or
dcbt cstablishcd in ordcr to fiilfill thc Rcdc� clopmcnt Agcnc� �s obligations undcr Scction >>�41 � of thc
Rcdc� clopmcnt La« and thc Rcdc� clopmcnt Plan.
Reserve Fund
Pursuant to thc 1998 Loan Agrccmcnt. a Rcscr� c Fund «as cstablishcd as additional sccurit� for thc
pa� mcnt b� thc Rcdc� clopmcnt Agcnc� of amounts duc undcr thc Parit� Loan Agrccmcnts. T7�c Rcscr� c
Fund is rcquircd to bc maintaincd b� thc Tnistcc in thc amount of thc "Rcscr� c Rcquircmcnt.�� T7�c Rcscr� c
Rcquircmcnt is dcfincd in thc Parit� Loan Agrccmcnts. as of a,�� datc of calculation. as thc Icast of:
(i) Ma�imum Annual Dcbt Scr� icc: (ii) 12�`%� of a� cragc annual dcbt scr� icc on thc Parit� Loans and all
outstanding Parit� Dcbt: and (iii) 10`%� of thc procccds of thc applicablc Parit� Loans (i.e. thc original
Principal Amount of thc Parit� Bonds) and thc procccds of am Parit� Dcbt.
T7�c Rcdc� clopmcnt Agcnc� plcdgcs and grants a licn and sccurit� intcrest to thc Tnistcc in thc
Rcscr� c Fund to sccurc thc pa� mcnt obligations of thc Rcdc� clopmcnt Agcnc� undcr thc Parit� Loan
Agrccmcnts. Amounts on dcposit in a Rcscr� c Fund ma� bc uscd solcl� for thc purposc of making transfcrs
to thc applicablc Intcrest Account. Principal Account. in such ordcr. in thc c� cnt of a dcficicnc� at am timc in
a��� such accounts «ith respcct to thc amounts duc on thc applicablc scrics of Parit� Bonds.
o�,o � � r�,�-�
ix
Follo«ing thc issuancc ofthc 2006 Scrics Bonds. thc Rcscr�c Rcquircmcnt «ill bc � . In
conncction «ith thc issuancc of thc 2006 Scrics Bonds. thc Rcdc� clopmcnt Agcnc� «ill dcposit a dcbt
scr� icc rescr� c surct� polic� in thc aggrcgatc amount of `f into thc Rcscr� c Fund. «hich togcthcr «ith
thc amounts on dcposit thcrcin in thc amount of `f «ill cqual thc Rcscr� c Rcquircmcnt.
Parity Debt and Subordinate Debt
/ssucu7ce of Pnrit�� Debt. In addition to thc 2006 Scrics Bonds. thc Rcdc� clopmcnt Agcnc� ma�. b�
supplcmcntal indcnturc. issuc or incur othcr loans. ad� anccs or indcbtcdncss pa� ablc from Ta� Rc� cnucs or
Subordinatc Ta� Rc� cnucs. on a parit� «ith thc 2006 Scrics Bonds. thc 2001 Scrics Bonds and thc 1998
Scrics Bonds ("Parit� Dcbt��) and refiinding bonds issucd solcl� to financc and refinancc rcdc� clopmcnt
acti� itics «ith respcct to thc Projcct Arca in such principal amount as shall bc dctcrmincd b� thc
Rcdc� clopmcnt Agcnc� .
T7�c Rcdc� clopmcnt Agcnc� co� cnants in thc 2006 Loan Agrccmcnt that it «ill not incur am
indcbtcdncss pa�ablc from all or am part of thc Ta� Rc� cnucs othcr than: (i) thc Parit� Loans: (ii) additional
Parit� Dcbt subjcct to thc conditions dcscribcd bclo«. and (iii) am dcbt sccurcd b� a plcdgc ofTa� Rc�cnucs
«hich is subordinatc to thc plcdgc of Ta� Rc� cnucs crc;atcd b� thc Parit� Loan Agrccmcnts. T7�c
Rcdc� clopmcnt Agcnc� has fiirthcr co� cnantcd in thc 2006 Loan Agrccmcnt that it «ill not amcnd thc
Rcdc� clopmcnt Plan (c�ccpt for thc purposc of c�tcnd or climinating thc timc limit for thc rcccipt of ta�
incrcmcnt. or incrc;asing thc limitation on thc numbcr of dollars of ta�cs to bc allocatcd to thc Rcdc� clopmcnt
Agcnc� ) or am of thc Pass-Through Agrccmcnts. or cntcr into am agrccmcnt «ith thc Count� or am othcr
go� crnmcntal unit. «hich «ould ha� c thc cffcct of rcducing thc amount of Ta� Rc� cnucs a� ailablc to thc
Rcdc� clopmcnt Agcnc� for pa� mcnt of thc Parit� Loans unlcss thc Rcdc� clopmcnt Agcnc� has first
obtaincd: (i) a rcport of an Indcpcndcnt Rcdc� clopmcnt Consultant stating that thc amount of Ta� Rc� cnucs
for thc thcn currcnt Fiscal Yc;ar (calculatcd on thc assumption that such rcduction of Ta� Rc� cnucs «as in
cffcct throughout such Fiscal Yc;ar). plus. at thc option of thc Rcdc� clopmcnt Agcnc�. thc Additional
Rc� cnucs. «ill mcct thc co� cragc tcst sct forth in paragraph (b) bclo«. and (ii) thc permission of thc Bond
Insurcr.
Pursuant to thc 2006 Loan Agrccmcnt. thc Rcdc� clopmcnt Agcnc� ma� issuc or incur additional
Parit� Dcbt subjcct to thc follo« ing spccific conditions:
(a) No E� cnt of Dcfault has occurrcd and is continuing undcr and as dcfincd in thc 2006 Loan
Agrccmcnt. and thc Rcdc� clopmcnt Agcnc� is othcn� isc in compliancc «ith all co� cnants sct forth in thc
2006 Loan Agrccmcnt.
(b) T7�c amount of Ta� Rc� cnucs for thc thcn currcnt Fiscal Ycar. as sct forth in a Ccrtificatc of
thc Rcdc� clopmcnt Agcnc� . bascd on asscsscd � aluation of propert� in thc Projcct Arca as c� idcnccd in thc
«rittcn rccords of thc Count�. plus at thc option of thc Rcdc� clopmcnt Agcnc� thc Additional Rc� cnucs.
shall bc at Ic;ast cqual to 12�`%� of Ma�imum Annual Dcbt Scr� icc.
(c) T7�c rclatcd Dcbt Instnimcnt pro� idcs that thc balancc of thc Rcscr� c Fund «ill bc incrc;ascd
to thc nc« Rcscr� c Rcquircmcnt cffccti� c aftcr thc incurrcncc of such Parit� Dcbt.
(d) T7�c rclatcd Dcbt Instnimcnt pro� idcs that am Parit� Dcbt that bcars currcnt intcrest is
pa�ablc on April I and Octobcr I ofam �c;ar: and thc principal on such Parit� Dcbt is pa�ablc on thc samc
datc as principal and intcrest on thc 2006 Loans arc pa�ablc.
(c) T7�c issuancc of such Parit� Dcbt «ill not causc thc Rcdc� clopmcnt Agcnc� to c�cccd am
applicablc limitations containcd in thc Rcdc� clopmcnt Plan.
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19
(� T7�c Rcdc� clopmcnt Agcnc� dcli� crs to thc Tnistcc a«rittcn ccrtificatc ccrtifi ing that thc
conditions prcccdcnt to thc issuancc of such Parit� Dcbt sct forth in subparagraphs (a) through (c) abo� c ha� c
bccn satisficd.
.Suborclii7nte Debt. In addition to thc Parit� Loans and am Parit� Dcbt. thc Rcdc� clopmcnt Agcnc�
ma� from timc to timc issuc or incur Subordinatc Dcbt in such principal amount as dctcrmincd b� thc
Rcdc� clopmcnt Agcnc�. pro� idcd that thc issuancc of such Subordinatc Dcbt «ill not causc thc
Rcdc� clopmcnt Agcnc� to c�cccd am applicablc limitations containcd in thc Rcdc� clopmcnt Plan.
Investment of Funds
All fiinds hcld b� thc Tnistcc undcr thc 2006 Indcnturc arc rcquircd to bc im cstcd in Pcrmittcd
Im cstmcnts. Scc APPI:NUIX D attachcd hcrcto for thc dcfinition of Pcrmittcd Im cstmcnts. All fiinds hcld b�
thc Rcdc� clopmcnt Agcnc� . including thc Spccial Fund into «hich all Ta� Rc� cnucs and Subordinatc Ta�
Rc� cnucs arc initiall� dcpositcd. ma� bc im cstcd b� thc Rcdc� clopmcnt Agcnc� in am im cstmcnt
authorizcd b� la« . Scc thc auditcd financial statcmcnts of thc Rcdc� clopmcnt Agcnc� for thc � car cndcd
Junc �0. 200� attachcd hcrcto as APPI:NUIX B for a dcscription of thc Rcdc� clopmcnt Agcnc� �s im cstmcnt
polic� at Junc �0. 200�. All im cstmcnts. including thc Pcrmittcd Im cstmcnts and thosc authorizcd b� la«
from timc to timc for im cstmcnts b� municipalitics. contain a ccrtain dcgrcc of risk. Such risks includc. but
arc not limitcd to. a lo«cr ratc of rcturn than c�pcctcd and loss or dcla�cd reccipt of principal. T7�c
occurrcncc of thcsc c� cnts «ith respcct to amounts hcld undcr thc 2006 Indcnturc or thc Spccial Funds could
ha� c a matcrial ad� crsc affcct on thc sccurit� for thc 2006 Scrics Bonds.
BONDINSURANCE
��1L' fUllU117Yl��� !YlfUl'177Cf1lUl9 �1Cf.1' J7L'L'Y! flll'Y!!.1'�1L'L% J71' 1�1L' RUl9Ll �Yl.1'1lPL'l' fUl' 11.1'L' !Y! 1�1l.1' i)f f!ClCf� .S�1Cf1L'177L'Yl1.
Refei�ence i.s mac% tu Al'l'l: �7�/.�" H, fui� a.specimen uf'tl�e l�lYlCfYlClCf� G1lCfl'CfYlh' �Yl.1'tll'CfYlCL' l'ulic�� tu he i.s.siiecl h��
tl�e RUl9Ll �Yl.1'1lPL'l'. I�9L' Rec%velupment A,��encr make.s nu i�epi�e.sentatiun.s a.s tu tl�e acciu�acr ui� cumpletene.s.s
uf't/�i.s infui�matiun ui� a.s tu t/�e ah.sence uf'matei�ia/ ac/vei�.se c/urn,��L'.1' !Y! 1�9l.1' !YlfU/'/77Cf1lU/9 .1'11J7.1'L'L�1lL'Y!1 lU t/�e
clate l�ei'euf.' . .
7%e RUl9Ll �Yl.1'1lPL'l' CfCCL'�)1.1' Y!U i�e.spun.sihilih� .fui� tl�e acciu�acr ui� cumpletene.s.s uf' tl�i.s Of'Jicial
.S'tatement ui� an�� utl�ei� infui�matiun ui� cli.sclu.siu�e cuntainecl %ei�ein. ui� umittecl %ei�efi�um. utl�ei� tl�an tiritl�
i�e.spec7 tu tl�e acciu�acr uf'tl�e infui�matiun i�e,��co�clin,�� tl�e RUl9Ll �Yl.1'1lPL'l' CfYlLl 11.1' Cfffl�lCf1L'.1' .1'L'1 fUl'1�9 1lYlL%L'l' 1�9l.1'
�1L'CfLllYl���. �Y! CfL%Lll1lUl9. 1�1L' RUl9Ll �Yl.1'1lPL'l' 177Cf�CL'.1' Y!U PL'�)PL'.1'L'Yl1Cf1lUl9 PL'���CO'LllYl��� 1�1L' �ilil� .S�L'/7L'.1' �Ul9L%1' Ul' 1�1L'
ac/vi.sahi/ih' Uf !YlVL'.1'1!Yl,�� in t/�e ?00<.S'ei�ie.s Runcls.
�TO COME�
LIMITATIONS ON TAX REVENUES
Article X111 A of State Constitution
On Junc 6. 1978. California � otcrs appro� cd Proposition I�("Proposition I�"). «hich addcd Articic
XIII A to thc Statc Constitution ("Articic XIII A��). Articic XIII A. as amcndcd. limits thc amount of am
acl valui�em ta� on rcal propert� to onc perccnt of thc fiill cash � aluc thcrcof. c�ccpt that additional
acl valui�em ta�cs ma� bc Ic� icd to pa� dcbt scr� icc on (i) indcbtcdncss appro� cd b� thc � otcrs prior to Jul� I.
1978. (ii) (as a result ofan amcndmcnt to Articic XIII A appro�cd b� Statc �otcrs on Junc �. 1986) on bondcd
indcbtcdncss for thc acquisition or impro� cmcnt of rc;al propert� «hich has bccn appro� cd on or aftcr Jul� I.
1978 b� t«o-thirds of thc �otcrs on such indcbtcdncss. and (iii) bondcd indcbtcdncss incurrcd b� a school
o�,o � � r�,�-�
20
district or communit� collcgc district for thc constniction. rcconstniction. rchabilitation or rcplaccmcnt of
school facilitics or thc acquisition or Icasc of rc;al propert� for school facilitics. appro� cd b� ��`%� of thc � otcrs
of thc district. but onl� if ccrtain accountabilit� mcasures arc includcd in thc proposition. Articic XIII A.
among othcr things affccts thc � aluation of rc;al propert� for thc purposc of ta�ation in that it dcfincs thc fiill
cash propert� � aluc to mcan "thc count� asscssor�s � aluation of rc;al propert� as sho« n on thc 197�-76 ta�
bill undcr 'fiill cash �aluc�. or thcrcaftcr. thc appraiscd �aluc of rc;al propert� «hcn purchascd. nc«I�
constnictcd. or a changc in o« ncrship has occurrcd aftcr thc 197� asscssmcnt.�� Thc fiill cash � aluc ma� bc
adjustcd annuall� to rcflcct inflation at a ratc not to c�cccd 2`%� per � c;ar. a rcduction in thc consumcr pricc
indc� or comparablc local data. or dcclining propert� � aluc causcd b� damagc. dcstniction or othcr factors
including a gcncral cconomic do« nturn.
In thc gcncral cicctions of 1986. 1988 and 1990. California � otcrs appro� cd � arious mcasures «hich
fiirthcr amcndcd Articic XIII A. Onc such amcndmcnt gcncrall� pro� idcs that thc purchasc or transfcr of (i)
rc;al propert� bct«ccn spouscs or (ii) thc principal residcncc and thc first �I.000.000 ofthc fiill cash �aluc of
othcr rc;al propert� bct«ccn parcnts and children. do not constitutc a"purchasc�� or "changc of o«ncrship��
triggcring rc;asscssmcnt undcr Articic XI II A. T7�is amcndmcnt rcduccs thc propert� ta� rc� cnucs of thc Cit�
and thc ta� incrcmcnt of thc Rcdc� clopmcnt Agcnc� . Othcr amcndmcnts permittcd thc Lcgislaturc to allo«
persons o� cr �� «ho scll thcir residcncc and on or aftcr No� cmbcr �. 1986. bu� or build anothcr residcncc of
cqual or Icsscr �aluc «ithin t«o �cars in thc samc count�. to transfcr thc old residcncc�s asscsscd �aluc to thc
nc« residcncc. and permittcd thc Lcgislaturc to authorizc cach count� undcr ccrtain circumstanccs to adopt
an ordinancc making such transfcr or asscsscd �aluc applicablc to situations in «hich thc rcplaccmcnt
d«clling purchascd or constnictcd aftcr No�cmbcr 8. 1988. is locatcd «ithin that count� and thc original
propert� is locatcd in anothcr count� «ithin thc Statc.
In thc Junc 1990 cicction. thc � otcrs of thc Statc appro� cd additional amcndmcnts to Articic XII I A
permitting thc California Lcgislaturc to c�tcnd thc rcplaccmcnt d«clling pro�isions applicablc to persons
o� cr �� to sc� crcl� disablcd homco« ncrs for rcplaccmcnt d«cllings purchascd or nc« I� constnictcd on or
aftcr Junc �. 1990. and to c�cludc from thc dcfinition of "nc« constniction�� triggcring rc;asscssmcnt
impro�cmcnts to ccrtain d«cllings for thc purposc of making thc d«clling morc acccssiblc to sc�crcl�
disablcd persons. In thc No� cmbcr 1990 cicction. thc � otcrs appro� cd thc amcndmcnt to Articic XII I A to
permit thc Statc Lcgislaturc to c�cludc from thc dcfinition of "nc« constniction�� scismic rctrofitting
impro� cmcnts or impro� cmcnts utilizing c;arthquakc hazard mitigation tcchnologics constnictcd or installcd
in c�isting buildings aftcr No� cmbcr 6. 1990.
Both thc California Suprcmc Court and thc Unitcd Statcs Suprcmc Court ha� c uphcld thc
constitutionalit� of Articic XIII A.
(.71n!lei7�;es to Article X/// A. On Scptcmbcr 22. 1978. thc California Suprcmc Court uphcld thc
amcndmcnt o� cr challcngcs on sc� cral statc and fcdcral constitutional grounds (Amaclui� G'crlle�� Juint
Uniun Hi,��l� .S'c%uul l)i.sti�ict v. .S'tate Rucn�cl uJ�l:�yi�alizariun). Thc Court rescr�cd ccrtain constitutional
issucs and thc �alidit� of Icgislation implcmcnting thc amcndmcnt for firturc dctcrmination in proper
cascs. Sincc 1978. sc� cral cascs ha� c bccn dccidcd intcrprcting � arious pro� isions of Articic XIII A:
ho« c� cr. nonc of thcm ha� c qucstioncd thc abilit� of rcdc� clopmcnt agcncics to usc ta� allocation
financing. Thc Unitcd Statcs Suprcmc Court uphcld thc � alidit� of thc asscssmcnt proccdures of Articic
XIII A in Nui�cllin,��ei� v. Hal�n.
Thc Rcdc� clopmcnt Agcnc� cannot prcdict «hcthcr thcrc «ill bc am firturc challcngcs to
California�s prescnt s� stcm of propert� ta� asscssmcnt and cannot c� aluatc thc ultimatc cffcct on thc
Rcdc� clopmcnt Agcnc� �s rcccipt of Ta� Rc� cnucs should a firturc dccision hold unconstitutional thc
mcthod of asscssing propert� .
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21
/mplemei7tii7�; I.e�;islntioi7. Lcgislation cnactcd b� thc California Lcgislaturc to implcmcnt
Articic XIII A pro�idcs that all ta�ablc propert� is sho«n at fiill asscsscd �aluc as dcscribcd abo�c. In
conformit� «ith this proccdurc. all ta�ablc propert� � aluc includcd in this Official Statcmcnt (c�ccpt as
notcd) is sho« n at 100`%� of asscsscd � aluc and all gcncral ta� ratcs rcflcct thc `f I per `f 100 of ta�ablc
� aluc. Ta� ratcs for � otcr appro� cd bondcd indcbtcdncss and pcnsion liabilit� arc also applicd to 100�%� of
asscsscd � aluc.
Futurc asscsscd �aluation gro«th allo«cd undcr Articic XIII A(nc« construction. changc of
o« ncrship. 2`%� annual � aluc gro«th) «ill bc allocatcd on thc basis of "situs�� among thc jurisdictions that
scr�c thc ta� ratc arca «ithin «hich thc gro«th occurs. c�ccpt for ccrtain utilit� propert� asscsscd b� thc
Statc Board of Equalization. Local agcncics and school districts «ill sharc thc gro«th of "basc�� rc� cnuc
from thc ta� ratc arca. Each � car�s gro«th allocation bccomcs part of cach agcnc� �s allocation thc
follo« ing � car. Thc Rcdc� clopmcnt Agcnc� is unablc to prcdict thc naturc or magnitudc of firturc
rc� cnuc sourccs «hich ma� bc pro� idcd b� thc Statc to rcplacc lost propert� ta� rc� cnucs. Articic XI II A
cffccti� cl� prohibits thc Ic� � ing of am othcr acl valui�em propert� ta� abo� c thc I`%� limit c�ccpt for ta�cs
to support indcbtcdncss appro� cd b� thc � otcrs as dcscribcd abo� c.
Scc "CI:RInIN RISKs Ic� Bc�NUIIc�I,UI:Rs—Rcduction in Inflationar� Ratc�� rcgarding ccrtain
litigation rclating to propert� asscssmcnts and thc pro� ision of Articic XIII A limiting thc annual inflation
adjustmcnt to t«o perccnt «hcn thc asscssor tricd to "rccapturc�� thc ta� �aluc of thc propert� b�
incrcasing its asscsscd � aluc b� appro�imatcl� four perccnt in a singlc � car.
I.iti�;ntioi7 Re�;nrclii7�; 2% I.imitntioi7. Scction � I of thc Rc� cnuc and Ta�ation Codc permits count�
asscssors «ho ha� c rcduccd thc asscsscd � aluation of a propert� as a result of natural disastcrs. cconomic
do« nturns or othcr factors. to subscqucntl� "rccapturc�� such � aluc (up to thc prc-dcclinc � aluc of thc
propert� ) at an annual ratc highcr than 2`%�. dcpcnding on thc asscssor�s mcasurc of thc restoration of � aluc of
thc damagcd propert�. T7�c constitutionalit� of this proccdurc «as challcngcd in a la«suit brought in thc
Orangc Count� Superior Court cntiticd ('ui�nh� uf'Oi�avr,��e v. Oi�an,��e ('ui�nh� A.,�.,�e.,�.,vnent AppeaL,� Rucn�cl Nu. -1
and in similar la«suits brought in othcr countics. on thc basis that thc dccrc;asc in asscsscd �aluc crc;atcs a
nc« "basc � car � aluc" for purposcs of Proposition I� and that subscqucnt incrc;ascs in thc asscsscd � aluc of a
propert� b� morc than 2`%� in a singlc � car � iolatc Articic XIII A. In 2001. thc Orangc Count� Superior Court
issucd an ordcr dcclaring thc rccapturc practicc to bc unconstitutional as applicd to thc plaintiffta�pa�cr. On
March 26. 200�4. thc Court of Appc;al hcld that thc trial court crrcd in niling that asscsscd �aluc
dctcrminations arc al«a� s limitcd to no morc than 2`%, of thc prc� ious � car�s asscsscd � aluc and re� crscd thc
judgmcnt of thc trial court. On Jul� 21. 200�4. thc California Statc Suprcmc Court dcnicd a pctition to rc� ic«
thc dccision of thc Court of Appcal.
Article X111 B of the State Constitution; Appropriation Limitations
An initiati� c to amcnd thc Statc Constitution «as appro� cd on Scptcmbcr 6. 1979 thcrcb� adding
Articic XIII B to thc Statc Constitution ("Articic XIII B��). Articic XIII B limits thc annual appropriations
from thc procccds of ta�cs of thc Statc and am cit�. count�. school district. authorit� or othcr political
subdi� ision of thc Statc to thc Ic� cl of appropriations for thc prior fiscal � car. as adjustcd for changcs in thc
cost of li� ing. population and scr� iccs rcndcrcd b� thc go� crnmcntal cntit� . Articic XIII B includcs a
rcquircmcnt that if an cntit� �s rc� cnucs in am � car c�cccd thc amount permittcd to bc spcnt. thc c�ccss
«ould ha� c to bc rcturncd b� rc� ising ta� or fcc schcdulcs o� cr thc subscqucnt t« o� c:ars.
Effccti� c Scptcmbcr �0. 1980. thc Statc Lcgislaturc addcd Scction >;678 to thc Rcdc� clopmcnt La«
«hich pro� idcs that thc allocation of ta�cs to a rcdc� clopmcnt agcnc� for thc purposc of pa� ing principal of.
or intcrest on. loans. ad� anccs or indcbtcdncss incurrcd for rcdc� clopmcnt acti� it� shall not bc dccmcd thc
rcccipt b� such agcnc� of procccds of ta�cs «ithin thc mc;aning of Articic XIII B. nor shall such portion of
ta�cs bc dccmcd reccipt of procccds of ta�cs b�. or a��� appropriation subjcct to thc limitation of. am othcr
o�,o � � r�,�-�
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public bod� «ithin thc mcaning or thc purposc of thc Constitution and la«s of thc Stntc. including Scction
>;678 ofthc Rcdc�clopmcnt La«. T«o Statc appcllatc court dccisions ha�c uphcld thc constitutionalit� of
Scction >;678. and in thc onc casc in «hich a pctition for rc� ic« «as filcd in thc California Suprcmc Court.
such pctition «as dcnicd.
Articles X111 C and X111 D of the State Constitution
On No� cmbcr �. 1996. California � otcrs appro� cd Proposition 218—Votcr Appro� al for Local
Go� crnmcnt Ta�cs—Initiati� c Constitutional Amcndmcnt. Proposition 218 addcd Articics XIII C and XIII D
to thc California Constitution. imposing ccrtain � otc rcquircmcnts and othcr limitations on thc imposition of
nc« or incrc;ascd ta�cs. asscssmcnts and propert� -rclatcd fccs and chargcs. Thc Bonds are sccurcd b�
sourccs of rc� cnucs that arc not subjcct to limitation b� Proposition 218.
Taxation of Unitary Property
AB �4��4 (Statutcs of I 987. Chaptcr 92 I) pro� idcs a rc� iscd mcthod of rcporting and allocating
propert� ta� rc� cnucs gcncratcd from most Statc-asscsscd unitar� propertics commcncing «ith Fiscal Ycar
1988-89. Undcr AB �1��4. thc Statc rcports to c;ach count� auditor-controllcr on thc count�-«idc unitar�
ta�ablc �aluc of c;ach utilit�. «ithout an indication of thc distribution of thc �aluc among ta� ratc arc;as.
AB �4��4 pro� idcs t«o formulas for auditor-controllcrs to usc in ordcr to dctcrminc thc allocation of unitar�
propert� ta�cs gcncratcd b� thc count� -« idc unitan � aluc. «hich arc: (i) for rc� cnuc gcncratcd from thc I`%�
ta� ratc. c;ach jurisdiction is to rccci� c up to 102`%� of its prior � car unitar� propert� ta� incrcmcnt rc� cnuc.
ho« c� cr. if count� -« idc rc� cnucs gcncratcd for unitnn propertics arc grcatcr than 102`%� of prior � car
rc� cnucs. c;ach jurisdiction rccci� cs a perccntagc sharc of thc c�ccss unitar� rc� cnucs cqual to thc perccntagc
of c;ach jurisdiction�s sharc of sccurcd propert� ta� rc� cnucs: or (ii) for rc� cnuc gcncratcd from thc
application of thc dcbt scr� icc tati ratc to count� -« idc unitnr� tn�ablc � aluc. cach jurisdiction is to rccci� c a
perccntagc sharc of rc� cnuc bascd on thc jurisdiction�s annual dcbt scr� icc rcquircmcnts and thc perccntagc
of propert� ta�cs rccci� cd b� cach jurisdiction from unitan propert� ta�cs.
T7�c pro� isions of AB �4��4 appl� to all Statc-asscsscd propert�. c�ccpt railroads and non-unitar�
propertics thc � aluation of «hich «ill continuc to bc allocatcd to indi� idual ta� ratc arc;as. Thc pro� isions of
AB �4��4 do not constitutc an climination or rc�crsion ofthc mcthod ofasscssing utilitics b� thc Statc Board of
Equalization. AB �4��4 allo«s. gcncrall�. �aluation gro��th or dcclinc of Statc-asscsscd unitar� propert� to bc
sharcd b� all jurisdictions «ithin a count� .
T7�c unitan rc� cnuc allocation madc b� thc Count� Auditor-Controllcr to thc Projcct Arc;a for Fiscal
Ycar 200�4-0� �� as � . For Fiscal Ycar 200�-06. thc aggrcgatc amount of unitar� rc� cnuc is cstimatcd
to bc � .
Property Tax Collection Procedw•es
(.7nssificntioi7s. In California. propert� «hich is subjcct to ad �alorcm ta�cs is classificd as
"sccurcd�� or "unsccurcd.�� Sccurcd and unsccurcd propert� arc cntcrcd on scparatc parts of thc asscssmcnt
roll maintaincd b� thc count� asscssor. Thc sccurcd classification includcs propert� on «hich am propert�
ta� Ic� icd b� thc Count� bccomcs a licn on that propert� sufficicnt. in thc opinion of thc count� asscssor. to
sccurc pa� mcnt of thc ta�cs. E� cr� ta� «hich bccomcs a licn on sccurcd propert� has priorit� o� cr all othcr
licns on thc sccurcd propert�. rcgardlcss of thc timc of thc crc;ation of othcr licns. A tas Ic� icd on unsccurcd
propcm docs not bccomc a licn against thc propert�. but ma� bccomc a licn on ccrtain othcr propert� o«ncd
b� thc ta�pa� cr.
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2�
(.'o!lectioi7s. T7�c mcthod of collccting dclinqucnt ta�cs is substantiall� diffcrcnt for thc t«o
classifications of propert� . Thc ta�ing authorit� has four «a�s of collccting unsccurcd propert� ta�cs in thc
abscncc of timcl� pa� mcnt b� thc ta�pa� cr: ( I) a ci� il action against thc ta�pa� cr: (2) filing a ccrtificatc in thc
officc of thc count� cicrk spccifi ing ccrtain facts in ordcr to obtain a judgmcnt licn on ccrtnin propert� of thc
ta�pa� cr: (�) filing a ccrtificatc of dclinqucnc� for rccord in thc count� rccordcr�s officc. in ordcr to obtain a
licn on ccrtain propert� of thc ta�pa� cr: and (�4) scizurc and salc of thc personal propert�. impro� cmcnts or
posscsson intcrests bclonging or asscsscd to thc asscsscc.
T7�c c�clusi� c mcans of cnforcing thc pa� mcnt of dclinqucnt ta�cs «ith respcct to propert� on thc
sccurcd roll is thc salc of propert� sccuring thc ta�cs to thc Statc for thc amount of ta�cs «hich arc
dclinqucnt.
Currcnt ta� pa� mcnt practiccs b� thc Count� pro� idc for pa� mcnt to thc Rcdc� clopmcnt Agcnc� of
Ta� Rc� cnucs monthl� throughout thc fiscal � car. «ith thc majorit� of Ta� Rc� cnucs dcri� cd from sccurcd
propert� paid to thc Rcdc� clopmcnt Agcnc� in mid-Dcccmbcr and mid-April. and thc majorit� of Ta�
Rc� cnucs dcri� cd from unsccurcd propert� paid to thc Rcdc� clopmcnt Agcnc� b� mid-No� cmbcr. A final
rcconciliation is madc aftcr thc closc of thc fiscal � car to incorporatc all adjustmcnts to prc� iousl� rcportcd
currcnt �c;ar ta�ablc �alucs. T7�c diffcrcncc bct«ccn thc final rcconciliation and Ta� Rc�cnucs prc�iousl�
allocatcd to thc Rcdc� clopmcnt Agcnc� is allocatcd mid-August.
Pei7nities. A 10`%� pcnalt� is addcd to dclinqucnt ta�cs «hich ha� c bccn Ic� icd «ith respcct to
propert� on thc sccurcd roll. In addition. propert� on thc sccurcd roll on «hich ta�cs arc dclinqucnt is sold to
thc Statc on or about Junc �0 of thc fiscal � car. Such propert� ma� thcrcaftcr bc rcdccmcd b� pa� mcnt of thc
dclinqucnt ta�cs and a dclinqucnc� pcnalt�. plus a rcdcmption pcnalt� of I`%� per month to thc timc of
rcdcmption and a`f I� Rcdcmption Fcc. If ta�cs arc unpaid for a period of fi� c� cars or morc. thc propert� is
dccdcd to thc Statc and thcn is subjcct to salc b� thc count� tn� collcctor. A 10�1� pcnalt� also applics to thc
dclinqucnt ta�cs on propert� on thc unsccurcd roll. and fiirthcr. an additional pcnalt� of I`%� per month
accnics «ith respcct to such ta�cs bcginning thc first da� of thc third month follo« ing thc dclinqucnc� datc.
Delii7quei7cies. T7�c � aluation of propert� is dctcrmincd as of Januan I c;ach � c;ar and cqual
installmcnts of ta�cs Ic� icd upon sccurcd propert� bccomc dclinqucnt aftcr thc follo« ing Dcccmbcr 10 and
April 10. Ta�cs on unsccurcd propert� arc duc April I. Unsccurcd ta�cs cnrollcd b� Jul� � I. if unpaid. arc
dclinqucnt August � I at �:00 p.m. and are subjcct to pcnalt�: unsccurcd ta�cs addcd to thc roll aftcr Jul� � I.
if unpaid. arc dclinqucnt on thc last da� of thc month succccding thc month of cnrollmcnt.
.Supplemei7tn! Assessmei7ts. A bill cnactcd in 198 �. SB 81 �(Statutcs of 198 �. Chaptcr �498).
pro� idcs for thc supplcmcntnl asscssmcnt and tnxation of propert� as of thc occurrcncc of a changc in
o«ncrship or complction of nc« constniction. Prc� iousl�. statutcs cnablcd thc asscssmcnt of such changcs
onl� as of thc nc�t Januan I ta� licn datc follo« ing thc changc and thus dcla� cd thc rc;alization of incrc;ascd
propert� ta�cs from thc nc« asscssmcnts for up to 1�4 months. As cnactcd. Chaptcr �498 pro� idcs incrc;ascd
rc� cnuc to rcdc� clopmcnt agcncics to thc c�tcnt that supplcmcntal asscssmcnts as a result of nc«
constniction or changcs of o« ncrship occur «ithin thc boundarics of rcdc� clopmcnt projccts subscqucnt to
thc Januan I licn datc. To thc c�tcnt such supplcmcntal asscssmcnts occur «ithin thc Projcct Arc;a. Ta�
Rc� cnucs ma� incrc;asc.
Property Tax Administrative Costs
Lcgislation cnactcd b� thc Statc Lcgislaturc authorizcs count� auditors to dctcrminc propert� ta�
administrati� c costs proportionatcl� attributablc to local jurisdictions and to submit im oiccs to thc
jurisdictions for such costs. Subscqucnt Icgislation spccificall� includcs rcdc� clopmcnt agcncics among thc
cntitics that are subjcct to such chargcs. Spccificall�. in 1990 thc Statc Icgislaturc cnactcd SB 2��7
(Chaptcr �466. Statutcs of I 990) authorizing countics to chargc for thc cost of asscssing. collccting and
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2�4
allocating propert� ta� rc� cnucs to local go� crnmcnts jurisdictions in proportion to thc ta� dcri� cd re� cnucs
allocatcd to cach. SB I��9 (Chaptcr 697. Statutcs of 1992) c�plicitl� includcs rcdc� clopmcnt agcncics
among thc jurisdictions «hich are subjcct to such chargcs. T7�c Count� collccts propert� ta� administration
costs from thc Rcdc� clopmcnt Agcnc� b� dcducting such costs from ta� rc� cnucs prior to dcli� cring such
amounts to thc Rcdc� clopmcnt Agcnc� . For Fiscal Ycar 200�4-0� thc Count� �s administrati� c fcc «as
I.22�4�`%� of thc gross ta� incrcmcnt rc� cnucs from thc Projcct Arca or `f I I 8.9��4. and for Fiscal Yc;ar 200�-
06. thc Count� administrati� c fcc is cstimatcd to bc � 126. �80. For purposcs of projccting Ta� Rc� cnucs. thc
Fiscal Consultant assumcs that this administrati� c fcc «ill rcmain at � I.22�4� �`%�. Scc also AI�I�I:Nu►x A—
..R►:►�c�►irc�r r►►►:F►scn►.Cc�Nsu►:rnN�r...
Housing Set-Aside
Scctions >;>>�4.2 and >;>>�4. � of thc Rcdc� clopmcnt La« (addcd b� Chaptcr I>; 7. Statutcs of I 976)
rcquirc rcdc� clopmcnt agcncics to sct asidc 20'%� of all ta� incrcmcnt dcri� cd from rcdc� clopmcnt projcct
arc;as cstablishcd aftcr Dcccmbcr � I. 1976 in a lo«- and modcratc-incomc housing fiind. Scction >;>>�4.2
pro� idcs that this lo«- and modcratc-incomc housing rcquircmcnt can bc rcduccd or climinatcd if a
rcdc� clopmcnt agcnc� finds annuall� b� resolution. consistcnt «ith thc housing cicmcnt of thc communit� �s
gcncral plan. thc follo« ing: (a) that no nccd c�ists in thc communit� to impro� c. incrcasc. or prescr� c thc
suppl� of lo« - and modcratc-incomc housing. including its sharc of thc rcgional housing nccds of � cn lo«
incomc houscholds and persons and familics of lo« or modcratc incomc: (b) that somc statcd perccntagc Icss
than 20`%� of thc ta� incrcmcnt is sufficicnt to mcct thc housing nccds of thc communit�. including its sharc of
thc rcgional housing nccds of persons and familics of lo« or modcratc incomc and � cr� lo« incomc
houscholds: or (c) that thc communit� is making substantial cfforts. consisting of dircct financial
contributions of fiinds from statc. local and fcdcral sourccs for lo«- and modcratc-incomc housing of
cqui�alcnt impact. to mcct its c�isting and projcctcd housing nccds (including its sharc of rcgional housing
nccds). T7�c Rcdc� clopmcnt Agcnc� currcntl� dcposits thc 20'%� of gross ta� incrcmcnt rc� cnucs in its Lo«
and Modcratc Incomc Housing Fund. Such fiinds arc not Ta� Rc� cnucs and arc not plcdgcd to thc
rcpa� mcnt of thc 2006 Scrics Bonds. Pursuant to thc Rcdc� clopmcnt La«. housing sct-asidc fiinds ma� bc
plcdgcd to thc rcpa� mcnt of bonds onl� to thc c�tcnt procccds of such bonds arc uscd (or arc uscd to rcfiind
bonds. thc procccds of «hich «crc uscd) to financc lo« and modcratc incomc housing purposcs. Scc
"SI:CURI"I Y �NU SOURCI:S OF P�YMI:N�I FOR "I I II: BONUS-AlloCation of Ta�cs.��
As amcndcd b� AB � I�(Chaptcr 872. Statutcs of 1991). Scction >;>>�4.2 has additional restrictions
on thc abilit� to rcducc or climinatc thc lo« and modcratc incomc housing rcquircmcnt. A communit� can
claim that no nccd c�ists. or can claim that Icss than 20`%� of ta� incrcmcnt rc� cnuc is sufficicnt. onl� if that
claim is consistcnt «ith thc housing cicmcnt of thc communit� �s gcncral plan. T7�c authorit� for communitics
to claim an "cqui� alcnt cffort�� c�cmption «as rcpcalcd as of Junc �0. 199 �. c�ccpt for obligations incurrcd
prior to Ma� I. 1991. «hich «crc cntcrcd into «ith thc undcrstanding that thc "cqui�alcnt cffort�� c�cmption
«ould remain intact. T7�c Rcdc� clopmcnt Agcnc� has madc no such findings.
Certification of Redevelopment Agency Indebtedness
Undcr thc Rcdc� clopmcnt La«. rcdc� clopmcnt agcncics must filc «ith thc count� auditor a
statcmcnt of indcbtcdncss for c;ach projcct arc;a not latcr than thc first da� of Octobcr of cach � car. As
dcscribcd bclo«. thc statcmcnt of indcbtcdncss controls thc amount of ta� incrcmcnt rc� cnuc that «ill bc paid
to thc Rcdc� clopmcnt Agcnc� in cach fiscal � car.
Each statcmcnt of indcbtcdncss is filcd on a form prescribcd b� thc Statc Controllcr and spccifics.
among othcr things: (i) thc total amount of principal and intcrest pa�ablc on all loans. ad�anccs or
indcbtcdncss (thc "Dcbt��). both o� cr thc lifc of thc Dcbt and for thc currcnt fiscal � c;ar. and (ii) thc amount of
"a� ailablc rc� cnuc�� as of thc cnd of thc prc� ious fiscal � c;ar. "A� ailablc rc� cnuc�� is calculatcd b� subtracting
thc total pa� mcnts on Dcbt during thc prc� ious fiscal � car from thc total rc� cnucs (both ta� incrcmcnt
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2�
rc� cnucs and othcr rc� cnucs) rccci� cd during thc prc� ious fiscal � car. plus am carr� fon� ard from thc prior
fiscal � c;ar. A� ailablc rc� cnucs includc amounts hcld b� thc Rcdc� clopmcnt Agcnc� and irrc� ocabl� plcdgcd
to thc pa� mcnt of Dcbt. but do not includc amounts sct asidc for lo« and modcratc incomc housing.
T7�c count� auditor ma� onl� pa� ta� incrcmcnt rc� cnuc to thc rcdc� clopmcnt agcnc� in am fiscal
� car to thc c�tcnt that thc total rcmaining principal and intcrest on all Dcbt c�cccds thc amount of a� ailablc
rc� cnucs as sho« n on thc statcmcnt of indcbtcdncss.
T7�c statcmcnt of indcbtcdncss constitutcs prima facic c� idcncc of thc indcbtcdncss of thc
rcdc� clopmcnt agcnc� : ho« c� cr. thc count� auditor ma� disp�rtc thc statcmcnt of indcbtcdncss in ccrtain
cascs Scction >;67� pro� idcs for ccrtain timc limits controlling am disputc of thc statcmcnt of indcbtcdncss.
and allo« s for Superior Court dctcrmination of such disputc in thc c� cnt it cannot bc resol� cd b� thc
rcdc� clopmcnt agcnc� and thc count� . Am such action ma� onl� challcngc thc amount of thc Dcbt as sho« n
on thc statcmcnt. and not thc � alidit� of am Dcbt or rclatcd contract or thc c�pcnditures rclatcd thcrcto. No
challcngc can bc madc to pa� mcnts to a fiscal agcnt in conncction �� ith a bond issuc or pa� mcnts to a public
agcnc� in conncction «ith pa� mcnts b� that public agcnc� «ith respcct to a Ic;asc or bond issuc.
Tax Sharing Agreements and Payments
Pnss-�llrou�;l1 A�;reemeizts. T7�c Rcdc� clopmcnt Agcnc� has cntcrcd into agrccmcnts «ith cach of
thc Count�. thc Dcscrt Sands Unificd School District. thc Dcscrt Communit� Collcgc District. thc Coachclla
Vallc� Mosquito. Abatcmcnt District_ thc Coachclla Vallc� Rccrcation and Park District. thc Coachclla
Vallc� Rcsourcc Conscr� ation Ccntcr. thc Coachclla Vallc� Watcr District and thc Ri� crsidc Count�
Superintcndcnt of Schools District to pa� ta� incrcmcnt rc�cnucs to cach ta�ing cntit�. othcr than thc Cit�.
that has tcrritor� locatcd «ithin thc Projcct Arca in thc amount «hich thc Rcdc� clopmcnt Agcnc� dctcrmincs
is appropriatc to allc� iatc am financial burdcn or dctrimcnt causcd to such tn�ing cntit� as a result of
rcdc� clopmcnt acti� itics «ithin thc Projcct Arc;a. Each of thcsc agrccmcnts (c;ach a"Pass-T7�rough
Agrccmcnt��) pro� idcs for a pass-through of ta� incrcmcnt rc� cnuc dircctl� to thc rclatcd ta�ing cntit� . For a
dcscription of thc Pass-Through Agrccmcnts. scc APPI:NUIX A—"RI:Pc)R I c)F I111: FISCnI. Cc)NSUI; I nN i.��
.Stntutor�� �n.r .Sllnrii7�; Pn��mei7ts. Thc Rcdc� clopmcnt Plan for thc Projcct Arca «as amcndcd
March I I. 200�4 and thcrcforc is subjcct to thc statutor� ta�-sharing pa� mcnts mandatcd in thc
Rcdc� clopmcnt La«. as amcndcd b� AB 1290. rcquiring that a portion of thc ta� incrcmcnt rc� cnucs bc
sharcd «ith tA�ing CntitiCs. SCC Also "SI:CURI IY nNU SOURCI;S OF PnYMI:N l FOR I�I II: BONUS-
Rcdc� clopmcnt Plan Limitations—AR /?�0." T7�csc ta�-sharing pa� mcnts are sct b� statutc and arc not
ncgotiatcd. Thc Count� Auditor-Controllcr allocatcs all ta� incrcmcnt rc� cnuc to thc Rcdc� clopmcnt Agcnc�
for pa� mcnt of tati-sharing pa� mcnts. This dcfincd tati sharing amount has thrcc Ticrs.
Ticr I: Commcnccs «ith thc first � car that thc Projcct Arca rccci� c ta� incrcmcnt rc� cnuc
and continucs for thc lifc of thc Projcct Arc;a. T7�c Ticr I ta�-sharing amount is cqual to 2�`%� of thc
gross ta� incrcmcnt rc� cnuc allocatcd from thc Projcct Arc;a nct of thc Housing Sct-Asidc
Rcquircmcnt. T7�c Cit� ma� chosc to forgo its sharc of this ticr of ta�-sharing pa� mcnts.
Ticr 2: Commcnccs in thc I I th � car aftcr thc Rcdc� clopmcnt Agcnc� first rccci� cs ta�
incrcmcnt rc� cnuc (i.e. Fiscal Ycar 202�4-2�). and is in an amount cqual to 21 `%� of thc ta� incrcmcnt
rc� cnuc nct of thc Housing Sct-Asidc Rcquircmcnt. dcri� cd from thc gro« th in asscsscd � aluc that is
in c�ccss of thc asscsscd � aluc of thc Projcct Arca in thc tcnth � c;ar. T7�c Cit� ma� not rccci� c am
portion of thc Ticr 2 tn�-sharing pa� mcnts.
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26
Ticr �: Commcnccs in thc � I st � car aftcr thc Rcdc� clopmcnt Agcnc� first rccci� cs ta�
incrcmcnt rc� cnucs and is an amount cqual to I�4`%� of thc ta� incrcmcnt rc� cnuc nct of Housing Sct-
Asidc dcri� cd from thc gro« th in asscsscd � aluc that is in c�ccss of thc asscsscd � aluc of thc Projcct
Arca in thc �Oth � car. T7�c Cit� ma� not rccci� c am portion of thc Ticr � ta�-sharing pa� mcnts.
T7�csc thrcc ticrs of ta� sharing arc calculatcd indcpcndcnt of onc anothcr and continuc from
thcir inccption through thc lifc ofthc Projcct Arc;a.
.SB 211 �n.r.Sllnrii7�; Pn��mei7ts. On March I I. 200�4. thc Cit� Council adoptcd Ordinancc No. 106 �
climinating thc timc limit to incur dcbt in thc Projcct Arca. Pursuant to SB 21 I. thc adoption of such an
ordinancc rcquires thc Rcdc� clopmcnt Agcnc� to bcgin making statutor� ta� sharing pa� mcnts in thc Fiscal
Ycar follo« ing thc c�piration of thc original timc limit for thc incurrcncc of nc« indcbtcdncss. Scc also
..SI:CURI I Y �NU SOURCI:S OF P�YMI:N�I FOR I I II: BONUS-Rcdct clopmcnt Plan Limitations-.S'R ?/ /...
T7�c limit for incurrcncc of nc« indcbtcdncss for thc Projcct Arc;a «as c�tcndcd b� onc �car. B�
c�tcnding this limit to Jul� 17. 201 I. thc Rcdc� clopmcnt Agcnc� causcd statutor� ta� sharing pa� mcnts to
commcncc «ith Fiscal Ycar 201�4-I�. T7�c asscsscd �alucs in thc last Fiscal Yc;ar prior to initiation of thc
statutor� ta� sharing pa� mcnts arc uscd as thc basc � aluc for calculation of thc ta� sharing pa� mcnts. T7�c
projcctions of thc Fiscal Consultant assumc that thc Cit� «ill cicct to rccci� c its sharc of thcsc pa� mcnts.
ho« c� cr. currcntl� . if thc Cit� ciccts not to rccci� c its sharc of thcsc ta� sharing pa� mcnts. that portion of thc
statutor� ta� sharing pa� mcnt «ill rcmain «ith thc Rcdc� clopmcnt Agcnc� for its usc. Thc Count� Auditor-
Controllcr allocatcs all ta� incrcmcnt rc� cnuc to thc Rcdc� clopmcnt Agcnc� and it is thc responsibilit� of thc
Rcdc� clopmcnt Agcnc� to makc thc rcquircd ta� sharing pa� mcnts.
�T7�c Rcdc� clopmcnt Agcnc� has dctcrmincd at this timc not to scck subordination of thcsc statutor�
ta� sharing pa� mcnts from thc ta�ing agcncics. � -
Limitation of Tax Revenues from Certain Increased Tax Rates
An initiati� c to amcnd thc California Constitution cntiticd "Propert� Ta� Rc� cnucs—Rcdc� clopmcnt
Agcncics�� «as appro� cd b� California � otcrs at thc No� cmbcr 8. 1988 gcncral cicction. This initiati� c
amcnds thc California Constitution to allo« thc California Lcgislaturc to prohibit rcdc� clopmcnt agcncics
from rccci� ing am of thc propert� ta� rc� cnuc raiscd b� incrcascd propert� ta� ratcs imposcd b� local
go� crnmcnts to makc pa� mcnts on thcir bondcd indcbtcdncss. Thc initiati� c applics to ta� ratcs Ic� icd to
financc bonds appro� cd b� thc � otcrs on or aftcr Januan I. 1989. T7�c Rcdc� clopmcnt Agcnc� docs not
currcntl� projcct rccci� ing am ta� rc� cnucs as a result of gcncral obligation bonds «hich ma� ha� c bccn
appro� cd on or aftcr Januan I. I 989.
Ballot Initiatives and Legislative Matters
Articics XIIIA. XIIIB. XIIIC and XIIID «crc c;ach adoptcd pursuant to a mcasurc qualificd for thc
ballot pursuant to thc Statc�s constitutional initiati� c proccss: thc Statc Lcgislaturc has in thc past cnactcd
Icgislation «hich has altcrcd thc spcnding limitations or establishcd minimum fiinding pro� isions for
particular acti� itics undcr thc Rcdc� clopmcnt La«. From timc to timc. othcr initiati� c mc;asures could bc
adoptcd b� � otcrs of thc Statc or Icgislation cnactcd b� thc Statc Lcgislaturc. T7�c adoption of am such
initiati� c mc;asures or Icgislation might placc limitations on thc abilit� of thc Statc. thc Rcdc� clopmcnt
Agcnc� or local districts to incrcasc rc� cnucs. to incrc;asc appropriations or on thc abilit� of a lando« ncr to
complctc thc dc� clopmcnt of propert� .
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27
THE FINANCING AUTHORITY
T7�c Financing Authorit� is dul� organizcd and c�isting undcr a Joint E�crcisc of Po«crs Agrccmcnt
datcd Januar� 26. 1989. b� and bct« ccn thc Cit� and thc Rcdc� clopmcnt Agcnc�. and undcr thc pro� isions
of Chaptcr � of Di� ision 7 of Titic I of thc Statc Go� crnmcnt Codc. Thc mcmbcrs of thc Cit� Council scr� c
as thc Commission mcmbcrs of thc Financing Authorit� . T7�c Financing Authorit� has no ta�ing po« cr and
no sourcc of rc� cnuc to pa� dcbt scr� icc on thc Bonds othcr than thc Rc� cnucs. Thc Financing Authorit� has
no ta�ing po�� cr. Scc "SI:CURI I Y �NU SOURCI:S OF P�YMI:N�I FOR I�I II: BONUS .. -
THE REDEVELOPMENT AGENCY
Authority, Members and Personnel
T7�c Rcdc� clopmcnt Agcnc� «as cstablishcd pursuant to thc Rcdc� clopmcnt La«. and «as acti� atcd
in 197�4. T7�c Rcdc� clopmcnt Agcnc� adoptcd thc rcdc� clopmcnt plan for thc Projcct arc;a in Jul� 1991. T7�c
Projcct Arca is thc onl� projcct arc;a of thc Rcdc� clopmcnt Agcnc� . T7�c Rcdc� clopmcnt Agcnc� has no
ta�ing po«cr.
Mcmbcrs of thc Cit� Council of thc Cit� scr� c as mcmbcrs of thc Rcdc� clopmcnt Agcnc� . Thc Cit�
Council mcmbcrs arc cicctcd at largc for four-� car o� crlapping tcrms. Thc currcnt mcmbcrs of thc
Rcdc� clopmcnt Agcnc� are sct forth on thc insidc co� cr pagc of this Official Statcmcnt.
T7�c Rcdc� clopmcnt Agcnc� is administcrcd b� a staff scicctcd from thc cmplo� ccs of thc Cit� and is
undcr thc o� crall dircction of Mr. Ortcga. Bricf resumcs of thc profcssional staff of thc Rcdc� clopmcnt
Agcnc� are sct forth bclo« :
(.'arlos I.. l)rte�;n, E.recutive Director. Mr. Ortcga has scr� cd as E�ccuti� c Dircctor of thc
Rcdc� clopmcnt Agcnc� sincc I 98 �. Hc «as also appointcd Cit� Managcr in August 2000. From 1980 to
199�. Mr. Ortcga scr� cd as Assistant Cit� Managcr and from 1977 to 1980 as Assistant to thc Cit� Managcr.
Prior to 1977. hc scr�cd as Intcrim Cit� Managcr (onc �car) and Assistant Cit� Managcr/Financc Dircctor
(fi� c� cars) for thc Cit� of Coachclla. California. Mr. Ortcga rccci� cd a Bachclor of Scicncc dcgrcc in
Economics from Uni� crsit� of California. Ri� crsidc. and has complctcd graduatc studics in Public
Administration and Managcmcnt at Uni� crsit� of California. Ri� crsidc and Uni� crsit� of Rcdlands.
./ustii7 Mc(.'artll��, Assistcu7t (.'it�� Mcn7n�;er for Redevelopmei7t. Mr. McCarth� has scr�cd as
Assistant Cit� Managcr for Rcdc� clopmcnt sincc No� cmbcr 2001. Prior to joining thc Cit� in
Mr. McCarth� «as an anal�st in thc Cit� of Long Bc;ach implcmcnting rcdc� clopmcnt projccts in thc
do« nto« n ccntral busincss district. thc port industrial arc;a and Long Bcach Airport. From to hc
scr� cd as thc Rcdc� clopmcnt Managcr for thc San Dicgo Southcast Economic Dc� clopmcnt Corporation
managing industrial and commcrcial projccts and from to hc scr� cd as thc Dcput� E�ccuti� c
Dircctor and Communit� Dc� clopmcnt Dircctor for thc Cit� of Commcrcc. Mr. McCarth� rccci� cd a
dcgrcc in from .
Arin K. .Scott, .Sei7ior Fii7cn7cin! Ai7nl��st for Redevelopmei7t. Ms. Scott «as appointcd as Scnior
Financial Anal� st for Rcdc� clopmcnt in Januar� 2006 and is responsiblc for thc rc� ic«. anal� sis and budgct
monitoring of thc financcs and bond issucs of thc Rcdc� clopmcnt Agcnc� . From 1990 to 2006. shc «as
cmplo�cd b� JPMorgan Chasc Bank. «hcre shc bcgan in thc Tnist Operations Dcpartmcnt and «as latcr
promotcd to thc Trc;asun and Sccurit� Scr� iccs Dcpartmcnt as a Rclationship Managcr. In that position shc
«orkcd in thc Municipal and Corporatc Dcbt Dcpartmcnt. «hcre shc «orkcd «ith �arious municipalitics and
corporations scr� ing as a bond tnistcc. Shc «as latcr promotcd to thc Tnist Compliancc Dcpartmcnt «hcrc
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zx
shc «as responsiblc for rc� ic« ing documcnts. la«s and regulations in ordcr to mitigatc risk. Shc rccci� cd a
Bachclor of Busincss Administration dcgrcc in Financc from Uni� crsit� of Houston.
.Sl1eiln R. (�i!li�;cu7, Assistcu7t (.'it�� Mcu7n�;er for (.'ommui7it��.Services. Ms. Gilligan has scr� cd as thc
Assistant Cit� Managcr for Communit� Scr� iccs sincc 2000. Shc is responsiblc for thc arc;as of
Administration (including grants and franchisc agrccmcnts). Human Rcsourccs. Cit� Clcrk. Ci� ic Arts.
Markcting and Promotion. Public Information. thc Visitor�s Information Ccntcr. and spccial c� cnts for thc
Cit� . Prior to appointmcnt to hcr currcnt position. Ms. Gilligan scr� cd as thc Dircctor of Communit� Affairs
«hilc also scr� ing as thc Cit� Clcrk. Ms. Gilligan scr� cd as Cit� Clcrk from 1976 to Junc. 2001.
Pnul.S. (�ibsoi7, �rensurer/Fii7cu7ce Director. Mr. Gibson has scr� cd as Tre;asurcr/Financc Dircctor
of thc Rcdc� clopmcnt Agcnc� sincc I 988 «hcrc hc is responsiblc for . Hc has also scr� cd as thc
Trc;asurcr/Financc Dircctor of thc Cit� sincc 1988. Mr. Gibson has bccn cmplo�cd b� thc Cit� sincc
.«hcn hc «as hircd as thc Accounting Super� isor. Prior to joining thc Cit�. hc scr� cd from to
as thc Accountant-Auditor for thc Imperial Counri Auditor-Controllcr�s officc. Mr. Gibson holds a
Bachclor of Scicncc dcgrcc in Accounting from San Dicgo Statc Uni� crsit� .
Dcrvid I.. Yri�;o��ei7, Director of Reclevelopmei7t ii7 Housii7�;. Mr. Yrigo�cn «as appointcd as
Dircctor of Rcdc� clopmcnt in Housing and is responsiblc for all housing and redc� clopmcnt acti� itics «ithin
thc Cit� . Hc has bccn cmplo� cd «ith thc Cit� sincc 198� «hcn hc scr� cd as thc Scnior Administrati� c
Assistant to thc Rcdc� clopmcnt Agcnc� and thcn «as promotcd to Rcdc� clopmcnt Managcr. From. 1982 to
198� Mr. Yrigo� cn «orkcd «ith thc Cit� of Coachclla. as thc Economic Dc� clopmcnt Coordinator. Mr.
Yrigo� cn rccci� cd a Bachclor of Arts dcgrcc in Political Scicncc from Uni� crsit� of California. Bcrkcic� . and
a Mastcr of Arts dcgrcc in Managcmcnt from National Uni� crsit� . San Dicgo.
Rnclle!!e D. Klnssei7. .Secretnr��. Ms. Klasscn has bccn Sccrctan of thc Rcdc� clopmcnt Agcnc� and
Cit� Clcrk sincc Jul� I. 2002. Shc has bccn cmplo� cd b� thc Cit� sincc 199� «hcn shc «as hircd as a
in thc Financc Dcpartmcnt. In 1997. shc bcgan «orking in Cit� Clcrk's Officc: initiall� as thc Rccords
Tcchnician. «as appointcd Dcput� Cit� Clcrk in 1998. a��d thcn Cit� Clcrk. Shc rccci� cd Ccrtificd
Municipal Clcrk status from thc Intcrnational Institutc of Municipal Clcrks in Octobcr. 2001. As Cit� Clcrk.
shc also scr�cs as Sccrctar� to Housing Authorit� and thc Financc Authorit�. «ith responsibilitics of
prcparing and prescnting all agcndas and minutcs for samc. maintaining all official Cit�/Agcnc�/Authorit�
rccords. as «cll as thc rclatcd dutics ofthc Cit� cicctions and bcing a�ailablc to thc public for information on
Icgislati� c and administrati� c actions. Ms. Klasscn holds an Associatc in Arts Dcgrcc. «ith honors. from
WaldorfCollcgc. Forest Cit�. lo«a. «ith continuing units obtaincd at Collcgc ofthc Dcscrt.
Veroi7icn �npin, Redevelopmei7tAccoui7tcu7t. Ms. Tapia has bccn cmplo�cd b� thc Cit� for morc
than ninc � c;ars. and for thc last t« o� c;ars has scr� cd as thc Accountant for thc Rcdc� clopmcnt Agcnc� . Ms.
Tapia is responsiblc for compiling thc fcdcral and Statc mandatcd reports. thc administration of thc
outstanding bond issucs of thc Rcdc� clopmcnt Agcnc�. and thc o� crall accounting dutics for both thc
Rcdc� clopmcnt Agcnc� and thc Housing Dcpartmcnt. Ms. Tapia rccci� cd a Bachclor of Scicncc dcgrcc.
graduating Summa Cum Laudc. in Busincss and Managcmcnt from thc Uni� crsit� of Rcdlands and currcntl�
is complcting graduatc studics in Managcmcnt at thc Uni� crsit� of Rcdlands.
Powers
All po« crs of thc Rcdc� clopmcnt Agcnc� arc � cstcd in its fi� c-mcmbcr Board. Thc� arc chargcd
«ith thc responsibilit� of climinating blight through thc proccss of rcdc� clopmcnt. Gcncrall�. this proccss
culminatcs «hcn thc Rcdc� clopmcnt Agcnc� disposcs of land for dc� clopmcnt b� thc pri� atc scctor. In ordcr
to accomplish this. thc Rcdc� clopmcnt Agcnc� has broad authorit� to acquirc. dc� clop. administcr. scll or
Icasc propert�. including thc right of cmincnt domain and thc authorit� to issuc bonds and c�pcnd thcir
procccds.
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29
Prior to disposing of land for rcdc� clopmcnt. thc Rcdc� clopmcnt Agcnc� must complctc thc proccss
of acquiring and asscmbling thc ncccssar� sitcs. rclocating residcnts and busincsscs. In addition. thc
Rcdc� clopmcnt Agcnc� ma� dcmolish dctcrioratcd impro� cmcnts. undcrtakc cm ironmcntal mitigation.
gradc and prcpare sitcs for purchasc. and in conncction «ith am dc� clopmcnt can causc strccts. high«a� s
a��d sidc«alks to bc constnictcd or rcconstnictcd and public utilitics to bc installcd.
Rcdc� clopmcnt in thc Statc of California is carricd out pursuant to thc Communit� Rcdc� clopmcnt
La« (Scction >;000 er .,�ey. of thc He;alth and Safct� Codc). Scction >;020 of thc Rcdc�clopmcnt La«
dcfincs rcdc� clopmcnt as thc planning. dc� clopmcnt. rcplanning. rcdcsign. cicarancc. rcconstniction or
rchabilitation. or am combination of thcsc. of all or part of a sur� c� arc;a and thc pro� ision of such residcntial.
commcrcial. industrial. public or othcr stnictures or spaccs as ma� bc appropriatc or ncccssar� in thc intcrest
of thc gcncral «clfarc. including rccrc;ational and othcr facilitics incidcntal or appurtcnant to thcm.
T7�c Rcdc�clopmcnt Agcnc� ma�. out of thc fiinds a�ailablc to it for such purposcs. pa� for all or
part of thc �aluc of thc land and thc cost of buildings. facilitics. stnictures or othcr impro�cmcnts to bc
publicl� o« ncd and operatcd to thc c�tcnt that such impro� cmcnts arc of bcncfit to thc projcct arc;a and no
othcr rc;asonablc mcans of financing is a� ailablc.
T7�c Rcdc� clopmcnt Agcnc� must scll or Icasc rcmaining propert� «ithin a projcct arc;a for
rcdc� clopmcnt b� othcrs in strict conformit� «ith thc rcdc� clopmcnt plan. and ma� spccifi a period «ithin
«hich such rcdc� clopmcnt must bcgin and bc complctcd. In accordancc «ith thcsc critcria. thc
Rcdc� clopmcnt Agcnc� has adoptcd a Rcdc� clopmcnt Plan. as amcndcd. in thc Projcct Arc;a that authorizcs
thc usc of thc rcdc� clopmcnt proccss and proccdures.
Redevelopment Agency Finances
Fii7cu7cin! .Stntemei7ts. T7�c accounts of thc Rcdc� clopmcnt Agcnc� arc organizcd on thc basis of
fiinds and account groups. T7�c operations of cach fiind arc accountcd for «ith a scparatc sct of sclf-balancing
accounts that comprisc its asscts. liabilitics. fiind cquit�. rc�cnucs and c�pcnditures. T7�c auditcd financial
statcmcnts of thc Rcdc� clopmcnt Agcnc� for thc Fiscal Ycar cnding Junc �0. 200� are sct forth in
AI�I�I:Nu►x B.
Retiremei7t PIcu7. Substantiall� all fiill-timc Cit� cmplo� ccs. including cmplo� ccs of thc
Rcdc�clopmcnt Agcnc�. arc cligiblc to participatc in rctircmcnt bcncfit plans through a contract «ith thc
California Public Emplo�ccs� Rctircmcnt S�stcm ("PERS��). a multiplc-cmplo�cr public scctor cmplo�cc
dcfincd bcncfit pcnsion plan. PERS pro� idcs rctircmcnt and disabilit� bcncfits. annual cost-of-li� ing
adjustmcnts and dcath bcncfits to PERS mcmbcrs and bcncficiarics. PERS acts as a common in� cstmcnt and
administrati� c agcnt for participating public cntitics «ithin thc Statc. PERS is a contributor� plan dcri� ing
fiinds from cmplo� cc contributions as «cll as from cmplo� cr contributions and carnings from im cstmcnts.
PERS maintains t«o pcnsion plans for thc Cit�. a Safct� Plan (thc "Safct� Plan") and a
Misccllancous Plan (thc "Misccllancous Plan�� a��d. togcthcr «ith thc Safct� Plan. thc "PERS Plans��). T7�c
Cit� contributcs to PERS amounts cqual to thc rccommcndcd ratcs for thc PERS Plans multiplicd b� thc
pa� roll of thosc currcnt cmplo� ccs of thc Cit�. including thc Rcdc� clopmcnt Agcnc�. «ho arc cligiblc undcr
PERS. T7�crc arc positions in thc Rcdc� clopmcnt Agcnc� cligiblc to participatc in PERS.
For information conccrning PERS. including information rclating to its financial position and
imcstmcnts contact PERS dircctl� at CaIPERS. Lincoln Plaz�. �400 P Strcct. Sacramcnto. California 9�81�4.
tcicphonc: 888-22�-7 �77.
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�0
Information rcgarding thc contributions madc b� thc Cit� to PERS for thc PERS Plans is a� ailablc in
thc Cit� �s Comprchcnsi� c Annual Financial Rcport copics of «hich arc a� ailablc upon rcqucst from thc Cit�
of Palm Dcscrt Dcpartmcnt 7�-� 10 Frcd Waring Dri� c. Palm Dcscrt. California 92260-2�78: tcicphonc:
760-��46-0611 or ma� bc obtaincd cicctronicall� from thc Cit��s ��cbsitc at
««« .cit� ofpalmdcscrt.org/contcnt/O�CAFR.pdf.
l)tller Post Emplo��mei7t Bei7efits. T7�c Cit� offcrs thc PERS Hc;alth Carc Program to its rctirccs.
T7�c Cit� contributcs `f�8 per month on bchalf of c;ach rctircc cligiblc for PERS and makcs an additional
contribution to«ards ccrtain rctirccs� prcmiums undcr a Rctircc Scr� icc Stipcnd program. If thc rctircc rctires
from both thc Cit� and PERS simultancousl�. has attaincd thc agc of �0 and complctcd a minimum of 10
�cars of scr�icc «ith thc Cit� and satisfics am othcr rcquircmcnts spccificd in such program continucd
co� cragc for cligiblc rctirccs. spouscs and/or cligiblc dcpcndcnts for thc lifctimc of thc rctircc upon
satisfaction of thc abo� c-rcfcrcnccd critcria. T7�c Rctircc Scr� icc Stipcnd is not actuariall� fiindcd and thc
asscts arc accountcd for in an agcnc� fiind. An actuarial � aluation complctcd for thc Rctircc Scr� icc Stipcnd
program as of Jul� l. 2QQ2 indicatcd that thc amount of thc actuarial liabilit� to currcnt and firturc liabilitics
for thc Cit� to bc �9.761.06�.
THE PROJECT AREA
General
T7�c Projcct Arca is locatcd in thc Cit� and includcs appro�imatcl� 2.260 acres. comprising zoncd for
residcntial. officc. commcrcial. industrial. public and opcn spacc uscs. Thc Projcct Arca is gcncrall� boundcd
b� Eldorado Dri�c to thc «cst. ninning south«ard to thc boundan ofthc Cit� of Indian Wclls. thcn c;ast«ard
to thc corncr boundar� bct��ccn thc count� linc and thc Cit� of Indian Wclls. Thc ��cstcrn boundar� follo«s
this linc south«ard to Frcd Waring Dri� c. «hich is also thc southcrn boundan of thc Cit� limits. Thc c;astcrn
boundar� is Washington Strcct and thc northcrn boundan is Countr� Club Dri� c. For a map of thc Projcct
Arca scc pagc � i. For ccrtain information rcgarding thc Cit�. scc APPI:NUIX C—"GI:NI:RnI, INl c)RMn i Ic)N
CONCI:RNING I�I II: CI IY OF PnI,M DI:SI:R I.��
Redevelopment Plan Limits
T7�c Rcdc� clopmcnt Plan for Projcct Arc;a No. �4 «as adoptcd b� thc Cit� on Jul� 19. 199 �. Thc
Projcct Arca includcs appro�imatcl� 2.260 acres of residcntial. officc. commcrcial. industrial. public and
opcn spacc uscs.
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Tablc 2 summarizcs thc Rcdc� clopmcnt Plan Limits for thc Projcct Arca.
Table 2
Palm Desert Redevelopment Agency
Project Area No. 4
Summary of Redevelopment Plan Limit Amendments
Arca Plan Limit Tcrmination Rc� cnuc Limits
Sizc Basc Dcbt Plan Dcbt Total Ta� Amount
acres Ycar Incurrcncc E�uiration Rcua� mcnt Incrcmcnt Rccci� cd' �'
2.260 1992-9; Nonc',' 7/19/;�4 7/19/�4�4 �600.000.000 y��49.822.890
Limitation on Outstanding Bondcd Dcbt: `f 100 million
I I;I Reprc�nts gross tas increment rc�enucs recci�ecl as ot�.lwic ;O. 2OOi.
12;1 Ilic limit prc�ioush establishecl as.luh 19. 2c)I ;. ��as climinatecl b� thc acloption ot�(hclinancc Ic)G; on March I I. 2c)c�-I.
Sotu'cc: Krdrrrlopnu�iii.l�;riu.t'. . .
Controls, Land Use and Building Restrictions
T7�c Rcdc� clopmcnt Plan for thc Projcct Arc;a scts forth thc principal land uscs permittcd and thc
building restrictions to bc imposcd in projcct dc� clopmcnt. It also assigns thc Rcdc� clopmcnt Agcnc� and
thc Cit� thcir respccti� c responsibilitics in carn ing out thc Rcdc� clopmcnt Plan. Pro� ision is madc for
rchabilitation as «cll as nc« constniction and scts forth conditions and proccdures rcquircd undcr both
approachcs. Constniction is rcquircd to compl� «ith all applicablc Statc and local la«s in cffcct. including
«ithout limitation. building. cicctrical. hcating and � cntilating. housing and plumbing codcs of thc Cit� .
T7�c information in Tablc � is bascd on land usc dcsignations as pro� idcd b� Ri� crsidc Count� Officc
of thc Auditor Controllcr through ta� roll data. ho«c�cr. Count� land usc dcsignations do not ncccssaril�
parallcl Cit� land usc and zoning dcsignations. Unsccurcd and SBE non-unitan �alucs arc conncctcd «ith
parccls that arc alrc;ad� accountcd for in othcr catcgorics.
Table 3
Palm Desert Redevelopment Agency
Project Area No. 4
Land Uses by Catego�y
La��d Usc
Rcsidcntial
Rccrc;ational
Vacant Land
Industrial
Profcssional/Officc
Commcrcial
Unkno« n
Institutional
Tc��n►.
Numbcr of Parccls
�.772
x��
�86
I
2
i
i
10
6.267
200�-06 Asscsscd Valuc
Amount Pcrccnt
� I.�� 7.6 I 9.�4 I I 9�4. � 0'%�
�t;.x�x.o;; z.����
22.912.�488 I . �9
I 2.2 � i.6 I�4 0. 7�4
�4.�22.� �i 0.27
�4.�460.�42 I 0.27
2.678.878 0.16
`G 1.6�48.;07.�400 100.00`%�
Sow-cc: Metro Scan I R\N ba�cl upon intimnation irom thc Cowih /�s�ssor.
OG013 pu�-3
�2
Summary of Development
Reclevelopmei7t A�;ei7c�� Projects. T7�c primar� objccti� c of thc Rcdc� clopmcnt Plan is to corrcct
infrastnicturc and traffic circulation dcficicncics and promotc thc rchabilitation of propert� �� ithin thc Projcct
Arca through thc constniction of ccrtain public. rccrc;ational and opcn spacc impro� cmcnts.
To datc thc Rcdc� clopmcnt Agcnc� has complctcd thc follo« ing projccts «ithin thc Projcct Arc;a:
constniction and installation of ccrtain sc« cr and storm drain impro� cmcnts: thc undcrgrounding of ccrtain
utilitics: thc constniction. impro� cmcnt and rehabilitation of appro�imatcl� milcs of strccts: thc
constniction and installation of traffic signal impro� cmcnts: and fiinding of a portion of thc Intcrstatc 10
intcrchangc impro� cmcnts.
T7�c Rcdc� clopmcnt Agcnc� c�pccts to usc procccds from thc 2006 Scrics Bonds to c�tcnd thc
sound«all on Frcd Waring Dri� c. and undcrground ncighborhood and artcrial utilitics.
Privnte Developmeizt. In addition to thc projccts dircctl� sponsorcd b� thc Rcdc� clopmcnt Agcnc�
and dcscribcd abo� c. thc follo« ing pri� atc projccts arc in � arious stagcs of dc� clopmcnt «ithin thc Projcct
Arca including:
Palm Dcscrt Countn Club. T7�is dc� clopmcnt consists of thc constniction of appro�imatcl� I�6
singlc famil� residcntial homcs on appro�imatcl� _ acres «ithin thc Palm Dcscrt Countn Club.
Constniction is c�pcctcd co commcncc in and bc complctcd in «intcr 2007.
Frccdom Communit� Park. T7�is - acrc park «ill bc locatcd on and is a �joint
dc� clopmcnt «ith �. Constniction commcnccd and is c�pcctcd to bc complctcd in
Wcnd� �s Rcstaurant. Constniction of this casual dining restaurant to bc locatcd on is
c�pcctcd to commcncc in and bc complctcd in «intcr 2006.
Principal Taxpayers
T7�c top 10 ta�pa� crs «ithin thc Projcct Arc;a for Fiscal Yc;ar 200�-06 0« n propert� «ith an
aggrcgatc � aluc of `f I I�1.817.866. rcprescnting 7.07`%� of thc asscsscd � aluc and represcnts `%� of thc total
incrcmcntal � aluc of thc Projcct Arca.
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>>
Tablc �4 lists thc principal ta�pa�crs and primar� land uscs in thc Projcct Arca bascd on thc Fiscal
Ycar 200�-06 asscsscd � aluation.
O�� ncr
Indian Ridgc Countn Club Inc.
Ashford Park Holdings
Chcrokcc Imcstmcnts
Palm Dcscrt SPE
Dcscrt Brccics Associatcs
PD Villas on thc Grccn
Rcdc� clopmcnt Agcnc�
Palm Dcscrt Rcsort Counh Club Corp
Toscana LP
Dahoon Imcstmcnt Co. Inc.
S� �;rc�r.�i.Tc���T�t�
Othcr Propert� O�� ncrs
Tc�r.�i.
Table 4
Palm Desert Redevelopment Agency
Project Area No. 4
Principal Taxpaye�s�'�
Fiscal Year 2005-06
No. of
Parccls
37
I
2
-4
22
2G
22
119
G. I -l8
G.2G7
Priman Land Usc
Golf Coursc
fi��if'l I11CI71S
Commcrcial
Apartmcnts
Rcsidcntial Propertics
Apartmcnts
Apartmcnts/Vacant
`1�1C�lill
Misccllancous Stnictures/Clubhousc
Commcrcial/Golf Coursc
Various
200j-0G
Asscsscd
Valuc' ,'
�;Zx.;x2.22 ;
z�.z:>�.xx.>
I 2.2-10.000
I 1.�7i.2i8
7.G7G.807
7.-47 L000
�.x;��.x�� i
i.G79.G8 i
J.i9$.0 i i
-l. i-1G.908
$ I I G.279.i2-1
I.i07.i77.-192
$1.G2i.GiG.81 G
`%� of
200j-0G
Total Roll
i.����i�
i.��x
0.7�
0.7I
0.-47
0.-lG
o. ;��
O.ij
O.ii
o.2x
7.07
92.82
I 00.00`%�
I I 1 Inclucles �cw-ecl � aluc I`� LG I 1.77.;.O;21 ancl wi�cw-ecl � aluc I`� I 1.88;.78-I1.
12;1 Uocs not retlect homco��iicrs esemption.
Sottrcc: ('o�um�. issrssor's O/%icr ?00 �-OG lup�cdizrd Loccd . I ssrssmrii� Ko!!.
Tax Rates
Within thc Statc ta� ratcs �ar� from arc;a to arc;a. as «cll as «ithin a commw�it� and a projcct arc;a.
T7�c ta� ratc for am particular parccl is bascd upon thc jurisdictions Ic� � ing thc ta� ratc for thc arc;a (a "Ta�
Ratc Arca �) in «hich thc parccl is locatcd. T7�c ta� ratc applicd to incrcmcntal ta�ablc � alucs consist of t« o
componcnts: (i) thc gcncral Ic� � ratc «hich ma� not c�cccd � I.00 per � I 00 of ta�ablc � alucs in accordancc
«ith Articic XII I A of thc Statc Constitution and (ii) thc o� cr-ridc ta� ratc that is Ic� icd to pa� � otcr appro� cd
indcbtcdncss or contractual obligations that c�istcd prior to thc cnactmcnt of Proposition XIII. Scc
"LIMII�I1ON ON T�X RI:VI:NUI:S�� and "CI:RI�IN RISKS IO BONUO\�vNI:RS—RcduCtiOn in Asscsscd Valuc.��
T7�c o� cr-ridc ta� ratcs can dcclinc cach � car as incrc;asing propert� � alucs rcducc thc o� cr-ridc ratc nccdcd to
bc Ic� icd b� thc ta�ing cntitics to satisfi � otcr appro� cd dcbt scr� icc obligations and as thc � otcr appro� cd
dcbts is rctircd o� cr timc.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
o�,o � � r�,�-�
��4
T7�c Projcct Arc;a contains a total of I� Ta� Ratc Arc;as. T7�c ta�ing cntitics «ithin a Ta� Ratc Arca
c;ach rccci� c a proratcd sharc of thc gcncral Ic� � and thc rc� cnucs resulting from am � otcr appro� cd o� cr-
ridc ta� ratcs. �Am o� cr-ridcs'?� Thc componcnts that makc up thc ta� ratc applicablc to thc Projcct Arc;a arc
sct forth in Tablc � bclo« :
Table 5
Palm Desert Redevelopment Agency
Project Area No. 4
Breakdown of Tax Rate
Fiscal Year 2005-06
Gcncral Puruosc Lc� �
Count� Gcncral Fund
Count� Libran
Count� Firc
Cit� of Palm Dcscrt
Dcscrt Sands Unificd School
Dcscrt Communit� Collcgc
Count� Superintcndcnt of Schools
Ri� crsidc Count� Rcgional Park and Opcn Spacc
Coachclla Vallc� Public Ccmctcr�
Coachclla Vallc� Mosquito Abatcmcnt
Coachclla Vallc� Rccrc;ation and Park
Coachclla Vallc� Watcr District
Coachclla Vallc� Watcr District I-Dcbt Scr� icc
Coachclla Vallc� Rcsourcc Ccntcr
Coachclla Vallc� Watcr District Storm Watcr Unit
Tc��n►.
Sottrcc: Ko.sriiou .Sprrcicrk ( iro��p bic.
Historical, Cw•rent and Projected Tax Revenues
Ratc
0.2 I 92 I `%�
0.028 �0
0.06092
0.086i 7
0. �7�71
o.o�xo�
0.0�42�47
0.00�4�42
0.00 � i �
0.0 I �42 I
0.02 I �49
0.000 �6
0.0000 �
0.02879
0.0 �i9 �
I .00000`%�
T7�c Rcdc� clopmcnt Agcnc� �s primar� sourcc of fiinds to makc thc Loan Pa� mcnts undcr thc 2006
Loan Agrccmcnts is thc Rcdc� clopmcnt Agcnc� �s sharc of acl valui�em propert� ta� rc� cnucs «hich gcncrall�
result from thc complction of nc« rc;al cstatc dc� clopmcnts and a gcncral rc;asscssmcnt of propertics «ithin
thc Projcct Arca.
T7�c purposc of rcdc� clopmcnt is to rc� italizc dctcrioratcd or undcrdc� clopcd arc;as «ithin a
communit�. As nc« constniction progresscs. propert� �alucs normall� incrcasc and thc ultimatc result is a
proportionatc incrc;asc in acl valui�em propert� ta� rc� cnucs.
T7�c total ta�ablc � aluc of all propertics «ithin a gi� cn projcct arc;a on thc propert� asscssmcnt roll
last cqualizcd prior to thc cffccti� c datc of thc ordinancc adopting thc rcdc� clopmcnt plan for such projcct
arc;a and relatcd amcndmcnt arc;as. if am. cstablishcs a basc from «hich incrc;ascs in ta�ablc �aluc arc
computcd. Thc basc so cstablishcd for thc Projcct Arca is thc Fiscal Ycar 1992-9 � asscssmcnt roll. Undcr
thc Rcdc� clopmcnt La«. propert� ta�cs Ic� icd bascd upon thc amount sho« n on thc basc � car asscssmcnt
rolls «ill continuc to bc paid to and retaincd b� all ta�ing agcncics Ic� � ing propert� ta�cs in thc Projcct Arc;a.
Ta�cs Ic� icd b� thc respccti� c ta�ing agcncics on am incrc;ascs in ta�ablc � aluc rc;alizcd in thc Projcct Arc;a
«ill bc allocatcd to thc Rcdc� clopmcnt Agcnc� .
o�,o � � r�,�-�
�i
It should bc undcrstood that this proccdurc docs not im ol� c thc Ic� � of a,�� additional ta�cs. but
pro� idcs that rc� cnucs produccd b� thc ta� ratcs in cffcct from � car to � car arc apportioncd to thc ta�ing
agcncics Ic� � ing thc ta�cs and to thc Rcdc� clopmcnt Agcnc� on thc basis dcscribcd abo� c. Aftcr all loans.
ad� anccs and othcr indcbtcdncss. including intcrest. incurrcd b� thc Rcdc� clopmcnt Agcnc� in conncction
«ith thc Projcct Arc;a ha� c bccn paid. thc ta� rc� cnucs «ill bc paid to and retaincd b� thc respccti� c ta�ing
agcncics in thc normal manncr. Scc also "CI:R I nIN RISKS I c) Bc)NUl ic)I,UI:RS-Rcduction in Ta�ablc
Valucs.��
Tablc 6 prescnts thc aggrcgatc ta�ablc � aluc of all propert� «ithin thc Projcct Arc;a and thc ta�
incrcmcnt rc� cnucs rccci� cd for Fiscal Ycars cndcd Junc �0. 2002 through Junc �0. 2006 (Projcctcd).
Asscsscd Valuc'''
Local Sccurcd
Utilih (SBE)
U nsccu rcd
Tc� r.�i. Ass�tss�ti� V.�i.� �t
Basc Ycar Valuc
Incrcmcntal Valuc
Taz Ratc
Estimatcd Rc� cnuc
Taz Incrcmcnt Rc�cnuc
Unitan Utilih Rc�cnuc
Counh Administration Chargc
Tc�i.�i.Esri�i.�riti�Rit�it�� it
Actual Rcccipts
Sccurcd and Unitan Utilih
Supplcmcntal Pa� mcnts
Counh Administration Chargc
Tc�i.�i. Acr� .�i. Ri:ci:i��rs
Table 6
Palm Desert Redevelopment Agency
Project Area No. 4
Historical and Cw•rent Revenues
200I-02 2002-0i 200i-0-1
$ I. I97.7 i0.2�7
0
10.002. I O i
�;i.2o�.�;2.;��2
�;;x�. i��2.2 ix
G20. i-l0. I-l0
I .00`%�
$G.20 i.-l0 I
1.9 i0
(99.981)
$G. I07.3� I
$G.207. ii2
8�-4.021
(99.98 I )
$G.9G 1.372
$ I. iOG. i I i.080
0
8.-10 I .-1 I G
$ I .3 I -4. 7 I -4.-49G
�;;x�. i��2.2 ix
727. �22.278
I .00`%�
$7.27�.223
1.9�2
(109.02-11
$7.1G8.1�1
$7.280.9-1G
-41 1.99-4
(109.02-11
$7.�8i.9IG
$ I.i87.0i-4.82I
0
-4.G1 1.�28
$ I.i91.G-lG.i-l9
�;;x�. i��2.2 ix
80-4.-4 �-4. I 3 I
I .00`%�
$8.0-1-1. �-1 I
i.G-1 I
(11�.�83)
$7.9i2.�99
$8.0-1-1. j-1 I
i I8. i07
(11�.�83)
$8.2-47.2GG
200-1-0 i
$ I .-482.2 �-4. �8G
0
C�.C�Ki.ij�)
$ I.-188.9i7.9-1�
�;;x�. i��2.2 ix
90 I .7-4�.727
I .00`%�
$9.017.-4�7
2.0iG
( I 18.9�-4)
$8.900.ji9
$9.0 I 9.-19 i
G9-1.8G-1
( I 18.9�-4)
$9. �9j.-10 i
200j-OG' �'
$1.G07.187.GG7
0
i i.xx �.�x-t
$1.G 19.071.-4� 1
�;;x�. i��2.2 ix
I.Oi 1.879.2i i
I .00`%�
I I;I Securecl � alucs inclucic homco��iicr esemption � aluc.
12;1 /�ssessecl Valucs arc basecl on act�kil cl�ita. all remaining intimnation is projectecl.
Sottrces: Kirrnsidr ('o�uirt' O/%icr o/ du�. l��diior-('oii0•oNrrcuid ('iit' o/7'cdm l)rsrri l'iiicuicr l)c/�cu•O�u�iii.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
$10. i 18.792
2.0iG
(12G.i80)
$10. I 9-1.-1-18
o�,o � � r�,�-�
�6
Tablc 7 summarizcs thc projcctcd Ta� Rc� cnucs rccci� cd b� thc Projcct Arc;a bascd on fiscal � c;ars
cnding Junc �0. 2007. through Junc �0. 200 . To datc. thc Count� has paid to thc Rcdc� clopmcnt Agcnc�
thc fiill amount of Ta� Rc� cnucs c�pcctcd to bc rccci� cd b� thc Rcdc� clopmcnt Agcnc�. «ithout rcgard to
dclinqucncics in ta� collcction. Scc "—Ta� Lc� ics. Collcctions and Dclinqucncics.��
Table 7
Palm Desert Redevelopment Agency
Project Area No. 4
Projection of Incremental Taxable Value and Tax Increment Revenue
Txxxblc Vxlucs
Sccurcd
Unsccurcd
Totxl Vxluc
Basc Ycar Valuc
Txxxblc Vxluc o��cr Bxsc
Gross Taz Incrcmcnt Rc� cnuc
Unitan Taz Rc�cnuc
Gross Rc��enucs
Lcss:
SB 2»7 Admin. Fcc
Housing Sct Asidc Rcquircmcnt
Statuton Taz Sharing Pa� mcnts
Txx Rc��enucs
t nsses�cl � alucs arc ba�cl on act�kil cl�ita. all remaining intimnation is projectecl.
Sottrces: Kirrnsidr ('o�uirt' O/%icr o/du�. l��diior-('oii0•oNrrcuid Kosriiou .4prrcicrk (iro��p bic.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
o�,o � � r�,�-�
�7
Debt Service Coverage Projections
���
x
Thc follo« ing Tablc 8 sho« s schcdulcd dcbt scr� icc on thc 2006 Scrics Bonds. «ithout rcgard to am optional rcdcmption and cstimatcd
co� cragc. Scc "DI:13I SI:RVICI: SCI II:UUI,I:" for thc schcdulcd scmiannual dcbt scr� icc on thc 2006 Scrics Bonds.
Fiscal Yc;ar
Ending Projcctcd Nct
Junc ;0 Ta� Rc� cnucs' � �
Table 8
Palm Desert Redevelopment Agency
Project Area No. 4
Debt Service Coverage Projections
($ in 000's)
1998 200; 2006
Scrics Bonds
Scrics Bonds Scrics Bonds
Estimatcd
Dcbt Scr� icc
Total Co�cra�c','
'�' Projectecl Net Ias Rc�enucs is net ot�thc I lousing Set-nsicic. Pass=lhrough Pa�ments ancl Cowih aclministrati�c tces. ��hich aclministrati�c tces arc projectecl to cy�4il 1.22-I�`%� ot�
ann�kil Gross "Ias Rc�enucs. Iliis tablc asswncs that pro}�rt� �alucs in thc Project /�rca ��ill incrca� ba�cl upon nc�� cic�clopment ��ithin thc Project /�rca. Scc "Ilu. 1'�zc�i�.c�i
/��z�..�—Sunmian ot�lk�clopment" ancl tirr inilation at thc ratc ot�2`%� ann�kilh. .
''' Calcttlalccl as Projeclecl Ncl I as Rc� enttes cli� iclecl b� lolal 2( )( )G Scrics 13oncls I kbl Scrt icc.
''' Calculatecl as Projectecl Net I as Rc� enucs lrss total 2( )( )G Scrics 13oncls I kbt Sen icc cli� iclecl b� total Suborclinatc Capital /�ppreciation 13oncls I kbt Sen icc.
Sottrcc: Ko.sc�iiou .Sprrcicrk ( iro��p bic.
Assessment Appeals
Propert� ta� �alucs dctcrmincd b� thc Count� Asscssor ma� bc subjcct to an appc:al b� thc propert�
o« ncrs. Asscssmcnt appcals arc annuall� filcd �� ith thc Asscssmcnt Appcals Board for a hcaring and
resolution. T7�c resolution of an appcal ma� result in a rcduction to thc Count� Asscssor�s original ta�ablc
� aluc and a ta� rcfiind to thc applicant/propert� o« ncr. T7�c rcduction in firturc Projcct Arca ta�ablc � alucs
and thc rcfiind of ta�cs affccts all ta�ing cntitics. including thc Rcdc� clopmcnt Agcnc� .
Each asscssmcnt appcal could result in a rcduction ofthc ta�ablc �aluc ofthc rc;al propert�. personal
propert� or posscsson intcrest of thc propert� «hich is thc subjcct of thc appc;al. A rcduction in such ta�ablc
� aluc «ould result in a rcduction of thc rc� cnucs of thc Rcdc� clopmcnt Agcnc� a� ailablc for Ta� Rc� cnucs
«ith respcct to thc 2006 Scrics Bonds. Altcrnati�cl�. an appc;al ma� bc «ithdra«n b� thc applicant or thc
Appc;als Board ma� dcm or modifi thc appc;al at a hc;aring or b� stipulation.
Bct��ccn Fiscal Ycar 20Q I-Q2 through No� cmbcr 200� thcrc ha� c bccn 7� asscssmcnt appcals filcd
«ithin thc Projcct Arca. Of thc appcals filcd. onc resultcd in a rcduction in � aluc. 62 «crc «ithdra« n and 12
arc pcnding. Thc pcnding appcals ha� c a combincd asscsscd � aluc of ��.07 �.9� �.�96 undcr appcal and
includc asscssmcnt appc:als of � aluc for Fiscal Ycars 200�4-0� a��d 200�-06.
Ofthc tcn principal ta�pa�crs in thc Projcct Arc;a sho«n in Tablc �. t«o Palm Dcscrt SPE ("Palm
Dcscrt��) and PD Villas on thc Grccn ("PD Villas��) had appc:als outstanding and unresol� cd «ith thc Count�
Asscssor as of Januan 2006. Palm Dcscrt o« ns four parccls in thc Projcct Arca and is sccking an adjustmcnt
of `f �.� 7�.2 �8 (rcprescnting a�48.2`%� rcduction rcqucst) to thc Fiscal Ycar 200�4-0� � aluc.
PD Villas o«ns onc parccl in thc Projcct Arc;a and is sccking a rcduction of thc asscsscd �alucs of
`.G I.97 I.000 (rcprescnting a 26.�4`/� rcduction rcqucst) to thc Fiscal Ycar 200�4-0� � aluc.
Table 9
Palm Desert Redevelopment Agency
Project Area No. 4
Assessment Appeals
Fiscal Years 2000-01 through 2005-06
ii<>u
Yc�ir
2( )( )i-( )G
2c )c �I-( ) i
2( )( )i-( )-I
2c �c �2-c � ;
2c�c�l-c�2
Ic�I.V.
I otal
a <>r
n����<���
Filecl
7
IO
�x
7
I�
%�
Tablc 9 summarizcs thc appc;als filcd in thc Projcct Arc;a sincc Fiscal Yc;ar 2001-02.
1�p}�als
\Nithclra��i�/
No
/�p}�arancc/
Latc Filc
c)
;
;�
7
I�
��Z
/�p}�als
na�«����v
Reclttcecl/
Stinulatecl
c)
c)
I
c)
c)
I
n����<���
Pencline
7
;
c�
c)
c)
12
I otal
���«,-�a
n�,��,�a
Valuc
`� I .G( )7.782.2 I G
I .-IGG,171. �8G
I . ;71.( )( )2.( )2 I
1.2�� I. I � Lc�x��
I .18 �,12�.-1�7
`�G.9 I 9.2 ;2. I G( )
I otal
ii�y«����a
Reclttction
`�7. �7G.97( )
I ;.xc�2.;;-I
2.Oi9.989
�, ; I .�,;�,
LGiO.O9-I
`�2 i.72 I .2G ;
l�ct�kd
Reclttction
in
n�,��,�a
Valuc
`�c )
c)
79.( )( )( )
c)
c)
`�79.( )( )( )
Sottrces: Kirrnsidr ('o�uirt' O/%icr o/du�. l��diior-('oii0•oNrrcuid Kosriiou .Sprrcicrk (iro��p bic.
OG013 pu�-3
J �)
/�ct�kil
Reclttction
'%� o��total
n��;��a
Valttc
( ).( )( )( )( )( )`%�
c).c)c)c)c)c)
O.00i7G
c�.c�c�c�c�c�
O.00OOO
( ).( )( )i7G`%�
Pencline
Reclttction
�„ n�,��,�a
Valttc
`�7. �7G.97( )
I x.7c �;.c �c u
c)
c�
cl
`�2G.28 L97-I
Pencline
Reclttction
`%� o��
I otal
n�,��,�a
Valttc
c ).-17`%�
i.zx
c).c)c)
c�.c�c�
c�.c�c�
I .7�`%�
Tablc 10 lists thc principal ta�pa� crs (scc Tablc �4 abo� c) «ho ha� c filcd such appcals. thc asscsscd
� aluc. thc rcduction rcqucstcd and thc status of thc appcal.
Table 10
Palm Desert Redevelopment Agency
Project Area No. 4
Outstanding Appeals by the Top Ten Taxpayers
Fiscal Years 2000-01 through 2005-06
Applicant
Appcal Total No. Opinion
Auulicant Ycar Parccls Valuc
`%� of
Potcntial Asscsscd
Roll Valuc Rcduction Valuc
Palm Dcscrt SPE 200i .� y�6.000.000 y� I 1.�7 �.2 �8 `��.�7 �.2 �8
PD Villas on thc Grccn 200i I �.�00.000 1.971.000 1.971.000
Sui3Tc�rni. � II.�00.000 y�19.0�4�4.2;8 �7.��4�4.2;8
All Othcrs Various 7 8.6�40.2�4 � I�.12 �.029 �4.�482.786
Tc� rni. I 2 �20. I�40.2�4 � ��2. I 67.267 � 12.027.02�4
Sottrces: Kirrnsidr ('o�uirt' O/%icr o/du�. l��diior-('oii0•oNrrcuid Kosriiou .Sprrcicrk (iro��p bic.
Tax Levies, Collections and Delinquencies
T7�c Count� docs not track sccurcd ta� chargcs and dclinqucncics b� Projcct Arc;a.
�tx.z�i�
26.�4
�9.6`%�
��4.2
� 7.�4`%�
T7�c Count� has adoptcd thc Altcrnati� c Mcthod of Distribution of Ta� Lc� ics and Collcctions and of
Ta� Salc Procccds (thc "Tcctcr Plan��). as pro� idcd for in Scction �4701 er. .,�ey. of thc Statc Rc� cnuc and
Ta�ation Codc. Undcr thc Tcctcr Plan. c;ach participating local agcnc� . including citics. Ic� � ing propert�
ta�cs in its count� ma� rccci� c thc amount of uncollcctcd ta�cs crcditcd to its fiind in thc samc manncr as if
thc amount crcditcd had bccn collcctcd. In rcturn. thc count� «ould recci� c and retain dclinqucnt pa� mcnts.
pcnaltics and intcrest. as collcctcd. that «ould ha� c bccn duc to thc local agcnc� . Ho« c� cr. although a local
agcnc� could recci� c thc total Ic� � for its propert� ta�cs «ithout rcgard to actual collcctions. fiindcd from a
rescr� c cstablishcd and hcld b� thc count� for this purposc. thc basic Icgal liabilit� for propert� ta�
dcficicncics at all timcs rcmains «ith thc local agcnc� .
T7�c Tcctcr Plan rcmains in cffcct unlcss thc Count� Board of Super� isors ordcrs its discontinuancc
or unlcss. prior to thc commcnccmcnt of am fiscal �car of thc Count� («hich commcnccs on Jul� I). thc
Count� Board of Super� isors rccci� cs a pctition for its discontinuancc joincd in b� resolutions adoptcd b�
t«o-thirds of thc participating rc�cnuc districts in thc Count�. in «hich c�cnt. thc Count� Board of
Super� isors is to ordcr discontinuancc of thc Tcctcr Pla�� cffccti� c at thc commcnccmcnt of thc subscqucnt
fiscal � car. T7�c Count� Board of Super� isors ma�. b� resolution adoptcd not latcr than Jul� I� of thc fiscal
�car for «hich it is to appl�. aftcr holding a public hcaring on thc mattcr. discontinuc thc proccdures undcr
thc Tcctcr Plan «ith respcct to am ta� Ic� � ing agcnc� in thc count� .
T7�c Cit� is a participant in thc Tcctcr Plan. Scc "LIMI InI1c�Ns c�N TnX RI:vI:NUI:s—Propert� Ta�
Collcction Proccdures.��
o�,o � � r�,�-�
�40
CERTAIN RISKS TO BONDHOLDERS
7%e fu//utirin,�� !YlfU/'/77Cf1lU/9 .1'/9U11�L% J7L' cun.sic%i�ec/ h�� pi�u.spec7ive !YlVL'.1'lU/'.1' !Y! eva/i�atin,�� t/�e ?00<
.SL/7L'.1' RUl9LL1'. HU11'L'VL'l'. 1�9L' fUllU117Yl,�� clue.s nut pt�ipui't tu he an exl�at�.stive li.stin,�� uf'i'i.sk.s ancl utl�ei'
CU/9.1YL%L'/'Cf!!U/21' 11'�1lC�1 /77Cf1' %7L' PL'�L'VCfYl1 lU /77Cf�ClYl��� CfY! !YlVL'.1'1/77L'Y!1 L%L'Cl.1YU/21' 1171�1 PL'.1'�)L'Cl lU 1�1L' �i%i%� .SL/'!L'.1'
/3U/9L%1'. �Y! CfL%L%!1!U/9. 1�1L' U/'L%L'/' !Y! 11'�1lC�1 1�1L' fU//U117Yl��� !YlfU/'/77Cf1lU/9 !.1' �)PL'.1'L'Yl1L'L% !.1' YlUI !Yl1L'Y!L%L'L% lU PL'fIL'Cl 1�1L'
i�elative impui�tance uf'an��.siic% i�i.sk.s.
Accuracy of Assumptions
To cstimatc thc rc� cnucs a� ailablc to pa� dcbt scr� icc on thc Bonds. thc Rcdc� clopmcnt Agcnc� has
madc ccrtain assumptions «ith rcgard to thc asscsscd � aluation of ta�ablc propert� in thc Projcct Arc;a. firturc
ta� ratcs. perccntagc of ta�cs collcctcd. thc amount of fiinds a� ailablc for im cstmcnt and thc intcrest ratc at
«hich thosc fiinds «ill bc im cstcd. T7�c Rcdc� clopmcnt Agcnc� bclic� cs thcsc assumptions to bc
rc;asonablc. but to thc c�tcnt that thc asscsscd � aluation. thc ta� ratcs and thc perccntagcs collcctcd. arc Icss
than thc Rcdc� clopmcnt Agcnc� �s assumptions. thc Ta� Rc� cnucs a� ailablc to makc thc Loan Pa� mcnts and
thc resulting dcbt scr� icc on thc Bonds «ill. in all likclihood. bc Icss than thosc projcctcd hcrcin. Scc "DI:13I
SI:RVICI: SCI II:UUI,I:�� and "TI II: PRc�.iI:C i ARI:n—Dcbt Scr� icc Co� cragc Projcctions...
Reduction of Tax Revenues
Ta� Rc� cnucs allocatcd to thc Rcdc� clopmcnt Agcnc� .«hich constitutc thc primar� sccurit� for thc
Bonds. arc dctcrmincd b� thc incrcmcntal asscsscd � aluc of ta�ablc propert� in thc Projcct Arc;a. thc currcnt
ratc or ratcs at «hich propert� in thc Projcct Arc;a is ta�cd. and thc perccntagc of ta�cs collcctcd in thc Projcct
Arca. Sc� cral t��pcs of c� cnts «hich arc bc� ond thc control of thc Rcdc� clopmcnt Agcnc� could occur a��d
causc a rcduction in a� ailablc Ta� Rc� cnucs. A rcduction of ta�ablc � alucs of propert� in thc Projcct Arc;a or
a rcduction of thc ratc of incrc;asc in ta�ablc � alucs of propert� in thc Projcct Arca causcd b� cconomic or
othcr factors bc� ond thc control of thc Rcdc� clopmcnt Agcnc� (such as a succcssfiil appc;al b� a propert�
o« ncr for a rcduction in a propert� �s asscsscd � aluc. a rcduction of thc gcncral inflationar� ratc. a rcduction
in �aluc. or thc dcstniction of propert� causcd b� natural or othcr disastcrs) could occur. thcrcb� causing a
rcduction in thc Ta� Rc� cnucs that sccurc thc Bonds. Such a rcduction in Ta� Rc� cnucs could ha� c an
ad� crsc impact on thc Rcdc� clopmcnt Agcnc� �s abilit� to makc timcl� pa� mcnt of principal of and intcrest
on thc Bonds.
Morco� cr. in addition to thc othcr limitations on Ta� Rc� cnucs dcscribcd undcr "LIMI I n I Ic�Ns c�N
TnX RI:vI:Nul:s." thc Statc cicctoratc or Lcgislaturc could adopt a constitutional or Icgislati� c propert� ta�
dccrcasc «ith thc cffcct of rcducing Ta� Rc� cnucs pa� ablc to thc Rcdc� clopmcnt Agcnc� . Thcrc is no
assurancc that thc Statc cicctoratc or Lcgislaturc «ill not at somc firturc timc appro� c additional limitations
that could reducc Ta� Rc� cnucs and ad� crscl� affcct thc sccurit� of thc Bonds.
Additionall�. thc Rcdc� clopmcnt Agcnc� has no po« cr to Ic� � and collcct propert� ta�cs. T7�c
rcccipt of ta� rc� cnucs b� thc Rcdc� clopmcnt Agcnc� is dcpcndcnt on thc timcl� pa� mcnt of propert� ta�cs
b� lando« ncrs «ithin thc Projcct Arc;a. Substantial dclinqucncics or othcr rcductions in thc pa� mcnt of
propert� ta�cs on rcal propert� in thc Projcct Arc;a b� a largc numbcr of lando« ncrs could ha� c an ad� crsc
cffcct on thc Rcdc� clopmcnt Agcnc� �s abilit� to makc timcl� dcbt scr� icc pa� mcnts on thc Bonds sccurcd b�
Ta� Rc� cnucs dcri� cd from thc Projcct Arc;a. Ta� rc� cnucs allocatcd to thc Rcdc� clopmcnt Agcnc� arc
distributcd throughout thc fiscal �c;ar in installmcnts. «ith a first installmcnt in Dcccmbcr and thc sccond
installmcnt in Junc of thc samc fiscal � c;ar. T7�c pa� mcnts arc adjustcd to rcflcct actual collcctions.
o�,o � � r�,�-�
�4 I
Reductions in Unitary Values
As thc result of thc adoption of AB �4��4 (Chaptcr 921. Statutcs of 1986). a portion of thc Count�-
«idc unitan �alucs assigncd to public utilitics «as allocatcd to thc Projcct Arc;a. In Fiscal Yc;ar. 200�-06.
appro�imatcl� `%� of thc Ta� Rc� cnucs in thc Projcct Arc;a «as attributablc to such unitar� � alucs. Am
substantial rcduction in thc �alucs of public utilit� propertics. cithcr bccausc of dcrcgulation of a utilit�
industr� or for am othcr rc;ason. «ill ha� c an ad� crsc impact on thc amount of Ta� Rc� cnucs. Ho« c� cr. am
such impact «ith respcct to utilit� propertics «ithin thc Projcct Arc;a «ill bc Icsscncd bccausc thc impact «ill
bc sprc;ad on a Count� -« idc basis. For fiirthcr information conccrning unitar� � alucs. scc "LIMI I n I Ic�Ns c�N
TnX RI:vI:NUI:s—Propert� Ta� Collcction Proccdures�� and "—Ta�ation of Unitan Propert� .��
Appeals to Assessed Values
T7�crc arc t«o basic t�pcs ofasscssmcnt appc;als pro�idcd for undcr Statc la«. Thc first t��pc of
appc;al. commonl� rcfcrrcd to as a basc � car asscssmcnt appc;al. im ol� cs a disputc on thc � aluation assigncd
b� thc Count� asscssor immcdiatcl� subscqucnt to an instancc of a changc in o«ncrship or complction of
nc« constniction. If thc basc � car � aluc assigncd b� thc Count� asscssor is rcduccd. thc � aluation of thc
propert� cannot incrc;asc in subscqucnt �c;ars morc than t«o perccnt annuall� unlcss and until anothcr changc
in o« ncrship and/or additional nc« constniction acti� iri occurs. T7�c sccond t� pc of appcal. commonl�
rcfcrrcd to as a Proposition 8 appcal. can result if factors occur causing a dcclinc in thc markct � aluc of thc
propert� to a Ic� cl bclo« thc propert� �s thcn currcnt ta�ablc � aluc (cscalatcd basc � car � aluc). Pursuant to
California la«. a propert� o«ncr ma� appl� for a Proposition 8 rcduction of thc propert� ta� asscssmcnt for
such o«ncr�s propert� b� filing a«rittcn application. in form prescribcd b� thc Statc Board of Equalization.
«ith thc appropriatc count� board of cqualization or asscssmcnt appc;als board.
In thc Count�. a propert� o«ncr dcsiring a Proposition 8 rcduction of thc asscsscd �aluc of such
o« ncr�s propert� in am onc � car must submit an application to thc Ri� crsidc Count� Asscssmcnt Appc;als
Board (thc "Appcals Board��). Applications for am ta� � car must bc submittcd b� Scptcmbcr I� of such ta�
� car. Follo« ing a rc� ic« of thc application b� thc Ri� crsidc Count� Asscssor�s Officc (thc "Count�
Asscssor �). thc Count� Asscssor ma� offcr to thc propert� o«ncr thc opportunit� to stipulatc to a rcduccd
asscssmcnt. or ma� confirm thc asscssmcnt. If no stipulation is agrccd to. and thc applicant ciccts to pursuc
thc appc;al. thc mattcr is brought bcforc thc Appc;als Board (or. in somc cascs. a hcaring c�amincr) for a
hcaring and dccision. Thc Appc;als Board gcncrall� is rcquircd to dctcrminc thc outcomc of appcals «ithin
t«o �c;ars of c;ach appcal�s filing datc. Am rcduction in thc asscssmcnt ultimatcl� grantcd applics onl� to thc
�car for «hich application is madc and during «hich thc «rittcn application is filcd. T7�c asscsscd �aluc
incrc;ascs to its prc-rcduction Ic� cl (cscalatcd to thc inflation ratc of no morc than t« o perccnt) follo« ing thc
�car for i�hich thc rcduction application is filcd. Ho«c�cr. thc Count� Asscssor has thc po«cr to grant a
rcduction not onl� for thc � car for «hich application «as originall� madc. but also for thc thcn currcnt � c;ar
and am intcr�cning �cars as «cll. In practicc. such a rcduccd asscssmcnt ma� and oftcn docs rcmain in
cffcct bc� ond thc � car in «hich it is grantcd. Scc "LIMI�I � I1c)NS c�N TnX RI:vI:NUI:s—Propert� Ta�
Collcction Proccdures�� and "TI II: PRc�,il:c i ARI:n—Asscssmcnt Appc;als.��
An appcal ma� result in a rcduction to thc Count� Asscssor�s original ta�ablc �aluc and a ta� rcfiind
to thc applicant propert� o« ncr. A rcduction in ta�ablc � alucs «ithin thc Projcct Arca and thc rcfiind of ta�cs
«hich ma� arisc out of succcssfi�l appcals b� thcsc o«ncrs «ill affcct thc amount of Ta� Rc�cnucs and
Subordinatc Ta� Rc� cnucs a� ailablc to pa� dcbt scr� icc on thc 2006 Scrics Bonds.
Reduction in Inflation Rate
As dcscribcd in grc;atcr dctail abo� c. Articic XIII A of thc California Constitution pro� idcs that thc
fiill cash � aluc basc of rc;al propert� uscd in dctcrmining ta�ablc � aluc ma� bc adjustcd from � car to � car to
rcflcct thc inflation ratc. not to c�cccd a t« o perccnt incrc;asc for am gi� cn � c;ar. or ma� bc rcduccd to rcflcct
o�,o � � r�,�-�
�42
a rcduction in thc consumcr pricc indc�. comparablc local data or am rcduction in thc c� cnt of dcclining
propert� � aluc causcd b� damagc. dcstniction or othcr factors (as dcscribcd abo� c). Such mcasurc is
computcd on a calcndar � c;ar basis. Am resulting rcduction in thc fiill cash � aluc basc o� cr thc tcrm of thc
2006 Scrics Bonds could reducc Ta� Rc� cnucs. Scc "LIMI�I n I Ic�Ns c�N TnX RI:vI:Nul:s—Articic XI II A of thc
Statc Constitution.��
Bankruptcy and Foreclosw•e
T7�c rights of thc O« ncrs of thc 2006 Scrics Bonds and thc cnforcc;abilit� of thc obligation to makc
pa�mcnts on thc Bonds ma� bc subjcct to bankniptc�. insol�cnc�. rcorganization. moratorium and othcr
similar la«s affccting crcditors� rights undcr currcntl� c�isting la« or la«s cnactcd in thc fiiturc and ma� also
bc subjcct to thc c�crcisc of judicial discrction undcr ccrtain circumstanccs. T7�c opinions of Bond Counscl
as to thc cnforccabilit� of thc obligation to makc pa� mcnts on thc 2006 Scrics Bonds «ill bc qualificd as to
ba��kruptc� and such othcr Icgal c� cnts. Scc A►�►�►:Nu►x E—"P►�c�►>c�s►:u Fc�►�Nt c�► Bc�Nu Cc�uNs►:►. O►�►N►c�N."
Furthcr. thc pa� mcnt of thc ta� incrcmcnt rc� cnucs and thc abilit� of thc Count� to timcl� forcclosc
thc licn of a dclinqucnt unpaid ta� ma� bc limitcd b� bankruptc�. insol�cnc�. or othcr la«s gcncrall�
affccting crcditors� rights or b� thc la«s ofthc Statc rclating to judicial forcclosurc. Am dcla� in prosccuting
superior court forcclosurc procccdings «ould incrc;asc thc likclihood of a dcla� or dcfault in pa� mcnt of thc
principal of and intcrest on thc 2006 Scrics Bonds and thc possibilit� of dclinqucnt ta� installmcnts not bcing
paid in fiill.
Delinquencies
Dclinqucncics in thc pa� mcnt of propert� ta�cs and thc impact of bankruptc� procccdings on thc
Icgal abilit� to collcct propert� ta�cs could ha� c an ad� crsc impact on thc abilit� of thc Rcdc� clopmcnt
Agcnc� to makc timcl� pa� mcnts undcr thc 2006 Loan Agrccmcnt. T7�c � aluation of propert� is dctcrmincd
as of thc Januar� I licn datc as cqualizcd in August of cach � c;ar and cqual installmcnts of ta�cs Ic� icd upon
sccurcd propert� bccomc dclinqucnt on thc follo« ing Dcccmbcr 10 and April 10. Ta�cs on unsccurcd
propert� arc duc April I and bccomc dclinqucnt August � I. Scc "Ti u: Piic�,ii;c r Aiii:n—Ta� Lc� ics.
Collcctions and Dclinqucncics.��
State Budget
7%e, fullutirin,�� infui�matiun cuncei�nin,�� tl�e .S'tate '.s ?00-i-0� ancl ?00�-0< l�i.scal }''eco� Rial��et.s ancl tl�e
?00<-Oi Guvei�nui�'.s Rial��et l�a.s heen uhtainecl fi�um pi�hliel�' CfVCfl�CfJ7�L' !YlfUl'177Cf1lUl9 Ul9 1�9L' .S'tate l)epco7ment
uf'l'!YlCfYlCL'. 1�9L' .S'tate 7i�ea.siu�ei� ancl tl�e ('alifui�nia /,e,��i.slative Anal��.st Of'Jice tireh.,�ite.,�. 7%e e.stimate.s ancl
pi�ujec7iun.s pi�uvic%cl helutir co�e ha.secl i�pun VCO7U11.1' Cf.1'.1'tl177�)1!U121' Cf.1' 1l�)L%Cf1L'Ll !Y! tl�e ?00<-Oi Guvei�nui�'.s
Rial��et. ti�•%ic% mm� he affec7ecl h�' 1911/77L'PU11.1' fCfC1Ul'.1'. !YlC�1lLllYl,��.fi�tiu�e ecunumic cunclitiun.s in tl�e .S'tate ancl
1�1L' YlCf!!U19. CfYlL% 1�1L'PL' CCfY! J7L' Y!U Cf.1'.1'tll'CfYlCL' 1�1Cf1 1�1L' L'.1'1!177Cf1L'.1' 11'!�� %7L' CfC�1lL'VL'L% �'Ul' f1ll'1�1L'l' !YlfUl'177Cf1lUl9 CfYlLl
Lll.1'C11.1'.1YU19 Uf, fCfC1Ul'.1' 1lYlL%L'l'�17Yl��� 1�1L' .S�1Cf1L' .1' �)PU�L'C!!U121'. .1'L'L' 1�1L' CffUl'L'177L'Y!1!Ul9L'L% 11'L'J7.1Y1L'.1'. I�1L' RL'L%L'VL'�U�)177L'Y!1
A,��encr helieve.s .siic% infui�matiun tu he i�eliahle. l�utirevei�. tl�e Rec%velupmen! A,��enc�' 1Cf�CL'.1' Y!U /'L'.1'�)U/21'!J7l�lh'
a.s tu t%e acciu�acr ui� cumpletene.s.s tl�ei�euf'ancl%a.s nut inc%penc%ntl�' VL'l7flL'Ll.1'11C�9 !YlfUl'177Cf1lUl9.
In conncction «ith its appro� al of thc budgct for Fiscal Ycars 1992-9 �. I 99 �-9�4. 199�4-9�. 2002-0 �.
200 �-0�4. 200�4-Oi and 200;-06. thc Statc Lcgislaturc cnactcd Icgislation «hich. among othcr things.
rc;allocatcd fiinds from rcdc� clopmcnt agcncics to school districts b� shifting a portion of c;ach rcdc� clopmcnt
agcnc� �s ta� incrcmcnt. nct of amounts duc to othcr ta�ing agcncics. to school districts for such fiscal � c;ars
for dcposit in thc Education Rc� cnuc Augmcntation Fund ("ERAF��). T7�c amount rcquircd to bc paid b� a
rcdc� clopmcnt agcnc� undcr such Icgislation is apportioncd among all of its rcdc� clopmcnt projcct arc;as on a
collccti� c basis. and «as not allocatcd scparatcl� to indi� idual projcct arc;as. In Fiscal Ycar 2002-0 �. thc
aggrcgatc amount transfcrrcd b� rcdc� clopmcnt agcncics into ERAF «as `f I.� billion. «as `f 2�0 million for
o�,o � � r�,�-�
�4 �
Fiscal Ycar 200�4-0� and �2�0 million for Fiscal Ycar 200�-06. Bascd on thc ta� incrcmcnt rc� cnucs sho« n
in of thc Statc Controllcr�s Annual Rcport as bcing rctaincd b� thc Rcdc�clopmcnt Agcnc�. thc
Rcdc� clopmcnt Agcnc� «as rcquircd to pa� `f into ERAF in Fiscal Ycar 200 �-0�4 of «hich
`f «as attributablc for thc Projcct Arca. `f �.887.1>; in Fiscal Ycar 200�4-0� of «hich `f I 17.698 «as
attributablc for thc Projcct Arc;a. and `f �.99�.0�4 I in Fiscal Ycar 200�-06 of «hich `f �60.8�9 is attributablc for
thc Projcct Arca.
Fiscn! Yenr 200;1-OS. Thc 200�4-0� Budgct Act (thc "Statc 200�4 Budgct Act") «as adoptcd b� thc
Lcgislaturc on Jul� 29. 200�4. along «ith a numbcr of implcmcnting mcasures. and signcd b� Go� crnor
Sch«arzcncggcr on Jul� � I. 200�4.
Undcr thc Statc 200�4 Budgct Act. Gcncral Fund re� cnucs «crc projcctcd to incrc;asc �.6`%�. from
�7�4.6 billion in Fiscal Yc;ar 200 �-0�4 (including appro�imatcl� �2. � billion in tobacco sccuritization bond
procccds) to `f 77. � billion in Fiscal Ycar 200�4-0�. Thc rc� cnuc projcctions assumcd a continuing rcbound in
California�s cconom� as rcflcctcd in sc� cral kc� indicators. E�cluding thc impact of thc cconomic rcco� cn
bonds. Gcncral Fund c�pcnditures «crc cstimatcd to incrc;asc b� 6.7`%�. from �7�.6 billion in Fiscal Ycar
200 �-0�4 to `f 80.7 billion in Fiscal Yc;ar 200�4-0�. Thc Junc �0. 200� rescr� c«as projcctcd to bc `f 768
million. comparcd to an cstimatcd Junc �0. 200�4 rescr� c of �2.198 billion.
T7�c Statc 200�4 Budgct Act and relatcd Icgislation dra�naticall� changcd thc Statc-local fiscal
rclationship. Pursuant to Proposition I A. thc VLF «as rcduccd from 2`%� to 0.6�`%� of thc � aluc of thc � chicic.
In ordcr to protcct local go� crnmcnts. thc rcduction in VLF rc� cnuc to citics and countics from this ratc
changc «as to bc rcplaccd b� an incrc;asc in thc amount of propert� ta� thc� rccci� c. Rcdc� clopmcnt
agcncics «crc again rcquircd to makc transfcrs to thc applicablc ERAF in thc aggrcgatc amount of `f2�0
million as implcmcntcd b� SB 1096. T7�c transfcrs rcquircd undcr SB 1096 to thc ERAF «cre subordinatc to
pa� mcnts on bonds sccurcd b� ta� incrcmcnt rc� cnucs. For a morc dctailcd dcscription of SB 1096. scc
..SI:CURI I Y �NU SOURCI:S OF P�YMI:N�I OF I�I II: BONUS-Rcdct clopmcnt Plan Limitations-.S%3 /O)<...
Undcr Proposition IA. for Fiscal Yc;ars 200�4-0� and 200�-06 onl�. thc rcplaccmcnt propert� ta�cs
that citics and countics rccci� c«ould bc rcduccd b� �700 million. In firturc � cars. local go� crnmcnts «ould
rccci� c thc fiill � aluc of thc VLF rc� cnuc that thc� «ould ha� c rccci� cd undcr currcnt la« . Also for thcsc
t«o Fiscal Ycars. Proposition IA «ould requirc rcdc�clopmcnt agcncics to shift `f2�0 million in propert� ta�
rc� cnuc thc� «ould othcn� isc rccci� c to schools. and spccial districts «ould shift ���0 million to schools.
For a morc dctailcd dcscription of Proposition I A. SCC "CONS I I I U"I1ONnl, nNU S I n I�U"I ORY LIMI l n llONS ON
Tnxi:s. iii:vi:Nui:s nNu Ai�i�iu�i>iiin ric�Ns—Proposition I A."
Fiscn! Yenr 200 �-0<.
Lcgislaturc on Jul� 7. 200i.
Sch«arzcncggcr on Jul� I I.
Thc 200�-06 Budgct Act (thc "Statc 200� Budgct Act") «as adoptcd b� thc
along «ith a numbcr of implcmcnting mcasures. and signcd b� Go� crnor
Thc 200� Statc Budgct Act rcflcctcd an impro� ing Statc fiscal picturc brought about b� bcttcr-
than-c�pcctcd gro«th in Gcncral Fund re�cnucs. Thc 200� Statc Budgct Act fiinds thc Proposition �42
transfcr of gcncral fiind salcs ta�cs to transportation spccial fiinds. and includcd significant incrcascs in
both K-12 and highcr cducation. Thc 200� Statc Budgct Act did not usc am of thc rcmaining ��.7 billion
in dcficit-financing bonds authorizcd b� Proposition �7. and thc Statc prcpaid thc `f 1.2 billion VLF "gap��
loan that «as duc to local go� crnmcnts in Fiscal Ycar 2006-07 in August 200�.
At thc samc timc. 200� Statc Budgct Act includcd appro�imatcl� �6 billion in sa� ings and relatcd
budgct solutions in ordcr to maintain budgctar� balancc. including. among othcr solutions. thc ERAF transfcr
from rcdc� clopmcnt agcncics in thc aggrcgatc amount of �2�0 million
o�,o � � r�,�-�
�4�4
Aftcr taking into account thc highcr rc� cnucs and othcr offsctting factors (including highcr
Proposition 98 fiinding rcquircmcnts undcr currcnt la« ) thc resulting operating shortfall for Fiscal Ycar
200i-06 «as cstimatcd at ��4.9 billion.
200<-07 (�overi7or'.s Bucl�;et. Thc 2006-07 Go� crnor�s Budgct (thc "2006 Go� crnor�s Budgct��).
rcicascd on Januar� 10. 2006. cstimatcs that thc Statc operating dcficit for Fiscal Ycar 2006-07 «ill bc �6. �
billion. Thc 2006 Go� crnor�s Budgct is balanccd b� using a largc part of thc Fiscal Ycar 200�-06 cnding
fiind balancc. Aftcr taking into considcration thc adjustmcnts of `f I.6 billion for thc rcpa� mcnt or prcpa� mcnt
of prior obligations. including ��460 million to prcpa� thc cconomic rcco� cn bonds. thc cffccti� c operating
dcficit for Fiscal Yc;ar 2006-07 is `f�4.7 billion.
T7�c 2006-07 Go� crnor�s Budgct projccts to cnd Fiscal Ycar 2006-07 «ith a�61 � million total
rescr� c. including `f�460 million in thc nc« I� crc;atcd Budgct Stabilization Account pursuant to Proposition �8
(cnactcd in 200�4). Statc Gcncral Fund re� cnucs and transfcrs for Fiscal Ycar 2006-07 arc projcctcd at
`f91.� billion. an incrc;asc of `f �.9 billion comparcd «ith rc� iscd cstimatcs for Fiscal Ycar 200�-06.
Statc Gcncral Fund c�pcnditures for Fiscal Ycar 2006-07 arc projcctcd at �97.9 billion. an incrc;asc
of �7.6 billion. or 8.�4`%�. comparcd «ith rc� iscd cstimatcs for Fiscal Yc;ar 200�-06. No ERAF transfcrs from
rcdc� clopmcnt agcncics arc includcd in thc 2006 Go� crnor�s Budgct.
200<-07 Mn�� Revisioi7. On Ma� I�. 2006. thc Go� crnor rcicascd a rc� ision to thc 2006 Go� crnor�s
Budgct (thc "2006 Ma� Rc� ision��). T7�c Ma� Rc� ision is bascd upon strongcr than c�pcctcd incomc ta�
collcction in thc amount of appro�imatcl� `f 7.� billion sincc thc rcicasc of thc 2006 Go� crnor�s Budgct in
Ja�uian 2006. Among othcr things. thc 2006 Ma� Rc� ision proposcs to (i) allocatc nc;arl� �40`%� of thc �7.�
billion incrc;asc in rc� cnucs to K-12 and communit� collcgc cducation: «ith thc balancc for prcpa� mcnt of
budgct dcbt: (ii) build up thc rescr� c: (iii) makc onc-timc and ongoing augmcntations to hcalth. resourccs.
corrcctions and local go� crnmcnts (including an `f 87 million prcpa� mcnt of thc Fiscal Ycar 2007-08
obligation of thc Statc for prior-�c;ar mandatc costs): and (i�) makc a proposcd sctticmcnt to a la«suit
im ol� ing school fiinding resulting in addcd annual out-� c;ar obligations a� craging morc than `f�400 million for
sc� cn � cars.
T7�c 2006 Ma� Rc� ision docs not includc am ERAF transfcrs from rcdc� clopmcnt agcncics. T7�c
Fiscal Ycar 2006-07 Statc Budgct is c�pcctcd to bc subjcct to significant ncgotiation and re� ision prior to
adoption b� thc Lcgislaturc of thc Statc. T7�crc can bc no assuranccs that thc final Fiscal Ycar 2006-07 Statc
Budgct «ill not placc additional burdcns on local go� crnmcnts. including thc Rcdc� clopmcnt Agcnc�. or «ill
not rc;allocatc or rcducc rc� cnucs to local go� crnmcnts.
T7�c Rcdc� clopmcnt Agcnc� cannot prcdict «hcthcr thc Statc Lcgislaturc «ill cnact firturc Icgislation
rcquiring additional or incrc;ascd firture shifts of ta� incrcmcnt rc� cnucs to thc Satc and/or to schools. «hcthcr
through an arrangcmcnt similar to ERAF or b� othcr arrangcmcnts. and. if so. thc cffcct on firturc Ta�
Rc� cnucs.
Natw•al Disasters
Floocliiz�;. Flood zoncs arc idcntificd b� thc Fcdcral Emcrgcnc� Managcmcnt Agcnc� ("FEMA��).
FEMA dcsignatcs land locatcd in a lo«- to modcratc-risk flood zonc (i.e. not in a floodplain) as bcing «ithin
a Non-Spccial Flood Haz�rd Arc;a (a "NSFHA��). A NSFHA is an arc;a that is in a lo«- to modcratc-risk
flood zonc (i.c. not in a floodplain) and has Icss than a I`%� chancc of flooding c;ach �c;ar. Whilc thc Cit� is
locatcd «ithin a NSFHA. sc� crc. conccntratcd rainfall could result in localizcd flooding and ri� cr o� crflo« s.
T7�c Cit� can makc no rcprescntation that firturc maps «ill not bc rc� iscd to includc thc Cit� «ithin an arc;a
dccmcd subjcct to flooding. T7�c occurrcncc of flooding in thc Projcct Arca could result in a rcduction in Ta�
Rc� cnucs and Subordinatc Ta� Rc� cnucs. Such a rcduction of Ta� Rc� cnucs or Subordinatc Ta� Rc� cnucs
o�,o � � r�,�-�
�4 �
could ha� c an ad� crsc cffcct on thc abilit� of thc Rcdc� clopmcnt Agcnc� abilit� to makc timcl� pa� mcnts of
principal and intcrest on thc 2006 Loans.
.Seismic Fnctors. Gcncrall�. scismic acti� it� occurs on a rcgular basis in thc Stntc. Pcriodicall�. thc
magnitudc of a singlc scismic c� cnt can causc significant ground shaking and potcntial damagc to propert�
locatcd at or ncar thc ccntcr of such scismic acti� it� . Thc occurrcncc of sc� cre scismic acti� it� in thc Cit�
could result in damagc to roads. infrastnicturc and othcr propert� «ithin thc Projcct Arca. T7�c occurrcncc of
such a sc� cre scismic could ha� c a ncgati� c impact on asscsscd � alucs of ta�ablc � alucs of propert� in thc
Projcct Arca and could result in a rcduction in Ta� Rc� cnucs and Subordinatc Ta� Rc� cnucs. Such a
rcduction of Ta� Rc� cnucs or Subordinatc Ta� Rc� cnucs could ha� c an ad� crsc cffcct on thc abilit� of thc
Rcdc� clopmcnt Agcnc� abilit� to makc timcl� pa� mcnts of principal and intcrest on thc 2006 Loans.
Hazardous Substances
An additional cm ironmcntal condition that ma� result in thc rcduction in thc asscsscd � aluc of
propert� «ould bc thc disco� cr� of a haz�rdous substancc that «ould limit thc bcncficial usc of ta�ablc
propert� «ithin thc Projcct Arca. In gcncral. thc o«ncrs and operators ofa propert� ma� bc rcquircd b� la«
to rcmcd� conditions of thc propert� rclating to rcicascs or thrcatcncd relcascs of hazardous substanccs. T7�c
o« ncr or operator ma� bc rcquircd to rcmcd� a hazardous substancc condition of propert� «hcthcr or not thc
o« ncr or operator has am thing to do «ith crc;ating or handling thc haz�rdous substancc. T7�c cffcct.
thcrcforc. should am of thc propert� «ithin thc Projcct Arca bc affcctcd b� a hazardous substancc. could bc
to rcducc thc markctabilit� and � aluc of thc propert� b� thc costs of rcmcd� ing thc condition.
Loss of Tax Exemption
In ordcr to maintain thc cticlusion from gross incomc for fcdcral incomc tnx purposcs of thc intcrest
on thc Bonds. thc Rcdc� clopmcnt Agcnc� has co� cnantcd in thc Indcnturc to compl� «ith thc applicablc
rcquircmcnts of thc Intcrnal Rc� cnuc Codc of 1986. as a�ncndcd. T7�c intcrest on thc 2006 Scrics Bonds
could bccomc includablc in gross incomc for purposcs of fcdcral incomc ta�ation rctroacti� c to thc datc of
issuancc of such 2006 Scrics Bonds as a result of acts or omissions of thc Rcdc� clopmcnt Agcnc� in
� iolation of this or othcr co� cnants in thc Indcnturc applicablc to thc 2006 Scrics Bonds. T7�c 2006 Scrics
Bonds arc not subjcct to rcdcmption or am incrcasc in intcrest ratcs should an c� cnt of ta�abilit� occur and
«ill rcmain outstanding until maturit� or prior rcdcmption in accordancc «ith thc pro� isions containcd in thc
Indcnturc. Scc "TnX Mn i'I1:Rs .. -
Risk of Tax Audit
In Dcccmbcr 1999. as a part of a largcr rcorganization of thc Intcrnal Rc� cnuc Scr� icc (thc
"IRS��). thc IRS commcnccd operation of its Ta� E�cmpt and Go� crnmcnt Entitics Di� ision (thc "TE/GE
Di� ision��). as thc succcssor to its Emplo� cc Plans and E�cmpt Organizations di� ision. Thc nc« TE/GE
Di� ision has a subdi� ision that is spccificall� dc� otcd to ta�-c�cmpt bond compliancc. Public statcmcnts
b� IRS officials indicatc that thc numbcr of ta�-c�cmpt bond c�aminations («hich «ould includc thc
issuancc of sccuritics such as thc 2006 Scrics Bonds) is c�pcctcd to incrcasc significantl� undcr thc nc«
TE/GE Di� ision. Thcrc is no assurancc that if an IRS c�amination of thc 2006 Scrics Bonds «as
undcrtakcn that it «ould not ad� crscl� affcct thc markct � aluc of thc 2006 Scrics Bonds. Scc "Tnx
Mn i i i:iis .. -
Thc Rcdc� clopmcnt Agcnc� has not bccn contactcd b� thc IRS rcgarding thc c�amination of am of
its bond transactions.
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�46
Secondary Market
T7�crc can bc no guarantcc that thcrc «ill bc a sccondan markct for thc 2006 Scrics Bonds or. if a
sccondar� markct c�ists. that thc 2006 Scrics Bonds can bc sold for am particular pricc. Occasionall�.
bccausc of gcncral markct conditions or bccausc of ad� crsc histon or cconomic prospccts conncctcd «ith a
particular issuc. sccondar� markcting practiccs are suspcndcd or tcrminatcd. Additionall�. priccs of issucs for
«hich a markct is bcing madc «ill dcpcnd upon thcn prc� ailing circumstanccs. Such priccs could bc
substantiall� diffcrcnt from thc original purchasc pricc.
TAX MATTERS
In thc opinion of Richards. Watson c�. Gcrshon. A Profcssional Corporation. Bond Counscl. undcr
c�isting la« intcrest on thc 2006 Scrics Bonds is c�cludcd from gross incomc for fcdcral incomc ta� purposcs
undcr Scction 10 � of thc Intcrnal Rc� cnuc Codc of I 986. as amcndcd (thc "Codc��). and is not an itcm of ta�
prcfcrcncc for purposcs of thc fcdcral altcrnati� c minimum ta� imposcd on indi� iduals and corporations.
Bond Counscl «ill c�press no opinion as to am othcr fcdcral ta� conscqucnccs rcgarding thc 2006 Scrics
Bonds.
T7�c opinion on fcdcral ta� mattcrs «ill bc bascd on and «ill assumc thc accurac� of ccrtain
rcprescntations and ccrtifications. a��d continuing complia��cc «ith ccrtain co� cnants. of thc Agcnc� and thc
Authorit� that arc intcndcd to assurc thc forcgoing. including that thc 2006 Scrics Bonds arc and «ill rcmain
obligations. thc intcrest on «hich is c�cludcd from gross incomc for fcdcral incomc ta� purposcs. Bond
Counscl «ill not indcpcndcntl� � crifi thc accurac� of thosc rcprescntations and ccrtifications.
T7�c Codc prescribcs a numbcr of qualifications and conditions for thc intcrest on statc and local
go� crnmcnt obligations to bc and to rcmain c�cludcd from gross incomc for fcdcral incomc ta� purposcs.
Somc of thcsc qualifications and conditions rcquirc firturc or continucd compliancc aftcr issuancc of thc
obligations for thc intcrest to bc and to continuc to bc c�cludcd from thc datc of issuancc. Noncompliancc
«ith thcsc qualifications and conditions b� thc Authorit� or thc Agcnc� ma� causc thc intcrest on thc 2006
Scrics Bonds to bc includcd in gross incomc for fcdcral incomc ta� purposcs rctroacti� cl� to thc datc of
issuancc of thc 2006 Scrics Bonds. Thc Authorit� and thc Agcnc� ha� c co� cnantcd to takc thc actions
rcquircd of thcm for thc intcrest on thc 2006 Scrics Bonds to bc and to rcmain c�cludcd from gross incomc
for fcdcral incomc ta� purposcs. and not to takc am actions that «ould ad� crscl� affcct that c�clusion.
Undcr thc Codc. a portion of thc intcrest on thc 2006 Scrics Bonds carncd b� ccrtain corporations
ma� bc subjcct to a corporatc altcrnati� c minimum ta�. In addition. intcrest on thc 2006 Scrics Bonds ma� bc
subjcct to a branch profits ta� imposcd on ccrtain forcign corporations doing busincss in thc Unitcd Statcs
a��d to a ta� imposcd on c�ccss nct passi� c incomc of ccrtain S corporations.
Undcr thc Codc. thc c�clusion of intcrest from gross incomc for fcdcral incomc ta� purposcs ma�
ha� c ccrtain ad� crsc fcdcral incomc ta� conscqucnccs on itcros of incomc. dcduction or crcdit for ccrtain
ta�pa� crs. including financial institutions. ccrtain insurancc companics. rccipicnts of Social Sccurit� and
Railroad Rctircmcnt bcncfits. thosc that arc dccmcd to incur or continuc indcbtcdncss to acquirc or carr� ta�-
c�cmpt obligations. and indi� iduals othcn� isc cligiblc for thc carncd incomc ta� crcdit. Thc applicabilit� and
c�tcnt of thcsc and othcr ta� conscqucnccs «ill dcpcnd upon thc particular ta� status or othcr ta� itcros of thc
o« ncrs of thc 2006 Scrics Bonds. Bond Counscl «ill c�press no opinion rcgarding thosc conscqucnccs.
Am c�ccss of thc statcd redcmption pricc at maturit� of thc 2006 Scrics Bonds o� cr thc initial
offcring pricc to thc public of thc 2006 Scrics Bonds sct forth on thc insidc co� cr of this Official Statcmcnt is
"original issuc discount.�� Such original issuc discount accniing on a 2006 Scrics Bond is trc;atcd as intcrest
c�cludcd from thc gross incomc of thc o« ncr thcrcof for fcdcral incomc ta� purposcs and c�cmpt from
o�,o � � r�,�-�
�47
California personal incomc ta�. Original issuc discow�t on am 2006 Scrics Bond purchascd at such initial
offcring pricc and pursuant to such initial offcring «ill accnic on a scmiannual basis o� cr thc tcrm of thc 2006
Scrics Bond on thc basis of a constant � icld mcthod and. «ithin cach scmiannual period. «ill accnic on a
ratablc dail� basis. T7�c amount of original issuc discount on such a 2006 Scrics Bond accniing during cach
period is addcd to thc adjustcd basis of such 2006 Scrics Bond to dctcrminc ta�ablc gain upon disposition
(including salc. rcdcmption or pa� mcnt on maturit� ) of such 2006 Scrics Bond. T7�c Codc includcs ccrtain
pro� isions rclating to thc accnial of original issuc discount in thc casc of purchascrs of thc 2006 Scrics Bonds
«ho purchasc thc 2006 Scrics Bonds othcr than at thc initial offcring pricc and pursuant to thc initial offcring.
Am person considcring purchasing a 2006 Scrics Bond should consult his on c�r o«n ta� ad�isors «ith
respcct to thc tax conscqucnccs of o« ncrship of bonds �� ith original issuc discount. including thc trc;at►ncnt of
purchascrs «ho do not purchasc in thc original offcring and thc original offcring pricc. thc allo«ancc of a
dcduction for am loss on a salc or othcr disposition. and thc trc;atmcnt of accnicd original issuc discount on
such bonds undcr fcdcral indi� idual and corporatc altcrati� c minimum ta�cs.
If thc 2006 Scrics Bonds «crc offcrcd and sold to thc public at a pricc in c�ccss of thcir statcd
rcdcmption pricc (thc principal amow�t) at maturit�. that c�ccss constitutcs "prcmium." For fcdcral incomc
ta� purposcs. that prcmium is amortizcd o� cr thc period to maturit� of thc 2006 Scrics Bonds. bascd on thc
� icld to maturit� of thc 2006 Scrics Bonds. compoundcd scmiannuall� . No portion of that prcmium is
dcductiblc b� thc o« ncr of a 2006 Scrics Bond. For purposcs of dctcrmining thc o« ncr�s gain or loss on thc
salc. rcdcmption (including rcdcmption at maturit� ) or othcr disposition of a 2006 Scrics Bond. thc o« ncr�s
ta� basis in thc 2006 Scrics Bond is rcduccd b� thc amount of prcmium that accnics during thc period of
o«ncrship. As a result. an o«ncr ma� rc;alizc ta�ablc gain for fcdcral incomc ta� purposcs from thc salc or
othcr disposition of a 2006 Scrics Bond for an amount cqual to or Icss than thc amount paid b� thc o« ncr for
that 2006 Scrics Bond. A purchascr of a 2006 Scrics Bond in thc initial public offcring at thc pricc for that
2006 Scrics Bond statcd on thc insidc co� cr of this Official Statcmcnt «ho holds that 2006 Scrics Bond to
maturit� «ill rc;alizc no gain or loss upon thc rctircmcnt of that 2006 Scrics Bond. O« ncrs of thc 2006 Scrics
Bonds should consult thcir o« n ta� ad� iscrs as to thc dctcrmination for fcdcral incomc ta� purposcs of thc
amount of prcmium properl� accniablc in am period «ith respcct to thc 2006 Scrics Bonds and as to othcr
fcdcral ta� conscqucnccs and thc trc;atmcnt of prcmium for purposcs of statc and local ta�cs on. or bascd on.
incomc.
Purchascrs of thc 2006 Scrics Bonds at othcr than thcir original issuancc at thc respccti� c priccs
indicatcd on thc insidc co� cr of this Official Statcmcnt should consult thcir o« n ta� ad� iscrs rcgarding othcr
ta� considcrations such as thc conscqucnccs of markct discount or prcmium.
In thc fiirthcr opinion of Bond Counscl. intcrest on thc 2006 Scrics Bonds is c�cmpt from personal
incomc ta�ation imposcd b� thc Statc of California.
A cop� of thc proposcd form of Bond Counscl�s final appro� ing opinion «ith respcct to thc 2006
Scrics Bonds is attachcd hcrcto as AI�I�I:Nu►x E.
APPROVAL OF LECAL PROCEEDINCS
Ccrtain Icgal mattcrs incidcnt to thc authorization. issuancc and salc of thc 2006 Scrics Bonds arc
subjcct to thc appro�al of Richards. Watson c�. Gcrshon. A Profcssional Corporation Los Angcics. California.
Bond Counscl. A cop� of thc proposcd form of Bond Counscl�s opinion is containcd in AI'1'I:NuIX E to this
Official Statcmcnt. and thc final opinion «ill bc madc a� ailablc to thc o« ncrs of thc 2006 Scrics Bonds at thc
timc of dcli� cr� of thc 2006 Scrics Bonds. Ccrtain Icgal mattcrs «ill bc passcd upon for thc Rcdc� clopmcnt
Agcnc� b� . and b� Lofton c�. Jcnnings. San Francisco. California. Disclosurc Counscl.
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�tx
Bond Counscl «ill also dcli� cr a supplcmcntal opinion as to thc accurac� in all matcrial respccts of
thc dcscriptions containcd in this Official Statcmcnt of thc Bonds. and Bond Counscl�s fcdcral and Statc ta�
opinions. E�ccpt as c�pressl� dcscribcd in said opinion. Bond Counscl is not passing upon and undcrtakcs
no responsibilit� for thc accurac�. complctcncss or fairncss of thc information containcd in this Official
Statcmcnt.
Bond Counscl and Disclosurc Counscl «ill c;ach rccci� c compcnsation from thc Rcdc� clopmcnt
Agcnc� that is contingcnt upon thc salc and dcli� cr� of thc 2006 Scrics Bonds.
ABSENCE OF MATERIAL LITIGATION
General
Thcrc is no litigation pcnding conccrning thc �alidit� of thc 2006 Indcnturc or thc 2006 Scrics
Bonds or thc issuancc and dcli� cr� thcrcof. thc c�istcncc of thc Financing Authorit� or thc
Rcdc� clopmcnt Agcnc�. thc titic of thc officcrs thcrcof «ho shall csccutc thc 2006 Scrics Bonds to thcir
respccti� c officcs. thc plcdgc of Rc� cnucs to thc pa� mcnt of thc 2006 Scrics Bonds. thc plcdgc of
Subordinatc Rc� cnucs to thc pa� mcnt of thc Subordinatc Capital Apprcciation Bonds. thc plcdgc of Ta�
Rc� cnucs to thc pa� mcnt of thc 2006 Loans or thc plcdgc of Subordinatc Ta� Rc� cnucs to thc pa� mcnt of
thc 2006 Subordinatc Loan.
Other Matters
In thc rcgular coursc of thc busincss. thc Financing Authorit� and thc Rcdc� clopmcnt Agcnc� arc
cach partics to a� arict� of pcnding and thrcatcncd la« suits and administrati� c procccdings. in addition to
thosc spccificall� discusscd hcrcin. Ncithcr thc Financing Authorit� nor thc Rcdc� clopmcnt Agcnc�
bclic� cs that am such la« suits or procccdings «ill ha� c a matcrial ad� crsc cffcct on thc operations or
financial condition of thc Financing Authorit� and thc Rcdc� clopmcnt Agcnc�. respccti� cl� .
FINANCIAL ADVISOR
Dcl Rio Ad� isors. LLC. Modcsto. California. has scr� cd as Financial Ad� isor to thc Financing
Authorit� and thc Rcdc� clopmcnt Agcnc� «ith respcct to thc salc of thc 2006 Scrics Bonds. T7�c Financial
Ad� isor has assistcd thc Financing Authorit� and thc Rcdc� clopmcnt Agcnc� in thc rc� ic« of this Official
Statcmcnt and in othcr mattcrs rclating to thc planning, stnicturing. c�ccution and dcli� cr� of thc 2006 Scrics
Bonds. Thc Financial Ad� isor has not indcpcndcntl� � crificd am of thc data containcd hcrcin or conductcd a
dctailcd im cstigation of thc affairs of thc Financing Authorit� and thc Rcdc� clopmcnt Agcnc� to dctcrminc
thc accurac� or complctcncss of this Official Statcmcnt. Duc to thcir limitcd participation. thc Financial
Ad� isor assumcs no responsibilit� for thc accurac� or complctcncss of am of thc information containcd
hcrcin. ' -
T7�c Financial Ad� isor «ill rccci� c compcnsation from thc Rcdc� clopmcnt Agcnc� contingcnt upon
thc salc and dcli� cr� of thc 2006 Scrics Bonds.
CONTINUING DISCLOSURE
T7�c Rcdc� clopmcnt Agcnc� has co� cnantcd in thc Continuing Disclosurc Agrccmcnt datcd
Jul� .2006. b� and among thc Rcdc�clopmcnt Agcnc�. thc Tnistcc. and MuniFinancial Inc.. as
Disscmination Agcnt for thc bcncfit of thc holdcrs and bcncficial o« ncrs of thc 2006 Scrics Bonds to pro� idc
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�49
ccrtain financial information and operating data rclating to thc Rcdc� clopmcnt Agcnc� c;ach � car b� not latcr
than thc datc «hich is si� months follo« ing thc cnd of thc Fiscal Yc;ar. commcncing «ith thc rcport for thc
200�-06 Fiscal Yc;ar (thc "Annual Rcport��). and to pro� idc noticcs of thc occurrcncc of ccrtain cnumcratcd
c� cnts. if matcrial. T7�c Annual Rcport and noticcs of matcrial c� cnts «ill bc filcd b� thc Tnistcc as
Disscmination Agcnt «ith c;ach nationall� Rccognizcd Municipal Sccuritics Information Rcpositor� and «ith
am thcn c�isting Statc Rcpositor�. if am . Currcntl�. thcrc is no Statc Rcpositor� . T7�c co� cnants sct forth in
thc Continuing Disclosurc Agrccmcnt ha� c bccn madc b� thc Rcdc� clopmcnt Agcnc� in ordcr to assist thc
Undcn� ritcrs in compl� ing «ith Sccuritics and E�changc Commission Rulc I�c2-12(b)(�). Thc spccific
naturc of thc information to bc containcd in thc Annual Rcport and thc noticcs of matcrial c� cnts is sct forth
in APPI:NUIX F-"FORM OF CON�I INUING DISCLOSURI: AGRI:I:MI:N�I ...
T7�c Rcdc� clopmcnt Agcnc� has nc� cr failcd to compl� in all matcrial respccts «ith am prc� ious
undcrtakings «ith rcgard to said Rulc to pro� idc annual rcports or noticcs of matcrial c� cnts.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
Upon dcli� cn of thc 2006 Scrics Bonds. . (thc "Vcrification
Agcnt��). «ill dcli� cr a rcport stating that it has rc� ic« cd and confirmcd thc mathcmatical accurac� of ccrtain
computations rclating to thc adcquac� of thc fiinds and/or sccuritics dcpositcd in thc Escro« Sccuritics and
thc intcrest thcrcon. if am. to pa�. «hcn duc. thc rcdcmption pricc and intcrest on thc Prior Bonds on thc
spccificd pa� mcnt or rcdcmption datc thcrcof.
UNDERWRITING
Pursuant to thc tcrms of a Bond Purchasc Agrccmcnt datcd . 2006 (thc "Purchasc
Agrccmcnt��). among thc Financing Authorit�. thc Rcdc�clopmcnt Agcnc� and Wcdbush Morgan Sccuritics
Inc. (thc "Undcn�ritcr �). thc Undcn�ritcr «ill purchasc all of thc 2006 Scrics Bonds. if am arc purchascd.
ho« c� cr. thc obligation of thc Undcn� ritcr to makc such purchasc is subjcct to ccrtain tcrms and conditions
sct forth in thc Purchasc Agrccmcnt.
T7�c public offcring priccs of thc 2006 Scrics Bonds ma� bc changcd from timc to timc b� thc
Undcn� ritcr. Thc Undcn� ritcr ma� offcr and scll 2006 Scrics Bonds to ccrtain dcalcrs and othcrs at a pricc
lo« cr than thc offcring pricc statcd on thc insidc co� cr pagc hcrcof.
Cw•rent Interest Bonds
T7�c Undcn�ritcr purchascd thc Currcnt Intcrest Bonds. at a pricc of � (rcprescnting
thc principal amount of thc Currcnt Intcrest Bonds Icss an Undcn�ritcr�s discount in thc amount of
`f ).
Capital Appreciation Bonds
T7�c Undcn� ritcr purchascd thc Capital Apprcciation Bonds. at a pricc of `f
(rcprescnting thc principal amount of thc Capital Apprcciation Bonds Icss an Undcn�ritcr�s discount in thc
amount of `f ).
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�0
RATI NGS
Standard c�. Poor�s Ratings Scr� iccs. a di� ision of thc McGra« Hill Companics ("Sc�.P��) a��d Fitch
Inc. ("Fitch��) ha� c assigncd thcir ratings of " �� and " .�� respccti� cl� . to thc 2006 Scrics Bonds «ith thc
undcrstanding that upon dcli� cr� of thc 2006 Scrics Bonds thc Insurancc Polic� «ill bc issucd b� thc Bond
Insurcr. Scc "Bc)NU INSURnNCI:�� And APPI:NUIX H-"SPI:CIMI:N FINnNCInI, GUnRnN�I Y INSURnNCI:
Pc�I,ICY.�� Sc�.P and Fitch ha� c also assigncd uninsurcd ratings of " �� and " .�� respccti� cl�. to thc 2006
Scrics Bonds. A rating rcflccts onl� thc � ic« of thc agcnc� gi� ing such rating and is not a rccommcndation
to bu�. scll or hold thc 2006 Scrics Bonds. An c�planation of thc significancc of thc rating ma� bc obtaincd
from Sc�.P at Standard c�. Poor�s. �� Watcr Strcct. Nc« York. Nc« York 100�41 and from Fitch at Fitch
Ratings. Onc Statc Strcct Plaz�. Nc« York. Nc« York 100�41. Thcrc is no assurancc that such ratings «ill
continuc for am gi� cn period of timc or that thc� «ill not bc rcduccd or «ithdra« n cntircl� b� Sc�.P or Fitch.
if in thcir indi� idual judgmcnt circumstanccs so «arrant. T7�c Rcdc� clopmcnt Agcnc� has not undcrtakcn
am responsibilit� to opposc am such proposcd re� ision or �� ithdra��al. Am such rc� ision or �� ithdra«al of a
rating ma� ha� c an ad� crsc cffcct on thc markctabilit� or markct pricc of thc 2006 Scrics Bonds.
FINANCIAL STATEMENTS
Thc auditcd financial statcmcnts of thc Rcdc� clopmcnt Agcnc� for Fiscal Ycar 200�4-0�. prcparcd
b� Lancc. Soll and Lunghard LLP. indcpcndcnt ccrtificd public accountants. in accordancc «ith
Go� crnmcntal Accounting Standards Board guidclincs. arc includcd as APPI:NUIX B attachcd hcrcto.
Lancc. Soll and Lunghard LLP �has/has not� conscntcd to thc inclusion of its rcport in AI'1'I:NuIX B. but
has not undcrtakcn to updatc its rcport or takc am action intcndcd or likcl� to clicit information
conccrning thc accurac�. complctcncss or fairncss of statcmcnts madc in this Official Statcmcnt and no
opinion is c�presscd b� Lancc. Soll and Lunghard LLP «ith respcct to am c� cnt subscqucnt to thc datc of
its rcport.
o�,o � � r�,�-�
�I
MISCELLANEOUS
All of thc prcccding summarics of thc 2006 Scrics Bonds. thc 2006 Indcnturc. thc 2006 Loan
Agrccmcnts. thc Rcdc� clopmcnt La«. thc Rcdc� clopmcnt Plan. thc Projcct Arca. othcr applicablc Icgislation.
agrccmcnts and othcr documcnts arc madc subjcct to thc pro� isions of thc 2006 Scrics Bonds and such
documcnts. respccti� cl�. and do not purport to bc complctc statcmcnts of am or all of such pro� isions.
Rcfcrcncc is hcrcb� madc to such documcnts on filc «ith thc Rcdc� clopmcnt Agcnc� for fiirthcr information
in conncction thcrc« ith.
Am statcmcnts madc in this Official Statcmcnt im ol� ing mattcrs of opinion or of cstimatcs. «hcthcr
or not c�pressl� statcd. are sct forth as such and not as rcprescntations of fact. and no rcprescntation is madc
that am ofthc cstimatcs «ill bc rc;alizcd.
T7�c c�ccution and dcli� cn of this Official Statcmcnt b� thc � E�ccuti� c Dircctor� of thc Financing
Authorit� has bccn dul� authorizcd b� thc Financing Authorit� .
PALM DESERT FINANCING AUTHORITY
:
�Carlos L. Ortcga. E�ccuti� c Dircctor�
o�,o � � r�,�-�
i2
APPENDIX A
REPORT OF THE FISCAL CONSULTANT
o�,o � � r�,�-�
A- I
APPENDIX B
REDEVELOPMENT AGENCY AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
o�,o � � r�,�-�
B- I
APPENDIX C
GENERAL INFORMATION CONCERNING THE CITY OF PALM DESERT
7%e .fullutirin,�� infui�matiun CUl9CL'l'Y!!Yl,�� tl�e ('ih� uf' l'alm l)e.sei�t. tl�e ('ui�nh� uf' Ilivei�.sic% ancl
.1'tll'PU1lYlLllYl��� C(PL'C(.1' !.1' !YlC�1lL%L'L% Ul9/1' fUl' 1�1L' �)1ll�)U.SL' Uf .1'tl�)�)�17Yl��� ���L'Y!L'l'Cf� !YlfUl'197Cf1lUl9 PL'���Cfl'LllYl��� 1�1L'
CU177/7711Y!!11'.
Overview
Thc Cit� of Palm Dcscrt (thc "Cit� ��). incorporatcd in No� cmbcr 26. 197 � Zs a gcncral la« cit�.
bccamc a chartcr cit� through thc adoption of Ordinancc 8�8 b� thc Cit� Council on Januar� 8. 1998. Thc
Cit� is locatcd in thc Coachclla Vallc� and is appro�imatcl� mid-«a� bct«ccn thc citics of Indio and Palm
Springs. I 17 milcs cast of Los Angcics. I I 8 milcs northcast of San Dicgo and � I� milcs southcast of San
Francisco.
Thc Cit� occupics an arca of appro�imatcl� 26 squarc milcs. Elc� ation of thc Cit� is 2�4 � fcct and
thc mcan tcmperaturc is 7�. I dcgrccs. E�ccpt in summcr. thc «cathcr is mild and annual a� cragc rainfall is
�. �8 inchcs. According to thc Statc Dcpartmcnt of Fina��cc. thc Cit� population as of Januan I. 2006 «as
appro�imatcl� �49.� �9. an incrcasc of appro�imatcl� 19.�`%� sincc 2000. attributablc in part to tcrritorial
annc�ation. - -
Government
T7�c Cit� Council is compriscd of fi� c mcmbcrs. cicctcd at largc for four-� car staggcrcd tcrms c� cr�
t��o � cars. Thc Cit� Council sciccts onc of its mcmbcrs to scr� c as Ma� or for a onc-� car tcrm and appoints a
Cit� Managcr to conduct thc da� to da� busincss of thc Cit� and thc Cit� Clcrk. Thc Cit� Attornc� is
appointcd b� . Thc Cit� operatcs as "Contract Cit��� utilizing. primaril�. agrccmcnts «ith othcr
go� crnmcntal cntitics. pri� atc companics and indi� iduals to pro� idc scr� iccs. Contractcd scr� iccs includc
policc and firc protcction pro� idcd through thc Count�. animal control. hcalth scr� iccs. Icgal scr� iccs and
landscapc maintcnancc.
T7�c Cit� Council also scr� cs as thc go� crning board of thc Financing Authorit�. thc Rcdc� clopmcnt
Agcnc� . thc Housing Authorit� and thc Parking Authorit� and thc Cit� Mangcr scr� cs as thc E�ccuti� c
Dircctor of thc Financing Authorit�. thc Rcdc�clopmcnt Agcnc�. thc Housing Authorit� and thc Parking
Authorit�. Thc Cit� Attornc� and thc Cit� Clcrk also scr�c as thc Gcncral Counscl and Sccrctan.
respccti� cl� . of thc Rcdc� clopmcnt Agcnc� and thcsc Authoritics. Thc currcnt mcmbcrs of thc Cit� Council
and kc� administrati� c personncl of thc Cit� arc listcd in Tablc C- I and Tablc C-2. respccti� cl� :
TABLE C-1
CITY OF PALM DESERT
City Council Members
Namc
Jim Fcrguson
Richard S. Kcll�
Jc;an M. Bcnson
Buford A. Critcs
Robcrt A. Spicgcl
Officc
Ma� or
Ma� or Pro Tcm
Councilmcmbcr
Councilmcmbcr
Councilmcmbcr
Tcrm E�pires
No� cmbcr 2006
No� cmbcr 2008
No� cmbcr 2006
No� cmbcr 2008
No� cmbcr 2008
Occuuation
Attornc�
Rctircd GTE E�ccuti� c
Rctircd Tra� cl Industr�
Collcgc Profcssor
Rctircd Rctail Industr�
Profcssional
E�ccuti� c
o�,o � � r�,�-�
c-i
TABLE C-2
CITY OF PALM DESERT
Key Administrative Personnel
Namc
Carlos L. Ortcga
Justin McCarth�
Paul S. Gibson
Da� id L. Yrigo� cn
Rachcllc D. Klasscn
Population
Position
Cit� Managcr
Assistant Cit� Managcr
Trc;asurcr/Financc Dircctor
Rcdc� clopmcnt Dircctor
Cit� Clcrk
Bct«ccn 2000 and 2006. thc Cit��s population incrcascd b� a total of 8.089 or appro�imatcl�
19.�`%�. In addition to permancnt residcnts. thc Cit� has appro�imatcl� I�. 000 scasonal residcntial residcnts
«ho li�c thrcc to si� month in thc Cit�. primaril� during thc «intcr months. Tablc C-� illustratcs thc
population of thc Cit�. thc Count� and thc Statc for 2000 through 2006.
Table C-3
CITY OF PALM DESERT AND RIVERSIDE COUNTY AND STATE OF CALIFORNIA
POPULATION
Ycar
(Januar� I )
2000
2001
2002
200�
2oo�t
200�
200��
�41.�4�0
�4 I .900
�42.900
�4�4. �00
�t�.�� i o
���.;��;
�t��.�;��
Ri� crsidc Count�
I . � � 7.800
1.�8 �.600
1.6�4�. �00
I .7 I 9.000
i.xo�.x�x
i.xxx. � i i
i_����_>;o
Statc of California
;�4.207.000
��4. �8�.000
� i3O � 7.000
�i,i91.000
�6.27I.09I
;��.�2x. i ����
;�.i�2.oi�
Sottrces: ( iiiird .Sicdr.s l)c/�cu•O�u�iii o/ ('onu�u�irr. 13�u•rcn� o/ du� ('ritsus /in• ?000 cuid .Sicdr o/ ('cdi/imiici l)c'pcu•O�u�iii o/ l'7iicuicr
/br rrmciiiiiii�; t'rcir.s.
Labor Force and Employment
T7�c main sourccs of rc� cnuc in thc Cit� arc dcri� cd from tourism and salcs ta�. Historicall�. thc
uncmplo� mcnt ratc in thc Cit� has bccn lo«cr than that for thc Count� and thc Statc.
Cit� of Palm Dcscrt
o�,o � � r�,�-�
c-z
Tablc C-�4 tablc rcprescnts thc labor pattcrns in thc Cit�. thc Count�. thc Statc, and thc Unitcd Statcs
from 2001 through 200i, - -
Table C-4
CITY OF PALM DESERT, RIVERSIDE COUNTY,
STATE OF CALIFORNIA AND UNITED STATES
CIVILIAN LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT
2001 through 2005
Uncmplo� mcnt
Ycar and Arc;a Labor Forcc Emulo� mcnt Uncmulo� mcnt Ratc
2001
Cit� 20.000 19.�400 600 �. I`%�
Count� 711.200 672.�00 �8.700 �.�4
Statc 17. I�0. I 00 16.217.�00 9�2.600 �.�4
Unitcd Statcs 1�41.81 �.000 I�i,07 �.000 6.7�42.000 �4.8
2002
Cit� 2 I.100 20. �00 800 �.6
Count� 7�49.800 702.;00 �47.�00 6. �
Statc 17. �26.900 16.16�. I 00 I.161.800 6.7
Unitcd Statcs 1�4�4.86 �.000 I�6.�48�.000 8. �78.000 �.8
2003
Cit� 21.900 21.100 800 �.6
Count� 781.600 7;2.;00 �49. �00 6. �
St�tc 17.�41�4.000 16.22�.i00 1.190.i00 6.8
Unitcd Statcs 1�46.�10.000 I�7.7�6.000 8.77�4.000 6.0
2004
Cit� 22.800 22.100 700 �. �
Count� 812.000 76�4.900 �47.100 �.8
Statc 17.��2.;00 16.�4�9.900 1.092.�100 6.2
Unitcd Statcs 1�47.�401.000 I�9.2�2.000 8.1�49.000 �.�
2005
Cit� 2�4.000 2�. �00 700 2.8
Count� 8�49.600 806.700 �42.900 �.I
Statc I 7.69�.600 I 6.7�46.900 9�48.700 �.�4
Unitcd Statcs 1�49.�21.000 1�41.7�0.000 7.�91.000 �.I
Sottrces: ('cdi/imiici .Sicdr l;mplotnu�iii l)rrrlopnu�iii l)c/�cu•O�u�iii cuid (�..5. l)c/�cu•O�u�iii o/7.cibor. 13�u•rcn� o/7.ci6or.Sicdi.siic.s.
OG013 pu�-3
c-�
Tablc C-� dcscribcs thc largcst cmplo� crs in thc Cit� .
Table GS
CITY OF PALM DESERT+
LARGEST EMPLOYERS
(As of January 1, 2006)
Comuam
Product/Scr� icc
Numbcr of
Emulo� ccs
JW Marriott Dcscrt Springs Rcsort
Sccuritas Sccurit� S� c USA Inc.
Collcgc of thc Dcscrt
Marriott's Dcscrt Spas Villas
Sunshinc Landscapc
Dcscrt Vallc� Industrics
Marriott O«ncrship Rcsorts Inc.
Sunrisc Colom Co.
Foundation For thc Rctardcd
Timc Warncr Cablc
Bighorn Golf Club
Springs At thc Fountains
Mac�'s Wcst
Montcrc� Palms Hcalth Carc
Fountains At thc Carlotta
Indian Ridgc Countr� Club
Williams Mcchanical Inc.
Hospitalit�
Sccurit� Scr� iccs
Education
Hospitalit�
Landscaping Scr� iccs
Busincss Support Scr� iccs
Hospitalit�
Golf Coursc Communit�
Social Scr� iccs
Tciccommunications
Golf Rcsort
Com alcsccnt and Nursing Carc
Rctail
Hc;althcarc
Com alcsccnt and Nursing Carc
Golf Coursc Communit�
Plumbing -
� Fecicral ancl Statc Go� emment not incluclecl.
Sow-cc: /�mcrica's Labor Market Intimnation S�steml/�I,MISI.
Commercial Activity
I. �00
700
6�0
i00
i00
�400
�00
2�0
2 �6
220
220
200
200
200
200
200
200
A salcs ta� is imposcd on rctail salc or consumption of personal propert� . Salcs ta� rc� cnucs arc
dctcrmincd b� thc total ta�ablc transactions «ithin a jurisdiction and distributcd b� thc Statc Board of
Equalization to thc jurisdiction «hcrc thc salc took placc. Salcs ta�cs collcctcd from mcrchants «ith no
permancnt placc of busincss (i.e.. manufacturcrs. constniction contractors. ctc.) arc accumulatcd to a
Count� «idc or Statc-« idc (out-of-statc busincsscs) pool a��d distributcd to citics and countics in proportion to
thcir collcctions from all salcs ta�pa� crs.
T7�c � aluc and � olumc of thcsc ta�ablc tra��sactions arc dcpcndcnt on cconomic conditions and othcr
factors. Such factors includcd thc Ic� cl of inflation affccting thc pricc of goods and scr� iccs subjcct to thc
salcs ta�. thc ratc of population gro«th in thc gcncral arca. thc charactcristics of rctail dc� clopmcnts. such as
thc rclati� c sizc of markct scr� icc arc;as. thc scnsiti� it� of thc t� pcs of busincsscs «ithin thc Cit� to changcs in
thc cconom�. and compcting rctail cstablishmcnts outsidc thc Cit�. A dctcrioration of cconomic conditions
and othcr factors influcncing ta�ablc salcs gcncratcd in thc Cit�. ma� rcducc thc Cit� �s salcs ta� rc� cnucs.
o�,o � � r�,�-�
c-�
Tablc C-6 summarizcs ta�ablc transactions in thc Cit� for calcndar � cars 2000 through 200�4.
TABLE C-6
CITY OF PALM DESERT
Taxable Retail Sales Data
Calendar Years 2000 to 2004
($ in 000's)
R►�rn►►. Src�►i►:s
Apparcl Stores
Gcncral Mcrchandisc
Food Stores
Eating c�. Drinking Placcs
Homc Furnishings and Applianccs
Building Matcrials and Farm Implcmcnts
Auto Dcalcrs and Auto Supplics
Scr� icc Stations
Othcr Rctail Stores
Tc� i n►. R► � rn►►. S rc�►i►:s
All Othcr Outicts
Tc�rn►. A►.►. Ou r►.►�rs
Most recent anntkil cl�ita a�ailablc.
Sottrcc: .S�cdr l3�xu•r! o/7up�cdizcdioii.
Construction Activity
2000
�92. I 92
269.776
��.817
I �;.970
i zx.x����
�7.86�
x. i ox
2�.807
227.�91
I .020.02 �
I 97.96 I
� I .2 I 7.986
f►.IiIill
�9;.792
272.8�6
�2.282
I ��.91 I
iz�.i;o
6�4.2 � I
x.xz�
22.6> ;
220.2�2
I .0 I �.9 � 2
19�.1 �7
� I .2 I I .069
2002
�97.92�4
z�x.�x �
�1.7�8
i�tx.zzx
i z��.��z;
��4.111
��.��o�t
2�.9�0
zzx.zx��
1.019. �27
190_Oi8
`f I .209. � 8 �
200�
x i ox.xz��
;o�. i x��
� 2.�46 I
i �2.�ox
i;;.�����t
i6.180
x.z i i
�9.1�46
z�t;.�t��t
I.10;.689
19;_0�41
� I .296.7;0
200�4+
x i;z.x; i
��to.2��
�47.�4i i
i���.�i�
i ��.��z i
68.7 �7
�.x��z
�4�.�8�
z���t. i z��
i.zzx. i i z
20�_ I 8�4
� I .�4;;.296
In Fiscal Ycar 200�4-0�. thc Cit� issucd constniction permits � alucd in c�ccss of � 170 million. T7�is
total amount. appro�imatcl� 27.�`%� consistcd of nc« singlc famil� constniction and appro�imatcl� 10. �'%�
consistcd of nc« multifamil� constniction. A fi� c-� car histor� of building permits and � aluation appc;ars in
T�bi� c-�. � � �
Table C-7
CITY OF PALM DESERT
BUILDING PERMITS AND VALUATIONS 2001-2005
Rcsidcntial
Numbcr of Units
Ycar Sin�lc Famil�
2001 2��
2002 221
200� 2�7
2oo�t �2�
200; i o0
Multifamil�
�4 I I
�10
101
iii
i;;
Valuation
(`G in OOO�s)+
� 120.07 �.2
I 00.�486.0
x��.;x�.��
io�.��x.2
�x. i;o.��
+ i„��«a�� ����«� <>r�„a���a�k�� «„���. �����r����<»,� ancl aciclitions.
Sow-cc: ('oiisntiu•iioii /iirh�snl�Krsrc,rc•l� 13�x,rd. 13��ildiii�; l'rii��i�.S��n�rt�.
Nonresidcntial
Valuation
(`G in OOO�s)+
y� �6. � 19.0
�41.�41 �.7
20. i 2;.0
�t;.i i2.i
��2.�;;.�t
Total
`f I �6.;92.0
I �4 I .899. 7
i o��.� i o.��
i�t��.x�o. �
i �o.����;.;
o�,01 � po�-�
c-�
Effective Buying Income
"Effccti� c bu� ing incomc" ("EBI") is a classification dc� clopcd c�clusi� cl� b� .krle.,� � Mco�kerin,��
Mana�ement magazinc to distinguish it from othcr sourccs rcporting incomc stntistics. EBI is dcfincd as
"monc� incomc�� Icss personal ta� and nonta� pa� mcnts - a numbcr oftcn rcfcrrcd to as "disposablc�� or
"aftcr-ta��� incomc. Monc� incomc is thc aggrcgatc of «agcs and salarics. nct farm and nonfarm sclf-
cmplo� mcnt incomc. intcrest. di� idcnds. nct rcntal and ro�alt� incomc. Social Sccurit� and railroad
rctircmcnt incomc. othcr rctircmcnt and disabilit� incomc. public assistancc incomc. uncmplo� mcnt
compcnsation. Vctcrans Administration pa� mcnts. alimom and child support. militar� famil� allotmcnts. nct
«innings from gambling and othcr periodic incomc. Monc� incomc docs not includc monc� rccci� cd from
thc salc of propert� (unlcss thc rccipicnt is cngagcd in thc busincss of sclling propert� ): thc � aluc of "in-kind��
incomc such as food stamps. public housing subsidics. mcdical carc. cmplo� cr contributions for persons. ctc.:
«ithdra«al of bank dcposits: monc� borro«cd: ta� rcfiinds: c�changc of monc� bct«ccn rclati�cs li� ing in
thc samc houschold: gifts and lump-sum inhcritanccs. insurancc pa� mcnts. and othcr t��pcs of lump-sum
rcccipts. EBI is computcd b� dcducting from monc� incomc all personal incomc tn�cs (fcdcral. stntc and
local). personal contributions to social insurancc (Social Sccurit� and fcdcral rctircmcnt pa� roll dcductions).
and ta�cs on o« ncr-occupicd nonbusincss rc;al cstatc.
T7�c total EBI for thc Cit�. as rcportcd b� Salcs c�. Markcting Managcmcnt in its ?00� .S'iuve�� uf'
Rm�in,�� l'utirei�. «as `f 1.29�.78� and thc mcdian houschold EBI «as ��42.769. Thc 200i Cit� mcdian
houschold EBI of ��42.769 compares that of �>;.��7 for thc Cit� of Palm Springs: ��9.287 for thc Cit� of
Ontario: �� 1.80 � for thc Cit� of Corona: �� �.20� for thc Cit� of Tcmccula: and ��9.�41 �4 for thc Cit� of Los
Angcics.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
o�,o � � r�,�-�
c-��
Tablc C-8 prescnts thc latcst a� ailablc total cffccti� c bu� ing incomc and mcdian houschold cffccti� c
bu� ing incomc for thc Cit�. thc Count�. thc Statc and thc nation.
Table C-8
CITY OF PALM DESERT, RIVERSIDE COUNTY,
STATE OF CALIFORNIA, AND UNITED STATES
EFFECTIVE BUYING INCOME
Yc;ar
and Arca
Total Effccti� c
Bu� ing Incomc
(`G in OOO�s)
Mcdian Houschold
Effccti� c
Bu� in� Incomc
2005
Cit�
Count�
scacc
Unitcd Statcs
2004
Cit�
Count�
Statc
Unitcd Statcs
2003
Cit�
Count�
Statc
Unitcd Statcs
2002
Cit�
Count�
Statc
Unitcd Statcs
2001
Cit�
Count�
Statc
Unitcd Statcs
� 1.29�.78�
z��.�t��x.zox
70i. I 08.�4 I 0
�.692.909.�67
1.2�8.�2�
27.62 �.7�4 �
67�4.72 I .020
�.�466.880.008
i.ix�t.izx
2�. I 80.0�40
6�47.879.�427
�.;�40.682.8 I 8
i.00x.���x
2�.617.�01
6i0.�21.�407
i. �0 �.�48 I .�498
1.109.�27
2 �. I �4�4. I 20
6i2. I 90.282
�.2;0.82�4.90�4
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Utilities
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Watcr. sc«agc trc;atmcnt and «astc«atcr disposal arc pro� idcd b� thc Coachclla Vallc� Watcr
District. Southcrn California Gas Compam supplics natural gas to thc Cit� and cicctric po« cr is pro� idcd b�
thc Southcrn California Edison Compam . Tcicphonc scn icc is a� ailablc through Vcrizon. Cablc tcic� ision
scr� icc is pro� idcd b� Timc Warncr.
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c-�
Transportation
Intcr-Cit� transportation is pro� idcd b� Grc� hound Bus «hich pro� idcs scr� icc from its conncction
points in thc Cit� to its lincs o�rtsidc of thc Cit� in addition to thc communit� o��ncd and operatcd Sunlinc
Bus S�stcm «hich pro� idcs scr� icc throughout thc cntirc Coachclla Vallc� . Intra-Cit� transportation is
pro� idcd b� Tcl-a-Ridc and local ta�i firms. Thc Cit� �s ccntral high«a�s arc California High«a� I I I and 7�4
«hich conncct to US Intcrstatc 10 and to California High«a� 6� and 86.
Shipping is pro� idcd b� numcrous tnick carricrs «hich ha� c o� crnight scr� icc to Los Angcics.
San Francisco. San Dicgo and Phocni�. Rail transportation is pro� idcd b� thc Southcrn Pacific Railroad
locatcd in Indio. 10 milcs c;ast of thc Cit�. and b� Amtrak. «hich has t«o stations locatcd in Coachclla
Vallc� .
A fiill scr� icc airport is locatcd in Palm Springs. 12 milcs north« cst of thc Cit�. «ith appro�imatcl�
sc� cn carricrs pro� iding scr� icc. Thc airport has an 8.�00 foot nu��� a� and gcncral a� iation facilitics. Thcrc
is also a pri� atc airport in Bcrmuda Duncs. cight milcs northc;ast of thc Cit� .
Community Services
T7�c Cit� of Palm Dcscrt pro� idcs both policc and firc protcction through contracts «ith thc Count�
of Ri� crsidc.
T7�c Ri� crsidc Count� Public Libran S� stcm pro� idcs libran scr� iccs to thc Cit� . Thc Cit� also
operatcs a�4 �.000 squarc foot public libran on thc Collcgc of thc Dcscrt campus «hich is jointl� uscd b� thc
public and thc Collcgc of thc Dcscrt.
Education, Cultw•e and Recreation
Public school cducation is pro� idcd b� thc Dcscrt Sands Unificd School District (thc "School
District��). T7�c School District pro� idcs preschool through gradc 12 cducation to studcnts li� ing in thc Cit�
and thc communitics of Indian Wclls. Indio. La Quinto. Rancho Miragc and Bcrmuda Duncs. T7�c School
District and operatcs 17 cicmcntan schools. si� middlc schools. thrcc comprchcnsi� c high schools. onc
indcpcndcnt stud�/altcrnati� c school and a continuation high school.
T7�c Collcgc of thc Dcscrt. thc Coachclla v�u�� co�„�„��„�c� cou��� is locatcd in thc Cit� . A
satcllitc campus of California Statc Uni� crsit�. San Bcrnardino is also locatcd on thc Collcgc of thc Dcscrt
Campus.
Cultural facilitics in thc Cit� includc thc 1.127 sc;at McCallum T7�catcr for thc Pcrforming Arts
locatcd in Bob Hopc Cultural Ccntcr. thc 1.200 acrc Li� ing Dcscrt Zoo and Gardcns. and thc Art in Public
Placcs (a muscum «ithout «alls fcaturing morc than I�0 «orks of art throughout thc Cit� ).
Rccrc;ation programs for residcnts ofthc Cit� and othcr ncighboring communitics arc offcrcd through
thc Coachclla Vallc� Rccrcation and Park District (thc "Park District��). T7�c Park District pro� idcs
rccrc;ational acti� itics and programs ranging from tim tots programs. kids clubs and summcr da� camp. to
dancc. hc;alth and fitncss and music instniction. to thc scnior gamcs.
Thc Dcscrt Willo�� Golf Rcsort. a�6 holc. public golf coursc. is locatcd on acres in thc arc;a
of thc Cit�. T7�is golf coursc also fc;atures a>;.000 squarc foot clubhousc. and dining and banquct facilitics.
T7�c Cit� also is homc to fi� c othcr public golf courscs and resorts and 20 pri� atc or scmi-pri� atc golf clubs
a��d resorts.
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APPENDIX D
SUMMARY OF CERTAIN PROVISIONS OF THE 2006 INDENTURE
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APPENDIX E
PROPOSED FORM OF BOND COUNSEL OPINION
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E-I
APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT
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APPENDIX G
DTC AND THE BOOK-ENTRY ONLY SYSTEM
7%e !YlfUl'177Cf1lUl9 !Y! tl�i.s Appenclix G CUl9CL'l'Y!!Yl,�� 7%e l)epu.situi��� 7rr�.st ('umpanr. Neu• r'ui�k. Neu•
r'ui�k (..l)7( ") ancl l)7( ".s huuk-enti�r .s��.stem l�a.s heen uhtainecl fi�um l)7(' ancl tl�e Rec%velupment A,��ener
1Cf�CL'.1' Y!U PL'.1'�)U/21'!J7l�lh'./ui' t/�e cump%etene.s.s ui' acctu'�tc�' t/�ei'euf.' 7%e Rec%ve/upmeht A,��enc�' CCfYlYlUI CfYlL%
c/ue.s nut ,��ive an�� a.s.stu�anee.s t/urt /)7('. /)7(' /�CO'1!Cl�JCfYl1.1' U/' //9L%!PL'Cl �'co�tieipant.s tiri// c/i.sti�ihiite tu t/�e
RL'Y!L'f!ClCf� i)11'Y!L'l'.1' �Cf� �)Cfl'177L'Yl1.1' Uf !Yl1L'PL'.1'1. �)l7YlCl�)Cf� Ul' �)l'L'l77l11/77. !f CfYl1�. tiritl� i�e.spec7 tu tl�e ?00< .S'ei�ie.s
l3Ul9L%1'. �J7� CL'l'1!flCCf1L'.1' PL'�)PL'.1'L'Y!1!Yl��� U11'Y!L'l'.1'�1l�) !Yl1L'PL'.1'1 !Y! Ul' U1�1L'P CUl9f!l'177Cf1lUl9 Ul' U11'Y!L'l'.1'�1l�) !Yl1L'PL'.1'1 !Y! 1�1L'
�i%i%� .S�L'/7L'.1' �U/9L%1'. U/' �C� PL'L%L'/77�)1!U/9 U/' U1�1L'/' YlUIlCL'.1' .1'L'Y!1 lU /)/( � U/' i�L'L%L' c�' i�U.. 11.1' Y!U/77lYlL'L'. Cf.1' 1�1L'
i�e,��i.stei�ecl utirnei� uf'tl�e ?00< .S'ei�ie.s RuncLs. ui� tl�at tl�e�� tiri// .su clu un a timel�� ha.si.s. ui� tlurt l)7('. l)7('
/'co7ieipant.s ui� /)7(' /nc/ii�ec7 /�CO'1!C!�)CfYl1.1' 11'!�� CfCI !Y! 1�9L' /77CfYlYlL'/' L%L'.1'C/'lJ7L'L% !Y! 1�9l.1' A�)�)L'Y!L%!�. I�9L' eiu�i�ent
..Ili�le.s.. applicrrhle tu l)7(' co�e un file tiritl� tl�e .S�L'Ctll71lL'.1' CfYlLl �:XC�9CfYl,��e ('ummi.s.siun ancl tl�e eiu�i�ent
..!'r.ucecltu�e.s.. u/'l)7(' !u he.fullu�i•ecl in c%c�(in� �i•rth l)7(' l'rn�ticipant.s a��e un./ile �rith l)l('.
T7�c Dcpositor� Tnist Compam ("DTC��). Nc« York. NY. «ill act as sccuritics dcpositor� for thc
2006 Scrics Bonds. T7�c 2006 Scrics Bonds «ill bc issucd as fiill�-rcgistcrcd sccuritics rcgistcrcd in thc namc
of Ccdc c�. Co. (DTC�s partncrship nomincc) or such othcr namc as ma� bc rcqucstcd b� an authorizcd
rcprescntati� c of DTC. Onc fiill� -rcgistcrcd sccurit� ccrtificatc «ill bc issucd for cach maturit� of thc 2006
Scrics Bonds. c;ach in thc aggrcgatc principal amount of such maturit�. and «ill bc dcpositcd «ith DTC.
DTC. thc «orld�s largcst dcpositor�. is a limitcd-purposc tnist compam organizcd undcr thc Nc«
York Banking La«. a"banking organization�� «ithin thc mc;aning of thc Nc« York Banking La«. a mcmbcr
of thc Fcdcral Rcscr� c S� stcm. a"cic;aring corporation�� «ithin thc mc;aning of thc Nc« York Uniform
Commcrcial Codc. and a"cicaring agcnc� �� rcgistcrcd pursuant to thc pro� isions of Scction 17A of thc
Sccuritics E�changc Act of 19 ��4. DTC holds and pro� idcs assct scr� icing for o� cr 2.2 million issucs of U.S.
and non-U.S. cquit� issucs. corporatc and municipal dcbt issucs. and monc� markct instnimcnts from o� cr
100 countrics that DTC�s participants ("Dircct Participants��) dcposit «ith DTC. DTC also facilitatcs thc post-
tradc sctticmcnt among Dircct Participants of salcs and othcr sccuritics transactions in dcpositcd sccuritics.
through cicctronic computcrizcd book-cntn transfcrs and plcdgcs bct«ccn Dircct Participants� accounts. This
climinatcs thc nccd for ph� sical mo� cmcnt of sccuritics ccrtificatcs. Dircct Participants includc both U.S. and
non-U.S. sccuritics brokcrs and dcalcrs. banks. tnist companics. cic;aring corporations. and ccrtain othcr
organizations. DTC is a«holl� -o« ncd subsidian of T7�c Dcpositor� Tnist c�. Clcaring Corporation
("DTCC��). DTCC. in turn. is o« ncd b� a numbcr of Dircct Participants of DTC and Mcmbcrs of thc
National Sccuritics Clcaring Corporation. Go�crnmcnt Sccuritics Clc;aring Corporation. MBS Clc;aring
Corporation. and Emcrging Markcts Clcaring Corporation. (respccti�cl�. "NSCC��. "GSCC��. "MBSCC��. and
"EMCC��. also subsidiarics of DTCC). as «cll as b� thc Nc« York Stock E�changc. Inc.. thc Amcrican Stock
E�changc LLC. and thc National Association of Sccuritics Dc;alcrs. Inc. Acccss to thc DTC s� stcm is also
a�ailablc to othcrs such as both U.S. and non-U.S. sccuritics brokcrs and dc;alcrs. banks. tnist companics. and
cic;aring corporations that cicar through or maintain a custodial rclationship «ith a Dircct Participant. cithcr
dircctl� or indircctl� ("Indircct Participants��). DTC has Standard c�. Poor�s highcst rating: AAA. Thc DTC
Rulcs applicablc to its Participants arc on filc «ith thc Sccuritics and E�changc Commission. Morc
information about DTC can bc found at «««.dtcc.com and «««.dtc.org.
Purchascs of thc 2006 Scrics Bonds undcr thc DTC s�stcm must bc madc b� or through Dircct
Participants. «hich «ill rccci� c a crcdit for thc 2006 Scrics Bonds on DTC�s rccords. Thc o« ncrship intcrest
of cach actual purchascr of c;ach Bond ("Bcncficial O« ncr �) is in turn to bc rccordcd on thc Dircct and
Indircct Participants� rccords. Bcncficial O«ncrs «ill not rccci�c «rittcn confirmation from DTC ofthcir
purchasc. Bcncficial O« ncrs arc. ho« c� cr. c�pcctcd to rccci� c«rittcn confirmations pro� iding dctails of thc
transaction. as «cll as periodic statcmcnts of thcir holdings. from thc Dircct or Indircct Participant through
«hich thc Bcncficial O« ncr cntcrcd into thc transaction. Transfcrs of o« ncrship intcrests in thc 2006 Scrics
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G- I
Bonds arc to bc accomplishcd b� cntrics madc on thc books of Dircct and Indircct Participants acting on
bchalf of Bcncficial O« ncrs. Bcncficial O« ncrs «ill not rccci� c ccrtificatcs rcprescnting thcir o« ncrship
intcrests in thc 2006 Scrics Bonds. c�ccpt in thc c� cnt that usc of thc book-cntr� s� stcm for thc 2006 Scrics
Bonds is discontinucd.
To facilitatc subscqucnt transfcrs. all 2006 Scrics Bonds dcpositcd b� Dircct Participants «ith DTC
arc rcgistcrcd in thc namc of DTC�s partncrship nomincc. Ccdc c�. Co.. or such othcr namc as ma� bc
rcqucstcd b� an authorizcd represcntati� c of DTC. T7�c dcposit of thc 2006 Scrics Bonds «ith DTC and thcir
rcgistration in thc namc of Ccdc c�. Co. or such othcr DTC nomincc do not cffcct am changc in bcncficial
o« ncrship. DTC has no kno« Icdgc of thc actual Bcncficial O« ncrs of thc 2006 Scrics Bonds: DTC�s rccords
rcflcct onl� thc idcntit� of thc Dircct Participants to «hosc accounts such Bonds arc crcditcd. «hich ma� or
ma� not bc thc Bcncficial O«ncrs. Thc Dircct and Indircct Participants «ill rcmain responsiblc for kccping
account of thcir holdings on bchalf of thcir customcrs.
Com c� ancc of noticcs and othcr commw�ications b� DTC to Dircct Participants. b� Dircct
Participants to Indircct Participants. and b� Dircct Participants and Indircct Participants to Bcncficial O«ncrs
«ill bc go� crncd b� arrangcmcnts among thcm. subjcct to am statutor� or rcgulator� rcquircmcnts as ma� bc
in cffcct from timc to timc. Bcncficial O« ncrs of thc 2006 Scrics Bonds ma� «ish to takc ccrtain stcps to
augmcnt thc transmission to thcm of noticcs of significant c� cnts «ith respcct to thc 2006 Scrics Bonds. such
as rcdcmptions. tcndcrs. dcfaults. and proposcd amcndmcnts to thc Indcnturc. For c�amplc. Bcncficial
O« ncrs of thc 2006 Scrics Bonds ma� «ish to asccrtain that thc nomincc holding thc 2006 Scrics Bonds for
thcir bcncfit has agrccd to obtain and transmit noticcs to Bcncficial O«ncrs. In thc altcrnati�c. Bcncficial
O« ncrs ma� «ish to pro� idc thcir namcs and addresscs to thc rcgistrar and requcst that copics of noticcs bc
pro� idcd dircctl� to thcm.
Rcdcmption noticcs shall bc scnt to DTC. T7�c com c� ancc of noticcs and othcr communications b�
DTC to DTC Participants. b� DTC Participants to Indircct Participants and b� DTC Participants and Indircct
Participants to Bcncficial O« ncrs «ill bc go� crncd b� arrangcmcnts among thcm. subjcct to am statutor� or
rcgulator� rcquircmcnts as ma� bc in cffcct from timc to timc. Am failurc of DTC to ad� isc am DTC
Participant. or of am DTC Participant or Indircct Participant to notifi a Bcncficial O« ncr. of am such noticc
and its contcnt or cffcct «ill not affcct thc � alidit� of thc rcdcmption of thc 2006 Scrics Bonds callcd for
rcdcmption or of a��� othcr action prcmiscd on such noticc. Rcdcmption of portions of thc 2006 Scrics Bonds
b� thc Rcdc� clopmcnt Agcnc� «ill rcducc thc outstanding principal amount of Bonds hcld b� DTC. In such
c� cnt. DTC «ill implcmcnt. through its book-cntr� s� stcm. a rcdcmption b� lot of intcrests in thc 2006 Scrics
Bonds hcld for thc account of DTC Participants in accordancc «ith its o«n nilcs or othcr agrccmcnts «ith
DTC Participants and thcn DTC Participants and Indircct Participants «ill implcmcnt a rcdcmption of thc
2pp6 Scrics Bonds for thc Bcncficial O«ncrs. Am such scicction of Bonds to bc rcdccmcd «ill not bc
go� crncd b� thc Indcnturc and «ill not bc conductcd b� thc Rcdc� clopmcnt Agcnc� or thc Tnistcc.
Ncithcr DTC nor Ccdc c�. Co. (nor am othcr DTC nomincc) «ill conscnt or � otc «ith respcct to thc
2006 Scrics Bonds w�lcss authorizcd b� a Dircct Participant in accordancc «ith DTC�s Proccdures. Undcr its
usual proccdures. DTC mails an Omnibus Pro�� to thc issucr as soon as possiblc aftcr thc rccord datc. T7�c
Omnibus Pro�� assigns Ccdc c�. Co.�s conscnting or �oting rights to thosc Dircct Participants to «hosc
accounts thc 2006 Scrics Bonds arc crcditcd on thc rccord datc (idcntificd in a listing attachcd to thc Omnibus
Pro�� ).
Pa� mcnts of principal of. prcmium. if am. and intcrest c� idcnccd b� thc 2006 Scrics Bonds «ill bc
madc to Ccdc c�: Co., or such othcr nomincc ns mn� bc rcqucstcd b� an authorizcd represcntati� c of DTC.
DTC�s practicc is to crcdit Dircct Participants� accounts upon DTC�s rcccipt of fiinds and corresponding
dctail information from thc Rcdc� clopmcnt Agcnc� or thc Tnistcc. on pa�ablc datc in accordancc «ith thcir
respccti� c holdings sho« n on DTC�s rccords. Pa� mcnts b� Participants to Bcncficial O« ncrs «ill bc
go� crncd b� standing instnictions a��d customan practiccs. as is thc casc «ith sccuritics hcld for thc accounts
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of customcrs in bc;arcr form or rcgistcrcd in "strcct namc.�� and «ill bc thc responsibilit� of such Participant
and not of DTC (nor its nomincc). thc Tnistcc. or thc Rcdc�clopmcnt Agcnc�. subjcct to am statutor� or
rcgulator� rcquircmcnts as ma� bc in cffcct from timc to timc. Pa� mcnt of principal of. prcmium. if am. and
intcrest c� idcnccd b� thc 2006 Scrics Bonds to Ccdc c�. Co. (or such othcr nomincc as ma� bc rcqucstcd b�
an authorizcd represcntati� c of DTC) is thc responsibilit� of thc Rcdc� clopmcnt Agcnc� or thc Tnistcc.
disburscmcnt of such pa� mcnts to Dircct Participants «ill bc thc responsibilit� of DTC. and disburscmcnt of
such pa� mcnts to thc Bcncficial O« ncrs «ill bc thc responsibilit� of Dircct and Indircct Participants.
NEITHER THE REDEVELOPMENT AGENCY NOR THE TRUSTEE WILL HAVE ANY
RESPONSIBILITY 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.
Ncithcr thc Rcdc� clopmcnt Agcnc� nor thc Tnistcc can gi� c am assuranccs that DTC. DTC
Participants. Indircct Participants or othcrs «ill distributc pa�mcnts of principal of. prcmium. if am. and
intcrest on thc 2006 Scrics Bonds paid to DTC or its nomincc. as thc rcgistcrcd O« ncr. or am rcdcmption or
othcr noticc. to thc Bcncficial O« ncrs or that thc� «ill do so on a timcl� basis or that DTC «ill scr� c and act
in a manncr dcscribcd in this Official Statcmcnt.
DTC ma� discontinuc pro� iding its scr� iccs as dcpositon «ith respcct to thc 2006 Scrics Bonds at
am timc b� gi� ing rc;asonablc noticc to thc Rcdc� clopmcnt Agcnc� or thc Tnistcc. Undcr such
circumstanccs. in thc c� cnt that a succcssor dcpositon is not obtaincd. Bond ccrtificatcs arc rcquircd to bc
printcd and dcli� crcd.
T7�c Rcdc� clopmcnt Agcnc� ma� dccidc to discontinuc usc of thc s� stcm of book-cntr� transfcrs
through DTC (or a succcssor sccuritics dcpositor� ). In that c� cnt. Bond ccrtificatcs «ill bc printcd and
dcli� crcd.
In thc c� cnt that thc book-cntr� s� stcm is discontinucd as dcscribcd abo� c. thc rcquircmcnts of thc
Indcnturc «ill appl�. Thc forcgoing information conccrning DTC conccrning and DTC�s book-cntr� s�stcm
has bccn pro� idcd b� DTC. and ncithcr thc Rcdc� clopmcnt Agcnc� nor thc Tnistcc takc am responsibilit�
for thc accurac� thcrcof.
T7�c Rcdc� clopmcnt Agcnc� and thc Tnistcc cannot and do not gi� c am assura��ccs that DTC. thc
Participants or othcrs «ill distributc pa� mcnts of principal. intcrest or prcmium. if am. c� idcnccd b� thc 2006
Scrics Bonds paid to DTC or its nomincc as thc rcgistcrcd o«ncr. or «ill distributc am rcdcmption noticcs or
othcr noticcs. to thc Bcncficial O«ncrs. or that thc� «ill do so on a timcl� basis or «ill scr�c and act in thc
manncr dcscribcd in this Official Statcmcnt. Ncithcr thc Rcdc� clopmcnt Agcnc� nor thc Tnistcc arc
responsiblc or liablc for thc failurc of DTC or am Participant to makc am pa� mcnt or gi� c am noticc to a
Bcncficial O« ncr «ith respcct to thc 2006 Scrics Bonds or an crror or dcla� rclating thcrcto.
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APPENDIX H
SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY
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H- I
APPENDIX J
TABLE OF ACCRETED VALUES
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I-I