HomeMy WebLinkAboutSR - BONDS PA1 - AMND 2007 Series/Res 06-144/Res FA-59/Res 534/ PA1 AmndsResolution
Resolution
Resolution
No. 06-144
No. FA-59
No. 534
CITY OF PALM DESERT
PALM DESERT FINANCING AUTHORITY
PALM DESERT REDEVELOPMENT AGENCY
STAFF REPORT
REQUEST: APPROVAL OF RESOLUTION NO.06-144 OF THE CITY COUNCIL
OF THE CITY OF PALM DESERT MAKING A FINDING OF
SIGNIFICANT PUBLIC BENEFIT IN CONNECTION WITH THE
ISSUANCE AND SALE BY THE PALM DESERT FINANCING
AUTHORITY OF ITS TAX ALLOCATION REFUNDING REVENUE
BONDS (PROJECT AREA NO. 1, AS AMENDED), 2007 SERIES A
APPROVAL OF RESOLUTION NO. FA- 59 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. 1, AS AMENDED), 2007
SERIES A, AND AUTHORIZING CERTAIN OTHER MATTERS
RELATING THERETO
APPROVAL OF RESOLUTION NO. 5340F 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 THE
AUTHORITY'S TAX ALLOCATION REFUNDING REVENUE BONDS
(PROJECT AREA NO. 1, AS AMENDED), 2007 SERIES A, AND
AUTHORIZING CERTAIN OTHER MATTERS RELATING THERETO
SUBMITTED BY: DAVID YRIGOYEN, DIRECTOR OF REDEVELOPMENT/HOUSING
DATE: NOVEMBER 16, 2006
CONTENTS: (1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
CITY COUNCIL RESOLUTION NO. 06- 144
PALM DESERT FINANCING AUTHORITY RESOLUTION NO. FA- 59
PALM DESERT REDEVELOPMENT AGENCY RESOLUTION NO. 534
INDENTURE OF TRUST
PROJECT AREA NO. 1, AS AMENDED, LOAN AGREEMENT
ESCROW AGREEMENT
PRELIMINARY OFFICIAL STATEMENT
BOND PURCHASE AGREEMENT
CONTINUING DISCLOSURE AGREEMENT
G \RDA\Mana Hun1\W PDATA\YRIGOYEN\STFRPTS\111606 PA91 Refunding 2007 DOC
924190.5
Resolution No. 06-144
Staff Report Resolution No. FA-59
Approval of City, Agency and Authority Resolutions Resolution No. 534
PA#1 Tax Allocation Refunding Revenue Bonds, 2007 Series A
Page 2 of 5
November 16, 2007
Recommendation:
By Minute Motion:
That the City Council approve Resolution No. 06-_, making a finding of significant
public benefit in connection with the issuance and sale of the Palm Desert Financing
Authority Tax Allocation Refunding Revenue Bonds (Project Area No. 1, As Amended),
2007 Series A (the "Bonds");
2. That the Palm Desert Financing Authority approve Resolution No. FA -
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. approving
and authorizing the execution and delivery of documents relating to the Bonds.
Executive Summary
Adoption of the attached resolutions will allow Staff to proceed with the issuance of the Bonds and
the use of proceeds from the Bonds to pay for the costs of the identified projects.
Backaround and discussion:
Staff recommends the issuance of the Bonds relating to the financing and refinancing of projects for
the Agency's Project Area No. 1. The Bonds will be issued as tax-exempt bonds.
The primary purpose for issuing the Bonds is to effect a refunding of the Authority's outstanding Tax
Allocation Refunding Revenue Bonds (Project Area No. 1, As Amended), Series 1997 (the "1997
Bonds") and to convert the annual savings into cash for approved projects. The remaining 1997
Bonds are scheduled to mature on April 1 of 2007, 2008, 2009, 2010, 2011, 2012, 2014 and 2018.
The 2007 maturity will be paid to maturity and 1997 Bonds maturing between 2008 and 2018 will be
redeemed as part of the refunding. The refunding Bonds will pay principal from April 1, 2008 to
April 1, 2018 to match the payment dates of the 1997 Bonds being refunded.
Earlier this year, the Authority issued its Tax Allocation Revenue Bonds (Project Area No. 1, As
Amended), 2006 Series A ("2006A Bonds"). The resolution adopted by the City Council on June 8,
2006, in connection with the 2006A Bonds identified certain Agency projects (the "PA#1 Projects"),
which are being funded, in whole or part, by proceeds of the 2006A Bonds. Approximately $1.7
million (based on current estimates by the Financial Advisor and the Underwriter) of cash generated
from the refunding will be set aside in a Project Fund to provide additional funding for the PA#1
Projects.
The debt service on the refunding Bonds for any year will not exceed the debt service on the
refunded 1997 Bonds for such year. The Financial Advisor has recommended moving forward with
the proposed issuance as long as the cash generated for the projects exceeds $1 million
(approximately three percent net present value benefit).
924190-5
Resolution No. 06-144
Staff Report
Resolution No. FA--W
534 Resolution No.
Approval of City, Agency and Authority Resolutions
PA#1 Tax Allocation Refunding Revenue Bonds, 2007 Series A
Page 3 of 5
November 16, 2007
The repayment of the Bonds will be primarily secured by tax increments generated with respect to
Project Area No. 1. The Bonds will rank on a parity with the outstanding bonds previously issued for
Project Area No. 1. The Bonds will be current interest bonds.
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:
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
Stone & Youngberg, LLC, San Francisco, CA — Underwriter
Rosenow Spevacek Group, Inc., Santa Ana, CA — Fiscal Consultant
MuniFinancial, Inc., Temecula, CA — Dissemination Agent
SUMMARY OF DOCUMENTS TO BE APPROVED:
Indenture of Trust
The Indenture sets forth all of the terms and conditions of the Bonds (e.g., principal amounts,
maturity and redemption schedules, payment, registration and transfer provisions and the form of
the Bonds), the covenants and other obligations of the Authority to the bondholders, and the role
and the duties of the Trustee. As presented, the Indenture is in substantially final form, except that
final dollar amounts and interest rates will be added after the Bonds have been priced and sold and
that provisions may be added, deleted or otherwise modified to accommodate the bond insurer
requirements.
Loan Agreement
Pursuant to the Loan Agreement, the Authority agrees to lend the Agency funds that would be used
by the Agency to refund the 1997 Bonds and provide additional funding for capital projects for
benefit to Project Area No. 1. 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
The Bond Purchase Agreement is an agreement among 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.
924190-5
Resolution No. 06-144
Resolution No. FA-59
ResoluticnNo. 534
Staff Report
Approval of City, Agency and Authority Resolutions
PA#1 Tax Allocation Refunding Revenue Bonds, 2007 Series A
Page 4 of 5
November 16, 2007
Preliminary Official Statement
A Preliminary Official Statement relating to the Bonds, in substantially final form, has been prepared
by Disclosure Counsel. The Preliminary Official Statement is designed to provide material
information to investors with respect to the terms and the security of the Bonds. It includes a full
description of the legal and financial aspects, as well as the various legal documents in regard to the
Bonds, except for certain information which will be determined upon the pricing of the Bonds (such
as the final principal amounts, the interest rates and the redemption dates). The Preliminary Official
Statement also includes information regarding the Authority, the Agency, and the Project 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.
Continuinq Disclosure Aqreement
The Continuing Disclosure Agreement is an agreement among the Agency, the Trustee and the
Dissemination Agent. This agreement directs the Agency to provide an annual report to the
Dissemination Agent. The Annual Report contains the Agency's audited financial statements and
other pertinent information relating to Project Area No. 1. 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 Aqreement
The Escrow Agreement is an agreement among the Agency, the Authority and the Trustee, acting
as Escrow Agent. The refunded 1997 Bonds will be redeemed on April 1, 2007. Between the
issuance date of the Bonds and April 1, 2007, money derived from the proceeds of the Bonds that
are to be used for the refunding of the 1997 Bonds, together with other moneys transferred by the
Agency, 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
redemption date.
Conclusion
The resolutions permit Staff to make the necessary changes to all of the documents in order to
finalize and execute the documents. Staff is recommending that the City Council, the Authority and
924190-5
Resolution No. 06-144
Resolution No. FA-59
ResolutionNNo. 534
Staff Report
Approval of City, Agency and Authority Resolutions
PA#1 Tax Allocation Refunding Revenue Bonds, 2007 Series A
Page 5 of 5
November 16, 2007
the Agency adopt their respective resolutions approving and authorizing the sale and issuance of
the Bonds, and the execution and delivery of the related documents.
Submitted by:
d
Dave Yrigoy n,!
Director of velopment/Housing
Approval:
v
Ju Carthy, ACM elopment
Carlos L. Ortega
City Manager/CA xecutive Director
pw BY RDA
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VERIFIED BY P i
Original on file with City Clerk"s Old
BY F/I�N/ AUTH
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924190-5
aul S. Gibson, Director of Finance/Treasurer
CITY COUNCIL�CTION:
APPROVED DENIED
CE IVED OTHER d
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AYES. ,,, fr--"-KDIl j..����PJ ffA rGt�Yri
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ABSENT:.W
ABSTAIN•
VERIFIED BY:
Original on File with City Clerk's Of fi�
RESOLUTION NO. 06-144 = --
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM DESERT MAKING A FINDING OF SIGNIFICANT PUBLIC
BENEFIT IN CONNECTION WITH THE ISSUANCE AND SALE
BY THE PALM DESERT FINANCING AUTHORITY OF ITS TAX
ALLOCATION REFUNDING REVENUE BONDS (PROJECT
AREA NO. 1, AS AMENDED), 2007 SERIES A
RECITALS:
WHEREAS, the Palm Desert Financing Authority (the "Authority") has proposed
to sell and issue its Tax Allocation Refunding Revenue Bonds (Project Area No. 1, As
Amended), 2007 Series A (the "Bonds"); and
WHEREAS, the proceeds of the Bonds will be applied to make a loan (the
"Loan") to the Palm Desert Redevelopment Agency (the "Agency") pursuant to a loan
agreement between the Authority and the Agency; and
WHEREAS, a portion of the proceeds of the Loan, together with other available
funds, will be used to effect the refunding of the Authority's Tax Allocation Refunding Revenue
Bonds (Project Area No. 1, As Amended), Series 1997, scheduled to mature on April 1, 2008
and thereafter through April 1, 2018; and
WHEREAS, a portion of the proceeds of the Loan also will be used to provide
additional financing for certain public capital improvements of benefit to Project Area No. 1, As
Amended, of the Agency, including: (i) the construction of on and off ramps at Portola Avenue
and Interstate 10; (ii) the widening of various portions of Monterey Avenue, Portola Avenue,
Country Club Drive, and various other street improvements throughout the Project Area; (iii)
improvements to the frontage roads along Highway 111; (iv) a sound attenuation wall along
portions of Fred Waring Drive; (v) landscape, lighting, median and parkway improvements along
El Paseo; (vi) landscape improvements throughout the Project Area; (vii) a Portola Avenue
Bridge over the Whitewater Channel; (viii) drainage improvements along a portion of Monterey
Avenue; (ix) the development of a visitors center (including the Henderson Building, botanical
gardens and related public improvements) at El Paseo and Highway 111; (x) neighborhood and
arterial street utility undergroundings throughout the Project Area; (xi) a parking structure to
accommodate a hotel and related development at the Desert Willow Golf Resort; (xii) a
business facade enhancement grant program; and (xiii) the construction of a swimming pool
and related athletic facilities at the College of the Desert; and
WHEREAS, pursuant to Section 6586.5 of the California Government Code, after
notice duly published in accordance with law, this City Council held a public hearing on this date
with respect to the issuance of the proposed Bonds and received evidence concerning the
public benefits therefrom; and
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT
DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. Recitals. The above recitals, and each of them, are true and correct.
P6402-1058\921994v3.doc
Resolution No. 06-144
Section 2. ADDroval of Financina. 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. 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.
adoption.
vote, to wit:
AYES:
NOES:
Section 4. Effective Date. This Resolution shall take effect immediately upon
APPROVED and ADOPTED this 16th day of November 2006 by the following
ABSENT:
ABSTAIN:
Jim Ferguson, Mayor
ATTEST:
Rachelle D. Klassen, City Clerk
P6402-1058\921994v3.doc 2
RESOLUTION NO. FA- 59
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. 1, AS AMENDED), 2007 SERIES A,
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 its Tax Allocation
Refunding Revenue Bonds (Project Area No. 1, As Amended), 2007 Series A (the
"Bonds") to be issued and secured pursuant to a certain Indenture (as defined below); and
WHEREAS, the proceeds of the Bonds will be applied to make a loan (the
"Loan") to the Palm Desert Redevelopment Agency (the "Agency") pursuant to a certain
Loan Agreement (as defined below); and
WHEREAS, a portion of the proceeds of the Loan, together with other
available funds, will be used to effect the refunding of the Authority's Tax Allocation
Refunding Revenue Bonds (Project Area No. 1, As Amended), Series 1997, scheduled to
mature on April 1, 2008 and thereafter through April 1, 2018; and
WHEREAS, a portion of the proceeds of the Loan also will be used to
provide additional financing for certain public capital improvements of benefit to Project
Area No. 1, As Amended, of the Agency; 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, that the issuance
of the Bonds will result in significant public benefit;
NOW, THEREFORE, THE PALM DESERT FINANCING AUTHORITY DOES
HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
P6402-1058\9219870.duc
Resolution No. FA-59
Section 1. Recitals. The above recitals, and each of them, are true
and correct.
Section 2. Acknowledgment of Citv Council Findings. The Authority
hereby acknowledges and concurs with the City Council's finding of significant public
benefit and hereby approves and authorizes the issuance and sale of the Bonds.
Section 3. Issuance of Bonds; Indenture. The Indenture of Trust (the
"Indenture"), proposed to be entered into by and between the Authority and the Trustee
(defined in Section 4 below), in the form presented and on file in the office of the Secretary
of the Authority (the "Secretary"), is hereby approved. The issuance of the Bonds, in an
aggregate principal amount not exceeding $36,000,000, 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. Appointment of Trustee and Escrow Agent. The
appointment of Wells Fargo Bank, National Association, as trustee (the "Trustee") under
the Indenture and as escrow agent (the "Escrow Agent") under the Escrow Agreement
described in Section 6 is hereby approved.
Section 5. Loan Aqreement. The Project Area No. 1, As Amended,
Loan Agreement (the "Loan Agreement"), proposed to be entered into by and among the
Agency, the Authority and the Trustee, in the form presented 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 Aqreement. The Escrow Agreement (Project Area
No. 1, As Amended), proposed to be entered into by and among the Agency, the Authority
and the Escrow Agent, in the form presented 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 7. Preliminary Official Statement. The Preliminary Official
Statement relating to the Bonds (the "Preliminary Official Statement"), in the form
presented 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
2
P6402-1058\9219870. duc
Resolution No. FA-59
changes therein as such Authorized Officer may approve, to be deemed final for the
purposes of Rule 15c2-12 promulgated under the Securities and Exchange Act of 1934.
The distribution by Stone & Youngberg LLC (the "Underwriter") of copies of the Preliminary
Official Statement to potential purchasers of the Bonds is hereby approved.
Section 8. Official Statement. Each Authorized Officer, acting singly, is
hereby authorized and directed to cause the Preliminary Official Statement to be brought
into the form of a final Official Statement (the "Official Statement"), and to execute the
same for and in the name and on behalf of the Authority, with such changes therein as
such Authorized Officer may approve (such approval to be conclusively evidenced by such
Authorized Officer's execution and delivery thereof). The distribution and use of the Official
Statement by the Underwriter in connection with the sale of the Bonds are hereby approved.
Section 9. Purchase Aqreement. The form of the Bond Purchase
Agreement (the "Purchase Agreement") as presented 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 10 below, each Authorized Officer, acting singly, is
authorized and directed, for and in the name and on behalf of the Authority, to execute and
deliver the Purchase Agreement in substantially said form, with such changes therein as
the officer executing the same may require or approve, including such matters as are
authorized by Section 10 hereof (such approval to be conclusively evidenced by such
Authorized Officer's execution and delivery thereof).
Section 10. Terms of Sale of Bonds. Each Authorized Officer, acting
singly, is hereby authorized and directed to act on behalf of the Authority to establish and
determine: (a) the aggregate principal amount of the Bonds, which amount shall not
exceed $36,000,000; (b) interest rates on the Bonds, provided that the true interest cost
with respect to the Bonds shall not exceed 5.25 percent; (c) the Underwriter's
compensation (i.e., underwriter's discount) with respect to the sale of the Bonds, provided
that such compensation shall not exceed one percent of the aggregate principal amount of
the Bonds; and (d) 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.
3
P6402-1058\9219870.duc
Resolution No. FA-59
Section 12. Effective Date. This Resolution shall take effect
immediately upon adoption.
APPROVED AND ADOPTED this 16th day of November 2006 by the
following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Jim Ferguson, President
ATTEST:
Rachelle D. Klassen, Secretary
.19
P6402-1058\921987v3.doc
RESOLUTION NO. 534
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 THE AUTHORITY'S TAX
ALLOCATION REFUNDING REVENUE BONDS
(PROJECT AREA NO. 1, AS AMENDED), 2007 SERIES A,
AND AUTHORIZING CERTAIN OTHER MATTERS
RELATING THERETO
RECITALS:
WHEREAS, the Palm Desert Financing Authority (the "Authority") has
determined to sell and issue its Tax Allocation Refunding Revenue Bonds (Project Area
No. 1, As Amended), 2007 Series A (the "Bonds"); and
WHEREAS, the proceeds of the Bonds will be applied to make a loan (the
"Loan") to the Palm Desert Redevelopment Agency (the "Agency") pursuant to a certain
Loan Agreement (as defined below); and
WHEREAS, a portion of the proceeds of the Loan, together with other
available funds, will be used to effect the refunding of the Authority's Tax Allocation
Refunding Revenue Bonds (Project Area No. 1, As Amended), Series 1997, scheduled to
mature on April 1, 2008 and thereafter through April 1, 2018; and
WHEREAS, a portion of the proceeds of the Loan also will be used to
provide additional financing for certain public capital improvements of benefit to Project
Area No. 1, As Amended, of the Agency;
NOW, THEREFORE, THE PALM DESERT REDEVELOPMENT AGENCY
DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. Recitals. The above recitals, and each of them, are true and
correct.
Section 2. Loan Agreement. The Project Area No. 1, As Amended, Loan
Agreement (the "Loan Agreement"), proposed to be entered into by and among the
Authority, the Agency and Wells Fargo Bank, N.A., as trustee (the "Trustee"), in the form
presented 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).
P6402-1058\92199 10.doc
Resolution No. 534
Section 3. Escrow Aqreement. The Escrow Agreement (Project Area No.
1, As Amended), proposed to be entered into by and among the Agency, the Authority
and the Escrow Agent, in the form presented 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. Continuina Disclosure Aqreement. 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 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 Agreement. The Bond Purchase Agreement (the
"Purchase Agreement") proposed to be entered into by the Authority, the Agency and
Stone & Youngberg LLC (the "Underwriter"), in the form presented 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, 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 Loan 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.
P6402-1059\9219910.doc
Resolution No. 534
Section 8. Effective Date. This Resolution shall take effect immediately
upon adoption.
APPROVED and ADOPTED this 16th day of November 2006 by following
vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Jim Ferguson, Chairman
ATTEST:
Rachelle D. Klassen, Secretary
P6402-1058\921991k3.doc
The additional documents
associated with this
request
are available for viewing in
the City Clerk's Office.
1.&J DRAPT #2
11 /3/06
S
PALM DESER'f FINANCING AUTHORITY
TAX ALLOCATION REFUNDING REVENUE BONDS
(PROJECI' AREA NO. 1, AS AMENDED)
2007 SERIES A
BOND PURCHASE AGREEMENT
December , 2006
Palm Desert Financing Authority
73-510 Fred Waring Drive
Palm Desert, California 92260-2578
Ladies and Gentlemen:
Stone & Youngberg LLC (the "Unrlenvriter•"), offers to enter into this Bond Purchase Agreement
(the "Purcha.se Agreement ") with the Palm Desert Financing Authority (the "Financing Au�horitl� "), a
joint po�vers authority created by a Joint Lxercise of Powers Agreement dated January 26, 1989 (the "JPA
Agreenrenr ") between the City of Palm Desert and the Palm Desert Redevelopmcnt Agency (the
"Rerlei�elopmenr Agency"), which upon acceptance and approval, will be binding upon the Financing
Authority and the Underwriter. This offer is made subject to acceptance by the Financing Authority and
approval by the Redevelopment Agency by execution of this Purchase Agreement and delivery of the
same to the Underwriter on or before 11:59 p.m. (California time) on the date hereof, and, if not so
accepted and approved, will be subject to withdrawal by the Underwriter upon notice delivered to the
Financing Authority at any time prior to such acceptance and approval.
Capitalized terms used in this Purchase Agreement and not otherwise defined herein shall have
the respective meanings set forth for such terms in the 2007 Indenture (defined below) and if not
othenvise defined therein, shall have the meanings given to such terms as set forth in the Official
Statemcnt (defined below).
Section 1. Purchase and Sale of the 2007 Bonds. Upon the terms and conditions and upon the
basis of the representations set forth in this Purchase Agreement, the Underwriter agrees to purchase from
the Financing Authority, and the Financing Authority agrees to sell and deliver to the Undenvriter, all
(but not less than all) of the $ aggrebate principal amount of the Palm Desert Financing
Authority Tax Allocation Refunding Revenue Bonds (Project Area No. 1, As Amended), 2007 Series A
(the "Z007 Bon�l.c ").
'I'he 2007 Bonds shall be dated the date of delivery and shall have the maturities, bear interest at
the rates per annum, have the yields and be subject to mandatory sinking fund redemption all as set forth
on Schedule [ attached hereto. The purchase price for the 2007 Bonds shall be $ (calculated as
the principal amount of the 2007 Bonds, less a net original issue discount in the amount of �
and less an Lnderwriter's discount in the amount of S l.
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Section 2. Preliminary Official Statement. The Financing Authority has delivered to the
Underwriter a Preliminary Official Statement, dated December _, 2006 (the "Pre/iminn��� O�Jiciul
Stutement "), and will deliver to the [lndcrwriter a tinal Official Statement dated the date hereof as
provided in Section 5 of this Purchase Agreement (as amended and supplemented from time to time
pursuant to Section 6(k) of this Purchasc Agreement, the "Ofrciril State,rrent "). The Financing Authority
and the Redevelopment Agency have each delivered to the Underwriter a certificate pursuant to Securities
and Exchange Commission Rule 15c2-12 ("Rule 15c2-12") relating to the Preliminary Official Statement,
in substantially the forms attached hereto as Exhibit A-1 and Exhibit A-2, respectively.
Section 3. Description of the 2007 Bonds. The 2007 Bonds are issued pursuant to the
Community Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the
Health and Safety Code, commencing with Section 33000 (the "Redevelopment Law ") and Resolution
No. adopted by the Financing Authority on November _, 2006 (the "Financing Authorit}�
Resolution "). The 2007 Bonds shall be payable and subject to redemption as provided in the 2007
Indenture (dcfined herein) and as set forth in the Official Statement. The 2007 Bonds are legal, valid and
binding limited obligations of the Financing Authority, and are payable solely from and secured by a
pledge of Revenues (as defined in the 2007 Indenture) derived primarily from loan paymenis made by the
Redevelopment Agency pursuant to the 2007 Loan Agreement (defined herein).
The 2007 Bonds shall be substantially in the form described in, shall be issued and secured under
the provisions of, and shall be payable as provided in, the Indenture of Trust, dated as of January 1, 2007
(the "2007 h��tenture "), by and between the Financing Authority and Wells Fargo Bank, National
Association (the "Trustee"). The Financing Authority is issuing the 2007 Bonds to make a loan (the
"Lnan "), to the Palm Desert Redevelopment Agency (the "Reclevelopmen� Agenc•y") pursuant to the terms
of a Project Area No. 1, As Amended Loan Agreement made and executed as of January 1, 2007 (the
"2�J07 Loan Ag►•eement") by and among the Financing Authority, the Redevelopment Agency and the
Trustee. The Redevelopment Agency will apply the proceeds of the 2007 Loan to: (i) refnance all but
the April 1, 2007 payment outstanding obligations of the Redevelopment Agency under a loan agreement
dated as of July 1, 1997 (the "Prior Loan Agreement "); (ii) finance various redevelopment activities
within Project Area No. 1, As Amended located in the City of Palm Desert (the "Project Area"); and
(iii) pay the costs associated with the issuance of the 2007 Bonds.
The payment of principal of and interest on the 2007 Bonds when due will be insured by a
financial guaranty insurance policy (the "Fincrncial Gttnrant}� Insuraiice Policy ") to be issued by MBIA
Insurance Corporation (the "Bond Insi�rer• "), simultaneously with the delivery of the 2007 Bonds.
Section 4. Public Offering. The Underwriter agrees to make a bona fide public offering of all
the 2007 Bonds at not in excess of the initial public offering prices or yields set forth in Schedule I
attached hereto, plus interest accrued thereon, if applicable, from the date of the 2007 Bonds. The
Underwriter reserves the ribht to make concessions to dealers and to change such initial public offerinb
prices or yields as the Underwriter reasonably deems necessary in connection with the marketing of the
2007 Bonds. Tl�e iinderwriter also reserves the right (i) to over-allot or effect transactions that stabili�e
or maintain the market price of the 2007 Bonds at a level above that which might otherwise prevail in the
open market and (ii) to discontinue such stahilizing, if commenced, at any time.
Section 5. Delivery of Official Statement. The Financing Authoriry shall deliver to the
Undenvriter, as promptly as practical but in no event later than the Closing Date (as detined herein), such
number of copies of the final Official Statement, as the Underwriter ►nay reasonably requcst in order to
comply �vith the Securities and Exchange Comm�ssion Rule 15c2-12(b) and the rules of the Municipal
Securities Rulemakin�; T3oard (the "MSRB ").
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"Che Financing Authority hereby authorizes the Underwriter to use the Official Statement and the
information contained therein in connection with the offering and sale of thc 2007 Bonds and ratifies and
confirms the authorization of the use by the Underwriter prior to the date hereof of the Preliminary
Official Statement, furnished to the Underwriter by the Financing Authority in connection with such
offering and sale.
"I'he Underwriter agrees that from the time the Official Statement becomes available until the
earlier of (i) the "En�f of the Un�te�ti�•►•iting Perio�t, " as defined in Section 6(j) herein, or (ii) the time when
the Official Statement is available to any person from a nationally recognized municipal securities
inforrnation repository, but in no case less than 25 days following the End of the Underwriting Period, the
Underwriter shall send no later than the next business day following a request for a copy thereof, by first
class mail or other equally prompt means, to any Potential Customer, as defined in Rule 15c2-12, on
request, a single copy of the Officia] Statement. The Underwriter agrees to file as soon as reasonably
practicable a copy of the Official Statement with a nationally recognized municipal securities information
repository and take any and all actions necessary to comply with applicable Securities and Exchange
Commission rules and MSRB rules governing the offering, sale and delivery of the 2007 Bonds to
ultimate purchasers.
At the time of pricing, the Underwriter shall deliver to the Financing Authority a summary of the
orders by maturity.
Section 6. Representations, Warranties and Covenants of the Financing Authority. The
Financing Authority represents, warrants and covenants with the Underwriter that:
(a) the governing board of the Financing Authority has by the Financing Authoriry Resolution
adopted by a majority of its members at a meeting duly called, noticed and conducted, at which a quorum was
present and acting throughout on November _, 2006, taken all action necessary for the execution, delivery
and due performance of the 2007 Indenture, the 2007 Loan Agreement, the Escrow Agreement dated as of
January l, 2007 (the "Escrnx� Agreement"), by and among the Financing Authority, the Redevelopment
Agency and Wells Fargo Bank, National Association, as escrow bank (the "Escr•otiti� Bank") regarding the
refunding of $31,885,000 outstanding principal amount of Palm Desert Financing Authority Tax Allocation
Refunding Revenue Bonds (Project Area No. 1, As Amended), Series 1997 (the "Prior Bond.s"), the
Certificate Regarding Compliance of Certain 1'ax Matters of the Financing Authority dated as of the ciate of
the initial delivery of the 2007 Bonds (the "TaY Certificutc� ") and this Purchase Agreement (collecti��ely, the
"Finuncing Authorit}� Agreemen[s ") and the authorization and approval of the Preliminary Official Statement
and the Official Statemenr the Financing Authoriry Resolution is in full force and ef%ct and has not been
amended, modified or rescinded; the adoption of the Financing Authoriry Resolution constitutes all necessary
action to be taken by the Financial Authority for the execution, issuance and delivery of the 2007 Bonds and
the execution delivery and due perf'ormance of the Financing Authority A�,�reements.
(b) the k'inancing Authority is and will be on the Closing Date a joint exercise of� powers
authoriry duly organized and existing under the laws of the State of Califomia (the "State ") and the JPA
Agrcement and has all necessary power and authority to adopt the Financing Authority Resolution, to enter
into and perform its duties under the Financing Authority Agreements; and, when executed and delivered by
the respective parties thereto, the Financing Authority Agreements will each constitute legal, valid and
binding obligation of the Financing Authoriry enforceable in accordance with its respective terms, except as
enforcement may be limited by bankrupicy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or affecting creditors' rights generally.
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(c) this Purchase Agreement has been duly executed and delivered by the Fii�ancing Authonry,
and constitutes, and upon their execution and delivery, the Financing Authority Agreements and the 2007
Bonds will constitute, [egal, valid and binding oblibations of the Financing Authority enforceable in
accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium
or creditors' rights generally; and the execution and delivery of the Purchase Agreement does not and the
execution and delivery of the Financing Authoriry Agreements and the 2007 Bonds and compliance with the
provisions of each thereof will not conflict with or constitute a breach of or a default under any applicable law
or administrative regulation of the State or the United States, or any appiicable judgment, decree, agreement or
other instrument to which the Financing AuU�ority is a party or is otherwise subject;
(d) at the time of acceptance hereof by the Financing Authority, and (�nless an event occurs
of the nature described in Section 6(k)) at all times during the penod from the date of this Purchase
Agreement to and including the date which is 25 days following the End of the Underwriting Period for
the 2007 Bonds (as detecmined in accordance with Section 6(j)), the statements and information contained
in the Preliminary Official Statement as of its date, and the Official Statement as of its date under the
caption "THE FINANCING AUTHORITY" is true, correct and complete in all material respects and such
statements with respect to the Preliminary Official Statement do not, and with respect to the Official
Statement will not, omit to state any material fact necessary to make such statements, in light of the
circumstances under which they were made, not misleading;
(e) to the best of its knowledge, the Financing Authority is not in violation or breach of or
default under any applicable constitutional provision, la�v or administrative rule or regulation of the State
of California or the United States of America, or any abency or instrumentality of either of them, or any
applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement or
other instrument to which the Financing Authority is a party or is otherwise subject, which would
constitute a default under any of the Financing Authority Agreements or the 2007 Bonds, and no event
has occurred and is continuing which, with the passage of time or the giving of notice, or both would
constitute a violation or a breach of or a desault under any such loan agreemeni, indenture, bond, note,
resolution, agreement or other instrument to which the Financing Authority is a party or is otherwise
subject;
( fl at the date hereof and on the Closing Date, the Financing Authority will be in compliance
in all respects with the material covenants and agreements contained in the Financing Authority
Agreements and no event of default and no event has occurred and is continuing which, with the passage
of time or giving of notice, or both, would constitute an event of default thereunder shall have occurred
and be continuing;
(g) to the best knowledge of the Financing Authority, after due investigation, other than as
set forth in the Official Statement or as the Financing Authority has otherwise disclosed in writing to the
Underwriter, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, or by or
before any court, governmental agency, public board or body, pending and served on the Financing
Authority or threatened against the Financing Authority, (i) wherein an unfavorable decision, rulin� or
finding �vould adversely affect the existence of the Financing Authority or the title of any official of the
h'inancing Authority to such person's office, or (ii) seeking to restrain or enjoin the issuance, sale or
delivery of the 2007 Bonds, or thc assignment by the Financing Authority of its rights under the 2007
Indenture, or (iii) in any way contesting or affecting the validiry or enforceability of the Financing
Authority Agreements or the 2007 Bonds, or (iv) contesting in any way the completeness or accuracy of
the Pretiminary Official Statement, or (v) contesting the power of the Financing Author�ty or its authonty
�v�th respect to the 2007 Bonds or the f�inancing Authority Agreements, or (vi) contestin� the exclusion of
interest on the 2007 Bonds from gross inrome for federal and State income �vherein an unfavorable
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decision, ruling or finding would materially adversely affect the validity of the Financing Authority
Agreements or the authorization, execution, delivery or performance by the Financing Authority of the
2007 Bonds or the Financing Authority Agreements;
(h) the Financing Authority will furnish such information, execute such instruments and take
such other action not inconsistent with law in cooperation with the Underwriter which the Underwriter
may reasonably request in order for the Underwriter to qualify the 2007 Bonds for offer and sale under
the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United
States as the Underwriter may designate and to determine the eligibility of the 2007 Bonds for investment
under the laws of such states and other jurisdictions; provided, however, that in no event shall the
Financing Authority be required to take any action which would subject it to service of process in any
jurisdiction in which it is not now subject;
(i) to the best of knowledge of the Financing Authority, all approvals, consents and orders of
any governmental authority or agency having jurisdiction in the matter which would constitute a
condition precedent to the due performance by the Financing Authority of its obligations under the
Financing Authority Agreements or the 2007 Bonds have been duly obtained or made, and are, and will
be on the Closing Date, in full force and effect;
(j) as used in this Purchase Agrecment, the term "End oJ 1he Underx�riting Periorf' for the
2007 Bonds shall mean the earlier of (i) the Closing Date unless the Financing Authority shall have been
notified in �vriting to the contrary by the Underwriter on or prior to the Closing Date or (ii) the date on
which the End of the Underwriting Period for the 2007 Bonds has occurred under Rule 15c2-12,
provided, however, that the Financing Authority may treat as the End of the Underwriting Period for the
2007 Bonds the date specified as such in a notice from the Underwriter stating the date which is the End
of the Underwriting Period;
(k) if between the date hereof and the date which is 25 days after the End of the
Underwriting Period for the 2007 Bonds, an event occurs, or facts or conditions become known to the
Financing Authoriry which, in the reasonable opinion of Richards, Watson 8c Gershon, A Professional
Corporation ("Bond Counsel") or Lofton & Jennings, San Francisco, California ("Disclnsw•e C'ounsel "),
might or would cause the information contained in the Official Statement, as then supplemented or
amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be
stated therein or necessary to make such information therein, in the light of the circumstances under
which it was made, not misleading in any material respect, the Financing Authority will notify the
Underwriter, and if in the opinion of the Underwriter such event requires the preparation and publication
of a supplement or amendment to the Official Statement, the Financing Authority will forthwith prepare
and furnish to the Underwriter (at the expense of the Financing Authority) a reasonable number of copies
of an amendment of or supplement to the Offcial Statement (in the form and substance satisfactory to the
Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time the Official Statement is delivered to
prospective purchasers, not misleading in any material respect with respect to the information of the
Financing Authority. [f� such notification shall be subsequent to the Closing Date, the Financin�
Authonty shall forthwith provide to the Underwriter such legal opinions, certificates, instruments and
other documents as the Underwriter may reasonably deem necessary to evidence the truth and accuracy of
such supplement or amendment to the Ofticial Statement. For the purposes of this subsection, between the
date hereof and the date which is 25 days after the End of the Underwriting Period for the 2007 Bonds,
the Financing Authority will furnish such information with respect to itself as the Underwriter may from
time to time reasonably request;
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(l) if the information contained in the Official Statement relating to the Financing Authority
is amended or supplemented pursuant to Section G(k), at the time of such supplement or amendment
thereto and (unless subsequently again supplemented or amended pursuant to such subparagraph) at all
times subsequent thereto up to and including the date which is 25 days after the End of the Underwritin�
Period for the 2007 Bonds, the portions of the Official Statement so supplemented or amended (including
any financial and statistical data contained therein), will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make such information
therein, in the light of the circumstances under which it was made, not misleading;
(m) any certificate signed by any officer of the Financing Authority and delivered to the
Underwriter pursuant to the 2007 Indenture or this Purchase Agreement or any document contemplated
thereby shall be deemed a representation and warranty by the Financing Authority to the Underwriter as
to the statements made therein and that such officer shall have been duly authorized to execute the same;
(n) to the best knowledge of the Financing Authority, there is no public vote or referendum
pending or proposed, the results of which could materially adversely affect the transactions contemplated
by the Official Statement or the Financing Authority Agreements or the 2007 Bonds, or the validity or
enforceability of the 2007 Bonds;
(o) the Financing Authority will comply with the requirements of the "I'ax Certificate
executed by the Financing Authority in connection with the delivery of the 2007 Bonds; and
(p) the Financing Authority will apply the proceeds from the sale of the 2007 Bonds for the
purposes specified in the 2007 Indenture.
Section 7. Representations, Warranties and Covenants of the Redevelopment Agency. The
Redevelopment Agency represents, warrants and covenants with the Underwriter that:
(a) the Redevelopment Abency is a public body corporate and politic, organized and existing
under the laws of the State, including the Redevelopment Law, with full right, power and authoriry to
execute, deliver and perform its obligations under the 2007 Loan Agreement, the Escrow Agreement, the
Continuing Disclosure Agreement among the Redevelopment Agency, the Trustee and MuniFinancial,
Inc., as Dissemination Agent, dated the Closing Date and substantially in the form attached to the Official
Statement as Exhibit F(the "Cnntinuing Disclosu►•e Agreement "), and to approve this Purchase
Agreement (collectively, the "Redevelnpmc>nt Agency Agreements "), and to carry out all transactions
contemplated by each of the Redevelopment Agency Aereements and the Official Statement.
(b) the Redevelopment Agency has by Resolution No. (the "Redevelopment Agencl•
Resohrtion") adopted by a majority of its members at a meeting duly called, noticed and conducted, at which a
quonun was present and acting throughout, on November _, 2006, taken all action necessary to be taken by it
to authorize and approve the execution, delivery of and the performance by the Redevelopment Agency
of the obligations contained in the Redevelopment Agency Agreements; the Redevelopment Agency
Resolution is in Full Force and effect and has not been amended, modified or rescinded; and the adoption
of the Redevelopment Agency Resolution constitutes all action necessary to be taken by the
Redevelopment Agency for the execution, delivery and duc performance of the Redevelopment Agency
Agreements;
(c) when executed and delivered by the respective parties thereto, each of the
Redevelopment Abency ngreements will constitute a legally valid and binding obligation of the
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Redevelopment Agency enforceable in accordance with their respective terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitablc
principles relating to or affecting creditors' rights generally; the Redevelopment Agency has complied,
and will at the Closing be in compliance in all material respects, with the terms of the Redevelopment
Agency Agreements;
(d) at ihe time of acceptance hereof by the Redevelopment Agency, and (unless an event
occurs of the nature described in Section 7(k)) at all times during the period from the date of this Purchase
Agreement to and including the date which is 25 days following the End of the Underwriting Period for
the 2007 Bonds (as determined in accordance with Section 7(j)), the statements and information contained
in the Preliminary Official Statement as of its date, and the Official Statement as of its date (excluding the
information under the captions "FINANCIAL GUARANTY INSURANCE,'� and "UNDERwRITINC;," and
contained in APPENDIX G-"DTC AND THE BOOK-ENTRY SYSTEM," and APPENDIX H-"SPECIMEN
FINANCIAI. GL�ARANTY INSURANCE POLICY" and APPENDIX I-"SPECIMEN RESERVE FL'ND SURGTY
POLICY") are true, correct and complete in all material respects and such statements do not with respect to
the Preliminary Official Statement, and will not with respect to the Official Statement, omit to state any
material fact necessary to make such statements, in light of the circumstances under which they were
made, not misleading;
(e) to the best of its knowledge, the Redevelopment Agency is not in violation or breach of
or default under any applicable constitutional provision, law or administrative rule or regulation of the
State or the United States of America, or any agency or instrumentality of either of them, or any
applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement or
other instrument to which the Redevelopment Agency is a party or is otherwise subject, which would
constitute a default under any of the Redevelopment Agreements, no event has occurred and is continuing
which, with the passage of time or the giving of notice, or both would constitute a violation or a breach of
or a default under any such loan agreement, indenture, bond, note, resolution, agreement or other
instrument to which the Redevelopment Agency is a party or is otherwise subject; and compliance with
the provisions of the Redevelopment Agency Agreements will not materially conflict with or constitute a
breach of or default under any applicable constitutional provision, la�v, administrative regulation, court
order or consent decree or any applicable judgment or decree or any loan agreement, note, resolution,
indenture, agreement or other instrument to which the Redevelopment Abency is a party or may be
otherwise subject;
(� at the date hereof and on the Closing Date, the Redevelopment Agency will be in
compliance in all respects with the material covenants and agreements contained in the Redevelopment
Agency Agreements and no event of default and no event has occurred and is continuing which, with the
passage of time or giving of notice, or both, would constitute an event of default thereunder shall have
occurred and be continuing;
(g) to the best knowledge of the Redevelopment Agency, after due investigation, other than
as set forth in the Official Statement or as the Redevelopmei�t Agency has otherwise disclosed in �vriting
to the tlnderwriter, there is no action, suit, proceeding, inquiry or investigation, at law or in eyuity, or by
or before any court, governmental agency, public board or body, pending and served on the
Redevelopment Agency or threatened against the Redevelopment Agency, (i) wherein an unfavorable
decis�on, ruling or findinb would adversely affect the existence of the Redevelopment Agency or the title
of any official of the Redevelopment Agency to such person's office, or (ii) in any way contesting or
affecting the validity or enforceability of the Redevelopment Agency Agreements or the 2007 Bonds, or
(iii) contesting in any way the completeness or accuracy of the information in the Preliminary Official
Statement, or (iv) contesting the po�ver of the Redevelopment Agency or its authority with respect to the
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Redevclopment Agency Agreements; wherein an unfavorable decision, ruling or finding would materially
adversely affect the validity of the Redevelopment Agency Agreements or the authorization, execution,
delivery or performance by the Redevelopment Agcncy of the Redevelopment Agency Agreements;
(h) the Redevelopment Agency will furnish such information, execute such instruments and
take such other action not inconsistent with law in cooperation with the Underwriter which the
Underwriter may reasonably request in order for the Underwriter to qualify the 2007 Bonds for offer and
sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of
the United States as the Underwriter may designate and to determine the eligibility of the 2007 Bonds for
investment under the laws of such states and other jurisdictions; provided, however, that in no event shall
the Redevelopment Agency be required to take any action which would subject it to service of process in
any jurisdiction in which it is not now subject;
(i) to the best of knowledge of the Redevelopment Agency, all approvals, consents and
orders of any governmental authoriry or agency having jurisdiction in ihe matter which would constitute a
condition precedent to the due performance by the Redevelopment Agency of its obligations under the
Redevelopment Agency Agreements have been duly obtained or made, and are, and will be on the
Closing Date, in full force and effect;
(j) as used in this Purchase Agreement, the term "Enrl nJt/re Undenti�riting PerrocP' for the
2007 Bonds shall mean the carlier of (i) the Closing Date unless the Redevelopment Agency shall have
been notified in writing to the contrary by the Underwriter on or prior to the Closing Date or (ii) the date
on which the End of the Underwriting Period for the 2007 Bonds has occurred under Rule 15c2-12,
provided, however, that the Redevelopment Agency may treat as the End of the Underwriting Period for
the 2007 Bonds the date specified as such in a notice from the Underwriter stating the date which is the
End of the Underwriting Period;
(k) if between the date hereof and the date which is 25 days after the �nd of the
Underwriting Period for the 2007 Bonds, an event occurs, or facts or conditions become known to the
Redevelopment Agency which, in the reasonable opinion of the Bond Counsel or Disclosure Counsel,
might or would cause the information contained in the Official Statement, as then supplemented or
amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be
stated therein or necessary to make such information therein, in the light of the circumstances under
which it was made, not misleading in any material respect, the Redevelopment Agency will notify the
Underwriter, and if in the opinion of the Underwriter such event requires the preparation and publication
of a supplement or amendment to the Ofticial Statement, the Redevelopment Agency will forthwith
prepare and furnish to the Underwriter or cause the Financing Authority to prepare and furnish to the
Underwriter (at the expense of the Redevelopment Agency) a reasonable number of copies of an
amendment of or supplement to the Official Statement (in the form and substance satisfactory to the
L!nderwriter) which will amend or supplement the Official Statement so that it will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time the Official Statement is delivered to
prospective purchasers, not misleading in any material respect with respect to the information of the
Redevelopment A�ency. If such notitication shall be subsequent to the Closing Date, the Redevelopment
Agency shall forthwith provide to the Underwriter such lebal opinions, certificates, instruments and ot}ier
documents as the Underwriter may reasonably deem necessary to evidence the truth and accuracy of such
supplement or amcndment to the Ofticial Statement. For the purposes of this subsection, bet�veen the
date hereof and the date which is 25 days after the End of the Underwriting Period for ihe 2007 Boncls,
the Redevelopment Agency will furnish such information with respect to itself� as the Underwriter may
from time to time reasonably request;
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(1) if the information contained in the Official Statement relating to the Redevelopment
Agency is amended or supplemented pursuant to Section 7(k), at the time of such supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuanl to such
subparagraph) at all times subsequent thereto up to and �ncluding the date which is 25 days atter the End
of the Underwriting Period for the 2007 Bonds, the portions of the Officiai Statement so supplemented or
amended (including any financial and statistical data contained therein), will not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to
make such information therein, in the light of the circumstances under which it was made, not misleading;
(m) any certificate signed by any officer of the Redevelopment Agency and delivered to the
Underwriter pursuant to the Redevelopment Agency Agreements or this Purchase Agreement or any
document contemplated thereby shall be deemed a representation and wananty by the Redevelopment
Agency to the Underwriter as to the statements made therein and that such officer shall have been duly
authorized to execute the same;
(n) to the best knowledge of the Redevelopment Agency, there is no public vote or
referendum pending or proposed, the results of which could materially adversely affect the transactions
contemplated by the Official Statement or the Redevelopment Agency Agreements or the validity or
enforceability of the 2007 Bonds;
(o) the Redevelopment Agency will apply the proceeds from the 2007 Loan for the purposes
specified in the 2007 Loan Agreement;
(p) the Low and Moderate Income Housing Fund does not, on the date hereof, contain any
"excess surplus" (as that term is defined in Section 33334.12 of the Redevelopment Law) that would
cause the Redevelopment Agency to be subject to the prohibitions contained in Section 33334.12(e) of
the Redevelopment Law.
(q) as of the time of acceptance hereof and as of the date of the Closing, except as otherwise
disclosed in the Official Statement, the Redevelopment Agency has complied with all material provisions
of the Redevelopment Law, without limitation, use of the Tax Revenues and the filing requirements of
Section 33080, 33080.6 and 33334.6 of the Redevelopment Law as applicable to the Redevelopment
Abency and the Project Area.
(r) the iinancial statements of the Redevelopment Agency contained in the Ofiicial
Statement as Appendix B fairly present the financial positions and results of operations thereof as of the
dates and for the periods therein set forth, and the Redevelopment Agency has no reason to believe that
such financial statements have not been prepared in accordance with generally accepted accounting
principles consistently applied; and
(s) the Redevelopment Agency is in compliance with all of its prior continuing disclosure
undertakings entered into pursuant to Rule ISc2-12 and at or prior to the Closing Date, the
Redevelopment Abenry shall have duly authorized, executed and delivered the Continuing Disclosure
Agreement.
Section 8. Closing. At 8:00 A.M., Califomia time, on January _, 2007, or on such earlier or
later date as may be mutually agreed upon by parties hcrcto (the "Closi�rg Dute"), the �inancing
Authority, will deliver or cause to be delivered to the Underwriter the duly executed Bonds through the
facilities of The Depository 'I'rust Company in New York, New York ("DTC"') by the initial deposit with
the �frustee (in care of DTC) through the Fast Automated Securities Transfer System, and will deliver or
z��-oc�u�z �x-z
cause to bc delivered at the offices of Bond Counsel in I.os Angeles, Califomia, or such other place as
shall have been mutually agreed upon by the parties,the other documents described herein; and the
Undenvriter shall pay the purchase price of each Series of 2007 Bonds as set forth in Section 1 of this
Purchase Agreement, less the premium for the Financial Guaranty Policy in the amount of � ,
which the Underwriter will wire directly to the Bond Insurer.
The 2007 Bonds shall be issued in fully registered foRn. It is anticipated that CUSIP
identification numbers will be inserted on the 2007 Bonds, but neither the failure to provide such numbers
nor any error with respect thereto shall constitute a cause for failure or refusal by the Undenvriter to
accept delivery of the 2007 Bonds in accordance with the terms of this Purchase Agreement.
Section 9. Termination. The Underwriter shall have the right to terminate the obligations of the
underwriters under this Purchase Agreement to purchase, to accept delivery of and to pay for the 2007
i3onds by notifying the Financing Authority of its election to do so if, after the execution hereof and prior
to the Closing Date: (1) legislation (including any amendments thereto), resolution, rule or rebulation
(including any amendments thereto) shall be introduced in, considered by or be enacted by any
governmental body, department or political subdivision of the State, or a decision by any court of
competent jurisdiction within the State shall be rendered which, in the reasonable opinion of the
linderwriter, would make it impracticable or inadvisable to proceed with the offer, sale or delivery of the
2007 Bonds on the terms and in the manner contemplated in the Official Statement; (2) the outbreak or
declaration of war, institution of a police action, engagement in or escalation of military hostilities by or
against the United States, or any escalation of any existing conflict or hostilities in which the United
States is involved or the occurrences of any other national emergency or calamity or crisis or any change
in financial markets resulting from the foregoing, which, in the reasonable opinion of the Undenvriter,
would make it impracticable or inadvisable to proceed with the offer, sale or delivery of the 2007 Bonds
on the terms and in the manner contemplated in the Official Statement (3) the declaration of a general
banking moratorium by federal, New York or California authorities, or the general suspension or material
limitation of trading on any national securities exchange which materially adversely affects the market
price of the 2007 Bonds; (4) the imposition by the New York Stock Exchange or other national securities
exchange, or any governmental authority, of any material restrictions not now in force with respect to the
2007 Bonds or obligations of the general character of the 2007 Bonds or securities generally, or the
material increase of any such restrictions now in force, including those relating to the extension of credit
by, or the charge to the net capital requirements of, the Underwriter which, in the reasonable opinion of
the Undenvriter would make it impracticable or inadvisable to proceed with the offer, sale or delivery of
the 2007 Bonds on the terms and in the manner contemplated in the Official Statement; (S) legislation
enacted (or resolution passed) by or introduced or pending legislation amended in the Congress or
recommended for passage by the President of the United States, or an order, decree or injunction issued
by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed)
issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental
agency having jurisdiction of the subject matter, to the effect that securities of the general character of the
2007 Bonds, or the 2007 Bonds, including any or all underlying arrangements, are not exempt from
registration under the Securities Act of 1933, as amended, or that the 2007 Indenture is not exempt from
qualification under the Trust Indenture Act of 1939, as amended, or that the execution, offering or sale of
obligations of the general character of the 2007 Bonds, including any or all underlying arrangements, as
contemplated hereby or by the Official Statement, otherwise is or would be in violation of the federal
securities laws as amended and then in effect; (6) action by or on behalf of the State or the California
Franchise '1'ax E3oard, with the purpose or effect, directly or indirectly, of imposing California personal
income taxation upon such interesi as would be received by the Owners of the 2007 Bonds; (7) (i)
legislation (including any amcndment thereto) shall have been introduced in or adopted by either House
of the Congress of the United States or recommcnded to the Congress or otherw�se endorsed for passage
2?4-ut,n42 �x-2
10
by the President of the United States, the Treasury Department of the United States, the Internal Revenue
or the chairman or ranking minority member of the Committee on Finance of the United States Senate or
the C'ommittee on Ways and Means of tlie United States House of Representatives, or legislation is
proposed for consideration by either such committee by any member thereof or presented as an option for
consideration by either such committee by the staff of such committee, or by the staff of the Joint
Committee on Taxation of the Congress of the United States, or a bill to amend the Internal Revenue
Code shall be filed in either house, or (ii) a decision shall have been rendered by any federal or state
court, or (iii) an order, filing, ruling or regulation shall have been issued or proposed by or on behalf of
the 'Creasury Department of the United States or the Internal Revenue Service or any other agency of the
United States, or (iv) a release or official statement shall have been issued by the President of the United
States or by the Treasury Department of the United States or by the Internal Revenue Service, the effect
of which, in any such case described in clause (i), (ii), (iii), or (iv), would be to impose, directly or
indirectly, federal income taxation upon interest received on obligations of the general character of the
2007 Bonds or upon income of the general character to be derived by the Financing Authority, other than
as imposed on the 2007 Bonds and income therefrom under the federal tax laws in effect on the date
hereof, in such a manner as in the reasonable judgment of the Underwriter would make it impracticable or
inadvisable to proceed with the offer, sale or delivery of the 2007 Bonds on the terms and in the manner
contemplated in the Official Statement; (8) the withdrawal or downgrading or any notice of an intendcd
or potential downgrading of any rating of the obligations of the Financing Authority or the
Redevelopment Agency (including the rating to be issued with respect to the 2007 Bonds) by a
"nationally recognized statistical rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act of 1933, as amended which, in the reasonable opinion of the
Underwriter, would make it impracticable or inadvisable to proceed with the offer, sale or delivery of the
2007 Bonds on the terms and in the manner contemplated in the Official Statement; (9) any event
occurring, or information becoming known which, in the reasonable judgment of the Underwriter, makes
untrue in any material respect any statement or information contained in the Official Statement, or has the
effect that the Official Statement contains any untrue statement of a material fact or omits to state a
material fact to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (]0) any change or development involving a
prospective change in the condition of the Financing Authority or the Redevelopment Agency, financial
or otherwise, or in the operations of the Financing Authority or the Redevelopment Agency from those set
forth in the Official Statement that makes the 2007 Bonds, in the reasonable judgment of the Underwriter,
impracticable or inadvisable to offer, sell or deliver the 2007 Bonds on the terms and in the manner
contemplated by the Official Statement; (1 I)(i) trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange or the Nasdaq National
Market; (ii) trading of any securities of the Financing Authority shall have been suspended on any
exchange or in any over-the-counter market; (iii) a material disruption in securities settlement, payment or
clearance services in the United States shall have occuned; or (iv) any moratorium on commercial
banking activities shall have been declared by Federal or New York State authorities; or (12) the purchase
of and payment for the 2007 Bonds by the Underwriter, or the resale of the 2007 Bonds by the
Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law,
governmental authority, board, agency or commission.
Section 10. Closing Conditions. l�he Underwriter hereby enters into this Purchase Agreement
in reliance upon the representations and warranties of the Financing Authority and the Rcdcvclopment
Agency contained hercin and the represeiitations and warranties to be contained in the documents and
instruments to be delivered on the Closing Date and upon the performance by the Financing Authority,
the Redevelopment Agency and the Trustee of their respective oblibations both on and as of the date
hereof and as of the Closing I�ate. Accordingly, the obligations of the tlnderwriter under this Purchase
Agreement to purchase, to accept delivery of and to pay tor the 2007 Bonds shall be subject, at the option
??4-nb���l? �x-2
��
of the Underwriter, to the accuracy in all material respects of the representations and warranties of the
f�inancing Authority and the Redevelopment Agency contained herein as of the date hereof and as of the
Closing Date, to the accuracy in all material respects of the statements of the officers and other offic�als of
the Financing Authority, the Redevelopment Agency and the Trustee made in any certificate or document
furnished pursuant to the provisions hereof, to the performance by ihe Financing Authority, the
Redevelopment Agency and the Trustee of their respective obligations to be performed hereunder and
under the Financing Authority Agreements and the Redevelopment Agency Agreements, at or prior to the
Closinb Date, and also shall be subject to the following additional conditions:
(a) the Underwriter shall receive, within seven business days after the date hereof, copies of
the Official Statement (including all information permitted to have been omitted from the Preliminary
Official Statement by the Rule 15c2-12 and any amendments or supplements as have been approved by
the Underwriter), in such reasonable quantiry as the Underwriter shal! have requested;
(b) on the Closing Date, the Financing Authority Abreements and the Redevelopment
Agency Abreements shall have been duly authorized, executed and delivered by the parties thereto, all in
substantially the forms heretofore submitted to the Underwriter, with only such changes as shall have
been agreed to in writing by the Underwriter, and such agreements shall be in full force and effect; and
there shall be in full force and effect such resolutions of the governing boards of the Financing Authority
and the Redevelopment Agency as, in the opinion of Bond C:ounsel, shall be necessary or appropriate in
connection with the transactions contemplated hereby;
(c) on the Closing Date, all necessary action of the Financing Authority relating to the
execution and delivery of the 2007 Bonds will have been taken and will be in full force and effect and
�vill not have been amended, modified or supplemented;
(d) at or prior to the Closing Date, the Underwriter shall have received the follo�ving
documents, in each case satisfactory in form and substance to the Underwriter:
(i) the Financing Authority Agreements, the Redevelopment Agency Agreements
and ihe Official Statemeni, each duly executed and delivered by the respective parties thereto, and
certified copies of the Financing Authority Resolution, the Redevelopment Agency Resolution and
Resolution No. 07- adopted by the City Council of the City on November _, 2006 making, among
other things, a Fnding of sibnificant public benefit;
(ii) the approving opinion of Bond Counsel, dated the Closing Date and addressed to
the Pinancing Authority, in substantially the form attached to the Official Statement as Appendix E,
together with a letter of Bond Counsel, addressed to the Underwriter to the effect that such opinion may
be relied upon by the Underwriter to the same extent as if such opinion were addressed to it;
(iii) the supplemental opinion of Bond Counsel, dated the Closing Date and addressed
to the lJnderwriter, substantially to the effect that: (A) this Purchase Agreement has been duly authorized,
executed and delivered by the Financing Authority and is a valid and binding agreement of the Financing
Authority, enforceable in accordance «�ith its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other laws affecting the enforcement of creditors, rights and by the application
of equitable principles if equitable remedies are sought; (B) the 2007 Bonds are not subject to the
registration requirements of the Securit�es Act of 1933, as amended, and the 2007 Indenture is exempt
trom qualification under the 'I'rust Indenture Act of 1939, as amended; (C) the ('ontinuing Disclosure
Agreement has been duly author�zed, executed and delivered by the Financing Authority; and (D) the
statements contained in the Official Statement under the captions "TIiE SF.RIFS 2007 A BUNDS,"
� �a-ur,ud2yx-2
�
"SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" and "TAX MnTTERS" and contained in
Appendix E, insofar as such statements expressly summarize certain provisions of the 2007 Bonds, the
2U07 [ndenture, and the final opinion of Bond Counsel concerning certain federal tax matters relating to
the 2007 Bonds, are accurate in all material respects;
(iv) an opinion of Bond Counsel with respect to the Prior Bonds, dated the Closing
Date and addressed to the Financing Authority, the Redevelopment Agency and the Underwriter, to the
effect that all of the liability of the Financing Authority with respect to the Prior Bonds has ceased and
been completely discharged (except that the holders thereof shall be entitled to the payment of the
principal, interest and premium with respect to the Prior Bonds from moneys deposited in the applicable
Escrow Fund), and the Prior Bonds will no longer be considered outstanding under the Trust Agreement
pursuant to which each such Prior Bonds �vere issued.
(v) the opinion of Richards, Watson & Gershon, A Professional Corporation, as
General Counsel to the Financing Authority, dated the Closing Date and addressed to the Financing
Authority and the Underwriter, in substantially the form of Exhibit B;
(vi) the opinion of Richards, Watson & Gcrshon, A Professional Corporation, as
General Counsel to the Redevelopment Agency, dated the Closing Date and addressed to the Financing
Authority and the Underwriter in substantially the form of Exhibit C;
(vii) the opinion of Disclosure Counsel, dated the Closing Date and addressed to thc
Financing Authority and the Redevelopment Abency �and the Underwriter], to the effect that, on the basis
of the information made available to them, no facts came to their attention in connection with the
preparation of the Official Statement which cause them to believe that the Official Statement as of its date
(excluding therefrom financial, engineering and statistical data, forecasts, projections, estimates,
assumptions and expressions of opinions, statements relating to DTC, Cede & Co. and the operation of
the book-entry system, the Bond Insurer and the Financial Guaranty Insurance Policy and the appendices
(except for Appendix F), as to all of which no view need be expressed) contained any untrue statcment of
a material fact or omitted to state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading in any material respect, the 2007 Bonds
are not subject to the registration requirements of the Securities Act of 1933, as amended, and the 2007
Indenture is exempt from qualification under the Trust Indenture Act of 1939 as amended[, and the
Continuing Disclosure Agreement provides a suitable basis for the Underwriter, in connection with the
Offering (as defined in Rule 15c2-12) of the 2007 Bonds to make a reasonable determination as required
by section (b)(5) of such Rule.].
[(viii) the opinion of ("Underwriter's Counsel") dated the Closing Date
and addressed to the Underwriter to the effect that, on the basis of the information made available to
them, no facts came to their attention in connection with the preparation of the Official Statement which
cause them to believe that the Official Statement as of its date (excluding therefrom financial, engineering
and statistical data, forecasts, projections, estimates, assumptions and expressions of opinions, statements
relating to DTC, Cede & Co. and the operation of the book-entry system, the Bond Insurer and the
Financial (ivaranty Insurance Policy and the appendices (except for Appendix F), as to all of which no
view need be expressed) contained any untrue statement of a material fact or omitted to state a mater�al
fact necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading in any material respect, the 2007 Bonds are not subject to the registration
requirements of the Securities Act of ] 933, as amended, and the 2007 Indenture is exempt trorn
qualification under the Trust Indenture Act of 1939, as amended, and the Continuing Uisclosure
Agreement provides a suitable basis for the tJnderwr�ter, in connection �vith the Offering (as defined in
z;�-uc,uaz.i,�-z
13
Rule 15c2-12) of the 2007 Bonds to make a reasonable detern�ination as required by section (b)(5) of
such Rule. �
(ix) the opinion of counsel to the Trustee, dated the Closing Date and addressed to the
[Jndenvriter and the Financing Authority, to the effect that: (A) the Trustee has been duly incorporated as
a national banking association, duly organized and validly existing and in good standing under the laws of
the United States of America and the State, having the legal authority to exercise trust powers in the State
and having full power and authority to enter into and to perform its duties as Trustee under the 2007
Indenture; (B) the Trustee has duly authorized, executed and delivered the 2007 Indenture and the 2007
Loan Agreement, and by all proper corporate action has authorized the acceptance of the trusts of the
2007 Indenture; (C) the 2007 Indenture and the 2007 I�oan Agreement constitutes a legally valid and
binding agreement of the Trustee, enforceable against it in accordance with its respective terms; (D) the
2007 Bonds have been validly authenticated, registered and delivered by the Trustee; (E) no
authorization, approvai, consent or other order of the State or any other govemmental authority or agency
within the State having jurisdiction over the Trustee, or, to such counsel's knowledge after reasonable
investigation, any other person or corporation, is required for the valid authorization, execution, delivery
and performancc by the Trustee of the 2007 Indenture; and (F) the execution and delivery of the 2007
Indenture, and compliance by the Trustee with the provisions of the 2007 Indenture under the
circumstances contemplated thereby, does not and will not in any material respect conflict with or
constitute on the part of the Trustee a breach or default under any agreements or other instrument to
which the Trustee is a parry (and of which such counsel is aware after reasonable investigation) or by
which it is bound (and of which such counsel is aware after reasonable investigation) or any existing law,
regulation, court order or consent decree to which the Trustee is subjecr
(x) the opinion of co�snsel to Wells Fargo Bank, National Association ("Wells
Fargo "), dated the Closing Date and addressed to the Underwriter and the Financing Authority, to the
effect that: (A) Wells Fargo has been duly incorporated as a national banking association, duly organized
and validly existing and in good standing under the laws of the United States of America and the State,
having the legal authority to exercise trust powers in the State and having full power and authority to
enter into and to perform its duties as Trustee Fargo under the 2007 Indenture and as Escrow Bank under
the Gscrow Agreement; (B) Wells Fargo has duly authorized, executed and delivered the each of the 2007
Indenture, the 2007 Indenture Loan Agreement and the Escrow Agreement, and by all proper corporate
action has authorized the acceptance of the trusts of the 2007 Indenture; (C) each of the 2007 Indenture,
the 2007 Indenture Loan Agreement and the Escrow Agreement constitutes a legally valid and binding
agreement of Wells Fargo, enforceable against it in accordance with its respective terms; (D) the 2007
Bonds have been validly authenticated, registered and delivered by Wells Fargo, as Trustee; (E) no
authorization, approval, consent or other order of the State or any other governmental authority or agency
within the State having jurisdiction over Wells Fargo, or, to such counsel's knowledge after reasonable
investigation, any other person or corporation, is required for the valid authorization, execution, delivery
and performance by Wells Fargo of the 2007 Indenture or the Escrow Agreement; and (F) the execution
and delivery of the 2007 Indenture and the Escrow Agreement, and compliance by Wells Fargo with the
provisions of each of the 2007 Indenture and the Escrow Agreement under the circumstances
contemplated thereby, does not and �vill not in any material respect conflict with or constitute on the part
of Wells Fargo a breach or default under any agreements or other instrument to which Wells Fargo is a
party (and of which such counsel is aware after reasonable investigation) or by which it is bound (and of
which such counsel is aware after reasonable investigation) or any existing law, regulation, court order or
consent decree to which Wells Fargo is sub�ect;
(xi) a certiticate of the Financing Authority dated the Closing Date, s�gned by a duly
authorized official, in form and substance satisfactory to the ilndenvriter, to the effect that, to the best of
'_�.l-nGud? pr-�
14
such official's knowledge: (A) the representations and warranlies of the Financing Authority contained in
the Purchase Agreement are true and correct in all material respects on and as of the Closing Date with
the same effect as if made on the Closing Date; (B) the Financing Authority has compl�ed tvith the
requirements of the Financing Authority Agreements required to be complied with on and as of the
Closing Date with respect to the 2007 Bonds; and (C) no event materially adversely affect�ng the
Financing Authority has occurred since the date of the Official Statement;
(xii) a certificate of the Redevelopment Agency dated the Closing Date, signed by a
duly authorized official, in form and substance satisfactory to the Underwriter, to the effect that, to the
best of such official's knowledge: (A) the representations and warranties of the Redevelopment Agency
contained in the Purchase Agreement are true and correct in all material respects on and as of the Closing
Date with the same effect as if made on the Closing Date; (B) the Redevelopment Agency has complied
with the requirements of the Redevelopment Agency Agreements required to be complied with on and as
of the Closing Date; (C) no event materially adversely affecting the Redevelopment Agency has occurred
since the date of the Offcial Statement; and (D) that the financial statements of the Redevelopment
Agency contained in the Official Statement fairly present the financial positions and results of operations
thereof as of the dates and for the periods therein set forth, and such officer has no reason to believe that
such financial statemenis have not been prepared in accordance with generally accepted accounting
principles consistently applied;
(xiii) a certificate of the Trustee dated the Closing Date, signed by a duly authorized
official, in form and substance satisfactory to the Underwriter, to the effect that: (A) the Trustee is a
national banking association organized and existing under and by viriue of the laws of the United States,
having the fuli power and being qualified to enter into and perform its duties under the 2007 Indenturc
and to authenticate and deliver the 2007 Bonds to the Underwriter; (B) the Trustee is duly authorized to
enter into the 2007 Indenture and to execute and deliver the 2007 Bonds to the Underwriter pursuant to
the 2007 Indenture; (C) the 2007 Bonds will have been duly authenticated and delivered by the Trustee;
(D) the execution and delivery of the 2007 Indenture and the 2007 Loan Agreement and compliance with
the provisions on ihe pari of ihe "I'rustee contained in the 2007 Indenture and ihe 2007 Loan Agreement,
will not conflict with or constitute a breach of or default under any law, administrative regulation,
judgment, decree, loan agreement, indenture, note, resolution, agreement or other instrument to which the
Trustee is a party or is otherwise subject (except that no representation or warranty is made with respect
to any federal or state securities or blue sky laws or regulations), nor will any such execut�on, delivery,
adoption or compliance result in the creation or imposition of any lien, charge or other security interest or
encumbrance of any nature whatsoever upon any of the properties or assets held by the Trustee pursuant
to the lien created by the 2007 Indenture under the terms of any such law, administrative regulation,
judgment, decree, [oan agreement, indenture, bond, note, resolution, agreement or other instrument,
cxcept as provided by the 2007 Indenture; and (E) to the best of the knowledge of the Trustee, it has not
been served with any action, suit, proceeding, inquiry or investigation in law or in equity, before or by
any court, govemmental agency, public board or body, nor is any such action or other proceedinb
threatened against it, affecting its existence, or the titles of its officers to their respective offices or
seekinb to prohibit, restrain, or enjoin�ng the execution and delivery of the 2007 Bonds or the collection
of revenues to be applied to pay the principal, premium, if any, and interest with respect to the 2007
Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the
2007 Indenture or contesting the powers of the "frustee or its authority to enter into, adopt or perform its
obl�gations under any of the fore�oing to which it is a party, wherein an unfavorable decision, ruling or
finciing �vould materially adversely affect the validity or enforceability of� the 2007 E3onds, the 2007
lndcnture and the 2007 Loan Agreement or the power and authoriry of the "I'rustee to enter into and
perform its respective duties under the 2007 Indenture and to authenticate and deliver the 2007 Bonds to
t}ie Underwriter;
, z�.��c,ua� r,c-z
1�
(xiv) a certificate of Wells Fargo dated the Closing Date, signed by a duly authorizcd
official, in form and substance satisfactory to the Underwriter, to the effect that: (A) Wells Far�;o is a
national banking association organized and existing under and by virtue of the laws of the United States,
having the full power and being qualified to enter into and perform its duties under the 2007 Indenture
and the Escro�v Agreement and to authenticate and deliver the 2007 Bonds to the Underwriter; (B) Wells
Fargo is duly authorized to enter into the 2007 Indenture and the Escrow Agreement and to execute and
dcliver the 2007 Bonds to the Underwriter pursuant to the 2007 Indenture; (C) the 2007 Bonds have been
duly authenticated and delivered by Wells Fargo, as Trustee; (D) the execution and delivery of the 2007
Indenturc, the 2007 Indenture Loan Agreement and the Escrow Agreement and compliance with the
provisions on the part of Wells Fargo contained in each of the 2007 Indenture, the 2007 Indenture Loan
Agreement and the Escrow Agreement, will not conflict with or constitute a breach of or default under
any ]aw, administrative regulation, judgment, decree, loan agreement, indenture, note, resolution,
agreement or other instrument to which Wells Fargo is a party or is otherwise subject (except that no
representation or warranry is made with respect to any federal or state securities or blue sky la�vs or
regulations), nor will any such execution, delivery, adoption or compliance result in the creation or
imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon
any of the properties or assets held by Wells Fargo pursuant to the lien created by the 2007 Indenture
under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture,
bond, note, resolution, agreement or other instrument, except as provided by the 2007 Indenture; and
(E) to the best of the knowledge of Wells Fargo, it has not been served with any action, suit, proceeding,
inquiry or investigation in law or in equity, before or by any court, governmental agency, public board or
body, nor is any such action or other proceeding threatened against it, affecting its existence, or the titles
of its officers to their respective offices or seeking to prohibit, restrain, or enjoining the execution and
delivery of the 2007 Indenture, the 2007 Bonds or the Escrow or the collection of revenues to be applied
to pay the principal, premium, if any, and interest with respect to the 2007 Bonds, or the pledge thereof,
or in any way contesting or affecting the validity or enforceability of the 2007 Indenture, the 2007
Indenture Loan Agreement or the Escrow Agreement or contesting its powers or its authority to enter
into, adopt or perform its obligations under any of the foregoing to which it is a party, wherein an
unFavorable decision, ruling or finding would materially adversely affect the validity or enforceability of
the 2007 Indenture, the 2007 Indenture Loan Agreement the 2007 Bonds or the Escrow Agreement or the
power and authority of Wells Fargo to enter into and perform its respective duties under the 2007
Indenture, the 2007 Indenture Loan Agreement or the Escro�� Agreement and to authenticate and deliver
the 2007 Bonds to the Underwriter;
(xv) a certificate of the City signed by an authorized officer of the City dated the
Closing Date to the effect that the information relating to the City in APPENDIX C-"GENERAI.
INFORMATION CONCERNING THE CITY OF PALM DESERT" to the Official Statement, as of its date and as
of the date of the Closing, is true and rorrect in all material respects;
(xvi) a certificate of Grant Thornton LLP (the "�c�rificution Agen1 "), independent
certified public accountants, dated the Closing Date, to the effect that it has verified the accuracy of the
mathematical computations of the adequacy of the maturing principal amounts of the Escrow Securities
with respect to the Prior Bonds to be held by the Escrow Bank, together with the interest earned and to be
eamed thereon to make full and timely payment of all principal and interest due with respect to the Prior
Bonds as are then outstanding, and on the specified dates at the then applicable redemption prices;
(xvii) evidence of insured ratings with respect to the 2007 Bonds of "[Aaa]" by
Moody's Investors Service and "[AAA]" by Standard & Poor's Ratings Services, a division of the
McGraw Hill Companies being in full force and effect as of the C'losing Date;
z;�t-nc,na� ix-�
16
(xviii) the Financial Guaranty Insurance Policy issued by the Bond Insurer;
(xix) an opinion of Counsel to the Bond Insurer, dated the Closing Date and addresscd
to the Financing Authority and the Underwriter to the effect that (a) the Financial Guaranty Insurance
Policy described in the Official Statement is a legal, valid and binding obligation of the Bond Insurer
enforceable in accordance with its terms, and (b) the statements in the Preliminary Official Statement and
the Official Statement under the caption "FINANCIAL GUARANTY INSURANCE" and contained in
APPENDIX H-"SPECIMEN FINANCfAL GUARANTY INSURANCE POL[CY'� accurately reflects and fairly
represents the information purported to be shown therein;
(xx) a certificate of Rosenow Spevacek Group Inc. (the "Fiscul Consul�nnt ") to the
effect that the report of the Fiscal Consultant dated , 2006 (the "Report ") contained in the
Official Statement does not contain any untrue statement of a material fact or omitted to state a material
fact necessary to make the statemenis therein, in ihe light of the circumstances under which they were
made, not misleading in any material respect, and consenting to the use of the Report in the Preliminary
and Final Official Statements;
(xxi) evidence that Lance, Soll and Lunghard has consented to the inclusion of its
report in the Preliminary Official Statement and the Official Statement as APPENDIX B-
"REDEVELOPMENT AGENCY AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED 1UNE 30,
200[5];"
(xxii) the Tax Certificate of the Financing Authority in form and substance acceptable
to Fiond Counsel;
filing;
(xxiii) evidence that the federal tax information form 8038-G has been prepared for
(xxiv) the preliminary and final Notices of Sale required to be delivered to the
California Debt and Investment Advisory Commission pursuant to Section 8855(g) and 53583 of the
California Government Code; and
(xxv) the Blanket I.etter of Representations of the Financinb Authority to the
Depository Trust Company, New York, New York, relating to the book-entry only system for the 2007
Bonds; and
(xxvi) such additional legal opinions, certificates, instruments or evidences thereof and
other documents as the Disclosure Counsel or Bond Counsel may reasonably request to evidence the due
authorization, execution and delivery of the 2007 Bonds and the conformity of the 2007 Bonds and the
2007 Indenture with the terms of the 2007 Bonds and as summarized in the Official Statement.
All of the opinions, letters, certifcates, instruments and other documents mentioned above or
elsewhere in this Purchase Agreement will be deemed to be in compliance with the provisions hercof' it'
and only if they are in form and substance satisfactory to the Undenvriter.
If the �inanc�ng Authority shall be unable to satisfy the conditions to the Undenvriter's
obligations contained in this Purchase Agreement or �f the lJnderwriter, obligations shall be terminated
for any reason permitted hcrein, all obligations of the Underwriter hereunder may be terminated by thc
iJndenvriter at, or at any time prior to, the Closing Date by written notice to the Financing Authority and
z?a-nc,n.�z Fx-z
17
none of ihe Underwriter the Financing Authority shall have any further obligations hereunder, except that
the respective obligations of the parties set forth in Sertion 10.
Section 11. Expenses. (a) The Uncierwriter shall be under no obligation to pay, and the
Financing Authority shall pay the following expenses incident to the performance of the Financing
Authoriry's obligations hereunder: (i) the fees and disbursements of Bond Counsel and Disclosure
Counsel; (ii) the cost of printing and delivering the 2007 Bonds, the Preliminary Official Statement and
the Official Statement (and any amendment or supplement prepared pursuant to this Purchase
Agreement); (iii) the fees and disbursements of Del Rio Advisors, LLC, as Financ�al Advisor to the
Financing Authority, the Trustee and its counsel, the Escrow Bank and it counsel, the Fiscal Consultant,
the Verification Agent, accountants, advisers and of any other experts or consultants retained by or for the
Financing Authority or the Redevelopment Agency; and (iv) subject to Section 11(b) any other expenses
and costs of the Financing Authoriry it�cident to the performance of their respective obligations in
connection with the authorization, issuance and sale of the 2007 I3onds, including out-of-pocket expenses
and regulatory expenses, and any other expenses agreed to by the parties.
(b) The Underwriter shall pay all expenses incurred by them in connection with the public
offering and distribution of the 2007 Bonds including, but not limited to: (i) all advertising expenses in
connection with the offering of the 2007 Bonds; and (ii) all out-of-pocket disbursements and expenses
incurred by the Underwriter in connection with the offering and distribution of the 2007 Bonds (including
travel and other expenses, [the fees and expenses of Underwriter's Counsel], fees of the California Debt
and Investment Advisory Commission, CUSIP Service Bureau fees and any other fees and expenses),
except as provided in (a) above or as otherwise agreed to by the Underwriter and the Financing Authority
Section 12. Notices Any notice or other communication to be given to the Financing Authority
or the Financing Authority under this Purchase Agreement may be given by delivering the same in
writing at the address of the Financing Authority set forth above, and any notice or other communication
to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in
writing to the Underwriter: Stone & Youngberg LLC, One Ferry Building, San Francisco, Califomia
94111; Attention: [James R. Cervantes, Managing Director].
Section 13. Parties in Interest. This Purchase Abreement is made solely for the benefit of the
Financing Authority and the Underwriter (including the successors or assigns of the Underwriter) and no
other person shall acquire or have any right hereunder or by virtue hereof. All the representations and
warranties of the parties hereto contained in this Purchase Abreement shall remain operative and in full
force and effect, regardless of (a) any investigations made by or on behalf of the Underwriter or the
Financing Authority or (b) delivery of and payment for the 2007 Bonds. The agreements contained in
Section 10 herein shall survive any termination of this Purchase Agreement.
Section 14. Severability. In the event any provision of this Purchase Agreement shall be held or
deemed to be invalid, inoperative or unenforceable by any court of competent jurisdiction, such holdinb
shall not invalidate or render unenforceable any other provision hereof.
Section 15. Governing I,aw; Venue. "This Purchase Agreemeni shall be governed and
interpreted exclusively by and construed in accordance with the laws of the State applicable to contracts
made and to be performed in the State. Any and all disputes or legal actions or proceedings arising out of�
this Purchase Agreement or any document related hereto shall be tiled and maintained in a court of
competent jurisdiction for matters arising in Riverside County, Califomia. By execution of and delivery
of this Purchase Agreement, the parties hereto accept and consent to the aforesaid jurisdiction.
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1R
Section 16. Execution in Counterparts. This Purchase Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one agreement, and any of the parties
hereto may execute the Purchase Agreement by signing any such counterpart.
Section 17. Entire Agreement. The parties agree that the terms and conditions of this Yurchasc
Agreement supersede those of all previous agreements between the parties, and that this Purchase
Agreement contains the entire agreement between the parties hereto. In the event of a dispute between
the parties under this Purchase Agreement, the losing party in such dispute shall pay all reasonable costs
and expenses incurred by the prevailing party in connection therewith, including but not limited to
attorneys' fees.
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I �)
Section 18. Effectiveness. This Purchase Agreement shall be effective as of the date set forth
above upon the execution of the acceptance hereof by authorized officers of the Financing Authority and
approval by the Redevelopment Agency shall be valid and enforceable as of'the time of such acceptance
and approval.
Very truly yours,
STONE & YOUNGBERG LLC
:
Acceptcd:
PALM DESERT FINANCING AUTHORITY
:
Carlos L. Ortega, Chief Administrative Officer
Approved:
PALM DESERT REDEVELOPMENT AGENCY
By:
Carlos L. Ortega, Executive Director
James R. Cervantes, Managing Director
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20
SCHEDULEI
SINKING FUND PAYMENT DATES, AMOUN"CS, RATES, YIELDS AND PRICES
$ 2007 Series A Bonds
Principal lnterest
A ril 1 Amount Rate Yield Price
%Term Bond due April l, 20_-Yield: %-Price: %
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EXHIBIT A-1
PALM DESERT FINANCING AUTHORITY
TAX ALI,OCATION REFUNDING REVENUE BONDS
(PROJECT AREA NO. 1, AS ANENDED)
2007 SERIES A
FORM OF THE CER'fIFICATE OF THE FIANCING AUT�IORI'fY
REGARDING PRELIMINARY OFFICIAL STATLMENT
The undersigned hereby states and certifies:
1. Tha1 he is 1he duly appointed, qualified and acling Chief Administrative Ofiicer of the
Palm Desert Financing Authority (the "Financing Authority") and as such, is familiar with the facts herein
certified and is authorized and qualified to certify the same;
2. That there has been delrvered to Stone & Youngberg LLC (the "Underwriter") of the
captioned Bonds, a Preliminary Official Statement, relative to the captioned Bonds, dated December _
2006 (including the cover page and all appendices thereto, the "Preliminary Official Statement"), which
the Financing Authority, deems final as of its date for purposes of Rule ISc2-12 promulgated under the
Securities Exchange Act of 1934, as amended ("Rule 15c2-12"), except for information permitted to be
omitted therefrom by Rule 15c2-12; and
3. The Financing Authority hereby approves the use and distribution by the linderwriter of
the Preliminary Official Statement.
Dated: December , 200G
PALM DESERT FINANCING AUTHORITY
By:
Carlos L. Orte�;a, Chief Administrative Officer
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EXHIBIT A-2
PALM DESERT FINAiVCING AU'I'HORITY
TAX ALLOCATION REFUNDING REVENUE BONDS
(PROJECT AREA NO. 1, AS AMENDED)
2007 SERIES A
FORM OF THE CERTIFICATE OF THE FINANCING AUTHORII'Y
REGARDING PRELIMINARY OFFICIAL STATEMENT
The undersigned hereby states and certifies:
l. That he is ihe duly appointed, Qualified and acting Executive Director of the Palm Desert
Redevelopment Abency (the "Redevelopment Agency") and as such, is familiar with thc facts herein
certificd and is authorized and qualified to certify the same;
2. That there has been delivered to Stone & Youngberg LLC (the "Undenvriter") of the
captioned Bonds, a Preliminary Official Statement, relative to the captioned Bonds, dated December _
2006 (including the cover page and all appendices thereto, the "Preliminary Official Statement"), which
with respect to the statements contained under the captions "THE REDEVELOPMENT AGENCY" and "THE
PROIECT AREA" and contained in APPENDIX B-"REDEVELOPMENT AGENCY AUDITED FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDED 1UNE 30, 200[5]" are true, correct and complete in all material
respects and such statements do not omit to state a material fact necessary to make such statements, in
light of the circumstances under which they were made, not misleading.
Dated: December , 2006
PALM DESERT REDEVELOPMENT AGENCY
I�
Carlos L.. Ortega, Executive Director
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EXHIBIT B
FOR11 OF OPINION OF FINANCIAL AIJTHORITY COIINSEL
[Letterhead of Counsel to the Financing Authoriry]
January _, 2007
Palm Desert Financing Authority
Palm Desert, Califomia
Stone & Youngberg LLC
San Francisco, Califomia
Re: Palm Desert Financing Authority Tax Allocation Refunding Revenue Bonds
(Project Area No. 1, As Amended), 2007 Series A
Ladies and Gentlemen:
Our office has acted as counsel to the Palm Desert Financing Authoriry (the "Financing Authority") in
connection with the issuance, sale and delivery of $ aggregate principal amount of the Palm
Desert Financing Authority Tax Allocation Refunding Revenue Bonds (Project Area No. 1, As
Amended), 2007 Series A(the "2007 Bonds").
In connection with the 2007 Bonds, we have reviewed: (i) those documents relating to the existence,
orbanization and operation of the Financing Authority; (ii) Resolution No. of the Financing Authority
adopted November _, 2006 (the "Resolution") authorizing the issuance, execution and delivery of the 2007
Bonds; (iii) the Indenture of Trust dated as of January 1, 2007 with respect to the 2007 Bonds (the "2007
Indenture"), by and between the Financing Authority and Wells Fargo Bank, National Association, as
trustee (the "Trustee"); (iv) the Escrow Agrecment dated as of January 1, 2007 (the "Escrow Agreement"), by
and among the Financing Authority, the Redevelopment Agency and Wells Fargo Bank, National
Association, as escrow banlc (the "Escrow Bank"); (v) the Project Area No. 1, As Amended Loan
Agreement made and executed as of January 1, 2007 (the "2007 Loan Agreement"), by and among the
Pinancing Authority, the Palm Desert Redevelopment Agency (the "Redevelopment Agency") and the
Trustee with respect to the loan of the proceeds of the 2007 Bonds by the Financing Authority to the
Redevelopment Agency, (the "2007 Loan"); (vi) the Bond Purchase Agreement, dated December _, 2006
(the "Purchase Agreement"), between the Financing Authority and Stone & Younbberg LLC, as underwriter
(the "Undenvriter"), and approved by the Redevelopment Agency; and (vii) the Official Statement, dated
December , 2006, with such changes and amendments thereto as of the date of this opinion (the "Official
Statement"). The 2007 Indenture, the 2007 Loan Agreement, the 2007 Loan, the Escrow Agrecment and the
Purchase Agreement are collectively referred to herein as the "Financing Authority Agreements." Any
capitalized term used herein and not otherwise defined shall have the meanings given to such terms as
specified in the Official Statement.
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I3- I
Sased on ihe %regoing, we aze of the opinion that:
l. The Financing Authority is a joint exercise of power authority duly creatcd, organized and
existing under the laws of the State of Califomia pursuant to an Agreement entitled "Joint Exercise of Powers
Ageement" dated January 26, 1989, between the City of Palm Desert and the Redevelopment Agency, and
has full legal right, power, and authoriry to issue the 2007 Bonds.
2. The Resolution approving and authorizing the issuance, execution, and delivery of the 2007
Bonds, and the execution and delivery of the Financing Authority Agreements and the Official Statement has
been duly adopted, and is in full force and effect and has not been modified, amended or rescinded.
3. The Financing Authoriry has the full legal right, power and authority to execute, deliver and
perform its obligations and duties under the 2007 Bonds and Financing Authority Agreements, and the
Financing Authority has complied with the provisions of applicable law in al] matters relatin� to the
transactions contemplated by the 2007 Bonds and the Financing Authority A�eements.
4. The Financing Authority Agreements have each been duly authorized, executed and
delivered by the Financing Authority, and assuming due authorization and delivery by the other parties
thereto, each is in full force and ef%ct and, assuming due authonzation, execution, and delivery by the other
parties thereto, constitute legal, valid and binding agreements of the Financing Authority enforceable against
the Financing Authority in accordance with their respective terms, except as the enforceability thereof may
be limited by any applicable bankruptcy, insolvency, debt adjustment, fraudulent conveyance or transfer,
moratorium, reorganization or other similar laws affecting creditors' rights, to the application of equitable
principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal
remedies against public entities in the State of California.
5. No approval, consent, or authorization of any govemmental or public agency, authority, or
person is required for the execution and delivery by the Financinb Authority of the Financing Authoriry
Agreements or the Official Statement, or the performance by the Financing Authority of its obligations
thereunder or for the issuance, sale and delivery of the 2007 Bonds, except as such approval, consent or
authorization may have been obtained, and except as may be required under State securities or blue sky laws
in connection with the purchase and distribution of the 2007 Bonds by the Underwriter.
G. The execution and delivery of the Financing Authority Agreements by the Financing
Authority, and compliance with the provisions thereof, under the circumstances contemplated thereby, does
not in any material respect conflict with or constitute a breach of, or default under, any insmunent relating to
the organization, existence or operation of the Financing Authoriry, or any commitment, agreement or other
instrument to which the Financing Authority is a party, or by which it is bound, or any existing law, ruling,
regulation, ordinance, judgment, order or decree to which the Financing Authonry is subject, which breach or
default has or may have a material adverse effect on the ability of the Financing Authority to perform its
obligations under the Financing Authority Agreements.
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f3-2
7. To the best of our knowledge, except as otherwise disclosed in ihe Official Statement, there is
no action, suit, proceeding, inquiry or investigation, at law or in equity, or before any court, public board or
body pending or threatened against the Financing Authority, challenging the creation, organization, existence
or powers of the Financing Authority, or challenging the capacity of its officers, or the validiry of the 2007
Bonds, the Financing Authority Agreements or the transactions contemplated thereby, or the proceedings
taken by the Financing Authoriry in connection �vith the authorization, execution or delivery of the 2007
Bonds or the Financing Authoriry Agreements, wherein any unfavorable decision, ruling or finding would
adversely affect the transactions contemplated thereby or by the Official Statement, or which, in any way,
would adversely affect the validity or enforceability of the 2007 Bonds or the Financing Authority
Agreements or, in any material respect, the ability of the Financing Authority to perform its obligations
thereunder.
This opinion is based on such examination of the law of the State of Califomia as we deemed
refevant for the purposes of ihis opinion. We have not considered the effect, if any, of the laws of any
other jurisdiction upon matters covered by this opinion. We express no opinion herein as to the status of
the 2007 Bonds or the interest thereon, or the Financing Authority Agreements under any federal
securities laws or any state securities or "Blue Sky" law or any federal, state or local tax law. Further, we
express no opinion with respect to any indemnifcation, contribution, choice of law, choice of forum or
�vaiver provisions contained in the Financing Authority Agreements. Without limiting any of the
foregoing, we express no opinion as to any matter other than as expressly set forth above.
Whenever a statement herein is qualified by "to the best of our knowledge," it shall be deemed to
indicate that, during the course of our representation of the Financing Authority in connection with the
financing described herein, no information that would give us current, actual knowledge of the inaccuracy
of such statement has come to our attention. We have not, however, undertaken any independent
investigation to determine the accuracy of such statements, and any limited inquiry undertaken by us
durinb the preparation of this opinion letter should not be regarded as such investigation. No inference as
to our knowledge of any matters bearing upon the accuracy of any such statement should be drawn from
the fact of our representation of the Financing Authority.
This letter is furnished by us as counsel to the Financing Authority. Other than the Financing
Authority, no attorney-client relationship has existed or exists between our firm and you in connection
with the 2007 Bonds or by virtue of this letter. We disclaim any obligation to update this letter. This
letter is delivered to you, is solely for your benefit and is not to be used, quoted or otherwise referred to or
relied upon for any other purpose or by any other person. This letter is not intended to, and may, not, be
rclied upon by owners of the 2007 Bonds.
Very truly yours,
�t4-OGu42�pc-2
R-3
EXHIBIT C
FORM OF OPINION OF REDEVELOPMENT AGENCY COUNSEL
[Letterhead of Counsel to the Redevelopment Agency]
January _. 2007
Palm Desert Financing Authority
Palm Desert, California
Stone & Youngberg LLC
San Francisco, California
Re: Palm Desert Financing Authority Tax Allocation Refunding Revenue Bonds
(Project Area No. l, As Amended), 2007 Series A
Ladies and Gentlemen:
Our office has acted as counsel to the Palm Desert Redevelopment Agency (the "Redevelopment
Agency") in connection with the issuance, sale and delivery of $ aggregate principal amount of the
Palm Desert Financing Authority Tax Allocation Refunding Revenue Bonds (Project Area No. l, As
Amended), 2007 Series A(the "2007 Bonds").
In connection with the 2007 Bonds, we have reviewed: (i) those documents relating to the existence,
organization and operation of the Redevelopment Agency; (ii) Resolution No. of the Redevelopment
Agency adopted November _, 2006 (the "Resolution") authorizing the execution and delivery of the
Redevclopment Agency Agreements (defined below); (iii) the Project Area No. I, As Amended Loan
Agreement made and executed as of January 1, 2007 (the "2007 Loan Agreement"), by and among the
Palm Desert Financing Authority (the "Financing Authority"), the Redevelopment Agency and Wells
Fargo Bank, National Association (the "Trustee") with respect to the loan of the proceeds of the 2007
Bonds by the Financing Authority to the Redevelopment Agency (the "2007 Loan"); (iv) the Bond
Purchase Agreement, dated December _, 2006 (the "Purchase AgreemenP'), between the Financing
Authority and Stone & Youngberg LLC, as underwriter (the "Underwriter"), and approved by the
Redevelopment Agency; and (v) the Official Statement, dated December , 2006, with such changes and
amendments thereto as of the date of this opinion (the "Official Statement"); and the Continuing Discloswe
Agreement, dated January _, 2007 (the "Continuing Disclosure Agreement"), by and among the
Redevelopment Agency, the Trustee and MuniFinancial, Inc., as dissemination agent. The 2007 Loan
Agreement, the 2007 Loan, the Purchase Agreement and the Continuing Discloswe Agreement are
collectively referred to herein as the "Redevelopment Agency A�eements." Any capitalized term used herein
and not otherwise defined shall have the meanings given to such terms as specified in the Official Statement.
2?�-OGO-12,�x-2
('-1
F3ased on the foregoing, we are of the opinion that:
1. 'rhe Redevelopment Agency is duly organized and validly existing under the Constitution
and laws of the State of California.
2. The Resolution approving and authorizing the execution and delivery of the
Redevelopment Agency Agreements was duly adopted at a meeting of the Redevelopment Agency which
�vas called and held pursuant to law and with all public notice required by law and at which a quorum was
present and acting throughout, and is in full force and effect and has not been amended or repealed;
3. No material litigation is pending, with service of process having been accomplished or, to
the knowledge of the Redevelopment Agency, threatened, concerning the validity of the Redevelopment
Agency Agreements, the corporate existence of the Redevelopment Agency, or the title of the officers of
the Redevelopment Agency who will execute the Redevelopment Agency Agreements as to their
respective offices;
4. The adoption of the Resolution, the execution and delivery of the Redevelopment Agency
Agreements, and compliance by the Redevelopment Agency with the provisions of the foregoing, under
the circumstances contemplated thereby, do not and will not in any material respect conflict with or
constitute on the part of the Redevelopment Agency a breach or default under any agreement or other
instrument to which the Redevelopment Agency is a party (and of which such counsel is aware after
reasonable investigation) or by which it is bound (and of which such counsel is aware aRer reasonable
investigation) or by any existing law, regulation, court order or consent decree to which the
Redevelopment Agency is subject;
5. The Redevelopment Agency Agreements each have been duly authorized, executed and
delivered by the Redevelopment Agency and, assuming due authorization, execution and delivery by the
other parties thereto, constitute legal, valid and binding agreements of the Redevelopment Agency
enforceable in accordance with the respect�ve terms except as the enforceability thereof may be limited by
any applicable bankruptcy, insolvency, debt adjustment, fraudulent conveyance or transfer, moratorium,
reorganization or other similar laws affecting creditors' rights, to the application of equitable principles,
to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies abainst
public entities in the State of Califomia.
6. No authorization, approval, consent, or other order of the State of California or any other
governmental authority or agency �vithin the State of Califomia having jurisdiction over the
Redevelopment Agency is required for the valid authorization, execution, delivery and performance by
the Redevelopment Agency of the Redevelopment Agency Agreements, or for the adoption of the
Resolution which has not been obtained.
7. To the best of our knowledge, except as otherwise disclosed in the Official Statement, there is
no action, suit, proceeding, inquiry or investigation, at law or in equity, or before any court, public board or
body pending or threatened against the Redevelopment Agency, challenging the creation, organization,
existence or powers of the Redevelopment Agency, or challenging the capacity of its officers, or the validity
of the Redevelopment Agency Agreements or the transactions contemplated thereby, or the proceed►ngs
talcen by the Redevelopment Agency in connection with the authorization, execution or delivery of the
Redevelopment Agency Agreements, wherein any unfavorable decision, ruling or finding would adversely
affect the transaciions contempiated thereby or by the Official Statement, or which, in any way, would
adversely affect thc validity or enforceability of the Redevelopment Agency Ab�reements or, in any matenal
respect, the ability of the Redevelopment Agency to perform rts obligations thereunder.
z:.�_no�u, �x-,
C-2
This opinion is based on such examination of the law of the State of Califomia as we deemed
rclevant for the purposes of this opinion. We have not considered the effect, if any, of the laws of any
other jurisdiction upon matters covered by this opinion. We express no opinion herein as to the status of
the 2007 Bonds or the interest thereon, or the Redevelopment Agency Agreements under any federal
securities laws or any state securities or "Blue Sky" law or any federal, state or locai tax law. Further, we
express no opinion with respect to any indemnification, contribution, choice of law, choice of forum or
waiver provisions contained in the Redevelopment Agency Agreements. Without limiting any of the
foregoing, we express no opinion as to any matter other than as expressly set forth above.
Whenever a statement herein is qualified by "to the best of our knowledge," it shall be deemed to
indicate that, during the course of our representation of the Redevelopment Agency in connection with
the financing described herein, no information that would give us current, actual knowledge of the
inaccuracy of such statement has come to our attention. We have not, however, undertaken any
independent investigation to determine the accuracy of such statements, and any limited inquiry
undertaken by us during the preparation of this opinion letter should not be regarded as such
investigation. No inference as to our knowledge of any matters bearing upon the accuracy of any such
statement should be drawn from the fact of our representation of the Redevelopment Agency.
This letter is furnished by us as counsel to the Redevelopment Agency. Other than the
Redevelopment Agency, no attorney-client relationship has existed or exists between our firm and you in
connection with the 2007 Bonds or by virtue of this letter. We disclaim any obligation to update this
letter. This letter is delivered to you, is solely for your benefit and is not to be used, quoted or otherwise
referred to or relied upon for any other purpose or by any other person. This letter is not intended to, and
may, not, be relied upon by owners of the 2007 Bonds.
Very truly yours,
2 ��s-nc,oa2 ix-?
C'-3
L&J DRAFT
11 /03/06
CONTINUING DISCLOSURE AGREEMENT
The Continuing Disclosure Agreement (the "Disclosure Agreement") is executed and delivered by
the Palm Desert Redevelopment Agency (the "Redevelopment Agency"), Wells Fargo Bank, National
Association (the "Trustee") and MuniFinancial, Inc. (the "Dissemination Agent") in connection with the
issuance of the S principal amount of Palm Desert Financing Authority Tax Allocation Refunding
Revenue Bonds (Project Area No. 1, As Amended) 2007 Series A (the `Bonds"). The Bonds are being
executed and delivered pursuant to an Indenture of Trust dated as of January 1, 2007 (the "Indenture"), by
and between the Palm Desert Financing Authority (the "Financing Authority") and the Trustee. The
Financing Authority will loan the proceeds of the Bonds to the Redevelopment Agency pursuant to a Loan
Agreement made and entered into as of January 1, 2007. The Redevelopment Agency covenants and agrees
as follows:
SECTION 1. Puruose of this Disclosure Agreement. This Disclosure Agreement is being executed
and delivered by the Redevelopment Agency for the benefit of the Holders and Beneficial Owners of the
Bonds and in order to assist the Participating Underwriter in complying with Securities and Exchange
Commission ("SEC") Rule 15c2-12(b)(5). The Redevelopment Agency acknowledges that the Financing
Authority has undertaken no responsibility with respect to any reports, notices or disclosures provided or
required under this Disclosure Agreement, and has no liability to any person, including the owners of the
Bonds, with respect to any reports, notices or disclosures.
SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any
capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following
capitalized terms shall have the following meanings:
"Annual Report" shall mean any annual report provided by the Redevelopment Agency pursuant to,
and as described in, Sections 3 and 4 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or
consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through
nominees, depositories or other intermediaries) or (b) is treated as the owner of any Bonds for federal income
tax purposes.
"Central Post Office" shall mean the Disclosure USA website maintained by the Municipal Advisory
Council of Texas or any successor thereto, or any other organization or method approved by the staff or
members of the Securities and Exchange Commission as an intermediary through which issuers may, in
compliance with the Rule, make filings required by this Disclosure Agreement.
"Dissemination Agent" shall mean MuniFinancial, Inc., acting in its capacity as Dissemination
Agent hereunder, or any successor Dissemination Agent designated in writing by the Redevelopment Agency
and which has filed with the Trustee a written acceptance of such designation.
"Fiscal Year" shall mean with respect to the Redevelopment Agency, the period beginning on July 1
of each year and ending on the next succeeding June 30, or any twelve month or fifty-two week period
thereafter selected by the Redevelopment Agency with notice of such selection of change in fiscal year to be
provided as set forth herein.
"Holders" shall mean either the registered owners of the Bonds, or, if the Bonds are registered in the
name of The Depository Trust Company or another recognized depository, any applicable participant in its
depository system.
00042 cdc- I
"Listed Event" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
"National Repository" shall mean any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule. A list of the current National Repositories approved by the S.E.C. may
be found at the S.E.C. website: http://www.sec.gov/info/municipaUnnnsir.htm.
"Participating Underwriter" shall mean Stone & Youngberg LLC, as the original underwriter of the
Bonds required to comply with the Rule in connection with offering of the Bonds.
"Repository" shall mean each National Repository and each State Repository, if any.
"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as the same may be amended from time to time.
"State" shall mean the State of California.
"State Repository" shall mean any public or private repository or entity designated by the State as a
state repository for the purpose of the Rule and recognized as such by the Securities and Exchange
Commission. As of the date of this Disclosure Agreement, there is no State Repository.
SECTION 3. Provision of Annual Reports.
(a) The Redevelopment Agency shall, not later than six months after the end of the
Redevelopment Agency's Fiscal Year (which currently is June 30), commencing with the report for the
2006-07 Fiscal Year, provide to each Repository an Annual Report which is consistent with the requirements
of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as
separate documents comprising a package, and may include by reference other information as provided in
Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Redevelopment
Agency may be submitted separately from the balance of the Annual Report. The Redevelopment Agency
shall provide a written certification with each Annual Report furnished to the Dissemination Agent and the
Trustee to the effect that such Annual Report constitutes the Annual Report required to be furnished by the
Redevelopment Agency hereunder. The Dissemination Agent and the Trustee may conclusively rely upon
such certification of the Redevelopment Agency. If the Redevelopment Agency's Fiscal Year changes, it
shall give notice of such change in the same manner as for a Listed Event under Section 5(c).
(b) If the Dissemination Agent is other than the Redevelopment Agency, then not later than
fifteen (15) Business Days prior to said date, the Redevelopment Agency shall provide the Annual Report to
the Dissemination Agent. If the Dissemination Agent is unable to verify that an Annual Report has been
provided to the Repositories by the date required in subsection (a), the Dissemination Agent shall send a
notice to the Municipal Securities Rulemaking Board and the State Repository, if any, in substantially the
form attached as Exhibit A to this Disclosure Agreement.
(c) The Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the name and
address of each Repository;
(ii) file the Annual Report with each Repository by the date required therefor by
Section 3(a) and file any notice of a listed Event, if requested by the Redevelopment Agency, as soon as
practicable following receipt from the Redevelopment Agency of such notice; and
OM)42`cdc- I
(iii) if the Dissemination Agent is other than the Redevelopment Agency, file a report
with the Redevelopment Agency certifying that the Annual Report has been provided pursuant to this
Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was
provided.
(d) Notwithstanding any other provision of this Disclosure Agreement, the City and the
Dissemination Agent reserve the right to make any of the aforementioned filings through the Central Post
Office.
SECTION 4. Content of Annual Retorts. The Redevelopment Agency's Annual Report shall
contain or incorporate by reference the following:
(a) The audited financial statements of the Redevelopment Agency, presented in accordance
with generally accepted accounting principles as promulgated to apply to governmental entities Commission
from time to time. If the audited financial statements of the Redevelopment Agency are not available by the
time the Annual Report is required to be filed as described above, the Annual Report shall contain unaudited
financial statements in a format similar to the financial statements contained in the final Official Statement,
and the audited financial statements shall be filed in the same manner as the Annual Report when they
become available.
(b) Unless otherwise provided in the audited financial statements filed on or prior to the annual
filing deadline for Annual Reports provided in Section 3 above, financial information and operating data with
respect to the Redevelopment Agency for the preceding Fiscal Year, substantially similar to that provided in
the following tables and charts in the Official Statement:
0) Table 4-"Palm Desert Redevelopment Agency Project Area No. 1 - Combined -
Principal Taxpayers;" (Table 4A-"Palm Desert Redevelopment Agency Project Area No. 1 -
Original Area -Principal Taxpayers;" and Table 4B-"Palm Desert Redevelopment Agency Project
Area No. 1 - Added Territory -Principal Taxpayers;"] and
(ii) Table 6A-"Palm Desert Redevelopment Agency Project Area No. 1 - Original
Area -Historical Taxable Values and Tax Increment Revenues;" and Table 6B-"Palm Desert
Redevelopment Agency Project Area No. I - Added Territory -Historical Taxable Values and Tax
Increment Revenues."
(c) The outstanding principal amount of Bonds, for the preceding Fiscal Year.
Such annual information and operating data described above may be included by specific reference
to other documents, including official statements of debt issues of the Redevelopment Agency or related
public entities, which have been submitted to each of the Repositories or the Securities and Exchange
Commission; provided, that if the documents included by reference is a final official statement, it must be
available from the Municipal Securities Rulemaking Board; and provided further, that the Redevelopment
Agency shall clearly identify each such other document so included by reference.
SECTION 5. RenortinR of Sienificant Events.
(a) Pursuant to the provisions of this Section 5, the Redevelopment Agency shall give, or cause
to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:
(i) principal and interest payment delinquencies.
(ii) non-payment related defaults.
ON"2 cdc-I
Bonds.
(iii) modifications to rights of Bondholders.
(iv) optional, contingent or unscheduled bond calls.
(v) defeasances.
(vi) rating changes.
(vii) adverse tax opinions or events adversely affecting the tax-exempt status of the
(viii) unscheduled draws on the Reserve Fund reflecting financial difficulties.
(ix) unscheduled draws on the credit enhancements reflecting financial difficulties.
(x) substitution of the credit or liquidity providers or their failure to perform.
(xi) release, substitution or sale of property securing repayment of the Bonds.
(xii) Significant amendments to the land use regulations or entitlements of the City of
Palm Desert within the Project Area which would adversely affect development of property therein.
(b) The Trustee shall, promptly upon obtaining actual knowledge of the occurrence of any of the
Listed Events contact the Disclosure Representative, inform such person of the event, and request that the
Redevelopment Agency promptly notify the Dissemination Agent in writing whether or not to report the
event pursuant to subsection (f) and promptly notify the Trustee in writing whether or not to report the event
to the Owners (unless notice to the Owners is required by the Indenture). For purposes of this Disclosure
Agreement, "actual knowledge" of the occurrence of such Listed Events shall mean actual knowledge by the
officer at the Trust Office of the Trustee with regular responsibility for the administration of the Indenture.
(c) Whenever the Redevelopment Agency obtains knowledge of the occurrence of a Listed
Event, whether because of a notice from the Trustee pursuant to Section 5(b) or otherwise, the
Redevelopment Agency shall as soon as possible determine if such event would be material under applicable
federal securities laws.
(d) If the Redevelopment Agency determines that knowledge of the occurrence of a Listed
Event would be material under applicable federal securities laws, the Redevelopment Agency shall promptly
notify the Dissemination Agent and the Trustee in writing. Such notice shall instruct the Dissemination
Agent to file a notice of such occurrence with the Municipal Securities Rulemaking Board and the State
Repository, if any. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(iv)
and (a)(v) need not be given under this subsection any earlier than the notice (if any) of the underlying event
is given to Holders of affected Bonds pursuant to the Indenture.
(e) If in response to a request under subsection (b), the Redevelopment Agency determines that
the Listed Event is not material, the Redevelopment Agency shall so notify the Dissemination Agent and the
Trustee in writing and instruct the Dissemination Agent and the Trustee not to report the occurrence.
SECTION 6. Termination of Reportinu Oblieation. The obligations of the Redevelopment Agency
under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the
Redevelopment Agency shall give notice of such termination in the same manner as for a Listed Event under
Section 5(c).
06042 cdc 1
4
SECTION 7. Dissemination Agent. The Redevelopment Agency may, from time to time, appoint or
engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and
may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent.
The Dissemination Agent shall not be responsible in any manner for the content of any notice or report
prepared by the Redevelopment Agency pursuant to this Disclosure Agreement.
The initial Dissemination Agent shall be the MuniFinancial, Inc.
The Dissemination Agent may resign its duties hereunder at any time upon written notice to the
Redevelopment Agency.
SECTION 8. Amendment. Notwithstanding any other provision of this Disclosure Agreement, the
panties may amend this Disclosure Agreement (and the Trustee and the Dissemination Agent shall agree to
any amendment so requested by the Redevelopment Agency provided that neither the Trustee nor the
Dissemination Agent shall be obligated to enter into any such amendment that modifies or increases its duties
or obligations hereunder) only if
(a) the amendment is made in connection with a change in circumstances that arises from a
change in legal requirements, change in law, or change in identity, nature, or status of the Redevelopment
Agency, or type of business conducted;
(b) this Disclosure Agreement, as amended, would have compiled with the requirements of the
Rule at the time of sale of the Bonds, after taking into account any amendments or interpretations of the Rule,
as well as any change in circumstances;
(c) the amendment does not materially impair the interests of the Owners, as determined by
parties unaffiliated with the Redevelopment Agency (such as, but without limitation, the Redevelopment
Agency's bond counsel) or by Owner's consent pursuant to Section 7.01 of the Indenture; and
(d) the annual financial information containing (if applicable) the amended operating data or
financial information will explain, in narrative form, the reasons for the amendment and the "impact" (as that
word is used in the letter from the staff of the Securities and Exchange Commission to the National
Association of Bond Lawyers dated June 23, 1995) of the change in the type of operating data or financial
information being provided.
SECTION 9. Additional Information.
(a) The Redevelopment Agency agrees to provide public information concerning the Bonds and
the Redevelopment Agency to any Holder or Beneficial Owner making a written request therefor.
(b) Nothing in this Disclosure Agreement shall be deemed to prevent the Redevelopment
Agency from disseminating any other information, using the means of dissemination set forth in this
Disclosure Agreement or any other means of communication, or including any other information in any
Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this
Disclosure Agreement. If the Redevelopment Agency chooses to include any information in any Annual
Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this
Disclosure Agreement, the Redevelopment Agency shall have no obligation under this Disclosure Agreement
to update such information or include it in any fixture Annual Report or notice of occurrence of a listed
Event.
ON)42 cdc-1
SECTION 10. Default. In the even to a failure of the Redevelopment Agency to comply with any
provision of this Disclosure Agreement, the Trustee shall, at the written direction of any Participating
Underwriter or the Owners of a majority in aggregate principal amount of Outstanding Bonds (but only to the
extent funds have been provided to it or it has been otherwise indemnified to its satisfaction from any cost,
liability, expense or additional charges of the Trustee whatsoever, including, without limitation, fees and
expenses of its attorneys), or any Owner may, take such actions as may be necessary and appropriate,
including seeking mandate or specific performance by court order, to cause the Redevelopment Agency, the
Trustee or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure
Agreement; provided that any such action may be instituted only in the Federal or State Court located in the
County of Los Angeles, State of California and no remedy other than specific performance may be sought or
granted. A default under this Disclosure Agreement shall not be deemed an Event of Default under the
Indenture or the Loan Agreement, and the sole remedy under this Disclosure Agreement in the event of a
failure of the Redevelopment Agency, the Trustee or the Dissemination Agent to comply with this Disclosure
Agreement shall be an action to compel performance.
SECTION 11. Duties, Immunities and Liabilities of Dissemination AV-ent. The Dissemination Agent
shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Redevelopment
Agency agrees to indemnify and save the Dissemination Agent and the Trustee, their officers, directors,
employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or
in the exercise or performance of its powers and duties hereunder, including the costs and expenses
(including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the
Dissemination Agent's or Trustee's negligence or willful misconduct. The Dissemination Agent may rely on
and shall be protected in acting or refraining from acting upon any direction from the Issuer or an opinion of
nationally recognized bond counsel. The Dissemination Agent and the Trustee shall be paid compensation by
the Redevelopment Agency for its services provided hereunder in accordance with its schedule of fees as
amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination
Agent in the performance of its duties hereunder. The Dissemination Agent and the Trustee shall have no
duty or obligation to review any information provided to them by the Redevelopment Agency hereunder and
shall not be deemed to be acting in a fiduciary capacity for the Financing Authority, the Redevelopment
Agency, the Owners, or any other parry. The obligations of the Redevelopment Agency under this Section
shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall
have any right to commence any action against the Dissemination Agent seeking any remedy other than to
compel specific performance of this Disclosure Agreement. The Dissemination Agent shall not be liable
under any circumstances for monetary damages to any person for any breach of this Disclosure Agreement.
SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
Redevelopment Agency, the Participating Underwriter, the Dissemination Agent and Holders and Beneficial
Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 13. Notices. Notices should be sent in writing to the following addresses. The following
information may be conclusively relied upon until changed in writing.
Redevelopment Agency: Palm Desert Redevelopment Agency
73-510 Fred Waring Drive
Palm Desert, California 92260
(760)346-0611
(760) 346-0574 Fax
06042�cdc-I
Trustee: Wells Fargo Bank, National Association
700 South Flower Street, Suite 500
Los Angeles, California 90017A 104
(213) 630-6237
(213) 630-6215 Fax
Dissemination Agency: MuniFinancial, Inc.
27368 Via Industrial, Suite 10
Temecula, California 92590
(909)587-3500
(909) 587-3510 Fax
SECTION 14. Countervarts. This Disclosure Agreement may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and the same instrument.
Date: .2007
PALM DESERT REDEVELOPMENT AGENCY OF
21
Authorized Officer
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Officer
MUNIFINANCIAL, INC.,
as Dissemination Agent
:
nrrN2 ak- 4
Authorized Officer
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Party: Palm Desert Redevelopment Agency
Name of Bond Issue: Palm Desert Financing Authority Tax Allocation Refunding Revenue
Bonds (Project Area No. 1, As Amended) 2007 Series A
Date of Issuance: , 2007
NOTICE IS HEREBY GNEN that the Palm Desert Redevelopment Agency (the "Redevelopment
Agency") has not provided an Annual Report with respect to the above -named Bonds as required by
Section 3 of the Continuing Disclosure Agreement dated , 2007, by and among the Redevelopment
Agency, the Trustee and the Dissemination Agent executed by the Dissemination Agent for the benefit of the
Holders and Beneficial Owners of the above -referenced bonds. The Redevelopment Agency anticipates that
the Annual Report will be filed by
Dated:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee, on behalf of the Redevelopment Agency
By:
Its:
cc: Executive Director, Palm Desert Redevelopment Agency
WAW2 AAc-I
A-1
ESCROW AGREEMENT
(PROJECT AREA NO. 1, AS AMENDED)
by and among
PALM DESERT FINANCING AUTHORITY
and
PALM DESERT REDEVELOPMENT AGENCY
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Escrow Agent
Dated as of January 1, 2007
Relating to the Refunding of the
Palm Desert Financing Authority
Tax Allocation Refunding Revenue Bonds
(Project Area No. 1, As Amended)
Series 1997
(scheduled to mature on April 1, 2008 through April 1, 2018)
P6402-1058\924118v4.doc RWG DRAFT: 11/2/2006
TABLE OF CONTENTS
Page
Section1.
Definitions............................................................................................................... 2
Section 2.
Appointment of Escrow Agent............................................................................... 2
Section3.
Escrow Fund........................................................................................................... 2
Section 4.
Deposit to Escrow Fund.......................................................................................... 3
Section 5.
Investment of Escrow Fund.................................................................................... 3
Section 6.
Reinvestment; Payment of Refunding Requirements ............................................. 4
Section7.
Verification............................................................................................................. 4
Section 8.
Compliance with Agreement and Prior Indenture .................................................. 4
Section9.
Notices.................................................................................................................... 4
Section 10.
Defeasance of Prior Bonds...................................................................................... 5
Section11.
Nature of Lien......................................................................................................... 5
Section12.
Amendments........................................................................................................... 5
Section 13.
Compensation of Escrow Agent............................................................................. 5
Section 14.
Resignation or Removal of Escrow Agent; Appointment of Successor ................. 6
Section 15.
Limitation of Powers and Duties............................................................................ 7
Section 16.
Indemnification....................................................................................................... 7
Section 17.
Limitation of Liability............................................................................................. 8
Section18.
Termination............................................................................................................. 8
Section19.
Governing Law....................................................................................................... 8
Section20.
Severability............................................................................................................. 9
Section 21.
Counterparts............................................................................................................ 9
SCHEDULE
A REFUNDING REQUIREMENTS
SCHEDULE
B ESCROW SECURITIES
EXHIBIT A
FORM OF DEFEASANCE NOTICE
P6402-1058\9241 18v4.doc -1-
ESCROW AGREEMENT
(Project Area No. 1, As Amended)
This Escrow Agreement (Project Area No. 1, As Amended) (this "Agreement') is
made and entered into as of January 1, 2007, by and among the Palm Desert Financing
Authority, a joint powers authority duly organized and existing pursuant to the laws of the State
of California (the "Authority"), the Palm Desert Redevelopment Agency, a public body
corporate and politic organized and existing pursuant to the laws of the State of California (the
"Agency"), and Wells Fargo Bank, National Association, a national banking association duly
organized and existing under the laws of the United States of America, as Escrow Agent
(together with any successors and assigns, the "Escrow Agent').
RECITALS
A. The Authority has previously issued its Palm Desert Financing Authority
Tax Allocation Refunding Revenue Bonds (Project Area No. 1, As Amended), Series 1997 (the
"Series 1997 Bonds"), pursuant to the Indenture of Trust, dated as of July 1, 1997 (the "Prior
Indenture"), by and between the Authority and Bank of America National Trust and Savings
Association, as succeeded by Wells Fargo Bank, National Association, as trustee (the "Prior
Bonds Trustee").
B. Pursuant to the Prior Indenture, the Series 1997 Bonds maturing on April
1, 2008 and thereafter through April 1, 2018 (the "Prior Bonds") are subject to redemption on
any interest payment date on or after April 1, 2007.
C. The Series 1997 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. 1, As Amended), dated as of July 1, 1997 (the "Prior Loan
Agreement'), by and among the Agency, the Authority and the Prior Bonds Trustee.
D. The Agency and the Authority have determined to redeem the Prior Bonds
pursuant to the Prior Indenture and effect a refunding thereof.
E. The Authority has determined to issue its Tax Allocation Refunding
Revenue Bonds (Project Area No. 1, As Amended) 2007 Series A (the "Series 2007 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 "2007 Trustee").
F. Proceeds of the Series 2007 Bonds will be used to make a loan (the
"Series 2007 Loan") to the Agency pursuant to the Loan Agreement, dated as of event date
herewith (the "2007 Loan Agreement'), by and among the Agency, the Authority and the 2007
Trustee.
G. Pursuant to the 2007 Loan Agreement, proceeds derived from the Series
2007 Loan will be deposited in escrow with the Escrow Agent and applied to the purchase of
noncallable direct obligations of, or noncallable obligations guaranteed by, the United States of
America.
P6402-1058\924118v4.doc -1-
H. 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 1997 Bonds, the principal and interest and
premium, if any, to become due thereon, then with respect to such portion of the Series 1997
Bonds the lien of the Prior Indenture will thereupon cease, terminate and become void and be
discharged and satisfied.
1. 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 Requirements" means an amount sufficient to pay all installments of
principal and interest of the Prior Bonds on their earliest available optional redemption date, as
set forth in Schedule A attached hereto.
Section 2. Appointment of Escrow Ap-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.
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
P6402-1058\924118v4.doc -2-
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 2007
Bonds, the Authority and the Agency shall cause to be deposited with the Escrow Agent in the
Escrow Fund, the following: (a) $ , representing a portion of the sale proceeds of the
Series 2007 Bonds; and (b) $ from other available funds of the Agency. Moneys on
deposit in the Escrow Fund shall be held in irrevocable trust by the Escrow Agent and applied
solely as provided in this 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 be held 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.
P6402-1058\924118A.doc -3-
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 accordance with the written instructions of the Agency. On the redemption date of the Prior
Bonds as set forth Schedule A (i.e., April 1, 2007), the Escrow Agent shall transfer an amount
sufficient to pay the Refunding Requirements from the Escrow Fund to the Prior Bonds Trustee.
Such amounts shall be applied by the Prior Bonds Trustee to the payment of the Refunding
Requirements for the equal and ratable benefit of the holders of the Prior Bonds.
Section 7. Verification. The Agency has caused schedules to be prepared
relating to the sufficiency of the anticipated receipts from the Escrow Securities to pay the
Refunding Requirements. The Agency shall furnish the Escrow Agent with the report of Grant
Thornton LLP, verifying the mathematical accuracy of the computations contained in such
schedules.
Section 8. Compliance with Agreement and Prior Indenture. The Authority
and the Agency hereby direct, and the Escrow Agent, in its capacities as escrow agent hereunder
and as the Prior Bonds Trustee, hereby agrees that the Escrow Agent will take all the actions
required to be taken by it hereunder, including the timely transfer of moneys for the payment of
principal and interest with respect to the Prior Bonds, in order to effectuate this Agreement. The
liability of the Escrow Agent for the payment of the Refunding Requirements, pursuant to this
Section and, in its capacity as Prior Bonds Trustee, the Prior Indenture, shall be limited to the
application, in accordance with this Agreement, of moneys and the Escrow Securities in the
Escrow Fund (including interest earnings thereon, if any) available for the purposes of and in
accordance with this Agreement.
Section 9. Tax Covenants. Notwithstanding any other provision of this
Agreement, the Agency and the Authority hereby covenant that no part of the proceeds of the
Series 2007 Bonds or of the moneys or funds held by the Escrow Agent hereunder shall be used,
and that it shall not direct the Escrow Agent to use any of such moneys or funds at any time,
directly or indirectly, in a manner that would cause any of the Series 2007 Bonds to be an
"arbitrage bond" under Section 148 of the Code and the regulations of the Treasury Department
thereunder proposed or in effect at the time of such use and applicable to obligations issued on
the date of issuance of the Series 2007 Bonds. None of the Authority, the Agency nor the
Escrow Agent shall, except as set forth in this Agreement, sell, transfer or otherwise dispose of
the Escrow Securities; provided that the Escrow Agent may effectuate the transfer of such
Escrow Securities to a successor escrow agent in accordance with the provisions of Section 15
relating to the transfer of rights and property to successor escrow agents.
Section 10. Notices. The Authority hereby instructs the Escrow Agent, in its
capacity as the Prior Bonds Trustee, to mail to the registered owners of the Prior Bonds, as soon
as practicable upon receipt of the deposit of moneys in the Escrow Fund pursuant to Section 4, a
notice substantially in the form set forth in Exhibit A attached hereto. The Authority also hereby
instructs the Escrow Agent, in its capacity as the Prior Bonds Trustee, to send redemption
notices, at least 30 days but no more than 60 days before the redemption date set forth in
Schedule A, 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
P6402-1058\924118v4.doc -4-
prescribed by Section 2.03(e) of the Prior Indenture. The Escrow Agent shall provide copies of
the notices described in this Section 9 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 April 1, 2008 will be deemed paid
and will no longer be deemed to be outstanding within the meaning and with the effect expressed
in the Prior Loan Agreement.
Section 12. Nature of Lien. The trust hereby created shall be irrevocable and
the holders of the Prior Bonds shall have an express lien on all moneys and Escrow Securities in
the Escrow Fund, including the interest earnings thereon, until paid out, used and applied in
accordance with this Agreement.
Section 13. Amendments. This Agreement is made pursuant to and in
furtherance of the Prior Indenture and for the benefit of the Agency, the Authority and the
holders from time to time of the Prior Bonds and it shall not be repealed, revoked, altered,
amended or supplemented without the written consent of all such holders and the written consent
of the Escrow Agent, the Authority and the Agency; provided, however, that the Agency, the
Authority and the Escrow Agent may, without the consent of, or notice to, such holders, enter
into such agreement supplemental to this Agreement as shall not materially adversely affect the
rights of such holders and as shall not be inconsistent with the terms and provisions of this
Agreement, for any one or more of the following purposes:
(a) To cure any ambiguity or formal defect or omission in this Agreement;
(b) To grant to, or confer upon, the Escrow Agent for the benefit of the
holders of the Prior Bonds, any additional rights, remedies, powers or authority that may
lawfully be granted to, or conferred upon, such holders or the Escrow Agent;
(c) To transfer to the Escrow Agent and make subject to this Agreement
additional funds, securities or properties; and
(d) To make any other change determined by the Authority and the Agency to
be not materially adverse to the holders of the Prior Bonds.
The Escrow Agent shall be entitled to rely exclusively upon an opinion of counsel
with respect to compliance with this Section, including the extent, if any, to which any change,
modification or addition affects the rights of the holders of the Prior Bonds, or that any
instrument executed hereunder complies with the conditions and provisions of this Section.
Section 14. Compensation of Escrow Agent. In consideration of the services
rendered by the Escrow Agent under this Agreement, the Agency agrees to and shall pay to the
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
P6402-1058\924118v4.doc -5-
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. Resignation or Removal of Escrow Aizent, Appointment of
Successor. The Escrow Agent at the time acting hereunder may at any time resign and be
discharged from the trusts hereby created by giving written notice to the Agency, the Authority
and the Prior Bonds Trustee (if different from the Escrow Agent) specifying the date when such
resignation will take effect, but no such resignation shall take effect unless a successor Escrow
Agent shall have been appointed by the holders of the Prior Bonds or by the Agency as
hereinafter provided and such successor Escrow Agent shall have accepted such appointment, in
which event such resignation shall take effect immediately upon the appointment and acceptance
of a successor Escrow Agent. The Escrow Agent may be removed at any time by an instrument
or concurrent instruments in writing, delivered to the Escrow Agent and to the Agency and the
Authority and signed by the registered holders of a majority in principal amount of each series of
the Prior Bonds. The Escrow Agent may also be removed at any time by the Agency with not
less than 30 days' written notice to the Escrow Agent, the Authority, the Prior Bonds Trustee (if
different from the Escrow Agent) and the registered holders of the Prior Bonds.
In the event the Escrow Agent hereunder shall resign or be removed, or be
dissolved, or shall be in the course of dissolution or liquidation, or otherwise become incapable
of acting hereunder, or in case the Escrow Agent shall be taken under the control of any public
officer or officers, or of a receiver appointed by a court, a successor Escrow Agent may be
appointed by the holders of a majority in principal amount of the Prior Bonds, by an instrument
or concurrent instruments in writing, signed by such holders, or by their attorneys in fact, duly
authorized in writing; provided, nevertheless, that in any such event, the Agency shall appoint a
temporary Escrow Agent to fill such vacancy until a successor Escrow Agent shall be appointed
by the holders of a majority in principal amount of each series of the Prior Bonds, and any such
temporary Escrow Agent so appointed by the Agency shall immediately and without further act
be superseded by the Escrow Agent so appointed by such holders. The Agency shall give
written notice of any such appointment made by it to the Authority and the Prior Bonds Trustee.
In the event that no appointment of a successor Escrow Agent or a temporary
successor Escrow Agent shall have been made by such holders or the Agency pursuant to the
foregoing provisions of this Section within 60 days after written notice of the removal or
resignation of the Escrow Agent has been given to the Agency, the holder of any of the Prior
Bonds or any retiring Escrow Agent may apply to any court of competent jurisdiction for the
appointment of a successor Escrow Agent, and such court may thereupon, after such notice, if
any, as it shall deem proper, appoint a successor Escrow Agent.
No successor Escrow Agent shall be appointed unless such successor Escrow
Agent shall be a corporation with trust powers organized under the banking laws of the United
States or any state, and shall have at the time of appointment capital and surplus of not less than
$75,000,000.
P6402-1058\9241 M4.doc -6-
Every successor Escrow Agent appointed hereunder shall execute, acknowledge
and deliver to its predecessor and to the Agency, an instrument in writing accepting such
appointment hereunder and thereupon such successor Escrow Agent without any further act,
deed or conveyance, shall become fully vested with all the rights, immunities, powers, trusts,
duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the written
request of such successor Escrow Agent or the Agency execute and deliver an instrument
transferring to such successor Escrow Agent all the estates, properties, rights, powers and trusts
of such predecessor hereunder; and every predecessor Escrow Agent shall deliver all securities
and moneys held by it to its successor. Should any transfer, assignment or instrument in writing
from the Agency be required by any successor Escrow Agent for more fully and certainly vesting
in such successor Escrow Agent the estates, rights, powers and duties hereby vested or intended
to be vested in the predecessor Escrow Agent, any such transfer, assignment and instrument in
writing shall, on request, be executed, acknowledged and delivered by the Agency.
Any entity into which the Escrow Agent, or any successor to it in the trusts
created by this Agreement, may be merged or converted or with which it or any successor to it
may be consolidated, or any entity resulting from any merger, conversion, consolidation or tax-
free reorganization to which the Escrow Agent or any successor to it shall be a party, shall, if it
meets the qualifications set forth in the fifth paragraph of this Section, and if it is otherwise
satisfactory to the Agency, be the successor Escrow Agent under this Agreement without the
execution or filing of any paper or any other act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 16. Limitation of Powers and Duties. The Escrow Agent shall have no
power or duty to invest any funds held under this Agreement except as provided in Sections 5
and 6. The Escrow Agent shall have no power or duty to transfer or otherwise dispose of the
moneys held hereunder except as provided in this Agreement.
Section 17. Indemnification. To the extent permitted by law, the Agency
hereby assumes liability for, and hereby agrees (whether or not any of the transactions
contemplated hereby are consummated) to indemnify, protect, save and keep harmless the
Escrow Agent and its respective successors, assigns, agents, employees and servants, from and
against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs,
expenses and disbursements (including reasonable legal fees and disbursements) of whatsoever
kind and nature which may be imposed on, incurred by, or asserted against, the Escrow Agent at
any time (whether or not also indemnified against the same by the Agency or any other person
under any other agreement or instrument, but without double indemnity) in any way relating to
or arising out of the execution, delivery and performance of this Agreement, the establishment
hereunder of the Escrow Fund, the acceptance of the funds and securities deposited therein, the
purchase of any securities to be purchased pursuant thereto, the retention of such securities or the
proceeds thereof and any payment, transfer or other application of moneys or securities by the
Escrow Agent in accordance with the provisions of this Agreement; provided, however, that the
Agency shall not be required to indemnify the Escrow Agent against the Escrow Agent's own
negligence 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.
P6402-1058\9241 M4.doc -7-
The indemnities contained in this Section shall survive the termination of this Agreement and
removal or resignation of the Escrow Agent.
Section 18. Limitation of Liabilitv. The Escrow Agent and its respective
successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in
tort, contract, or otherwise, in connection with the execution and delivery of this Agreement, the
establishment of the Escrow Fund, the acceptance of the moneys or any securities deposited
therein, the purchase of the securities to be purchased pursuant hereto, the retention of such
securities or the proceeds thereof, the sufficiency of the securities or any uninvested moneys held
hereunder to accomplish the payment and redemption of the Prior Bonds, or any payment,
transfer or other application of moneys or securities by the Escrow Agent in accordance with the
provisions of this Agreement or by reason of any non -negligent act, non -negligent omission or
non -negligent error of the Escrow Agent made in good faith in the conduct of its duties. The
recitals of fact contained in the Recitals of this Agreement shall be taken as the statements of the
Agency or the Authority, and the Escrow Agent assumes no responsibility for the correctness
thereof. The Escrow Agent makes no representation as to the sufficiency of the securities to be
purchased pursuant hereto and any uninvested moneys to accomplish the payment and
redemption of the Prior Bonds pursuant to the Prior Indenture or to the validity of this
Agreement as to the Agency or the Authority and, except as otherwise provided herein, the
Escrow Agent shall incur no liability in respect thereof. The Escrow Agent shall not be liable in
connection with the performance of its duties under this Agreement except for its own
negligence, willful misconduct or default, and the duties and obligations of the Escrow Agent
shall be determined by the express provisions of this Agreement. The Escrow Agent may
consult with counsel, who may or may not be counsel to the Agency, and in reliance upon the
written opinion or advice of such counsel shall have full authorization and protection in respect
of any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever
the Escrow Agent shall deem it necessary or desirable that a matter be proved or established
prior to taking, suffering, or omitting any action under this Agreement, such matter (except the
matters set forth herein as specifically requiring a certificate of a nationally recognized firm of
independent certified public accountants or an opinion of nationally recognized bond counsel)
may be deemed to be conclusively established by a written certification of the Agency or the
Authority, as applicable. Whenever the Escrow Agent shall deem it necessary or desirable that a
matter specifically requiring a certificate of a nationally recognized firm of independent certified
public accountants or an opinion of nationally recognized bond counsel be proved or established
prior to taking, suffering, or omitting any such action, such matter may be established only by
such a certificate or such an opinion. No provision of this Agreement shall require the Escrow
Agent to expend or risk its own funds or otherwise incur any financial liability in the
performance or exercise of any of its duties in accordance with this Agreement, or in the exercise
of its rights or powers.
Section 19. Termination. This Agreement shall terminate when moneys have
been transferred pursuant to Section 6 to the Prior Bonds Trustee sufficient to pay all Prior
Bonds. Upon such termination, all moneys remaining in the Escrow Fund after payment of any
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.
P6402-1058\9241 18v4.doc -8-
Section 21. Severability. If any one or more of the covenants or agreements
provided in this Agreement on the part of the Agency, the Authority or the Escrow Agent to be
performed should be determined by a court of competent jurisdiction to be contrary to law, such
covenant or agreement shall be deemed and construed to be severable from the remaining
covenants and agreements herein contained and shall in no way affect the validity of the
remaining provisions of this Agreement.
All the covenants, promises and agreements in this Agreement contained by or on
behalf of the Agency, the Authority or the Escrow Agent shall bind and inure to the benefit of
their respective successors and assigns, whether so expressed or not.
Section 22. Counterparts. This Agreement may be executed in several
counterparts, all or any of which shall be regarded for all purposes as one original and shall
constitute and be but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
P6402-1058\9241 18v4.doc -9-
(Escrow Agreement)
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be executed by their duly authorized officers and appointed or elected officials as of the date first
written above.
PALM DESERT FINANCING AUTHORITY
Chief Administrative Officer
PALM DESERT REDEVELOPMENT AGENCY
Executive Director
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Escrow Agent
Authorized Officer
P6402-1059\9241 I Rv4.doc -10-
SCHEDULE A
REFUNDING REQUIREMENTS
Redemption Redemption
Date Principal Interest Premium
April 1, 2007 $31,855,000 $842,192.50 $637,100
* Consists of the following Prior Bonds to be optionally redeemed on April 1, 2007:
Maturity
Date
Interest
Redemption
(April 1)
Principal
Rate
Price
2008
$ 2,290,000
4.90%
102%
2009
2,255,000
5.00
102
2010
2,505,000
5.10
102
2011
2,495,000
5.15
102
2012
2,755.000
5.20
102
2014
5,830,000
5.35
102
2018
13,725,000
5.45
102
Escrow
Requirement
$33,334,292.50
P6402-1058,,924118v4.doc Schedule A-1
SCHEDULE B
ESCROW SECURITIES
Type of Maturity Par
Security Date Amount Rate Price
, 2007 $ % $
P6402-1058\9241 i8v4.doc Schedule B-1
Accrued
Interest Cost
EXHIBIT A
[FORM OF DEFEASANCE NOTICE]
PALM DESERT FINANCING AUTHORITY
Notice to the Holders of
Palm Desert Financing Authority
Tax Allocation Refunding Revenue Bonds
(Project Area No. 1, As Amended)
Series 1997
scheduled to mature on April 1, 2008 and thereafter through April 1, 2018
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 June 1,
1997 (the "Indenture"), pertaining to the above -captioned Bonds with the maturity dates of April
1, 2008 and thereafter through April 1, 2018, the lien of such Indenture has been discharged
through the irrevocable deposit in escrow of cash and Federal Securities.
DATED this day of , 2007
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Escrow Agent
P6402-1058,924118%4.doc Exhibit A
Indenture of Trust
with reference to
$
Palm Desert Financing Authority
Tax Allocation Refunding Revenue Bonds
(Project Area No. 1, As Amended)
2007 Series A
P6402-1058�92276Sv4.doc RWG DRAF'I': I 1/I/200G
TABLE OF CONTENTS
ARTICLE I DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS;
EQUALSECURITY ..........................................................................................
Section1.1. Definitions .....................................................................................................
Section 1.2. Rules of Construction ....................................................................................
Section 1.3. Authorization and Purpose of Bonds . ...........................................................
Section1.4. Equal Security . ..............................................................................................
ARTICLEII ISSUANCE OF BONDS ....................................................................................
Section2.1. Designation . ..................................................................................................
Section2.2. Terms of Bonds .............................................................................................
Section 2.3. Redemption of Bonds ....................................................................................
Section2.4. Form of Bonds ...............................................................................................
Section2.5. Execution of Bonds .......................................................................................
Section2.6. Transfer of Bonds ..........................................................................................
Section 2.7. Exchange of Bonds ........................................................................................
Section 2.8. Temporary Bonds ..........................................................................................
Section 2.9. Registration Books ........................................................................................
Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen ...............................................
ARTICLE III llEPOSIT AND APPLICATION OF PROCEEDS OF BONDS;
Pa�e
..........2
..........2
..........9
..........9
..........9
........10
........10
........10
........11
........13
........13
........13
........13
........14
........14
........14
ISSUANCE OF BONDS ............................................................................................ I S
Section 3.1. Issuance of Bonds ..................................................................................................15
Section 3.2. Loan Funds; Application of Proceeds of Sale of Bonds ........................................15
Section 3.3. Validity of Bonds ..................................................................................................15
ARTICLE IV REVENUES; FLOW OF FUNDS ..............................................................................15
Section 4.1. Pledge of Revenues; Assignment of Rights . .........................................................15
Section 4.2. Receipt, Deposit and Application of Revenues .....................................................16
Section 4.3. Investments . ..........................................................................................................17
Section 4.4. Valuation and Disposition of Investments . ...........................................................18
ARTICLE V COVENANTS OF THE AUTHORITY .....................................................................18
Section 5.1. Punctual Payment ..................................................................................................18
Section 5.2. Extension of Payment of Bonds ............................................................................18
Section 5.3. Against Encumbrances ..........................................................................................18
Section 5.4. Power to lssue Bonds and Make Pledge and Assignment .....................................18
Section 5.5. Accounting Records and Financial Statements .....................................................19
Section 5.6. No Additional Indebtedness ..................................................................................19
Section 5.7. Tax Covenants Regarding Bonds ..........................................................................19
Section 5.8. Loan Agreement ....................................................................................................20
Section 5.9. Further Assurances ................................................................................................21
ARTICLE VI THE TRUSTEE ..........................................................................................................21
Section 6.1. Appointment of Trustee . .......................................................................................21
Section 6.2. Acceptance of Trusts .............................................................................................22
Section 6.3. Fees, Charges and Expenses of Trustee . ...............................................................25
Section 6.4. Notice to Owners of Default . ................................................................................25
Section 6.5. Intervention by Trustee . ........................................................................................25
Section 6.G. Removal of Trustee . ..............................................................................................25
Section 6.7. Resignation by Trustee ..........................................................................................25
Section 6.8. Appointment of Successor Trustee . ......................................................................2G
Section G.9. Merger or Consolidation . ......................................................................................2G
P6�102-1 OS 8\922765 v4. dor 1
Section 6.10. Concerning any Successor Trustee . ....................................................................26
Section 6.11. Appointment of Co-Trustee . ...............................................................................26
Section 6.12. Indemnification; Limited Liability of Truslee . ...................................................27
ARTICLE VII MODIFICATION AND AMENDMENT OF THE INDENTURE ............................28
Section7.1. Amendment Hereof ...............................................................................................28
Section 7.2. Effect of Supplemental Indenture ..........................................................................28
Section 7.3. Endorsement or Replacement of Bonds After Amendment . .................................29
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES .............................................................29
Section 8.1. Events of Default ...................................................................................................29
Section 8.2. Remedies Upon Event of Default ..........................................................................30
Section 8.3. Application of Revenues and �ther Funds After Default . ....................................31
Section 8.4. Power of Trustee to Control Proceedings ..............................................................31
Section 8.5. Appointment of Receivers .....................................................................................32
Seclion8.6. Non-Waiver ...........................................................................................................32
Section 8.7. Limitation on Rights and Remedies of Owners . ...................................................32
Section 8.8. Termination of Proceedings . .................................................................................33
ARTICLEIX BOND II�ISURANCE .................................................................................................33
Section 9.1. Payments Under the Insurance Policy; Certain Rights of the lnsurer . ..................33
Section9.2. Notices ...................................................................................................................35
Section 9.3. Control of Remedies upon Default ........................................................................35
Section 9.4. Suspension or Termination of Rights of Insurer . ..................................................35
ARTICLE X BOOK-ENTRY SYSTEM ..........................................................................................36
Section 10.1. Book-Entry System; Limited Obligation of Authority . ......................................3G
Section 10.2. Representation Letter ..........................................................................................37
Section 10.3. Transfers Outside Book-Entry System ................................................................37
Section 10.4. Payments to the Nominee ....................................................................................37
Section 10.5. Initial Depository and Nominee ..........................................................................37
ARTICLEXI MISCELLANEOUS ...................................................................................................37
Section 11.1. Limited Liability of Authority . ...........................................................................37
Section 11.2. Benefits of Indenture Limited to Parties . ............................................................38
Section 11.3. Discharge of Indenture ........................................................................................38
Section 11.4. Successor Deemed Included in All References to Predecessor . .........................39
Seclion I 1.5. Content of Certificates . .......................................................................................39
Section 11.6. Execution of Documents by Owners ...................................................................39
Section 11.7. Disqualified Bonds ..............................................................................................40
Section 11.8. Waiver of Personal Liability . ..............................................................................40
Section 11.9. Partiaf Invaiidity ..................................................................................................40
Section 11.10. Destruction of Cancelled Bonds . ......................................................................40
Section 1 I. I 1. Funds and Accounts ..........................................................................................41
Section 11.12. Payment on Business Days . ..............................................................................41
Section11.13. Notices ..............................................................................................................41
Section 11.14. Unclaimed Moneys ...........................................................................................42
Section 11.15. Governing Law . ................................................................................................42
EXHIBIT A— FORM OF BOND
PG402-1 OS 8\922765 v4. doc 11
Indenture of Trust
This Indenture of Trust (this "Indenture") is made and entered into as of January 1, 2007,
by and between the Palm Desert Financing Authority, a joint powers authority duly organized
and validly existing under the laws of the State of California (the "Authority") and Wells Fargo
Bank, National Association, a national banking association duly organized and validly existing
under the laws of the United States of America, having a corporate trust office in Los Angeles,
California, and being qualified to accept and administer the trusts hereby created (the "Trustee").
Recitals:
A. The Palm Desert Redevelopment Agency (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 (defined below), and the powers of the Agency include the power to borrow
money for any of its corporate purposes.
B. A Redevelopment Plan, as amended, for the Project Area No. 1, As
Amended, of the Agency 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 for Project Area
No. 1, As Amended, of the Agency, the Authority has determined to make a loan (the "Series
2007A Loan") to the Agency under and pursuant to the Project Area No. 1, As Amended, Loan
Agreement, dated as of January 1, 2007 (the "Loan Agreement"), by and among the Authority,
the Agency and the Trustee.
E. To provide the moneys required to make the Series 2007A Loan under the
Loan Agreement, the Authority has determined to issue its Tax Allocation Refunding Revenue
Bonds (Project Area No. 1, As Amended), 2007 Series A, in the aggregate principal amount of
$ (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 Auihority has
authorized the execution and delivery of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to
secure the payment of the principal of, premium, if any, and interest on the Bonds at any time
issued and Outstanding under this Indenture, according to their tenor, and to secure the
performance and observance of all the covenants and conditions therein and herein set forth, and
to declare the terms and conditions upon and subject to which the Bonds are to be issued and
received, and in consideration of the premises and of the mutual covenants herein contained and
PG402-1058�92276Sv4.doc 1
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 ihe Bonds, as follows:
ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE
OF BONDS; EQUAL SECURITY
Scction 1.1. 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 1.1 of the Loan Agreement and not otherwise defined in this Section 1.1 shall have the
meanings ascribed thereby in the Loan Agreement.
"Act" means Articles 1 through 4(commencing with Section 6500) of Chapter 5,
Division 7, Title 1 of the Government Code of the State, as in existence on the Closing Date or
as thereafter amended from time to time.
"A�ency" 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.
"Authority" 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.
"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 April 2 in one
calendar year to April 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 April 1, 2007.
"Bonds" means the Palm Desert Financing Authority Tax Allocation Refunding
Revenue Bonds (Project Area No. 1, As Amended), 2007 Series A.
P(r102-1058�922765v4. doc 2
"Business Dav" means any day other than (i) a Saturday or a 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.
"Citv" 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.
"Defeasance Obli�ations" means any of the following:
1. Cash
2. U.S. Treasury Certificates, Notes and Bonds (including State and Local
Government Series — "SLGS");
3. Direct obligations of the Treasury which have been stripped by the
Treasury itself, CATS, TIGRS and similar securities;
4. Resolution Funding Corp. (REFCORP), only the interest component of
RECORP strips which have been stripped by request to the Federal Reserve Bank of New York
in book entry form are acceptable; and
5. Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by
S&P; provided, however, if the issue is only rated by S&P (i.e., there is no Moody's rating), then
the pre-refunded bonds must have been pre-refunded with cash, direct U.S. or U.S. guaranteed
obligations, or "AAA" rated pre-refunded municipals to satisfy this condition.
"Depositorv" means The Depository Trust Company, New York, New York, and
its successors and assigns as securities depository for the Bonds, or any other securities
depository acting as Depository under Article X.
"Event of Default" means any of the events described in Section 8.1.
"Fiscal Year" means any twelve-month period extending from January 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.
P6402-1058\92276iv4.doc 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.
"Independent Accountant" means any certified public accountant or firm of
certified public accountants appointed and paid by the Authority, and who, or each of whom
(i) is in fact independent and not under domination of the Authority, the City or the Agency;
(ii) does not have any substantial interest, direct or indirect, in the Authority, the City or the
Agency; and (iii) is not connected with the Authority, the City or the Agency as an officer or
employee of the Authority, the City or the Agency but whom may be regularly retained to make
annual or other audiis of the books of or reports to the Authority, the City or the Agency.
"Information Services" means Financial Information, Inc.'s "Daily Called Bond
Service," 30 Montgomery Street, lOth Floor, Jersey City, New Jersey 07302, Attention: Editor;
Mergent's "Municipal and Government," 5254 77 Center Drive, Suite 150, Charlotte, North
Carolina 28217, Attention: Called Bond Department; and Xcitek, 5 Hanover Square, New York,
New York 10004; or, in accordance with then-current guidelines of the Securities and Exchange
Commission, such other addresses and/or such other services providing information with respect
to called bonds as the Agency may designate to [he Trustee in writing.
"Insurance PavinQ A�ent" means U.S. Bank National Association or its successors
under the Insurance Policy.
"Insurance Policv" means, collectively, the municipal bond insurance policies issued
by the Insurer insuring the payment when due of the principal of and interest on the Bonds.
"Insurer" means MBIA Insurance Corporation, and its successors and assigns.
"Interest Account" means the account by that name established and held by the
Trustee pursuant to Section 4.2(b)(1).
"Interest Pavment Date" means April 1 and October 1 of each year, commencing
on October 1, 2007.
"L.oan A�reement" means the Project Area No. 1, As Amended, Loan Agreement,
dated as of January 1, 2007, by and among the Authority, the Agency and the Trustee relating to
the Series 2007A Loan, as may from time to time be supplemented, modified or amended.
"Moodv's" means Moody's Investors Service, its successors and assigns.
"Nominee" means the nominee of the Depository, which may be the Depository,
as determined from time to time pursuant to Article X.
"Outstanding," when used as of any particular time with reference to Bonds,
means (subject to the provisions of Section 11.7) 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
P6402-1058\922765v4.doc 4
paid within the meaning of Section 11.3, and (iii) Bonds in lieu of or in substitution for which
other Bonds shall have been executed, issued and delivered pursuant to this Indenture.
"�wner" 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 itself�:
1. U.S. Export-Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of
beneficial ownership
2. Farmers Home Administration (FmHA)
Certificates of beneficial ownership
3. Federal Financin� Bank
4. Federal Housin� Administration Debentures (FHA)
5. General Services Administration
Participation certificates
6. Government National MortQa�e Association (GNMA or
"Ginnie Mae")
GNMA - guaranteed mortgage-backed bonds
GNMA - guaranteed pass-through obligations
7. U.S. Maritime Administration
PG402- l OS8\9227GSv4.doc S
Guaranteed Title XI financing
8. U.S. Department 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. govemment 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 Comoration (FHLMC or
"Freddie Mac")
Participation Certificates
Senior debt obligations
3. Federal National MortQa�e Association (FNMA or "Fannie
Mae")
Mortgage-backed securities and senior debt obligations
4. Resolution FundinQ 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 and, if rated by Moody's, rated Aaa,
Aal or Aa2.
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 furthcr 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.
PG402-1058\9227G5v4.doc 6
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 acceptable to the Insurer and
which provide for the transfer of securities from a dealer bank or securities firm (sellerlborrower)
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.
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 4.2(b)(2).
"Proiect Area" means the territory within the project area described and defined in
the Redevelopment Plan approved and adopted by the City by its Ordinance No. 80 and amended
by its Ordinances Nos. 275 and 324.
"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.
"Redemntion Account" means the account by that name established and held by
the Trustee pursuant to Section 4.2(b)(3).
"Redevelopment 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.
PG402-1058\922765v4.doc %
"Redevelopment Plan" means the Redevelopment Plan for the Project Area,
approved and adopted by the City by its Ordinance No. 80 and includes any amendment of the
Redevelopment Plan heretofore or hereafter made pursuant to law.
"ReQistration Books" means the records maintained by the Trustee pursuant to
Section 2.9 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 documenis to which such Report relates; (ii)
a brief statement as to the nature and scope of the examination or investigation upon which the
Report is based; and (iii) a statement that, in the opinion of such person or firm, sufficient
examination or 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.
"Representation Letter" means the Blanket Issuer L.etter of Representations, dated
July 1, 1997, from the Authority to the Depository, qualifying bonds issued by the Authority for
the Depository's book-entry system.
"ReQuest" means a request in writing signed by any officer of the designated
public entity duly authorized by its legislative body for that purpose.
"Revenue Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.2(a).
"Revenues" means (i) all amounts payable by the Agency pursuant to Section 2.3
or Section 2.4 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 5.7.
"S&P" means Standard & Poor's Ratings Services and its successors and assigns.
"Securities Devositories" means The Depository Trust Company, 55 Water Street,
50`h 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 2007A Loan" means the Series 2007A Loan, as defined in the Loan
Agreemcnt, made by the Authority to the Agency.
"Series 2007A Loan Fund" means the fund by that name established and held by
the Trustee pursuant to Section 3.2.
"Series 2007A Term Bonds" means the Bonds maturing on April 1, 20_.
P6402- ] 058\9227GSv4.doc $
"State" means the State of California.
"Supplemental Indenture" means any indenture, agreement or other instrument
hereafter duly executed by the Authority and the Trustee in accordance with the provisions of
Section 7.1.
"Tax ReQulations" means temporary and permanent regulations promulgatcd
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 11.13 or such other offices as may be specified to the Authority by the Trustee in
writing. With respect to presentation of Bonds for payment or for registration of transfer and
exchange such term shall mean the office or agency of the Trustee at which, at any particular
time, its corporate trust business shall be conducted.
"Trustee" means Wells Fargo Bank, National Association, and its successors and
assigns, and any other corporation or association which may at any time be substituted in its
place as provided in Article VI.
"Underwriter" means Stone & Youngberg LLC.
Section 1.2. 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.
Scction 1.3. Authorization and Purpose 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 exisi, 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 Series 2007A Loan to the Agency pursuant to the Loan
Agreement.
Section 1.4. Ec�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 thereof or the time of sale, execution or delivery thereof, or
otherwise for any cause whatsoever, except as expressly provided therein or herein.
P6402-1058\922765 v4.doc 9
ARTICLE II
ISSUANCE OF BONDS
Section 2.1. Desi�nation. The Bonds shall be designated the Palm Desert
Financing Authority Tax Allocation Refunding Revenue Bonds (Project Area No. 1, As
Amended), 2007 Series A, and shall be issued in the original aggregate principal amount of
$ .
Sectiun 2.2. Terms of Bonds. (a) The Bonds shall be issued in fully registered
form without coupons in denominations of $5,000 or any integral multiple thereof, so long as no
Series 2007A Bond shall have more than one maturity date. The Bonds shall be dated the
Closing Date, shall mature on April 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
(April 1) Amount Rate
$ %
(b) Interest on the 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; t�rovided, however,
that at the written request of the Owner of at least $1,000,000 in aggregate principal amount of
Outstanding Bonds filed with the Trustee prior to any Record Date, interest on such Bonds shall
be paid to such Owner on each succeeding Interest Payment Date by wire transfer of
immediately available funds to an account in the United States designated in such written request
(unless and until such request has been revoked in writing). Payments of defaulted interest with
respect to the Bonds shall be paid by check or draft to the Owners as of a special record date to
be fixed by the Trustee, notice of which special record date shall be given to the Owners not less
than ten days prior thereto. Principal of and premium, if any, on any Bond shal] be paid upon
presentation and surrender thereof, at maturity or the prior redemption thereof, at the Trust
P6402-1058\922765v4.doc 1 �
Office. The principal of and interest and premium, if any, on the Bonds shall be payable in
lawful money of the United States of America.
Each Bond shall bear interest from the Interest Payment Date next preceding the
date of authentication thereof, unless (i) it is authenticated during the period from the day after
the Record Date for an Interest Payment Date to and including such Interest Payment Date, in
which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated on or
prior to the Record Date for the first Interest Payment Date, in which event it shall bear interest
from the Closing Date; urovided, however, that if, at the time of authentication of any Bond
interest with respect to such Bond is in default, such Bond shall bear interest from the Interest
Payment Date to which interest has been paid or made available for payment with respect to such
Bond.
Section 2.3. Redemption of Bonds.
(a) Redemntion from Ontional Loan Prenavments. In the event that the Agency
shall exercise its option to prepay principal installments of the Series 2007A Loan pursuant to
Section 2.4(a) of the Loan Agreement, the Revenues derived from such prepayment shall be
applied to the redemption of the Bonds maturing on or after April 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 April 1,
20_, at a redemption price equal to [ 100] percent of the principal amount of Bonds, plus
accrued interest thereon to the date of redemption, without premium.
The Authority shall provide written notice to the Trustee of any redemption
pursuant to this Section 2.3(a) at least 45 but not more than 90 days prior to the date fixed for
such redemption.
(b) Mandatory Sinkin� Fund Redemntion. The Series 2007A Term Bonds shall
also be subject to mandatory redemption by lot, on April 1 in each year commencing April 1,
20_, from sinking fund payments made by the Authority into the Principal Account pursuant to
Section 4.2(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 as set foRh in the following table; provided, however, that (i) in lieu of
redemption thereof on April 1 of any year, the Series 2007A Term Bonds may be purchased by
the Agency pursuant to Section 2.3 of the Loan Agreement and tendered to the Trustee for
cancellation no later than the preceding January 15, and (ii) if some but not all of the Series
2007A Term Bonds have been redeemed pursuant to Paragraph (a) above, the total amount of all
future sinking fund payments with respect to such Series 2007A Term Bonds shall be reduced by
the aggregate principal amount of such Series 2007A Term Bonds so redeemed, to be allocated
among such sinking fund payments on a pro rata basis.
P6402-1058\922765v4.doc 11
Series 2007A Term Bonds MaturinQ April 1, 20
Sinking Fund
Redemption Date Principal Amount
(Anril 1) to be Redeemed
$
*
* maturity
(c) Notice of Redemption. The Trustee on behalf and at the expense of the
Authority shall send by first class mail (or such other means acceptable to such Owners and
institutions) notice of any redemption to the respective Owners of any Bonds designated for
redemption at their respective addresses appearing on the Registration Books, and to the
Securities Depositories and to one or more Information Services, at least 30 but not more than 60
days prior 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 Bond numbers (but only if less than all of the
Outstanding Bonds = are to be redeemed) and the maturity or maturities (in the event or
redemption of all of the Bonds of such m�tiurity or maturities in whole) of the Bonds 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.
(d) Selection of Bonds for Redemption. Whenever provision is made in this
Indenture for the redemption of less than all of the Bonds of any maturity, the Trustee shall select
the Bonds to be redeemed from all Bonds of such maturity not previously called for redemption,
by lot in any manner which the Trustee in its sole discretion shall deem appropriate under the
circumstances. For purposes of such selection, all Bonds be deemed to be comprised of separate
$5,000 portions and such portions shall be treated as separate bonds which may be separately
redeemed.
(e) Partial Redemption of Bonds. In the event only a portion of any Bond is
called for redemption, then upon surrender of such Bond the Authority shall execute and the
Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a
new Bond or Bonds of the same tenor and maturity date, of authorized denominations in
aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed.
(f� 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 the 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.
P6402-1058\922765v4.doc 12
Scction 2.4. Form of Bonds. The 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 Indenture.
Section 2.5. 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 issucd by
the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon
such authentication, delivery and issue, shall be as binding upon the Authority as though the
individual who signed the same had continued to be such officer of the Authority. Also, any
Bond may be signed on behalf of the Authority by any individual who on the actual date of the
execution of such Bond shall be the proper officer although on the nominal date of such Bond
such individual shall not have been such officer.
Only such of the Bonds as shall bear thereon a certificate of authentication in
substantially the form set forth in Exhibit A manually executed by the Trustee, shall be valid or
obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the
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 2.6. 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 like tenor, maturity and aggregate principal amount. The cost of printing any
Bonds and any services rendered or expenses incurred by the Trustee in connection with any
such transfer shall be paid by the Authority, except that the Trustee shall require the payment by
the Owner requesting such transfer of any tax or other governmental charge required to be paid
with respect to such transfer. The Trustee shall not be required to transfer, pursuant to this
Section 2.6, 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 2.3.
Section 2.7. ExchanQe of Bonds. Bonds may be exchanged at the Trust Office
for the same aggregate principal amount of Bonds of the same tenor and maturity and of other
authorized denominations. The cost of printing any Bonds and any services rendered or
expenses incurred by the Trustee in connection with any such exchange shall be paid by the
Authority, except that the Trustee shall require the payment by the Owner requesting such
exchange of any tax or other governmental charge required to be paid with respect to such
exchange. The Trustee shall not be required to exchange, pursuant to this Section 2.7, either (i)
P6402- ] 058\922765v4.doc 13
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 2.3.
Section 2.8. Temvorary 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 term, maturity and aggregate principal amount in authorized
denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits
under this Indenture as definitive Bonds authenticated and delivered hereunder.
Section 2.9. ReQistration Books. The Trustee will keep or cause to be kept at
its Trust Office sufficient records for the registration and transfer of the Bonds, which shall at all
times during regular business hours be open to inspection by the Authority with reasonable prior
notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable
regulations as it may prescribe, register or transfer or cause to be registered or transferred, on
such records, Bonds as hereinbefore provided.
Section 2.10. Bonds Mutilated, Lost, Destroved or Stolen. If any Bond shall
become mutilated, the Authority, at the expense of the Owner of such Bond, shall execute, and
the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor, maturity and
aggregate principal amount in authorized denominations in exchange and substitution for the
Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every
mutilated Bond so surrendered to the Trustee shall be cancelled by it and destroyed. If any Bond
issued hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may
be submitted to the Trustee and, if such evidence be satisfactory to the Trustee and indemnity
satisfactory to the Trustee shall be given, the Authority, at the expense of the Owner, shall
execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in
lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall
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 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.
P6402-1058\922765v4.doc 14
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS OF
BONDS; ISSUANCE OF BONDS
Section 3.1. Issuance of Bonds. Upon the execution and delivery of this
Indenture, the Authority shall execute and deliver the Bonds in the respective aggregate 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.
Scction 3.2. Series 2007A Loan Fund; Application of Proceeds of Sale of
Bonds. The Trustee shall establish and maintain a separate fund to be known as the "Series
2007A Loan Fund." Upon the receipt of payment for the Bonds on the Closing Date, the Trustee
shall deposit from the proceeds of sale thereof the amount of $ in the Series 2007A Loan
Fund (such amount being equal to the principal amount of the Bonds, [plus/less] a net original
issue [premium/discount) of $ , less an Underwriter's discount of $ , less an
amount of $ wired by the Underwriter at the request of the Authority and the Agency to
pay the premiums for the Insurance Policy and the Surety Bond allocable to the Bonds). The
Trustee shall disburse all amounts in the Series 2007A Loan Fund pursuant to Section 2.2 of the
Loan Agreement.
Section 3.3. 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 Series 2007A Loan, and the recital contained in
the Bonds that the same are issued pursuant to the Bond Law shall be conclusive evidence of
their validity and of the regularity of their issuance.
ARTICLE IV
REVENUES; FLOW OF FUNDS
Section 4.1. P1edQe of Revenues; Assi�nment of Ri�hts. Subject to the
provisions of Section 6.3, 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
number, date of Bonds, date of execution or date of delivery; and the payment of the interest on
and principal of the Bonds and any premiums upon the redemption of any thereof shall be and
are secured by an exclusive pledge, charge and lien upon the Revenues. So long as any of the
Bonds are Outstanding, the Revenues shall not be used for any other purpose; except that out of
the Revenues there may be apportioned such sums, for such purposes, as are expressly permitted
by Section 4.2.
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 5.4 thereo�. The Trustee shall be entitled to and shall receive all of the Revenues, and
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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 4.2. Receipt, Deposit and Application of Revenues.
(a) Denosit of Revenues, Revenue Fund. All Revenues described in clause (i) of
the definition thereof in Section 1.1 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) Annlication 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 Bonds. No deposit need be made into the Interest
Account if the amount contained therein is at least equal to the interest coming due and payable
upon all Outstanding Bonds on the next succeeding Interest Payment Date. All moneys in the
Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the
interest on the Bonds as it shall become due and payable (including accrued interest on any
Bonds redeemed prior to maturity). All amounts on deposit in the Interest Account on the first
day of any Bond Year, to the extent not required to pay any interest then having come due and
payable on the Outstanding Bonds, shall be withdrawn therefrom by the Trustee and transferred
to the Agency to be used for any lawful purposes of the Agency.
(2) Principal Account. On or before each date on which the principal of
the Bonds shall be payable, the Trustee shall deposit in the Principal Account an amount required
to cause the aggregate amount on deposit in the Principal Account to equal (i) the principal
amount of the Bonds coming due and payable on such date pursuant to Section 2.2 and (ii) the
principal amount of the Bonds subject to mandatory sinking fund redemption on such date
pursuant to Section 2.3(b). All moneys in the Principal Account shall be used and withdrawn by
the Trustee solely for the purpose of paying the principal 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.
P6402-1058\922765v4.doc 16
(3) Redemntion Account. The Trustee, at any time that the Agency shall
exercise its option to prepay principal installments of the Series 2007A Loan pursuant to Section
2.4 of the Loan Agreement, shall deposit the Revenues derived from such prepayment in the
Redemption Account (which the Trustee shall also establish and maintain within the Revenue
Fund), to be used and withdrawn by the Trustee solely for the purpose of paying the principal
and redemption premiums, if any, on the Bonds to be redeemed on their respective redemption
dates, as directed by the Authority.
Section �.3. 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 1.1 which embody legal conclusions (e.g., the
existence, validity and perfection of security interests in collateral), the Trustee shall be entitled
to rely conclusively on an opinion of counsel or upon a representation of the provider of such
Permitted Investment obtained at the Authority's or the Agency's expense.
Except as specifically provided in this Indenture, the Trustee shall not be liable to
pay interest on any moneys received by it, but shall be liable only to account to the Authority and
the Agency for earnings derived from funds that have been invested.
The Authority acknowledges that to the extent regulations of the Comptroller of
the Currency or other applicable regulatory entity grant the Authority the right to receive
brokerage confirmations of security transactions as they occur, the Authority specifically waives
receipt of such confirmations to the extent permitted by law. The Trustee will furnish the
Authority periodic cash transaction statements which include detail for all investment
transactions made by the Trustee hereunder.
P6402- ] 058\922765v4.doc 17
The Trustee or any of its affiliates may act as sponsor, advisor or manager in
connection with any investments made by the Trustee hereunder.
Scction 4.�. Valuation and Disposition of Investments. For the purpose of
determining the amount in any fund or account established hereunder or under the Loan
Agreement, any investments credited to such fund or account shall be valued at least annually,
on or before July 1, at the market value thereof. In making any valuations hereunder the Trustee
may utilize computerized securities pricing services that may be available to it, including those
available through its regular accounting system.
ARTICLE V
COVENANTS OF THE AUTHORITY
Sectiun 5. I. Punctual Pavment. The Authority shalt 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 5.2. 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 shaIl 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 5.2 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.
Section 5.3. 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.
Sectic�n 5.4. Power to Issue Bonds and Make Pled�e and Assi�nmcnt. 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 I,oan 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 anc! 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
P6402-1058\922765v4.doc 1$
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.
Scction 5.5, Accounting 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 thc 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 5.6. 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 5.7. Tax Covenants ReQardinQ Bonds.
(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(f� of the Code, and that it will
establish such accounting procedures as are necessary to adequately determine, account for and
pay over any such amount required to be paid thereunder in a manner consistent with the
requirements of Section 148 of the Code, such covenants to survive the defeasance of the Bonds.
(c) The Authority covenants that it will not take any action or omit to take any
action, which action or omission, if reasonably expected on the date of 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 ]03 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 the Indenture with respect to the Bonds shall be: (i) used in making
loans guaranteed by the United States (or any agency or instrumentality thereof�, (ii) invested
P6402-1058\922765v4.doc 19
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 thereof�; provided, however,
that the above restrictions do not apply to: (a) the investment on moneys held in the Revenue
Fund or any other "bona fide debt service fund" as defined for purposes of Section 148 of the
Code, (b) investment in direct obligations of the United States Treasury, (c) investment in
obligations guaranteed by the Federal National Mortgage Association, Government National
Mortgage Association, or the Federal Home Loan Mortgage Corporation, (d) investment in
obligations issued pursuant to Section 21B(d)(3) of the Federal Home Loan Bank Act, as
amended by Section 511(a) of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989, (e) investments permitted under regulations issued pursuant to Section 149(b)(3)(B) of
the Code, or (f� such other investments permitted under 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 5.8. Loan AQreement. The Trustee, as assignee of the Authority's
rights pursuant to Section 4.1, 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
pravisions 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
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;
P6402-1058\922765 v4.doc 20
(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 Codc, in the
opinion of Bond Counsel; or
(d) to provide for the issuance of Parity Debt in accordance with the provisions of
the Loan Agreement.
Noihing in this Section 5.8 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 modifcation 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; urovided, 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 5.8 have been met
with respect to any amendment or modification of the Loan Agreement.
Sec�ion 5.9. 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.
ARTICLE VI
TI-�E TRUSTEE
Section 6.1. 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 [he 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 6.1 the combined capital and surplus of
such financial institution shall be deemed to be its combined capital and surplus as set foRh in its
most recent report of condition so published.
The Trustee is hereby authorized to pay the principal of and interest and
redemption premium, if any, on the Bonds when duly presented for payment at maturity, or on
redemption or purchase prior to maturity, and to cancel all Bonds upon payment thereof. The
Trustee shall keep accurate records of aIl funds administered by it and of all Bonds paid and
discharged.
P6402-1058\922765v4.doc 21
Section G.2. Acceptance of Trusts. The Trustee hereby accepts the trusts
imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to
the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and after curing of
all Events of Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied covenants, duties or
obligations shall be read into the Indenture against the Trustee. In case an Event of Default
hereunder has occurred (which has not been cured or waived), the Trustee may exercise such of
the rights and powers vested in it by this Indenture, and shall use the same degree of care and
skill and diligence in their exercise, as a prudent person would use in the conduct of its own
affairs.
(b) The Trustee may execute any of the trusts or powers hereof and perform the
duties required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled
to advice of counsel concerning all matters of trust and its duty hereunder. The Trustee may
conclusively rely on such advice or an opinion of counsel as full and complete protection for any
action taken or suffered by it hereunder.
(c) The Trustee 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 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
P6402-1058\922765v4.doc 22
of any Bond or to take any action at his request unless the ownership of such Bond by such
person shall be reflected on the Registration Books.
(f� As to the existence or non-existence of any fact or as to the sufficiency or
validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a
Certificate of the Authority as sufficient evidence of the facts therein contained and prior to the
occurrence of an Event of Default hereunder of which the Trustee has been given notice or is
deemed to have notice, as provided in Section 6.2(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 enor of judgment.
(h) The Trustee shall not be required to take notice or be deemed to have notice of
any Event of Default hereunder except failure by the Authority to make any of the payments to
the Trustee required to be made by the Authority pursuant hereto, unless the Trustee shall be
specifically notified in writing of such default by the Authority, the Insurer or by the Owners of
at least 25 percent in aggregate principal amount of the Bonds then Outstanding and all notices
or other instruments required by this Indenture to be delivered to the Trustee must, in 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 6.5, Section 8.2 or the first
paragraph of Section 5.8, the Trustee may require that a satisfactory indemnity bond be furnishcd
P6402-1058\922765v4.doc 23
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.
(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.
(q) The Trustee in its capacity as Trustee is authorized and directed to execute the
Loan Agreement.
(r) The Trustee shall not be considered in breach of or in default in its obligations
hereunder or progress in respect thereto in the event of enforced delay ("unavoidable delay") in
the performance of such obligations due to unforeseeable causes beyond its control and without
its fault or negligence, including, but not limited to, Acts of God or of the public enemy or
terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to
procure or general sabotage or rationing of labor, equipment, facilities, sources of energy,
material or supplies in the open market, litigation or arbitration involving a party or others
relating to zoning or other governmental action or inaction pertaining to the project, maiicious
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;
urovided that, in the event of any such unavoidable delay under this paragraph 6.02(r), the
Trustee notify the Authority and the Agency in writing within five business days after (i) the
occurrence of the event giving rise to the unavoidable delay, (ii) the Trustee's actual knowledge
of the impending unavoidable delay, or (iii) the Trustee's knowledge of sufficient facts under
which a reasonable person would conclude the unavoidable delay will occur.
(s) The Trustee agrees to accept and act upon facsimile transmission of written
instructions or directions pursuant to this Indenture, provided, however, that: (i) subsequent to
such facsimile transmission of written instructions or directions the Trustee shall forthwith
receive the originally executed instructions or directions, (ii) such originally executed
P6402-1058\92276Sv4.doc 24
instructions or directions shall be signed by a person as may be designated and authorized to sign
for the party signing such instructions or directions, and (iii) the Trustee shall have received a
current incumbency certificate containing the specimen signature of such designated person.
Section 6.3. Fees, CharQes and Exvenses 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.
Section G.4. 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 6.2(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 6.5. 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 6.2(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.G. 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 6.1.
Section 6.7. 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
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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.
Scc;tion 6.8. Aaaointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 6.6 or 6.7, 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 6.6 or within 60 days
following the receip[ of notice by the Authority pursuant to Section 6.7, 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 6.1. 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.
Scction 6.9. 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 [rust 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 6.1, shall be the successor to such Trustee without the execution or filing
of any paper or further act, excepi 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
ceRainly vesting in such successor the estate, rights, powers and duties hereby vested or intended
to be vested in the predecessor Trustee, any and all such instruments in writing shall, on request,
be executed, acknowledged and delivered by the Authority.
Section 6.11. Appointment of Co-Trustee. It is the purpose of this Indenture that
there shall be no violation of any law of any jurisdiction (including particularly the law of the
State) denying or restricting the right of banking corporations or associations to transact business
as Trustee in such jurisdiction. It is recognized that in the case of li�igation 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
P6402-1058\922765v4.doc 26
appoint an additional individual or institution as a separate co-trustee. The following provisions
of this Section 6.11 are adopted to these ends.
In the event that the Trustee or the Authority appoints an additional individual or
institution as a separate or co-trustee, each and every remedy, power, right, claim, demand, cause
of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be
exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by
and vest in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in
such separate or co-trusiee but only to the extent necessary to enable such separate or co-trustee
to exercise such powers, rights and remedies, and every covenant and obligation necessary to the
exercise thereof by such separate or co-trustee shall run to and be enforceable by either of them.
The Trustee shall not be liable for the acts or omissions of any separate or co-trustee appointed
hereunder.
Should any instrument in writing from the Authority be required by the separate
trustee or co-trustee so appointed by the Trustee for more fully and certainly vesting in and
conforming to it such properties, rights, powers, trusts, duties and obligations, any and all such
insiruments 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 Indenture in
exercising any trust or power conferred on the Trustee by this Indenture. The obligations of the
Authority under this Section shall survive the payment and discharge of the Bonds or the
resignation or removal of the Trustee under this Indenture.
P6402- ] 058\922765v4.doc 27
�
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE
INDENTURE
Section 7.1. 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
sunender of such rights or powers shall not materially adversely affect the Owners of the Bonds;
or
(b) To make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained in this Indenture, or in any
other respect whatsoever as the Authority may deem necessary or desirable, provided under any
circumstances that such modifications or amendments shall either (i) conform to the original
intention of the Authority, or (ii) not materially adversely affect the interests of the Owners of
the Bonds in the reasonable judgment of the Authority; or
(c) To amend any provision hereof relating to the Code, to any extent whatsoever
but only if and to the extent such amendment will not adversely affect the exclusion from gross
income of interest on any of the Bonds under the Code, in the opinion of Bond Counsel.
Except as set forth in the preceding paragraphs of this Section 7.1, 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 affected Bonds then
Outstanding are filed with the Trustee. No such modification or amendment shall (i) extend the
maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of
the Authority to pay the principal, interest or premiums, if any, at the time and place and at the
rate and in the currency provided therein of any Bond without the express written consent of the
Owner of such Bond or (ii) reduce the percentage of Bonds required for the written consent to
any such amcndment 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 7.2. Effect of Sunplemental 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
P6402-1058\922765 v4.doc 2 g
Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
Section �.3. Endorsement or Reulacement 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 cffective
date and presentation of his bond for that purpose at the Trust Office of the Trustee, a suitable
notation as to such action shall be made on such Bond at the expense of the Authority. If the
Authority shall so determine, new Bonds so modified as, in the opinion of the Authority, shall be
necessary to conform to such Bond Owners' action shall be prepared and executed, and in that
case upon demand of the Owner of any Bond Outstanding at such effective date such new Bonds
shall be exchanged at the Trust Office of the Trustee at the expense of the Authority, for Bonds
then Outstanding, upon surrender of such Outstanding Bonds.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, SO LONG AS THE
INSURANCE POLICY REMAINS IN EFFECT AND THE INSURER HAS NOT
DEFAULTED WITH RESPECT TO ITS PAYMENT OBLIGATIONS UNDER THE
INSURANCE POLICY, ALL PROVISIONS OF THIS ARTICLE VIII SHALL BE SUBJECT
TO, AND QUALIFIED BY, THE PROVISIONS SET FORTH IN ARTICLE IX, INCLUDING,
WITHOUT LIMITATION, THE INSURER'S RIGHT TO CONSENT TO ACCELERATION
OF TI-IE BONDS, AND THE INSURER'S RIGHT TO CONSENT TO OR DIRECT CERTAIN
AUTHORITY, TRUSTEE OR OWNER ACTIONS.
Section 8.1. 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 lndenture or in the Bonds contained, other than as
referred to in the preceding Paragraphs (a) and (b), for a period of 60 days after written notice,
specifying such a failure and requesting that it be remedied has been given to the Authority by
the Trustee, or to the Authority and the Trustee by the Owners of a majority in aggregate
principal amount of the Outstanding Bonds; provided, however, that if in the reasonable opinion
of the Authority the faiiure stated in such notice can be conected, 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.
P6402-1OS8\922765v4.doc 29
(d) The filing by the Authority of a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other applicable law of the United States
of America, or if a court of competent jurisdiction shall approve a petition, filed with or without
the consent of the Authority, seeking reorganization under the federal bankruptcy laws or any
other applicable law of the United States of America, or if, under the provisions of any other law
for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or
control of the Authority or of the whole or any substantial part of its property.
(e) The occurrence of any Event of Default under, and as that term is defined in,
the Loan Agreement.
Section 8.2. Remedies Uvon Event of Default. Subject to the provisions of
Article IX, if any Event of Default shall occur, then, and in each and every such case during the
continuance of such Event of Default, the Trustee may, and at the written direction of the
Owners of a majority in aggregate principal amount of the Bonds at the time Outstanding shall,
upon notice in writing to the Authority and the Agency, declare the principal of all of the Bonds
then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon
any such declaration the same shall become and shall be immediately due and payable, anything
in this Indenture or in the Bonds contained to the contrary notwithstanding.
Any such declaration is subject to the condition that if, at any time after such
declaration and before any judgment or decree for the payment of the moneys due shall have
been obtained or entered, the Authority or the Agency shall deposit with the Trustee a sum
sufficient to pay all the principal of and installments of interest on the Bonds payment of which
is overdue, with interest on such overdue principal at the rate borne by the respective Bonds to
the extent permitted by law, and the charges and expenses of the Trustee and its counsel
(including the allocated costs and disbursements of in-house counsel to the extent the services of
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 6.2(1), the Trustee shall be obligated to exercise such one or
P6402-1058\922765v4.doc 3�
more of the rights and powers confened 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 [o the
Trustee (or to the Owners) is intended to be exclusive of any other remedy, but each and every
such remedy shall be cumulative and shall be in addition to any other remedy given to the
Trustee or to the Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of
Default shall impair any such right or power or shall be construed to be a waiver of any such
Event of Default or acquiescence therein; such right or power may be exercised from time to
time as often as may be deemed expedient.
Section 8.3. 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 8.4. 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,
P6402-1 O58\922765v4.doc 31
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; nrovided, 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 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 and 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 8.5. Annointment of Receivers. Upon the occurrence of an Event of
Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings
to enforce the rights of the Trustee and of the Owners under this Indenture, the Trustee shall be
entitled, as a matter or right, to the appointment of a receiver or receivers of the Revenues and
other amounts pledged hereunder, pending such proceedings, with such powers as the court
making such appointment shall confer.
Section 8.6. 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 8.7. 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
P6402-1058\922765v4.doc 32
for a period of 60 days after such written request shall have been received by, and said tender of
indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy
hereunder; it being understood and intended that no one or more Owners shall have any right in
any manner whatever by 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 8.8. Termination of ProceedinQs. 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
BOND INSURANCE
Section 9.1. Pavments Under the Insurance Policv; Certain RiQhts of the
Insurer. As long as the Insurance Policy is in full force and effect, the Authority and the Trustee
agree to comply with the following provisions:
(a) In the event thai, on the second Business Day, and again on the Business
Day, prior to an Interest Payment Date, the Trustee has not received sufficient moneys to pay all
principal of and interest on the Bonds due on the second following or following, as the case may
be, Business Day, the Trustee shall immediately notify the Insurer or its designee on the same
Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of
the amount of the deficiency.
(b) If a deficiency exists pursuant to paragraph (a) above and is made up in
whole or in part prior to or on the Interest Payment Date, the Trustee shall so notify the Insurer
or its designee by telephone or telegraph, promptly confirmed in writing by registered or
certified mail or facsimile transmission.
(c) If the Trustee has received written notice that any Owner has been
required to disgorge payments of principal or interest on a Bond to a trustee in bankruptcy or
creditors or others pursuant to a final judgment by a court of competent jurisdiction that such
P6402-1058\922765 v4.doc 33
payment constitutes a voidable preference to such Owner within the meaning of any applicable
bankruptcy laws, then the Trustee shall notify the Insurer or its designee of such fact by
telephone or telegraphic notice, confirmed in writing by registered or certified mail.
(d) The Trustee is hereby irrevocably designated, appointed, directed and
authorized to act as attorney-in-fact for Owners as follows:
(1) If and to the extent there is a deficiency in amounts required to pay
interest on the Bonds, the Trustee shall (a) execute and deliver to the Insurance Paying Agent, in
form satisfactory to the Insurance Paying Agent, an instrument appointing the Insurer as agent
for such Owners in any legal proceeding related to the payment of such interest and an
assignment to the Insurer of the claims for interest to which such deficiency relates and which
are paid by the Insurer, (b) receive as designee of the respective Owners (and not as Trustee) in
accordance with the tenor of the Insurance Policy payment from the Insurance Paying Agent
with respect to the claims for interest so assigned, and (c) disburse the same to such respective
Owners; and
(2) If and to the extent of a deficiency in amounts required to pay principal of
the Bonds, the Trustee shall (a) execute and deliver to the Insurance Paying Agent in form
satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for such
Owner in any legal proceeding relating to the payment of such principal and an assignment to the
Insurer of any of the Bonds surrendered to the Insurance Paying Agent of so much of the
principal amount thereof as has not previously been paid or for which moneys are not held by ihe
Trustee and availab]e for such payment (but such assignment shall be delivered only if payment
from the Insurance Paying Agent is received), (b) receive as designee of the respective Owners
(and not as Trustee) in accordance with the tenor of the Insurance Policy payment therefor from
the Insurance Paying Agent, and (c) disburse the same to such Owners.
(e) Payments with respect to claims for interest on and principal of Bonds
disbursed by the Trustee from proceeds of the Insurance Policy shall not be considered to
discharge the obligation of the Authority with respect to such Bonds, and the Insurer shall
become the owner of such unpaid Bonds and claims in accordance with the tenor of the
assignment made to it under the provisions of this subsection or otherwise.
(f� Irrespective of whether any such assignment is executed and delivered, the
Authority and the Trustee hereby agree for the benefit of the Insurer that,
(1) They recognize that to the extent the Insurer makes payments,
directly or indirectly (as by paying through the Trustee), on account of principal of or interest on
the Bonds, the Insurer will be subrogated to the rights of such Owners to receive the amount of
such principal and interest from the Authority, with interest therefrom as provided and solely
from the sources stated in this Indenture and the Bonds; and
(2) They will accordingly pay to the Insurer the amount of such
principal and interest (including principal and interest recovered under subparagraph (ii) of thc
first paragraph of the Insurance Policy, which principal and interest shall be deemed past due and
not to have been paid), with interest thereon as provided in this Indenture and the Bonds, but
P6402- l OS8\922765v4.doc 34
only from the sources and in the manner provided herein for the payment of principal of and
interest on the Bonds to Owners, and will otherwise treat the Insurer as the owner of such rights
to the amount of such principal and interest.
(g) In connection with the issuance of Parity Debt by the Agency, the
Authority shall cause the Agency to deliver to the Insurer a copy of the disclosure document, if
any, circulated with respect to such Parity Debt.
(h) Copies of any amendments made to the documents executed in connection
with the issuance of the Bonds which are consented to by the Insurer shall be sent by the
Authority to S&P.
(i) The Insurer shall receive notice from the Authority of the resignation or
removal of the Trustee and the appointment of a successor thereto.
(j) The Authority shall cause the Agency, on an annual basis, to furnish the
Insurer with copies of the Agency's audited financial statements and annual budget.
(k) The Insurer shall receive notice from the Authority at least fifteen
Business Days prior to any advance refunding of any Outstanding Bonds.
(1) Excepting the bond purchase agreement relating to the sale of the Bonds to
the Underwriter and the lawful public trading of the Bonds in the securities market, the Authority
shall not enter into any agreement nor shall it consent to or participate in any arrangement
pursuant to which Bonds are tendered or purchased for any purpose other than the redemption
and cancellation or legal defeasance of such Bonds without the prior written consent of the
Insurer.
Section 9.2. Notices. As long as the Insurance Policy is in full force and effect,
the Trustee shall provide the Insurer a copy of any notice that is required to be given to an Owner
pursuant to this Indenture. All notices required to be given to the Insurer under the Indenture
shall be in writing and shall be sent by registered or certified mail addressed to MB1A Insurance
Corporation, 113 King Street, Armonk, New York 10504, Attention: Insured Portfolio
Management.
Section 9.3. Control of Remedies upon Default. Notwithstanding the
provisions of Sections 8.2 and 8.4, as long as the Insurance Policy is in full force and effect,
upon the occurrence and continuance of an Event of Default, the Insurer, acting alone, shall be
entitled to control and direct the enforcement of all rights and remedies granted to the Owners or
the Trustee for the benefit of the Owners under this Indenture; provided, however, the Trustee
shall not be liable for any action or inaction taken at the direction of the Insurer. Any
acceleration of the Bonds or annulment thereof pursuant to Section 8.2 shall be subject to the
prior written consent of the Insurer. No waiver of a default shall be effective without the written
consent of the Insurer.
Section 9.4. Susnension or Termination of RiQhts of Insurer. All rights of the
Insurer to direct or consent to actions of the Authority, the Agency, the Trustee or the Owners
under this Indenture or under the Loan Agreement shall be suspended during any period in which
P6402- ] 058\922765v4.doc 35
the Insurer is in default in its payment obligations under the Insurance Policy (except to the
extent of amounts previously paid by the Insurer and due and owing to the Insurer) and shall be
of no force or effect in the event the Insurance Policy is no longer in effect or the Insurer asserts
that the Insurance Policy is not in effect.
ARTICLE X
BOOK-ENTRY SYSTEM
Section 10.1. 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 10.3, 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
notice of redemption, (iii) the selection by the Depository and its Pariicipants 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 [o principal of, premium, if any, or
interest due with respect to the Bonds. The Authority and the Trustee may treat and consider the
person in whose name each Bond is registered in the registration books kept by the Trustee as the
holder and absolute owner of such Bond for the purpose of payment of principal, premium, if
any, and interest with respect to such Bond, for the purpose of giving notices of redemption and
other matters with respect to such Bond, for the purpose of registering transfers with respect to
such Bond, and for all other purposes whatsoever. The Trustee shall pay ail principal of,
premium, if any, and interest due with respect to the Bonds only to or upon the order of the
respective Owners, as shown in the registration books kept by the Trustee, or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy
and discharge fully the Authority's obligations with respect to payment of the principal,
premium, if any, and interest due with respect to the Bonds to the extent of the sum or sums so
paid. No person other than an Owner, as shown in the registration books kept by the Trustee,
shall receive a Bond evidencing the obligation of the Authority to make payments of principal,
premium, if any, and interest pursuant to this Indenture. Upon delivery by the Depository to the
Trustee and the Authority of written notice to the effect that the Depository has 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.
P6402-1058�922765v4.doc 36
Section 10.2. Representation Letter. In order to qualify ihe 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 io ihe 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 10.3. 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 2.9.
Section 10.4. Pavments to the Nominee. Notwithstanding any other provisions
of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee,
all payments with respect to principal, premium, if any, and interest due with respect to such
Bond and all notices with respect to such Bond shall be made and given, respectively, as
provided in the Representation Letter or as otherwise instructed by the Depository.
Section 10.5. Initial Deoository and Nominee. The initial Depository under this
Article shall be The Depository Trust Company, New York, New York. The initial Nominee
shall be Cede & Co., as Nominee of The Depository Trust Company, New York, New York.
ARTICLE XI
MISCELLANEOUS
Section 11.1. 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 lndenture 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
P6402-1058\922765v4.doc 37
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 l.2. Bene�ts of Indenture Limited to Parties. Nothing in this Indenture,
expressed or implied, is intended to give to any person other than the Authority, the Trustee, the
Agency, the Insurer, and the Owners of the Bonds, any right, remedy or claim under or by reason
of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture
contained by and on behalf of the Authority shall be for the sole and exclusive benefit of the
Trustee, the Agency, the Insurer, and the Owners of the Bonds.
Section 11.3. DischarQe 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;
(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 Defeasance Obligations in such amount as an Independent Accountant shall
determine will, together with the interest to accrue thereon and available moneys then on deposit
in the funds and accounts established with the Trustee pursuant to this Indenture and the Loan
Agreement, be fully sufficient to pay and discharge the indebtedness on such Bonds (including
all principal, interest and redemption premiums) at or before their respective maturity dates; and
if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shal]
have been sent pursuant to Section 2.3 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
pucpose as aforesaid, and all expenses and costs of the Trustee. Any funds held by the Trustee,
following any payment or discharge of the Outstanding Bonds pursuant to this Section 11.3 and
the payment of the Trustee's and the Insurer's expenses and costs, shall be paid over to the
Authority.
In the case of a defeasance of all or a portion of the Bonds pursuant to clause (c) above,
the Authority shall deliver to the Insurer the following: (i) a written opinion of Bond Counsel as
to the discharge and satisfaction of the lien of this Indenture with respect to such Bonds (which
P6402-1058\922765 v4.doc 3 g
opinion may rely on the verification of an Independent Accountant of the amounts which shall be
sufficient to discharge and satisfaction of the lien of this Indenture with respect to such Bonds);
and (ii) with respect to any advance refunding (within the meaning of the Code), a written notice
at least 15 Business Days before such defeasance, and a report prepared by the Independent
Accountant verifying the amounts sufficient to discharge and satisfaction of the lien of this
Indenture with respect to such Bonds.
Section 11.4. Successor Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture the Authority is named or
referred to, such reference shall be deemed to include the successor to the powers, duties and
functions, with respect to the management, administration and control of the affairs of the
Authority, thai 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 ] 1.5. 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, 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 matiers, 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 i 1.6. Execution of Documents bv Owners. Any request, consent or
other instrument required by this Indenture to be signed and executed by Bond Owners may be in
any number of concurrent writings of substantially similar tenor and may be signed or executed
by such Bond Owners in person or by their agent or agents duly appointed in writing. Proof of
the execution of any such request, consent or other instrument or of a writing appointing any
such agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor
of the Trustee and of the Authority if made in the manner provided in this Section 11.6.
P6402-1058�922765v4.doc 39
The fact and date of the execution by any person of any such request, consent or
other instrument or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer of any jurisdiction, authorized by the laws
thereof to take acknowledgments of deeds, certifying that the person signing such request,
consent or other instrument or writing acknowledged to him the execution thereof.
The ownership of Bonds shall be proved by the Registration Books. Any request,
consent or vote of the Owner of any Bond shall bind every future Owner of the same Bond and
the Owner of any Bond issued in exchange therefor or in lieu thereof, in respect of anything done
or suffered to be done by the Trustee or the Authority in pursuance of such request, consent or
vote. In lieu of obtaining any demand, request, direction, consent or waiver in writing, the
Trustee may call and hold a meeting of the Bond Owners upon such notice and in accordance
with such rules and obligations as the Trustee considers fair and reasonable for the purpose of
obtaining any such action.
Section 11.7. 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) shal]
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 I 1.8. 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.
Section 11.9. PaRial 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.
Scction 1 l.lU. 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
P6402-1058\922765 v4. doc 4�
upon any statemen[ 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 11.1 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 I 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 11.13. 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
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
73-510 Fred Waring Drive
Palm Desert, California 92260
Attention: Chief Administrative Officer
Facsimile: (760) 340-0574
If to the Agency: Palm Desert Redevelopment Agency
73-510 Fred Waring Drive
Palm Desert, California 92260
Attention: Executive Director
Facsimile: (760) 340-0574
r
P6402-1058\922765v4.doc 41
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: MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management Group
Facsimile: (914) 765-3161
The Authority, the Agency, the Trustee and the Insurer may designate any further
or different addresses to which subsequent notices, certificates or other communications shall be
sent. Notices to the Insurer shall be also governed by Section 9.2.
Section 11.14. Unclaimed Monevs. Anything in this Indenture to the contrary
notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of
the Bonds or the interest thereon which remain unclaimed for two years after the date when such
Bonds or the interest thereon have become due and payable, either at their stated maturity dates
or by call for earlier redemption, if such moneys were held by the Trustee at such date, or for two
years after the date of deposit of such moneys if deposited with the Trustee after said date when
such Bonds or the interest thereon become due and payable, shall, at the Request of the
Authority, be repaid by the Trustee to the Authority, as its absolute property and free from trust,
and the Trustee shal] thereupon be released and discharged with respect thereto and the Owners
shall look only to the Authority for the payment of such Bonds; provided, however, that before
making any such payment to the Authority, the Trustee shall, at the Request and at the expense
of the Authority, cause to be mailed to the Owners of all such Bonds, at their respective
addresses appearing on the Registration Books, a notice that said moneys remain unclaimed and
that, after a date named in said notice, which date shall not be less than 30 days after the date of
mailing of such notice, the balance of such moneys then unclaimed will be returned to the
Authority.
Section 11.15. GoverninQ Law. This Agreement shall be construed and governed
in accordance with the laws of the State of California.
P(Ki02-1058\922765v4.doc 42
IN WITNESS WHEREOF, the PALM DESERT FINANCING AUT'HORITY 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
PG402-1058\922765v4.doc 43
EXHIBIT A
(FORM OF BOND]
Unless this certificate is presented by an authorized representative of The Depository Trust
Company, a IVew York corporation ("DTC"}, to the Authority or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the name of Cede &
Co. or in such other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALLTE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
No.
�
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION REFUNDING REVENUE BOND
(PROJECT AREA NO. 1, AS AMENDED)
2007 SERIES A
INTEREST RATE MATURITY DATE
ORIGINAL
ISSUE DATE
CUSIP
.,
REGISTERED OWNER:
Apri 1 1, 20
CEDE & CO.
PRINCIPAL AMOUNT:
January _, 2007
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 regis[ered
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 2007A Bond (unless this Series 2007A 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
2007A Bond is authenticated on or prior to September 15, 2007, in which event it shall bear
interest from the Original Issue Date identified above; provided, however, that if, at the time of
authentication of this Series 2007A Bond, interest is in default on [his Series 2007A Bond, this
Series 2007A 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
P6402- ] 058\922765v4.doc f�-1
October 1 in each year, commencing October 1, 2007 (the "Interest Payment Dates") until
payment of such Principal Amount in full. The Principal Amount hereof 15 payable upon
presentation of this Series 2007A Bond 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 2007A Bond is one of a duly authorized issue of bonds of the Authority
designaced the Palm Desert Financing Authority, Tax Allocation Refunding Revenue Bonds
(Project Area No. l, As Amended), 2007 Series A(the "Bonds" or the "Bonds"), limited in
principal amount to $ . The Bonds are secured by an Indenture of Trust, dated as of
January 1, 2007 (the "Indenture"), by and between the Authority and the Trustee. Unless the
context clearly requires otherwise, capitalized terms used but not defined herein have the
meanings ascribed to them in the Indenture. Reference is hereby made to the Indenture and all
indentures supplemental thereto for a description of the rights thereunder of the owners of the
Bonds, of the nature and extent of the Revenues, of the rights, duties and immunities of the
Trustee and of the rights and obligations of the Authority thereunder; and all of the terms of the
Indenture are hereby incorporated herein and constitute a contract between the Authority and the
Registered Owner hereof, and to all of the provisions of which Indenture the Registered Owner
hereof, by acceptance hereof, assents and agrees.
The Bonds are authorized to be issued pursuant to the provisions of the Marks-Roos
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 Bonds have been issued for the purpose of making a loan (the "Series 2007A 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 Projcct Area
No. 1, As Amended. The Series 2007A Loan has been made by the Authority to the Agency
P6402-1058\92276Sv4.doc A-2
pursuant to a Project Area No. 1, as Amended, Loan Agreement dated as of January 1, 2007 (the
"Loan Agreement"), by and among the Agency, the Authority and the Trustee.
The Bonds maturing on or after April 1, 20_ are subject to redemption prior to their
respective maturity dates as a whole, or in par[ among maturities as designated by the Authority
and by lot within a maturity, from prepayments of the Series 2007A Loan made at the option of
the Agency pursuant to the Loan Agreement, on any Interest Payment Date on or after April 1,
20_, at a redemption price equal to [100] percent of the principal amount of Bonds to be
redeemed, plus accrued interest thereon to the date of redemption, without premium.
The Series 2007A Term Bonds maturing on April 1, 20_ are also subject to mandatory
sinking fund redemption by lot, on April 1, 20_, 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; provided,
however, that in lieu of redemption thereof, such Bonds may be purchased by the Agency
pursuant to the Loan Agreement.
The Trustee on behalf and at the expense of the Authority shall send by first class mail
(or such other means acceptable to such registered owner and institutions) notice of any
redemption to the respective owners of any Bonds designated for redemption, at their respective
addresses appearing on the registration books maintained by the Trustee, to the Securities
Depositories and to one or more Information Services, at least 30 but not more than 60 days prior
to the redemption date; provided, however, that neither failure to receive any such notice so sent
nor any defect therein shall affect the validity of the proceedings for the redemption of such
Bonds or the cessation of the accrual of interest thereon. Such notice shall state the date of the
notice, the redemption date, the redemption place and the redemption price and shall designate
the CUSIP numbers, the serial numbers of each maturity or maturities (except that if the event of
redemption is of all of the Bonds of such maturity or maturities in whole, the Trustee shall
designate such maturities or the maturity in whole without referencing each individual number)
of the Bonds to be redeemed, and shall require that such Bonds be then surrendered at the Trust
Office for redemption at the redemption price, giving notice also that further interest on such
Bonds will not accrue from and after the redemption date.
Subject to the limitations and upon payment of the charges, if any, provided in the
Indenture, this Series 2007A Bond may be exchanged at the Trust Office for a like aggregate
principal amount and maturi[y of fully registered Bonds of other authorized denominations.
This Series 2007A 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 2007A Bond. Upon such transfer a new fully
registered Series 2007A Bond or Bonds, of authorized denomination or denominations, for the
same aggregate principal amount and of the same maturity will be issued to the transferee in
exchange therefor. The Trustee shall not be required to register the transfer or exchange of any
Series 2007A Bond during the 15-day period preceding the selection of Bonds for redemption or
any Series 2007A Bond selected for redemption. The Authority and the Trustee may treat the
PG402-1058\922765v4.doc fi-3
Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority and the
Trustee shall not be affected by any notice to the contrary.
The Indenture and the rights and obligations of the Authority and of the owners of the
Bonds and of the Trustee may be modified or amended from time to time and at any time in the
manner, to the extent, and upon the terms provided in the Indenture; provided that no such
modification or amendment shall (a) extend the maturity of or reduce the interest rate on any
Series 2007A Bond or otherwise alter or impair the obligation of the Authority to pay the
principal, interest or premiums at [he time and place and at the rate and in the currency provided
therein of any Series 2007A Bond without the express written consent of the Owner of such
Series 2007A Bond, (b) reduce the percentage of Bonds required for the written consent to any
such amendment or modification, or (c) without its written consent thereto, modify any of the
rights or obligations of the Trustee, all as more fully set forth in the Indenture.
It is hereby certified that all things, conditions and acts required to exist, to have
happened and to have been performed precedent to and in the issuance of this Series 2007A
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 2007A 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 2007A 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.
P6402-1058\922765v4.doc A-4
IN WITNESS WHEREOF, the Authority has caused this Series 2007A 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
:
President
Attest:
Secretary
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a policy containing the following
provisions, such policy being on file at Wells Fargo Bank National Association, Los Angeles,
California.
The Insurer, in consideration of the payment of the premium and subject to the terms of
this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter
defined, of the following described obligations, the full and complete payment required to be
made by or on behalf of the Authority to Wells Fargo Bank National Association, Los Angeles,
California or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either
at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund
payment) and interest on, the Obligations (as that term is defined below) as such payments shall
become due but shall not be so paid (except that in the event of any acceleration of the due date
of such principal by reason of mandatory or optional redemption or acceleration resulting from
default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking
fund payment, the payments guaranteed hereby shall be made in such amounts and at such times
as such payments of principal would have been due had there not been any such acceleration);
and (ii) the reimbursement of any such payment which is subsequently recovered from any
owner pursuant to a final judgment by a court of competent jurisdiction that such payment
constitutes an avoidable preference to such owner within the meaning of any applicable
bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be
referred to herein collectively as the "Insured Amounts." "Obligations" shall mean:
P6402-1058\922765 v4.doc A-$
$
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION REFUNDING REVENUE BONDS
(PROJECT AREA NO. 1, AS AMENDED)
2007 SERIES A
Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in
writing by registered or certified mail, or upon receipt of written notice by registered or certified
mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an
Insured Amount for which is then due, that such required payment has not been made, the
Insurer on the due date of such payment or within one business day after receipt of notice of such
nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank
National Association, in New York, New York, or its successor, sufficient for the payment of
any such Insured Amounts which are then due. Upon presentment and surrender of such
Obligations or presentment of such other proof of ownership of the Obligations, together wiih
any appropriate instruments of assignment to evidence the assignment of the Insured Amounts
due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the
appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding
related to payment of Insured Amounts on the Obligations, such instruments being in a form
satisfactory to U.S. Bank National Association, U.S. Bank National Association shall disburse to
such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less
any amount held by the Paying Agent for the payment of such Insured Amounts and legally
available therefor. This policy does not insure against loss of any prepayment premium which
may at any time be payable with respect to any Obligation.
As used herein, the term "owner" shall mean the registered owner of any Obligation as
indicated in the books maintained by the Paying Agent, the Authority, or any designee of the
Authority for such purpose. The term owner shall not include the Authority or any party whose
agreement with the Authority constitutes the underlying security for the Obligations.
Any service of process on the Insurer may be made to the Insurer at its offices located at
113 King Street, Armonk, New York 10504 and such service of process shall be valid and
binding.
This policy is non-cancellable for any reason. The premium on this policy is not
refundable for any reason including the payment prior to maturity of the Obligations.
In the event the Insurer were to become insolvent, any claims arising under a policy of
financial guaranty insurance are excluded from coverage by the California lnsurance Guaranty
Association, established pursuant to Article 14.2 (commencing with Section 1063) of Chapter 1
of Part 2 of Division 1 of the California lnsurance Code.
MBIA INSURANCE CORPORATION
---------------------
---------------------
PEr302-1058\922765v4.doc A-6
[FORM OF TRUSTEE'S CERTIFICATE OF AUTI-�NTICATION]
This is one of the Bonds described in the within-mentioned Indenture and registered on
the Bond Registration Books.
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
Date:
:
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 2007A 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 2007A 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.
P6402-1058\922765v4.doc A-%
Proiect Area No. 1, As Amended, Loan A�reement
with reference to
Palm Desert Financing Authority
Tax Allocation Refunding Revenue Bonds
(Project Area No. 1, As Amended)
2007 Series A
P6d112-II)SR'�)?�1176�5 doc RWG I)RAI T. I 1�220Ub
TABLE OF CONTENTS
Pa�e
ARTICLE I DEFINITIONS ........................................................................................................... 2
Section1.1. Definitions .................................................................................................... 2
Section 1.2. Rules of Construction . ................................................................................. 5
ARTICLE II THE SERIES 2007A LOAN; APPLICATION OF LOAN PROCEEDS; PARITY
DEBT................................................................................................................ 6
Section 2.1. Authorization . .............................................................................................. 6
Section 2.2. Disbursement and Application of Loan Proceeds ........................................ 6
Section 2.3. Repayment of Series 2007A Loan . .............................................................. 6
Section 2.4. Optional Prepayment . .................................................................................. 7
Section 2.5. Reserve Fund . .............................................................................................. 7
Section 2.6. Costs of Issuance Fund . ............................................................................... 9
Section2.7. Project Fund ................................................................................................. 9
Section2.8. Parity Debt . ................................................................................................ 10
Section 2.9. Issuance of Subordinate Debt . ................................................................... 10
Section 2.10. Validity of Series 2007A Loan . ................................................................. 11
ARTICLE III PLEDGE AND APPLICATION OF TAX REVENUES ...................................... 11
Section 3.1. Pledge of Tax Revenues ............................................................................. 11
Section 3.2. Special Fund; Deposit of Tax Revenues .................................................... 11
Section 3.3. Transfer of Tax Revenues From Special Fund . ......................................... 11
Section 3.4. Investment of Moneys; Valuation of Investments . .................................... 12
ARTICLE IV OTHER COVENANTS OF THE AGENCY ........................................................ l3
Section 4.1. Punctual Payment; Extension of Payments ................................................ 13
Section 4.2. Limitation on Additional Indebtedness ...................................................... 13
Section 4.3. Payment of Claims ..................................................................................... 13
Section 4.4. Books and Accounts; Financial Statements ............................................... 13
Section 4.5. Protection of Security and Rights . ............................................................. 14
Section 4.6. Paymenis of Taxes and Other Charges . ..................................................... 14
Section 4.7. Taxation of Leased Property ...................................................................... 14
Section 4.8. Disposition of Property . ............................................................................. 14
Section 4.9. Maintenance of Tax Revenues ................................................................... 14
Section 4.10. Payment of Expenses; lndemnification . .................................................... 15
Section 4.1 1. Tax Covenants . .......................................................................................... 15
Section 4.12. Redevelopment of Project Area . ................................................................ 16
Section 4.13. Low and Moderate Income Housing Fund . ............................................... 17
P��a��z- i nsR �>>a i ��,� s doc �
Section 4.14. Annual Review of "Cax Revenues . ............................................................. 17
Section 4.15. Further Assurances ..................................................................................... 17
ARTICLE V EVENTS OF DEFAULT AND REMEDIES ......................................................... 17
Section 5.1. Events of Default and Acceleration of Maturities . .................................... 17
Section 5.2. Application of Funds Upon Default ........................................................... 18
Section5.3. No Waiver .................................................................................................. 19
Section 5.4. Agreement to Pay Attorneys' Fees and Expenses . .................................... 19
Section 5.5. Remedies Not Exclusive ............................................................................ 20
Section 5.6. Control of Remedies by Insurer ................................................................. 20
ARTICLE VI MISCELLANEOUS ..............................................................................................20
Section 6.1. Benefits Limited to Parties ......................................................................... 20
Section G.2. Successor Deemed Included in All References to Predecessor ................. 20
Section 6.3. Discharge of Loan Agreement ................................................................... 20
Section6.4. Amendment ................................................................................................ 21
Section 6.5. Waiver of Personal Liability ...................................................................... 21
Section 6.6. Payment on Business Days . ....................................................................... 21
Section6.7. Notices . ...................................................................................................... 22
Section 6.8. Rights of Insurer . ....................................................................................... 22
Section6.9. Surety Bond . .............................................................................................. 22
Section 6.10. Partial Invalidity ......................................................................................... 23
Section 6.11. Article and Section Headings and References . .......................................... 23
Section 6.12. Execution of Counterparts . ........................................................................ 23
Section 6.13. Governing Law . ......................................................................................... 23
Section 6.14. The Trustee . ............................................................................................... 23
EXHIBIT A- SCHEDULE OF SERIES 2007A LOAN PAYMENTS
P6402-Illi�i y?4176�> du� I1
PROJECT AREA NO. l, AS AMENDED, LOAN AGREEMENT
This Project Area No. 1, as Amended, Loan Agrecment (this "Loan Agreement")
is made and entered into as of January 1, 2007, by and among the Palm Desert Redevelopment
Agency, a public body, corporate and politic, duly organized and validly existing under the laws
of the State of California (the "Agency"), the Palm Desert Financing Authority, a joint powers
authority duly organized and validly existing under the laws of the State of California (the
"Authority"), and Wells Fargo Bank, National Association, a national banking association duly
organized and validly existing under the laws of the United States of America (the "Trustee").
Recitals
A. The 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, as amended, for the Project Area (as defined in
thc below-mentioned Indenture) has been duly approved and adopted by the City.
C. The Agency has determined to incur a loan (the "Series 2007A Loan")
hereunder for the object and purpose of financing and refinancing public capital improvements
of benefit to the Project Area, as provided herein, 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.
1, As Amended), 2007 Series A(the "Bonds"), pursuant to the Bond Law and an Indenture of
Trust, dated as of January l, 2007 (the "Indenture"), by and between the Authority and the
Trustee, for the purpose of providing funds to make the Series 2007A Loan 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 Authority and the Agency have determined that all acts and
proceedings required by law necessary to make this Loan Agreement, when executed by the
Agency, the Trustee and the Authority, the valid, binding and legal obligation of the Agency and
the Authority, and to constitute this Loan Agreement a valid and binding agreement for the uses
and purposes herein set forth in accordance with its terms, have been done and taken, and the
execution and delivery of this Loan Agreement have been in all respects duly authorized.
NOW, THEIZEFORE, in consideration of the premises and the mutual agreements
herein containcd, the parties hereto do hereby agree as follows:
PGau2- ���ss•��?a � �6� � doc 1
ARTICLE I
DEFINITIONS
��rti�n I.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 1.1 shall, for all purposes of this Loan Agreement, have the respective meanings
herein specified.
"Bonds" means the Palm Desert Financing Authority Tax Allocation Refunding
Revenue Bonds (Project Area No. l, As Amended), 2007 Series A.
"Costs of Issuance" means all expenses incurred in connection with the
authorization, issuance, sale and delivery of the Bonds and the making of the Series 2007A Loan
pursuant to the Loan Agreement, including but not limited to all compensation, fees and
expenses (including but not limited to fees and expenses for legal counsel) of the Authority and
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 2.6.
"Escrow Fund" means the fund by that name established under the Escrow
Agreement (Project Area No. l, as Amended), dated as of even date herewith, by and among the
Authority, the Agency and Wells Fargo Bank, National Association, as escrow agent, relating to
the refunding of the portion of the Authority's Tax Allocation Refunding Revenue Bonds
(Project Area No. 1, As Amended) Series 1997, scheduled to mature on April 1, 2008 and
thereafter through April 1, 2018.
"Event of Default" means any of the events described in Section 5.1.
"Financial Guarantv A�reement" means the Financial Guaranty Agreement, by
and between the Agency and the Insurer relating to the issuance of the Surety Bond.
"Indenture" means the Indenture of Trust, dated as of January 1, 2007, 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.
"Independent Redevelopment Consultant" means any consultant or firm of such
consultants appointed by or acceptable to the Agency, and who, or each of whom: (i) is judged
by the Agency to have experience in matters relating to the collection of Tax Revenues or
otherwise with respect to the financing of redevelopment projects; (ii) is in fact independent and
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
I�o-tn2- � n;s•�)?a � 7Gvs doc 2
(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.
"Loan A�reement" means this Project Area No. l, As Amended, Loan
Agreement, as it 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 Series 2007A Loan and all outstanding Parity Debt in such Bond Year,
assuming that principal thereof is paid as scheduled and that any mandatory sinking fund
payments are made as scheduled, and (ii) the amount of principal payable on the Series 2007A
Loan and all outstanding Parity Debt in such Bond Year, including any principal required to be
prepaid by operation of mandatory sinking fund payments. For purposes of such calculation, at
the option of the Agency and specified to the Trustee in writing, there may 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 at least equal 115 percent of the amount of Maximum Annual Debt
Scrvice.
"1997 Loan" means the outstanding balance of the loan made by the Authority to
the Agency pursuant to the 1997 Loan Agreement.
"1997 Loan A�reement" means the Project Area No. 1, As Amended, Loan
Agreement dated as of July 1, 1997, by and among the Agency, the Authority and First Trust of
California, National Association, as succeeded by Wells Fargo Bank, National Association, as
trustee.
"Parity Debt" means the 1997 Loan, the 2002 Loan, the 2003 Loan, the 2004
Loan, the 2006 Loans and any other loans, bonds, notes, advances, or indebtedness payable from
Tax Revenues on a parity with the Series 2007A Loan, issued or incuned pursuant to and in
accordancc with the provisions of Section 2.8.
"Paritv Debt Instrument" means the 1997 Loan Agreement, the 2002 Loan
Agreement, the 2003 Loan Agreement, the 2004 Loan Agreement, the 2006 Loan Agreement
and any other 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 entered into by
the Agency on or prior to the date hereof pursuant to Section 33401 of the Redevelopment Law
with (i) the County of Riverside, (ii) the Coachella Valley Mosquito Abatement District, (iii) the
Coachella Valley Recreation and Park District, (iv) the Coachella Valley Water District, (v) the
Desert Community College District, (vi) the Desert Sands Unified School District and (vii) the
Riverside County Superintendent of Schools.
"Plan Limitations" means the limitations contained or incorporated in ttie
Redevelopment Plan on (i) the aggregate principal amount of bonded indebtedness payable from
Tax Revenues which may be outstanding at any time, (ii) the ag�regate amount of taxes which
PG-11�2- I U�8 9?-31 ?�n S.duc �
may be divided and allocated to the Agency pursuant to the Redevelopment Plan, and (iii) the
period of time for establishing or repaying 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 2.7.
"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 2.5, provided that all of the following
requirements are met at the time of deposit with the Trusiee: (i) either (a) the long-term credit
rating of such bank is within one of the two highest rating categories by Moody's or S&P, or the
claims paying ability of such insurance company is rated within one of the two highest rating
categories 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 ietter of credit or surety bond has a stated amouiit at
least equal to the portion of the Reserve Requirement with respect to which funds are proposed
to be released pursuant to Section 2.5; 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 3.3(a).
"Redevelovment Fund" means the Project Area No. l, As Amended,
Redevelopment Fund, heretofore established and held by the Agency.
"Redevelopment Proiect" means the undertaking of the Agency pursuant to the
Redevelopment Plan and the Redevelopment Law for the redevelopment of the Project Area.
"Reserve Fund" means the Project Area No. 1, As Amended, Reserve Fund held
by the Trustee pursuant to Section 2.5.
"Reserve ReQuirement," means the least of (i) Maximum Annual Debt Service,
(ii) 125 percent of average annual debt service on the Series 2007A Loan and all outstanding
Parity Debt, and (iii) 10 percent of the proceeds of the Series 2007A Loan (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 2007A Loan" means the loan made by the Authority to the Agency
pursuant to Section 2.1(a) from the proceeds of the Bonds in the principal amount of $
"Special Fund" means the fund by that name held by the Agency pursuant to
Section 3.2.
"Subordinate Debt" means any loans, advances or indebtedness issued or incurred
by the Agency in accordance with the reyuirements of Section 2.9, 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
P�,an2- i n5� 9?� 1 �r,� � duc 4
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 Series 2007A Loan and any Parity Debt.
"Suretv Bond" means thc Qualified Reserve Fund Credit ]nstruments issued by
the Insurer concurrently with the issuance and delivery of the Bonds 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.
"2006 Loans" means the outstanding balance of the loans madc by the Authority
to the Agency pursuant to the 2006 Loan Agreement.
"2006 Loan AQreement" means the Project Area No. l, As Amended, Loan
Agreement dated as of July l, 2006, by and among the Agency, the Authority and Wells Fargo
Bank, National Association, as trustee.
"2004 Loan" means the outstanding balance of the loan made by the Authority to
the Agency pursuant to the 2004 Loan Agreement.
"2004 Loan AQreement" means the Project Area No. 1, As Amended, Loan
Agreement dated as of June 1, 2004, by and among the Agency, the Authority and BNY Western
Trust Company, as succeeded by Wells Fargo Bank, National Association, as trustee.
"2003 Loan" means the outstanding balance of the loan made by the Authority to
the Agency pursuant to the 2003 Loan Agreement.
"2003 Loan A�reement" means the Project Area No. 1, As Amended, Loan
Agreement dated as of July l, 2003, by and among the Agency, the Authority and BNY Western
Trust Company, as succeeded by Wells Fargo Bank, National Association, as trustee.
"2002 Loan" means the outstanding balance of the loan made by the Authority to
the Agency pursuant to the 2002 Loan Agreement.
"2002 Loan AQreement" means the Project Area No. 1, As Amended, Loan
Agreement dated as of March 1, 2002, by and among the Agency, the Authority and BNY
Western Trust Company, as succeeded by Wells Fargo Bank, National Association, as trustee.
��; tic��� l.'_. Rules of Construction. All references herein to "Articles,"
"Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of
this Loan Agreemcnt, and thc words "herein," "hereof," "hereunder" and other words of similar
P(,�3112• 11)SR!)2� 17(,� i duc S
import refer to this Loan Agreement as a whole and not to any parcicular Article, Section or
subdivision hereof.
ARTICLE II
THE SERIES 2007A LOAN; APPLICATION OF LOAN PROCEEDS;
PARITY DEBT
S�cti��n '.I . Authorization. (a) The Authority hereby agrees to lend and the
Agency agrees to accept the Series 2007A Loan in the principal amount of $ under and
subject to the terms of this Loan Agreement, the Bond Law and the Redevelopment Law.
(b) This Loan Agreement constitutes a continuing agreement to secure the full
and final payment of the Series 2007A Loan, subject to the covenants, agreements, provisions
and conditions herein contained.
���ctiun �.�. Disbursement and Apolication of Loan Proceeds. On the Closin�
Date, the Authority shall cause to be deposited into the Series 2007A Loan Fund the amount of
$ , which shall be held by the Trustee and which shall be disbursed as follows:
Issuance Fund.
(i) The Trustee shall transfer the amount of $� to the Costs of
(ii} The Trustee shatl transfer the amount of $_ to the Escrow Fund.
(iii) The Trustee shall transfer the remaining amount of $ to the
Project Fund.
On the Closing Date, the Authority and the Agency shall also cause the amount of
$_ to be paid to the Insurer for the cost 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 accouni for the foregoing transfers.
S�ctiem ?. �. Repavment of Series 2007A Loan. The Agency shall, subject to
prepayment as provided in Section 2.4(a), repay the principal of the Series 2007A Loan in
installments on April 1 in each of the years and in the amounts, and shall pay interest on the
unpaid principal balance of the Series 2007A 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 2007A Loan shall be prepaid pursuant to Section 2.4(a), or in the event
the Bonds shall be redeemed pursuant to Section 2.3(a) of the Indentiire, the schedule of
P�,du?- � ns£+�9za � ��,� >��oc G
principal installments set forth in Exhibit A hereto shall be reduced as directed by the Agency to
the Trustee.
The obligation of the Agency to repay the Series 2007A Loan is, subject to
Section 3.1, 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 Series 2007A Loan shall be payable by the
Agency to the Trustee, as assignee of the Authority under the Indenture, in lawful money of the
United States. Payment of such principal and interest shall be secured, and amounts for the
payment thereof shall be deposited with the Trustee at the times, as set forth in Article III.
Notwithstandir►g the foregoing provisions of this Section 2.3, in lieu of payment
of any installment of principal of the Serics 2007A Loan coming due and payable on April 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 April 1, and tender sucl�
Bonds for cancellation, provided that such tender shall be made before the preceding January 15.
Section 2.4. Optional Prenavment.
(a) The Agency shall have the right to prepay principal installments of the
Series 2007A Loan, in any integral multiple of $5,000, such prepayment to be allacated among
such principal installments as the Agency may determine upon Request to the Authority and the
Trustee provided not less than 45 days prior to the prepayment date, on any Interest Payment
Date on which the Bonds are subject to redemption pursuant to Section 2.3(a) of the Indenture,
by depositing with the Trustee an amount sufficient to redeem a like aggregate principal amount
of Bonds together with the amount of accrued interest and premium, if any, required to be paid
upon such redemption.
(b) Before making any prepayment pursuant to this Section, the Agency shall
give written notice to the Authority and the Trustee describing such event and specifying the date
on which the prepayment will be paid and the order thereof, which date shall be not less than 45
days from the date such notice is given; provided, that notwithstanding any such prepayment, the
Agency shall not be relieved of its obligations with respect to the Series 2007A Loan, including
specifically its obligations under this Article, until the Series 2007A Loan shall have been fully
paid (or provision for payment thereof shall have been made pursuant to Section 6.3).
(c) The Authority agrees that upon payment by the Agency to the Trustee of
such amount, the Authority shall take or cause to be taken any and all steps required under the
Indenture to redeem such Outstanding Bonds of the applicable series on the redemption date
designated by the Agency; nrovided, however, that such date shall be a date of redemption of
such Bonds, for which notice has been timely given pursuant to the Indenture.
Sccti���� �.�. Reserve Fund. There is heretofore established a separate fund
known as the "Project Area No. 1, As Amended, Reserve Fund," which shall continue to be held
by the Trustee in trust for the benefit of the Atithority and thc Owners of thc Bonds and the
N�,ao?-i osa��2a i ��>� s<io� 7
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 securc the Agency's payment obligations under Sections 2.3 and 3.3(a). The
amount on deposit in the Reserve Fund shall be maintained at the Reserve Requirement ai 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 3.3(a), the Trustee shall withdraw from the Reserve
Fund and transfer to the Interest Account and the Principal Account, in such order, an amount
equal to the difference between (i) the amount required to be deposited pursuant to Section 3.3(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 Reyuirement, the Trustee shall notify
the Agency as soon as practicable of the amount required to be deposited therein to restore the
balance to the Reserve Requirement, such notice to be given by telephone, telefax or other form
of telecommunications promptly confirmed in writing, and the Agency shall thereupon transfer
to the Trustee the amount needed to restore the Reserve Fund to the Reserve Requirement.
In the event that the amount on deposit in the Reserve Fund on the 15th calcndar
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 shall (i) transfer such amounts to the Revenue Fund, (ii) if directed by the
Agency pursuant to a Written Request, apply such amounts toward the prepayment of the Series
2007A Loan pursuant to Section 2.4 or the prepayment of any Parity Debt, or (iii) upon receipt
of prior Request of the Agency to pay such amounts to the Agency to be used for any lawful
purpose relating to the 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 (as long as the policy insuring such Parity
Debt is in full force and effect), the Reserve Requirement may be satisfied by crediting to the
Reserve Fund moneys or a Qualified Reserve Fund Credii Instrument or any combination
thereof, which in the aggregate make funds available in the Reserve Fund an amount equal to the
Reserve Requirement. Upon the deposit with the Trustee of such Qualified Reserve Fund Credit
Instrument, the Trustee shall release moneys then on hand in the Reserve Fund to the Agency, to
be uscd 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
thc Reserve Fund has been expendcd. If at any time the amount credited to the Reserve Fund
includes more than one Qualified Reserve Fund Credit Instrument, any draw on the Qualified
Reserve Fund Credit Instruments shall be made on a pro rata basis based on the relative amounts
of debt service of the applicable bonds covered by each Qualified Reserve Fund Credit
Instrument in such Fiscal Year.
Pb40?-IO�R�`12d17C>v; doc g
��e:t���i� ?.��. Costs of Issuance Fund. There is hereby established a fund to be
held by the Trustee known as the "Costs of Issuance Fund." A portion of the proceeds of the
Series 2007A Loan shall be deposited in the Costs of Issuance Fund pursuant to Section 2.2(a).
The moneys in the Costs of Issuance Fund shal] be used to pay Cosis of Issuance of the Bonds
from time to time upon receipt of a Request of the Agency. On the 120th day after the Closing
Date (or the first Business Day thereafter), or upon the eartier 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.
�crtion 2.%. Proiect Fund. There is hereby established a fund to be known as
the "Project Fund," which shall be held and maintained by the Trustee. Amounts on deposit in
such fund shall be derived solely from the portion of the proceeds of the Series 2007A Loan
transferred thereto, or from excess amounts transferred thereto from the Reserve Fund, 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 otlier 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:
(i) that an obligation in the stated amount has been properly incurred under
and pursuant to this Loan Agreement and that such obligation is a proper charge against the
Project Fund; and
(ii) that there has not been filed with or served upon the Agency a stop notice
or any other notice of any lien, right to lien or attachment upon, or claim affecting the right io
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 accniing by mere operation of law.
Fh�lu2-� 1�ss9"_'a � 7G� s �or 9
Upon receipt of each such Request of the Agency, the Trustee shall pay the
amount set forth in such Request of the Agency as directed by the terms thereof within three
Business Days.
If any moneys deposited in the Project Fund remain therein after the full
accomplishment of the objects and purposes for which the Series 2007A Loan was made, said
moneys shall be transferred to the Special Fund.
Cccti��n ?.�. 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 2.8:
(a) No Event of Default shall have occurred and be continuing, and the
Agency shall otherwise be in compliancc 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 Certificatc of the Agency, based on assessed valt�ation of property in the Project Area as
evidenced in the written records of the Cou�ity, and projected annual Tax Revenues over the ternl
of this Loan Agreement based on current Tax Revenue collections, shall be at least equal to 115
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 Series 2Q07A Loan 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.
Scctiun �.��. Issuance of Subordinate Debt. In addition to the Series 2007A
Loan and any Parity Debt, from time to time the Agency may issue or incur Subordinate Debt in
such principal amount as shall be deternlined by the Agency, provided that the issuance of such
Subordinate Debt shall not cause the Agency to exceed any applicable Plan Limitations.
P(,4u2- I U;g :92-i 17h� 5 cfor 1 �
����t���i� ?. f t�. Validity of Series 2007A Loan. The validity of the Series 2007A
Loan 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.
ARTICLE III
PLEDGE AND APPLICATION OF TAX REVENUES
���ti��i� 3.1. Pled�e of Tax Revenues. The Series 2007A Loan 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 Specia] 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
otl�erwisc liablc for, thc paymcnt of principal of or interest on or prepayment premium, if any, on
the Series 2007A Loan.
���tie�n 3.�. Special Fund; Deposit of Tax Revenues. The A�ency has
heretofore established a special fund known as the "Special Fund," �vhich is and shall coiltinue to
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 lnstrument, any Tax Revenues
received during the Bond Year in excess of amounts required to be transferred to the Trustee
pursuant to Section 3.3 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 Series 2007A Loan and all Parity Debt and the payment
in full of all other amounts payable hereunder and under any Parity Debt Instrument, ihe Agency
shall not have any beneficial right or interest in the moneys on deposit in the Special Fund,
except only as provided in this Loan Agreement and in any Parity Debt Instrument, and such
moneys shall be used and applied as set forth herein and in any Parity Debt Instrument.
ti�ctioi> ;.�. Transfer of Tax Revenues From Special Fund. In addition to the
transfers required to be made pursuant to any Parity Debt Instrument, the Agency shall withdraw
from the Special Fund and transfer to the Trustee the following amounts at the following times
and in the following order of priority:
(a) Interest and Principal DeUosits. No later than the fifth Business Day
preceding each date on which the principal of or interest on the Series 2007A Loan or any Parity
Debt shall become due and payable, including but not limited to the principal amounts of the
Series 2007A Loan to be prepaid hereunder together with any prepayment premium thereon, the
Agency shall withdraw from the Special Fund and transfer to the Trustee an amount which,
together with the amounts then held on deposit in the Interest Account, the Principal Account
and the Revenue Fund, is equal to the aggregate amount of such principal, interest and
prepayment premium.
(b) Reserve Fund Deposits. In the event that the Trustee shall notify thc
Agency pursuant to Section 2.5 that the amount on deposit in the Reserve Fund is less than the
Ph=1n?-Iu�ti���2417G�; doc 1 1
�
Reserve Requirement, the Agency shall immediately withdraw from the Special Fund and
transfer to the Trustee for deposit in the Reserve Fund an amount of money necessary to
maintain the Reserve Requirement in the Reserve Fund (including repayment of any draw made
under a Qualified Reserve Fund Credit Instrument, including the Surety Bond, prior to
replenishing any cash in the Reserve Fund).
(c) Surplus. 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 reguired in such Bond Year pursuant to this Section 3.3. 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 dcposit in the Special Fund on any April 2 after making all of the
transfers theretofore rcquircd to be made pursuant to the preccding Paragraphs (a) and (b) anc�
pursuant to any Parity Debt Instniment, the Agency may withdraw such amounts from the
Special Fund, to be used for any la�vful purposes of t}ie Agency, including but not limited to the
paymcnt of any Subordinate Debt or thc payilie�it of any amounts ciue �lI1CI OW111� 10 111C Unitec]
States pursuant to Section 4.11.
��cti���13.-�. Investment of Monevs; Valuation of Investments. Subject to
Section 4.3 of the Indenture, all moneys in the Special Fund, the Project Fund, the Reserve Fund
and the Costs of Issuance Fund shall be invested in Permitted Investments. Absent any prior
written instruction from the Agency or the Authority, moneys in any fund held by the Trustee
hereunder or under the Indenture shall be invested in Permitted Investments described in clausc
D of the definition thereof. Absent the written consent of the Insurer, investments of moneys in
the Reserve Fund (not including any Qualified Reserve Fund Credit Instrument) shall not have
maturities extending beyond five years. Obligations purchased as an investment of moneys in
any fund or account established hereunder shall be credited to and deemed to be part of such
fund or account. The Agency or the Trustee, as the case may be, may commingle any amounts
in any of the funds and accounts held hereunder with any other amounts held by the Agency or
the Trustee for purposes of making any investment, nrovided 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 invesiment 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 3.4, an amount of interest
received with respect to any investment equal to the amount of accrued interest, if any, paid as
part of the purchase price of such investment shall be credited to the fund or account from which
such accrued interest was paid.
For the purpose of determining the amount in any fund or account established
hereunder, any investments credited to such fund shall be valued at least annually at the market
value thereof.
P641)2-111;R'92�317G� i dor l2
ARTICLE IV
OTHER COVENANTS OF THE AGENCY
���tic�n -1.1. Punctual Pavment; Extension of Pavments. The Agency shall
punctually pay or cause to be paid the principal of and interest and prepayment premium, if any,
on the Series 2007A Loan in strict conformity with the terms of this Loan Agreement, and it will
faithfully observe and perform all of the conditions, covenants and requirements of this Loan
Agreement. The Agency shall not directly or indirectly extend or assent to the extension of the
maturity of any installment of principal of or interest or prepayment premium, if any, on the
Series 2007A Loan, and in case the principal of or interest or premium, if any, on the Series
2007A Loan or the time of payment of any such claims therefor shall be extended, such
principal, interest, premium or claims for interest shall not be entitled, in case of any Event of
Default hereunder, to the benefits of this Loan Agreement except for payment of all amounts
which shall not have been so extencled.
��i:�i�,�i -1.�. Limitation on Additional Indebtedness. The Agcncy hereby
covenants that it shall not issue any bonds, notes or other obligations, enter into any agrccment or
otherwise incur any indebtedness, which is in any case payable from all or any part of tl�e 'I'ax
Revenues, excepting only the Series 2007A Loan, any Parity Debt, and any Subordinate Debt,
and any other obligations permitted by this Loan Agreement.
5�cti��n �l. �. 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 Series 2007A Loan. Nothing herein contained shall require the Agency
to make any such payment so long as the Agency in good faith shall contest the validity of said
claims.
��cti�n a.-�. 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
thc Special 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.
Pb�l�i2- I(��%�y2a 17r�. s.doc 1 3
ti�•r�ini� -�.�. Protection of Securitv and RiQhts. The Agency will preserve and
protect ihe security of the Series 2007A Loan and the rights of the Trustee and the Owners with
respect to the Series 2007A Loan. From and after the Closing Date, the Series 2007A Loan shall
be inconiestable by the Agency. The Series 2007A Loan and the provisions of this Loan
Agreement are and will be the legal, valid and binding special obligations of the Agency
enforceable in accordance with their terms, and the Agency shall at all times, to the extent
permitted by law, defend, preserve and protect all the rights of the 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 4.5 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 Series 2007A Loan and the discharge of this Loan
Agreement.
��cti�,�� -l.t�. Pavments of Taxes and Other CharQes. The Agency will pay and
discharge, or cause to be paid and discharged, all taxes, scrvice charges, assessments and otl�er
�ovcrnmcntal char�es which may hereaftcr be lawfully imposed upon ihe Agency or thc
properties then owned by the Agency in the Project Area when the same shall become due.
Nothin� herein contained shall require the A�ency to make any such paymcnt so lon� as the
Agency i�l good faith shall contest the validity of such taxes, assessments or cl�arges. The
Agency will duly obscrve and comply with all valid requirements of any governmental authority
relative to the Redevelopment Project or any part thereof.
S�rtiun -1.7. Taxation of Leased Propertv. 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.
Scctic�n 4.�. Disnosition of Provertv. 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 4.8. If the Agency proposes to participate in such a
disposition, it shall thereupon appoint an Independent Redevelopment Consultant to report on the
cffect of said proposed disposition. If the Report of the Independent Redevelopment Consultant
concludes that the security of the Series 2007A Loan or the rights of the Authority, the Owners
and the Trustee hereunder will not be materially impaired by said proposed disposition, the
Agency tnay 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.
����ti��n 1.�� 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
Revenucs, including without limitation the timely filing of any necessary statements of
PGJU'- l u;8�'��-� � ��,.;.<i�� ( 4
indebtedness with appropriate officials of the County and (in thc case of supplemental revenues
and other amounts payable by the State) appropriate officials of the State. The Agency shail not
amcnd the Redevelopment Plan (except for the purpose of extending or eliminating the time limit
on 1he establishment of loans, advances, and indebtedness, extending the time limit on the
effectiveness of the Redevelopment Plan, extending the time limit on the payment of
indebtedness, extending ihe time limit for ihe receipt of tax increment, or increasing the
limitation on the number of dollars of taxes to be allocated to the Agency) or any of the Pass-
Through Agreemenis, or enter into any agreement with the County or any other governmental
unit, which would have the effect of reducing the amount of Tax Revenues available to the
Agency for payment of the Series 2007A Loan, unless the Agency shall first obtain (a) the
Report of an Independent Redevelopment Consultant stating that the amount of Tax Revenues
for the ihen current Fiscal Year (calculated on the assumption that such reduction of Tax
Revenues was in effect throughout such Fiscal Year), shall be at least equal to 115 percent of
Maximum Anntial Debt Service, and (b) as long as the Insurance Policy is in fiill force anci
effect, the written consent of the Insurer. Nothing l�erein is intended or shall be constnied in any
�vay to prohibit or impose any limitations on the entering into by the Agency of any sucl�
agreement, amendment or supplement �vhich by its term is subordinate to the payment of the
Series 2007A Loan ancl ail Parity Debt.
����i���� -�.1��. 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,
incuned 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 disbursemenls 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 ihe Indenture, this Loan Agreement
and payment of the Series 2007A Loan and the discharge of this Loan Agreement.
Section 4.11. Tax Covenants.
(a) The Agency covenants that, in order to maintain the exclusion from �ross
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
P��auz- i nss����a i ��,� >�i�,�� l�
provision of the Code recessary 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 oi ihe Bonds shail 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 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(n 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) T'he Agency covenants that it will not take any action or omit to take any
action, �v}lich action or omission, if reasonably expected on the datc of initial execution ancl
deli��ery of the Bonds, would result in a loss of exclusion from gross income for pur�oses of
Federal income taxation, under Section 103 of ihe Cocle, of i►lterest on tl�e Bonds.
(d) "fhe A�ency covenants that it will not use or pennit 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
thc Codc.
(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 fl, (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, Govemment National
Mortgage Association, or the Federal Home Loan Mortgage Corporation, (d) investment in
obligations issued pursuant to Section 21B(d)(3) of the Federal Home Loan Bank Act, as
amended by Section 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
thc 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 incomc tax purposes of
interest on the Bonds.
��� ti«n -l. !.'_. Redevelopment 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 mana�c and operate all
P(�411?-1 Ilj R'92a 17G� S.doc � i)
properties owned by the Agency and comprising any part of the Redevelopment Projecl 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.
5cctic�n 4. I�. Low and Moderate Income HousinQ Fund. The Agency covenants
and a�-ees 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.
tic��tir.+� -t. !�. Annual Review of Tax Revenues. On or before June 30th of each
year commencing June 30, 2007, the Agency shall submit a Report of an Indcpendent
Redevclopmcnt Consultant to the lnsurer, which Report shall show the total amount of Tax
Revenues remaining available to be received by the A�ency under the Redevelo�ment Plan's
cumulativc tax increment limitation, as well as future cumulative annual dcbt ser��icc ��•ith
respect to the Series 2007A Loan 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 Series 2007A Loan 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 Series 2007A Loan or any Parity Debt. Once it is deiermined that Tax
Revenues available to be received by the Agency under the aforementioned tax increment
limitation in an upcoming year will not exceed 110 percent of aggregate remaining debt service
on the Series 2007A Loan 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 Series 2007A Loan and Parity Debt.
�ccti��n �4. I�. 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
ti���tiu» >.I. 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 Series 2007A Loan or any Parity Debt when and as the same shall
becomc due and payable.
Y���lu2-lUSi; �)2-317G�S doc I7
(b) Failure by the Agency to observe and perform any of the covenants,
agreements or conditions on its part contained in this Loan Agreement, other than as referred to
in the preceding Paragraph (a), for a period of 60 days after written notice specifying such failure
and requesting that it be remedied has been given to the Agency by the Trustee; provided,
however, that if the failure stated in such notice can be corrected, but not within such 60-day
period, such failure shall not constitute an Event of Default if corrective action is instituted by
the Agency within such 60-day period and thereafter is diligently pursued until such failure is
corrected.
(c) The filing by the Agency of a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other applicable law of the United States
of America, or if a court of competent jurisdiction shall approve a petition, filed with or without
the consent of the Agency, seeking reorganization under the federal bankruptcy laws or any other
applicable law of the Uniied States of America, or if, under the provisions of any other law for
the relief or aid of c3ebtors, any court of competent jurisdiction shall assume custody or control ol'
the Agency or of the whole or any substantial part of its property.
If an Event of Default has occurrcd and is continuing, the Authority or thc Tnistee
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 Series
2007A 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 afler the principal of the Series 2007A Loan shall have been so declared due and payable,
and before any judgment or decree for the payment of the moneys due shall have been obtained
or entered, the Agency shall deposit with the Trustee a sum sufficient to pay all installments of
principal of the Series 2007A Loan 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 attomeys' fees), and any and all other defaults known to the Trustee (other than
in the payment of principal of and interest on the Series 2007A Loan due and payable solely by
reason of such declaration) shall have been made good or cured to the satisfaction of the Trustec
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.
Sc�tir�r� �'. Avvlication of Funds Uvon 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:
P(,4uz-1 f�;8 ;93�117r,v5.doc 1 8
First, to the payment of the fees, costs and expenses of the Trustec, including
reasonable compensation to its agents, attorneys and counsel (including the aliocated 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
Series 2007A Loan 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 Series 2007A
Loan then due and unpaid, on a pro rata basis in the event that the available amoimis are
insufficient to pay all such i�iterest iil full,
(ii) second, to the payment of all instaliments of principal of the Series 2007A
Loan then due and payable, on a pro rata basis in the event that thc availablc amounts arc
installmcnts 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.
��rtion 5.3. No Waiver. Nothing in this Ariicle 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 Series 2007A Loan to the Trustee when due, as herein
provided, or affect or impair the right of action, which is also absolute and unconditional, of the
Trustee to institute suit to enforce such payment by virtue of the contract embodied in this Loan
Agreement.
A waiver of any default by the Trustee shall not affect any subsequent default or
impair any rights or remedies on the subsequent default. No delay or omission of the Trustee to
exercise any right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver of any such default or an acquiescence therein, and every power
and remedy conferred upon the 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 advcrsely 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.
��rti���� 5.-1. A�reement to Pav Attornevs' Fees and Expenses. In the evcnt the
Agency or the Authority should default under any of the provisions hereof and the nondefaulting
party or the Trustee should employ attorneys or incur other expenses for the collection oF
f'G�lu2-1OS$`•92417bt�5.dor � �)
moneys or the enforccment 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 pafly 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 counsei to the extent the services of such counsel are not duplicative
of services provided by outside counsel).
S�ctic�T� ti.�. 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.
tirctic�n �.{�. Control of Remedies bv Insurcr. Notwithstanding ihe 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 Instirance Policy is in full foree and effect and the Insurer has
not defau(ted with respect to its payment obligatioi�s thereunder, upon thc occurrence ancl
continuance of an Event of Default, the Insurer shall be entit(ed to control and direct thc
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 Series 2007A Loan or annufinent
thereof pursuant to Section 5.1 shall be subject to the prior written consent of the Insurer. No
waiver of a default shall be effective without the written consent of the Insurer.
ARTICLE VI
MISCELLANEOUS
�r�tio» ��.I. 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
Insurcr so long as the Insurance Policy remains in full force and effect.
��•�tiu» ��.�. Successor Deemed Included in All References to Predecessor.
Whenever in this Loan Agreement, the Agency, the Authority, the Trustee or the Insurer
is named or referred to, such reference shall be deemed to include the successors or assigns
thereof, and all the covenants and agreements in this Loan Agreement contained by or on behalf
of the Agency, the Authority, the Trustee or the Insurer shall bind and inure to the benefit of thc
respective successors and assigns thereof whether so expressed or not.
��•�ti���� c�. �. Dischar�e of Loan AQreement. If the Agency shall pay and
discharge the indebtedness on the Series 2007A Loan or any portion thereof in any one or more
of the following ways:
Pb�ioz- � ��sit.<�za t �6� i.doc 20
(a) by well and truly paying or causing to be paid the principal of and interest
and prepayment premiums, if any, on the Series 2007A Loan or such portion thereof, as and
when the same become due and payable;
(b) by irrevocably depositing with the Trustee, in trust, at or before maturity,
cash in an amount which, together with the available amounts then on deposit in any of the funds
and accounts established pursuant to the Indenture or this Loan Agreement, in the opinion or
report of an Independent Accountant is fully sufficient to pay all principal of and interest and
prepayment premiums, if any, on the Series 2007A Loan or such portion thereof; or
(c) by irrevocably depositing with the Trustee or any other Cduciary, in trust,
non-callable Defeasance Obligations in such amount as an Independent Accountant shall
determine will, together with the interesi to accrue ihereon and available moneys then on deposit
in the filnds and accounts established pursuant to the Indenture or this Loan Agreemcnt, be fully
sufficient to pay and discharge the indebtedness on the Series 2007A Loan or siich portion
thereof (including all principal, interest and prepayment premiums) at or before maturity;
then, at the election of the Ageiicy but only if all other amo�ints the» due and payahle hereu»der
shall have been paid or provision for their payment made, the pledge of and licn upon thc Tax
Revenues and other funds provided for in tliis Loan Agreement and all other obligations of the
Trustee, the Authority and the Agency under this Loan Agreement with respect to the Series
2007A Loan or such portion thereof shall cease and terminate, except only the obligation of the
Agency to pay or cause to be paid to the Trustee, from the amounts so deposited with the T'rustee
or such other fiduciary, all sums due with respect to the Series 2007A Loan or such portion
thereof, and to pay all expenses and costs of the Trustee when and as such expenses and costs
become due and payable. Notice of such election shall be filed with the Authority and the
Trustee. Any funds thereaRer held by the Trustee hereunder, which are not required for said
purpose, shall be paid over to the Agency.
��ctiuii t>.4. 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 5.8 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).
��•cti��r� ��.�. Waiver of Personal Liability. No member, officer, agcnt or
employee of the Agency shall be individually or personally liable for the payment of the
principal of or interest on the Series 2007A Loan; but nothing herein contained shall relieve any
such member, officer, agent or employee from the performance of any official duty provided by
law.
�:rtiv>> t>.c�. Pavtnent on Business Days. Whenever in this Loart Agreement
any amount is required to be paid on a day which is not a Business Day, such payment shall be
reyuired to be made on the Business Day immediately following such day, provided that interest
ori such payment shall not accrue from and after such day.
P(�4112-I(�5g,�12y17b��j duc � 1
�c� ric;n t�.--. 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 l.13 of the Indenture, which is hereby incorporated.
S:cti��n ��.� Ri�hts of Insurer.(a) 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 shal) deliver to the
Insurer a copy of the disclosure document, if any, circulated with respect to any Parity Debt.
(b) The Agency agrees to reimburse the Insurer immediately and unconditionally
upon written demand thereof, to the extent permitted by law, for all reasonable expenses,
including attorneys' fees and expenses, incurred by the Insurer in connection with (i) the
enforcement by the Insurer of the Authority's or the Agency's obligations, or the preservation or
defcnse of any rights of tt�e Insurer, under the Indenture or this Loan Agree�nent, and (ii) any
consent, amendment, waiver or other action with respect to the Indenture or a�iy related
cioc�iment, �vhether or not granted or appro��ed, and together witl�, if demanded by the (nst�rer in
writin�, interest on all such expe»ses Irom and includi»� the ciate incurred to the ciate of payment
at Citibailk's Primc Rate plus three percent or the maximum intcrest rate pcnnitted by la�v,
whichever is lcss. In addition, thc Insurer reserves the right to charge a fee in co►�ncction with its
review of any such consent, amendment or waiver, whether or not grantcd or approvcd.
(c) The Authority and the Agency agree not to use the Insurer's name in any public
document including, without limitation, a press release or presentation, announcement or forum
without the Insurer's prior consent; provided however, such prohibition on the use of the
Insurer's name shall not relate to the use of the Insurer's standard approved form of disclosure in
public documents issued in connection with the Bonds; and provided further such prohibition
shall not apply to the use of the Insurer's name in order to comply with public notice, public
meeting or public reporting requirements.
Scrtiui� ��.�). Suretv Bond. (a) To draw upon the Surety Bond pursuant to
Section 2.5, the Trustee shall deliver to the Insurer a Demand for Payment, in the form attached
to the Surety Bond, at least three days prior to the date on which funds are required under
Section 3.3(a).
(b) As security for its rights hereunder, the Insurer shall be deemed to have a security
interest in the Tax Revenues, subject only to any security interest of the T'rustee or of the Owners
of the Bonds or of the owners of any Parity Debt.
(c) Notwithstanding the provisions of Section 6.3, this Loan Agreement shall not
ierminate and no money shall be released by the Trustee to the Agency until alt sums owed to the
Insurer by the Agency or the Authority under the terrns of the Financial Guaranty Agreement or
any other document have been paid in full.
(d) The Trustee shall maintain adequate records, verified with the Insurer, as to the
amount available to be drawn at any given time under the Surety Bond and as to the amounts
paid and owing to the Insurer under the terms of the Financial Guaranty Agreement.
P(,�1u2-1u;8�9?�317(,.; doc 22
���cti��n (�. I�>. Partial Invalidity. If any Section, paragraph, sentence, clause or
phrase of this Loan Agreement shall for any reason be held illegal, invalid or unenforceable,
such holding shall not affect the validity of the remaining portions of this Loan Agreement. The
Agency hereby declares that it would have adopted this Loan Agreement and each and every
other Section, paragraph, sentence, clause or phrase hereof and authorized the Series 2007A
Loan irrespective of the fact that any one or more Sectians, paragraphs, sentences, clauses, or
phrases of this Loan Agreement may be held illegal, invalid or unenforceable.
�cctirn� (>. I 1. Article and Section HeadinQs and References. The headings or
titles of the several Articles and Sections hereof, and any table of contents appended to copies
hereof, shall be solely for convenience of reference and shall not affect the meaning, construction
or effect of this Loan Agreement. All references herein to "Articles," "Sections" and other
subdivisions are to the corresponding Articles, Sections or subdivisions of this Loan Agreement;
the words "herein," "hereof," "hercby," "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 thc masculine gender shall mean and includc �t�ords of the feminine and ncuter
genders.
���. t;��;� e,. i'. Execution of Counterparts. This Loan Agreement may be
executed in any number of counterparts, eacl� of which shall for all purposes be deemeci to be an
original and all of which shall together constitute but one and the samc instrumcnt.
Sccti��� (�.I �. GoverninQ Law. This Loan Ageement shal] be construed and
governed in accordance with the laws of the State.
S�rti��i� (�.l�l. 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 responsibie only for the duties of the Trustee expressly set forth herein.
�Remuinder of Page Intentionally Left BlnnkJ
PG4U7,- I U� J 92a I?r,� > doc 2?
jPFajec! Area No. 1, As Amended, Loan Agreernenf)
IN WITNESS WHERE4F, the AGENCY, the AUTHORITY and the TRl3S"FLE
I��ve caused this Loan Agreement to be signed by their respective officers, all as of the clay arxi
�ear �irst above written.
PALM DESERT REDEVELOPMENT
AGENCY
:
Executivc Dircctor
PAI,M DF,SERT FINANCING AUTHORITY
:
Chief Administrative Officer
WELLS FARGO BANK, NATIONAL
ASSOCIATION
as Trustee
:
Authorized Officer
Phd11?-II�SH 7?�317���j doc �4
EXHIBIT A
SCHEDULE OF SERIES 2007A LOAN PAYMENTS�
Date Principal Interest Total
4/ 1 /2007
10/ 1 /2007
4/ 1 /2008
10/ 1 /2008
4/ 1 /2009
1 Ql l /2009
4/1/2010
10/1/2010
4/ 1 /201 I
10/1/2011
4/1/2012
10!1/2012
4/1/2013
10/1/2013
4/1/2014
10/ 1 /201 �1
4/11201 S
10/1i201�
4/1/2016
]0/1/2016
4/1/2017
10/1/2017
4/1/2018
TOTAL
* Payable semiannually on the fifth Business Day preceding each Interest Payment Date indicated
on the leftmost column
Pr�a��?-� ��58 9za► �G� s.doc A-1
L&J DRAFT �2 -- 11 /3/06
PRFI.1�11\.1R1 (1F'fl('1.11.�'f.1fF�lk:\"11)1fF:l)l1F:CF�16F12 .20116
NEW 1SSUE - BOOK-�NTRY ONLY RA1'INGS: �loodv's S&P
INSURED:
(See "RnTI�'GS" herein)
!n the opinion oJRichards, �Vatson & Gershon, A Projessronu! Corpnrafion, Los Anbeles, Cu! jornia, Bnnd Counsel, based on e.rrsling lu�+� und �u.ivuning
compl�nnce xith rertain crnenunts set jnrth m rhe documenu pei•rninrng ro the 2007 Serrrs .9 Bnnds ond requiremenu �%the Inrernul Reremue Codr o% 148b, as
umend�c! (the ' Cude "), us described herern, interest on the 2�07 Serie.v A Bonds is not included in gross �nenme of 1he ox•ners thereoj Jnr jederal income tar
purposes. !n rhe opinion oJeond Cnunsel, inleresr on the 2007 Series A Bnnds is not treuted as an item oJtux prejerence in culculatrng thrJederuJ ulternatrve
mrnnnr�m [arahle income ojrndivrduals and corporaduns. Interest un the 2007 Series A Bnnd.s muy be suhject 10 cennin jedera! taxes imposed nn corpa•urronr,
including the cnrpnrate al�ernative mrnrmum tar on u portion ojlhut interest. fn the jurrher upinion ojBond Counsel, interest on !he 2007 Serie,s A Bond.r es rxempl
Jrnm persona! income tazes rmpnsed by� Ihe Srote olCuliJornia. See "TAX MA7'I'f•.RS" hcrein. [TO BE REVIEWED BY BOND COUNSEL]
$ *
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION REFUNDING REVENUE BONDS
(PRaJECT AREA NO. 1, AS AMENDED)
2007 SERIES A
D�tcd: Date of Delivery Due: April l, as shown on the inside cover page
Thrs cover puge conrarns certuin rnjormatrnn fr�r qurck rejerence on(�•. !t u not a summan� ojthese issues. /nvestors are uclvued to reud tlre entire
O�Jrcia/ Stutement ro nhrain injormurion essentral to the makrng ojan injmned inveslment decisron. For a discussion of some of the nsks assoaated with the
purchasc of the 2007 Scries A Bonds, sec "CF,R'fNT: RISKS TO BO�DHOLDERS."
The Palm Desert Financing Authonry (the "Financing Autlioriry") is issumg b • principal amount of Palm Desert Financing Authonry Tax
Allocahon Rcfunding Revcnuc Bonds (Pro�ect Area No. 1, As Amended) 2(�7 Scries A(thc "2007 Series A Bonds") to make a loan to tlie Palm Desert
Rrdevclopment Agency (the "Rcdevelopmcnt Agency") pursuant to the terms of s Project Area No. I, As Amended, Loan Agrccment dated as of January I, 2007
(tlu "2007 Loan Agrccmcnt") by and among the Financing Authority, the Redcvelopment Agency and Wclls Fargo Bank, Netional Association (thc "Trustec"). The
Redevelopment Agency will apply the proceed, of thc 2007 Loan to: (i) refinanec a portion of the outstanding obligations of the ReJevelopment Agency under a
loan agreement dated as of July 1, 1997 (the "1997 Loan AgreemenP'); (ii) finance vanous redevelopment actrvrties within the Palm Desert Redevelopment Agency
Project Arca No. 1, As Amended (the "Project Area"); xnd (iii) pny the costs associated with the issuance of die 2007 Senes A Bonds. See "PLAV OF FIVAVCE.��
l'he 2007 Scries A Bonds arc issued pursuant to an Indcnture uf Trust, dated as of lanuary 1, 2007 (the "2007 Indenture"), by and bct�rrern the Financing
Authunty and thc Trustce
The 2007 Scries A Bonds will be issued in bouk-entry fortn, mitially registercd in the name of Cede & Co. as nommec of the Depository Tnut Company,
New York, Ncw York ("DTC"), who will act as xcurincs depository for the 2W7 Serics A Bonds. Individual purchases of thc 2007 Series A Bonds will bc in book-
entry fonn only, and in denominations of $5,000. Purchasers will not reccive physical cernficntes representing their interesu m the 2007 Ser�es A k3onds. 1'rincipal
of, interest on and redemption premium, if any, on the 2007 Scnes A E3ondti will be paid by thc Trustee dircctly to DTC, which m tum is obligated to rcmrt such
pnncipal, intcrest, and redcmption premium, if any, to DTC Participants for subsequent disburscment to the Beneficial Owners of the applicable 2007 Scrics A
BondS. SeC APPLNDIX G—"llTC MD 771E BOOK—E\TRY OvLY SYSTEM."
Interest on the 2007 Series A Bonds will be payable vn cacli April I and October 1 of each year, commencing October 1, 2007 at the re,p��ctive rates set
forth on the inside cover page, and pnncipal of the 2007 Serics A Bond, is payable on Apnl I of each yenr, commencing Apnl l, 200R in the amoimtti set torth on the
inside covcr page.
The 2007 Scries A Bonds are subject to opHonal and sinking account redemption as described hercin. Sce "7'HE 2W7 SeRies A Bonn�
Redemption Prnvisinns."
7lic 2007 Scries A Bonds are special obligations of the Financing Authoriry payable from and secured by Revenues (as defined herein), consisting
pnmarily of amounu payablc by thc Rcdevelopment Agency undcr the 2007 Loan Agreemcnt. The 2007 Loan Agreement is secured by and payable from tax
incrcment revcnucs derived from property in the Project Area and allocated to the Redevelopment Agency pursuant to the Redevclopment Law. The 2007 Loan is
payable on a panry basis with certain outstanding obhgations of the Redcvclopmcnt Ag�mcy remainmg made undcr loan agreements entcrui into m 1997 (thc "1997
Loan Agreement"), in 2002 (die "2002 Loan Agreement"), in 2003 (the "2003 Loan Agreement") in 2004 (the "2W4 Loan Agrecmcnt") and in 2006 (thc "2006
Loan Agrecmcnt"). The Redevclopmcnt Agcncy may, pursuant to thc ternu of the 2007 Loan Ab�rcemcnt and the 2007 Indenture, secure addiuonal obligations on a
panry wnh the 2007 Loan, thc 2002 Loan, the 2003 Loan, the 2004 Loan and the 2006 Loaas. No funds or propernes of the Redevelopment Agency, other than thc
Tax Rcv�nues xcure peyment of the 2007 Loan Agrecment. See "SECUR1lY nND SOURCES OF PnYMF:�T �OR THF. BOVDS—Panty Debt and Subordmate Debt."
'Ilie scheduled paymcnt of the principal and interest on the 2007 Serics A Bonds when due will be bvarantecd under a financial guaranry insurance policy
to bc issued concurrcndy H�rth the delivery of the 2007 Series A Bonds by Mf3lA Insurance Corporation.
[MBIA Logo]
THE 2007 SFRIES A f30NDS ARE NOT A DEBT OF THE CITY OE PALM DESERT (Tfi� "CITY"), TIiE STATE OF CALIFORNIA (TIiE
"STAT�") OR ANY OF ITS POLITICAL SUHDIVISIONS, OTIi�R TIiAN THE FINANCING AUTIIORITY, AND NONE OF TI�E CITY, THF STATE OR
ANY OF ITS POLITICAL SUBDIVISIONS, OTHER TNAN 77�E FINANCING AU7'HORITY, IS LIABLE THEREFOR. THE 2007 LOAN IS NOT A D�BT
OF THE F'INANCING AUTHORITY OR THE STATE OR ANY OF ITS POLITICAL SUBD1V1S10NS, AND NON� OF TIi� FINANCING AUTFIORITY OR
TlIE STATE OR ANY OF lTS PO[.IT[CAL SUBDIVISIONS, IS LIABLE THEREFOR. NONE OF THE MEMBERS OF THE FINANCING AUTIIORITY,
THE CITY COUNCIL, TIIE REDEVELOPMENT AGENCY OR ANY PERSONS EXECUTING T{IE 2007 SERIES A BONDS OR THE 2007 LUAN
AGRF�MENT ARt LIAk3Lf: P�RSONALLY WITH RESPECT TO THE 2007 SERIES A BONDS OR THF 2W6 LOANS. TIIF. OBL[GATIONS OF THk:
RI:DF.VELOPMENT AG�NC:Y WITH RESPECT TO T71E 2007 LOAN IS PAYABLE SOLFLY FROM TtIE TAX REVENUtS (AS D�.FINHD FI�R�IN) AS
SET FORTH 1N TIiE 2007 LOAN AGREEMENT. NEfTHER TFIE FINANCING AUTHORITY NOR THE REDEVELOPMENT AGENCY fIAS TAXING
POWI:R.
Tlu 2007 Series A Bonds are ofTcred when, as and if issued by the Financing Authority and received by the Undenvriter, sub�ect to the approval as to
thcir lcgaliry by Richarde, Watsun & Gcrshon, A Professional Corporation, Los Angelcs, Califomia, Bond Counscl. Certam Icgal mattcrs will bc passcd upon for the
Financing Authoriry and thc Rcdevelopment Agency by their Gcneral Counsel, Itichards, Watson & Gershon, A Professional Corporation and by LoRon & lennings,
San Francisco, Califomia, Discloswe Counsel. It is anticipated that the 2007 Sencs A �3onds m book-entry only form will bc available for delivery tl�rough the
facilrties of DTC in New York, New York on or about January 8, 2007.
STONE & YOUNGBERG LLC
Uated� , 2007
` Preliminary, subject to changc.
0�042�pos-2
S *
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION REFUNDING REVENUE BONDS
(PROJECT AREA NO. 1, AS AMENDED)
2007 SERIES A
MATURITY SCHEDULE
Base CUSIP:
Maturity Date
(Anril 11
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Principal Interest
Amount Ratc Yield CUSIPf
Copyright, Amcrican Bankers Association. CUSIP data hcrein is provided by Standard and Poor's, CUSIP Scrvicc Bureau,
a division of Thc McGraw-Hill Companics, Inc. This data is not intendeJ to creatc a databasc and docs not serve in any way
as a substitute for the CUSIY Service. CUSIP numbers are provided for convenience of reference only. None of thc
Financing Authonty, the Redevelopment Agency or the Underwriter take any responsibility for the accuracy of such CUSIP
numbers. The CUSIP number for a specific maturity is subject to being changed after the issuance of the 2007 Series A
Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such
maturity.
06(142�Yx�s-2
PALM DESERT FINANCING AUTHORITY
PALM DESERT REDEVELOPMENT AGENCY
CITY OF PALM DESERT
FINANCING AUTHORITY COMMISSION
Jim Fcrguson, President���
Richard S. Kelly, Vice President
Jcan M. Benson, Commissionerr"
Robert A. Spiegel, Commissioner
Vacant, CommissronerJ2j
REDEVELOPMENT AGENCY BOARD AND CITY COUNC[L
Jim Ferguson, Chairmarr/Mayor���
Richard S. Kelly, Vice Chuirman/Mayor Pro Tem
Jean M. Benson, Member/Councilmember���
Robert A. Spiegel, Member/Counci(nrember
Vacant, Member/Councilmember�z�
FINANCING AUTHORITY, REDEVELOPMENT AGENCY AND CITY STAFF
Carlos L. Ortega, ChiefAdministrative O�cer/Executive Director/Ciry Manuger
Paul S. Gibson, Treasurer%1'reasurer/Finance Director
Rachelle D. Klassen, Secretary/Secretary/Ciry Clerk
Justin McCarthy, Assistant City Manager/Redevelopment
Shcila R. Gilligan, Assisrant Ciry Manager Community Services
David L. Yrigoyen, Director oJRedevelopment and Housing
David J. Erwin, Ciry Attorney
Arla K. Scott, Senior Financial Analyst
Veronica Tapia, Redevelopment Accountant
SPECIAL SERVICES
Richards, Watson & Gershon,
A Professional Corporation
Los Angeles, California
Bond Cotinsel
Wclls Fargo Bank, National Association
Los Angcles, California
Trustee
Rosenow Spevacek Group Inc.
Santa Ana, California
Fiscal Consultant
Grant Thomton LLP
Minneapolis, Minnesota
Verifrcution Agent
Lofton & Jennings
San Francisco, Califomia
Disclosure Counsel
Del Rio Advisors, LLC
Modesto, Califomia
Financial Advisor
MuniFinancial
Tcmccula, California
Dissemination Agen1
(1) 7he tcmu fur these members of the financing Authonty and City Council cxp�rc in Novcmbcr 2W6. The persons rlectrd at thc November 20(K�
Statewide General Electwn w�ll be swom m and take office December 14, 2006.
(2) "Ihis vacancy will fx ti11cJ at the Novcmlxr 2006 StatewiJe General Election. The pecson clectcd to fill this posuion wdl be awom m:�nd takc
ofl'ice on Dccember ]4, 2006.
OGU42\p�s-2
GEI�ERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of OffrciaJ Statement The information set forth hercin has been fumished by thc Financing
Authority, the Redevelopment Agency and the Ciry and includes information which has becn obtained from
othcr sources which are believed to be reliable. The information and expressions of opinion contained hercin
are subject to change without notice and neither the delivery of this Official Statement nor any sale made
hereunder shall under any circumstances create any implication that there has been no change in the affairs of
the Financing Authority and the Redevelopment Agency since the date hereof.
Es[inra[es and Forecasts. Any statement made in this Official Statement involving any forecast or
matter of estimates or opinion, whether or not expressly so stated, is intended solely as such and not as a
representation of fact. Certain statements included or incorporated by reference in this Official Statement
constitute "forward-looking statements" within the meaning of the United Statcs Private Securitics
Litigation Reform Act of 1995, Section 21 E of the United States Securities Exchange Act of 1934, as
amended, and Section 27A of the United States Securities Act of 1933, as amended (the "Securities Act").
Such statements are generally identifiable by the terminology used, such as "plan," "expect," "estimate,"
"budget" or other similar words. Such forward-looking statcments include, but are not limited to, certain
statements contained in thc information under the caption "THE PROJECT ARLA" and contained in
APPENDIX A-"REPORT OF THE FISCAL CONSULTANT."
The achievement of certain results or other expectations contained in such forward-looking
statements involves known and unknown risks, uncertainties and other factors which may cause actual
results, performancc or achievements describcd to be materially different from any futurc results,
performance or achievements expressed or implied by such forward-looking statements. The Financing
Authority and the Redevclopment Agency does not plan to issue any updates or revisions to thosc
forward-looking statements if or when their expectations, or events, conditions or circumstances on which
such statecnents are based occur.
Limit oJ Offering. No dealer, broker, salesperson or other person has been authorized to give any
information or to make any representations in connection with the offer or sale of the 2007 Series A Bonds by
thc Financing Authority, thc Redevelopment Agcncy or the Underwriter, other than thosc contained in this
Official Statement, and, if given or made, such other information or representations must not be relied upon
as having been authorized by the Financing Authoriry and the Redevelopment Agency. This Official
Statemcnt does not constitute an offcr to sell or the solicitation of an offer to buy, nor shall thcre be any sale
of the 2007 Series A Bonds by any person in any jurisdiction in which it is unlawful for such person to make
such an offer, solicitation or sale.
Involvement of Underwriter. The Underwriter has provided thc following scntcnce for inclusion in
this Of�icial Statement: The Underwriter ha.s reviewed the information in this Official Statement in
accordance with, and as part of, its responsibilities to investors under the federal securities laws as applicd to
the facts and circumstances of this transaction, but the Underwriter does not guaranty the accuracy or
complctcness of such information.
In connection with the offering of the 2007 Series A Bonds, the Underwriter may overallot or effect
transactions that stabilize or maintain the market price of the 2007 Series A Bonds at a lcvel above that which
might otherwisc prevail in the opcn market. Such stabilizing, if commenced, may be discontinued at any
timc. Thc Underwriter may offer and scll the 2007 Serics A Bonds to certain dcalers and others at priccs
lower than the public offcring priccs set forth on the inside cover page hereof and said public offering prices
may be changed from time to time by the Underwriter.
The 2007 Scries A Bonds have not been rcgistered under the Securities Act of 1933, as amendcd, in
reliance upon an exemption from the regish-ation requirements contained in such Act. The 2007 Scrics A
Bonds have not been rebistered or qualified undcr the securitics laws of any state.
oboaz��,s-z
�i
TABLE OFCONTENTS
Pa�e
INTRODUCTION .................................................. 1
General; Authority for Issuance ....................... 1
Purpose............................................................. 1
7'hc City ............................................................2
The Financing Authority .................................. 2
The Redevelopment Agency ............................ 2
Thc Projcct Area ...............................................2
Security for the 2007 Series A Bonds .............. 2
Bond lnsurancc .................................................5
Report of the Fiscal Consultant ........................ 5
Ccrtain Risks to Bondholders ...........................5
Continuing Disclosure ......................................
Additional Information .....................................
5
6
PLAN OF REFUNDING ........................................6
Rcfunding of Prior Bonds ................................. 6
Redevelopment Projec�s ................................... 7
Estimated Sources and Uses of Funds .............. 8
Debt Service Schcdules .................................... 8
T�IE 2007 SERIES A BONDS ...............................9
Gcneral............................................................. 9
SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS ................... 11
Revenucs and Loan Agrecments .................... 11
Tax Rcvenucs ................................................. 12
Tax Allocation Financing ............................... 13
Redevelopment Plan Limitations ................... 13
Allocation of Taxes ........................................ 15
Rcservc Fund .................................................. 16
Parity Debt and Subordinate Debt .................. 17
Investment of Funds ....................................... 18
FINANCIAL GUARANTY INSURANCE..........18
MBIA Insurancc Corporation ......................... 18
Rcgulation...................................................... 18
Financial Strcngth Ratings of MBIA .............. 19
MBIA Financial Information .......................... 19
Experts............................................................ 20
LIMITATIONS ON TAX REVENUES ...............21
Artic�e XIII A of the Statc Constitution ......... 21
Article XIII B of the State Constitution;
Appropriation Limitations ........................22
Articles XIII C and XII1 D of the State
Constitution .............................................. 23
Paec
Taxation of Unitary Property ......................... 23
Property Tax Collection Procedures .............. 24
Property Tax Administrative Costs ................ 25
Housing Set-Asidc ......................................... 25
Stipulation Agreement ................................... 26
Certification of Redevelopment Agcncy
lndebtedness ............................................. 26
Pass-Through Agreements and Tax
Sharing Paymcnts ..................................... 27
Limitation of Tax Revenues from
Certain Increased Tax Rates ..................... 28
Ballot Initiatives and Legislative Matters ...... 28
CERTAIN RISKS TO BONDHOLDERS............ 29
Added Territory Projected to Reach
Limit in Fiscal Ycar 2021-22 ................... 29
Accuracy of Assumptions .............................. 29
Reduction of Tax Revenues ........................... 30
Reductions in Unitary Valucs ........................ 30
Appcals to Asscsscd Valucs ........................... 30
Rcduction in Inflation Rate ............................ 31
Bankruptcy and Foreclosure .......................... 31
Delinquencies ................................................. 32
State Budgct ................................................... 32
Natural Disastcrs ............................................ 33
Hazardous Substances .................................... 34
Loss of Tax Exemption .................................. 34
Risk of Tax Audit ........................................... 34
Secondary Market .......................................... 35
THE FINANCING AUTHORITY ....................... 35
THE REDEVELOPMENT AGENCY ................. 35
Authority, Members and Personnel ................ 35
Powcrs............................................................ 37
Redevelopment Agency Finances .................. 37
THE PROJECT AREA ......................................... 38
General........................................................... 3 8
Redevelopment Plan Limits ........................... 39
Controls, Land Use and Building
Rcstrictions ............................................... 40
Summary of Dcvelopment ............................. 42
Principal Taxpaycrs ........................................ 42
TaxRates ........................................................ 45
Historical, Current and Projcctcd Tax
Revenues .................................................. 46
o�oa2��,s-z
iii
Debt Service Coverage Projcctions ................50
Asscssment Appcals ....................................... 52
Tax Levies, Collections and
Delinquencies ........................................... 54
TAX MATTERS ...................................................55
APPROVAL OF LEGAL PROCEEDINGS......... 56
ABSENCE OF MATERIAL LITIGATION ......... 57
Gencral........................................................... 57
Other Matters .................................................. 57
FINANCIAL ADVISOR ...................................... 57
CONTINUING DISCLOSURE ............................ 57
VERIFICATION OF MATHEMATICAL
COMPUTATIONS ....................................... 58
UNDERWRITING ............................................... 58
RATINGS............................................................. 58
FINANCIAL STATEMENTS .............................. 59
MI SCELLANEOU S ............................................. 59
MAPS AND TABLES
CityLocation Map .............................................................................................................................................viii
ProjectArca Map ................................................................................................................................................ ix
Tablc1- Prior Bonds ........................................................................................................................................ 7
Table 2A - Original Area—Summary of Redevelopmcnt Plan Limits .............................................................. 39
Table 2B - Added Territory—Summary of Redevelopmcnt Plan Limits ..........................................................40
Table3- Land Uses by Category ...................................................................................................................41
Tablc4 - Principal Taxpaycrs .........................................................................................................................43
Table 4A - Original Area - Principal Taxpayers ...............................................................................................44
Tablc 4B - Added Territory - Principal Taxpayers ...........................................................................................44
Table5- Breakdown of Tax Rate .................................................................................................................. 45
Table 6A- Original Area—Historical Taxablc Values and Tax Increment Revenues ..................................... 47
Table 6B - Added Temtory—Historical Taxable Values and Tax Increment Revenues ................................. 48
Table 7A - Original Area—Projection of Incremental Taxable Value and Tax Increment Revenue ...............49
Table 7B - Added Territory—Projcction of Incremcntal Taxable Value and Tax Incremcnt Revenue........... 50
Table 8- Projected Tax Increment Revenues and Debt Service Coverage ...................................................51
Table 9A - Original Area —Assessment Appeals .............................................................................................. 53
Table 9B - Added Territory—Assessment Appcals ...........................................................................................53
Tablc 10 - Outstanding Appeals by the Top Ten Taxpayers ........................................................................... 54
obcwz��,s-z
iv
APPENDICES
APPENDIX A- REPORT OF THE FISCAL CONSULTANT ...........................................................A-1
APPENDIX B- REDEVELOPMENT AGENCY AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 200[5] ............................................... B-1
APPENDIX C- GENERAL INFORMATION CONCERNING THE CITY OF PALM DESERT ..C-1
APPENDIX D- SUMMARY OF PRINCIPAL LEGAL DOCUMENTS ............................................D-1
APPENDIX C- PROPOSED FORM OF BOND COUNSEL OPINION ............................................ E-1
APPENDIX F- FORM OF CONTINU]NG DISCLOSURE AGREEMENT ..................................... F-1
APPENDIX G- DTC AND THE BOOK-ENTRY ONLY SYSTEM ..................................................G-1
APPENDIX H— SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY ...........................H-1
o�,��az��5-z
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Project Arca Map
06042�pos-2
Vll
S *
PALM DESERT FINANCING AUTHORITY
TAX ALLOCATION REFUNDING REVENUE BONDS
(PROJECT AREA NO. 1, AS AMENDED)
2007 SERIES A
INTRODUCTION
This intr•oduction contains only a 6rief summary of cer•tain oJ the term.s oj the 2007 Series A Bond.s
being offerecl, und a full reviex� should be made of !he entire Offtcial Statement including the cover page, the
table oJcontents and the appendices for a more complete description oI the terms ojthe 2007 Series A Bnnd.s.
A[l stutements contained in this introduction are gualired in their• entirery 6y rejerence to the entire O�cia!
Statement. References to, and strmmaries of provisions of, any othef• documents referred to herein do not
purport to be complete and such references ure qualified in tlreir entirery by rejerence to the complete�
provisions ofsuc•h documents.
Cencral; Authority for Issuance
The purpose of this Official Statcment, including the cover page, inside cover page and appendices,
is to furnish inforcnation in connection with the sale and delivcry by the Palm Desert Financing Authority (the
"Financing Authority") of $_,_,000* aggregate principal amount of Palm Desert Financing Authoriry
'Tax Allocation Bonds Refunding Revenue Bonds (Project Area No. 1, As Amended) 2007 Scries A(thc
"2U07 Scrics A Bonds").
The 2007 Scries A Bonds are issued pursuant to the provisions of the Mark-Roos Local Bond
Pooling Act of 1985, consisting of Article 4 of Chapter 5 of Division 7 of Title 1(commencing with
Section 6584) of the California Government Code (the `Bond Law"). The 2007 Series A Bonds will be
issued pursuant to an Indenture of Trust, dated as of January 1, 2007 (the "2007 Indenture"), by and between
the Financing Authority and Wells Fargo Bank, National Association (thc "Trustee").
Purposc
The proceeds of the 2007 Series A Bonds will be used by the Financing Authority to makc a loan
(thc "2007 Loan") to the Palm Descrt Redevelopment Agency (the "Redcvelopment Agcncy") pursuant to
a Projcct Area No. 1, As Amended, Loan Agrecment made and entered into as of January I, 2007 (the
"2007 Loan Agreement") by and among the Financing Authoriry, the Redevclopment Agency and the
Trustcc.
The Redcvelopment Agency will apply the proceeds of the 2007 Loan to: (i) rcfinance a portion of
the outstanding obligations of the Redevelopment Agency under a loan agreement dated as of July l, 1997
(the "1997 Loan Agrecment"); (ii) finance various redevelopment activities within the Palm Desert
Redevclopmcnt Agency Projcct Area No. 1, As Amended (the "Project Arca"); and (iii) pay the costs
associated with the issuance of thc 2007 Series A Bonds. See "PLAN OF FINANCG," "ESTIMATED SOURCES
AND USGS OF FUNDS" and "TrIE PROJC•CT AREA—Summary of Dcvelopment." Thc 2007 Scries A Bonds will
mature in the years and amounts and bcar interest at the ratcs set forth on thc inside cover pagc.
' Preliminary, subjcct to changc.
06042�s-2
Thc City
The Ciry of Palm Desert (the "City") is located in thc Coachella Valley and is approximately mid-
way between the citics of Indio and Palm Springs, 1 17 miles cast of Los Angeles, I 18 miles northeast of
San Diego and 515 miles southeast of San Francisco. According to the State Department of Financc, the
City population as of January 1, 2006 was approximately 45,539. The 2007 Series A Bonds are not an
obligation of thc City. For certain information regarding the City, see APPENDIX C—"G�NERAL
INFORMATION CONC[RNING THE CITY OF PALM DESERT."
The Financing Authority
The Financing Authority is a joint exercise of powers agency organized under the laws of the State of
California (the "State") and composed of the Ciry and the Redevelopment Agency. The Financing Authoriry
was fonncd pursuant to a Joint Exercise of Powcrs Agreement, dated January 26, 1989 by and bctwecn thc
City and the Redevelopment Agency to assist in the financing of public capital improvements. See "7'F��
FINANCING AUTHORITY."
The Redevclopmcnt Agency
The Redcvelopment Agency was activatcd by the City in 1974 and is authorized to exercise the
powcrs grantcd by the Communiry Redevelopment Law of the State of Califomia (constituting Part 1 of
Division 24 of the Health and Safery Code of the State of California, commencing with Section 33000) (the
"Redevelopmcnt Law") and, by an ordinance, the Ciry Council of the Ciry (the "City Council") dcclarcd
itsclf to be the Redevelopment Agency. Although the Redevelopment Agency is an entity distinct from the
Ciry, certain City personnel provide staff support for thc Rcdevelopment Agcncy. See "THE
RLDEV6LOPMET�iT AGENCY."
The Project Area
The Project Area was formally established with thc adoption by the City Council of a redcvelopment
plan (the "Original Plan") for approximately 580 acres (the "Original Area") pursuant to Ordinance No. 80,
adopted on July 16, 1975. Approximately 5,240 acres (the "Added Temtory") wcre added to the Original
Area pursuant to amendments to the Original Plan approved and adopted by the City Council by Ordinance
No. 275, adopted on November 25, 1981 and Ordinance No. 324, adopted on October 13, 1983 (collectively,
thc "Amendments"). The Original Plan, as amended by the Amendments, is referred to as the
"Redevelopment Plan." The Project Area contains approximately 5,820 acres, comprising approximately
12,825 parcels within the City. See "THE PROJECT ARGA."
Security for the 2007 Series A Bonds
Tax Allocation Financing. Thc Redevelopment Law provides a means for financing redevelopment
projccts based upon an allocation of property taxes collected within a project area. Subject to thc more
dctailcd discussion contained under the caption "SECURITY AND SOURCES OF PAYMENT FOR THE BONUS,"
the taxable valuation of a project area last cqualized prior to adoption of the redevelopmcnt plan, or base roll,
is establishcd and, except for any period during which thc taxable valuation drops below thc base ycar level,
or as may otherwise be agreed to among taxing agencies, the taxing agencies thereafter receive the taxes
produced by the levy of the then current tax rate upon the base roll. Taxes collected upon any increase in
taxablc valuation over the base roll (except such portion benerated by rates levied to pay voter-approvcd
bonded indebtcdness after January 1, 1989 for the acquisition or improvecncnt of real property), gcnerally
refcrred to as tax increment revenues, are allocated to a redcvelopment agency and may be pledgcd by a
rcdevclopment agency to the rcpayment of any indebtedness incurred in financing or refinancing a
rcdevelopmcnt project. Sec "SECURITY AND SOURCES OF PAYMENf FOR THE BONDS." Rcdevclopment
06042�pos-2
agencies themselves havc no authority to levy property taxes and must look specifically to the allocation of�
taxcs described above.
Any future decrease in the taxable valuation in the Project Arca or in the applicablc tax rates will
rcduce the Tax Rcvenues allocatcd to thc Redcvelopment Agency from the Project Area and conscquently
may have an adverse impact on the ability of the Redevelopment Agency to pay debt service on the 2007
Scnes A Bonds. See "CERTAIN RISKS TO BONDHOLDERS."
Pledge of Tax Revenues. The 2007 Scries A Bonds are secured by a first lien on and pledgc of
Rcvenues consisting primarily of amounts paid by the Redevclopmcnt Agency to thc Financing Authority
pwsuant to the 2007 Loan Agreement and certain other funds held by the Trustee pursuant to the 2007
Indenturc. The Redevelopment Agcncy is obligated undcr thc 1997 Loan Agreement, a loan agreement madc
and cntered into as of March 1, 2002 (the "2002 Loan Agrcemcnt"), a loan agreement made and entered into
as of July I, 2003 (the "2003 Loan Agrcement"), a loan ageemcnt made and entered into as of Junc 1, 2004
(the "2004 Loan Agreemcnt") and a loan agrcements made and entered into as of July 1, 2006 (the "2006
Loan Agrecment") to pay from Tax Revenues (defined below) the amounts set forth in the 2002 Loan
Agreement, the 2003 Loan Agrccment, the 2004 Loan Agrcement and the 2006 Loan Agrcemcnt,
respectively. See "SECURITY AND SOURCGS OF PAYM[NT FOR THG BONDS."
The obligations of thc Redcvelopment Agency undcr thc 2007 Loan Agreement are on a pariry with
thc loan obligation that will remain outstanding under the 1997 Loan Agreement and thc loan obligations
under the 2002 Loan Agreemcnt, the 2003 Loan Agreemcnt, the 2004 Loan Agreement and thc 2006 Loan
Agrccment (collcctively with the 2007 Loan Agreement, the "Parity Loan Agreements") as describcd below.
The loans incurred by the Redcvelopment Agency arc referred to as the "2007 Loan," thc "2002 Loan," thc
"2003 Loan," the "2004 Loan" and the "2006 Loans," respcctively. No funds or properties of the
Rcdevelopment Agency, other than ihe Tax Revenues, secure payment obligations under the Parity Loan
Agrcemcnts.
1997 Loan Aereement. Following the issuance of the 2007 Series A Bonds, the 1997 Loan
Agreement will secure repayment of $2,065,000 outstanding principal amount of Palm Descrt
Financing Authority Tax Allocation Rcfunding Revenue Bonds (Project Area No. 1, As Amended),
Serics 1997, which mature April 1, 2007 (the "Remaining 1997 Series Bonds").
2002 Loan Aereement. The 2002 Loan Agrcement secures repaymcnt of $22,U70,000
outstanding principal amount of Palm Desert Financing Authority Tax Allocation Refunded Revenue
Bonds (Project Area No. 1, As Amended), Series 2002 (the "Series 2002 Bonds"), which wcre issucd
pursuant to an Indenturc of Trust dated as of March 1, 2002 (the "2002 Indenture") by and bctwecn
the Financing Authority and BNY Western Trust Company, as prior trustee.
2003 Loan Aareement. The 2003 Loan secures repayment of � 19,000,000 outstanding
principal amount of Palm Desert Financing Authority Tax Allocation Revenuc Bonds (Project Area
No. 1, As Amended), Series 2003 (the "Series 2003 Bonds"), which were issued pursuant to an
Indenture of Trust dated as of July I, 2003 (thc "2003 Indenture") by and between the Financing
Authority and BNY Western Trust Company, as prior trustee.
2004 Loan A�recment. The 2004 Loan Agreement secures rcpayment of �23,595,000
outstanding principal amount of Palm Descrt Financing Authority Tax Allocation Rcfunding
Revcnue Bonds (Project Area No. 1, As Amended), Series 2004 (the "Series 2004 Bonds"), which
were issued pursuant to an lndenture of Trust dated as of June 1, 2004 (the "2Q04 Indenturc") by and
bctween the Financing Authority and BNY Westcrn Trust Company, as prior trustce.
o��oaz�s-Z
2006 Loan Aercement. Thc 2006 Loan Agreement secures repayment of $37,780,000
outstanding principal amount of Palm Dcsert Financing Authority Tax Allocation Revcnue Bonds
(Project Arca No. 1, As Amended), 2006 Serics A and 524,540,000,000 outstanding principal
amount of Palm Desert Financing Authority Tax Allocation Rcfunding Revenue Bonds (Projcct Area
No. 1, As Amended), 2006 Series B(Taxablc) (together, the "2006 Serics Bonds"), which werc
issucd pursuant to an Indenture of Trust dated as of July 1, 2006 (the "2006 Indcnture") by and
betwccn the Financing Authoriry and the Trustee.
The Remaining 1997 Series Bonds, the Series 2002 Bonds, the Series 2003 Bonds, thc
Series 2004 Bonds and the 2006 Series Bonds are rcferred to collectively, as the "Parity Bonds."
71�e Redevelopment Agency has pledgcd for thc repayment of the 1997 Loan, thc 2007 Loan, the
2002 Loan, thc 2003 Loan, the 2004 Loan and the 2006 Loans monies allocated or paid to the
Redevelopment Agency derived from: that portion of taxes levied upon taxablc property within thc Project
Arca allocatcd and paid into the Special Fund of the Rcdevelopmeni Agency pursuant to Article 6 of Chaptcr
6 of the Redcvclopment Law and Section 16 of Articic XVI of the Constitution of the State of Califomia (thc
"State"), exclusive of amounts placed in the low and moderate income housing fund of the Redcvelopment
Agency pursuant to Sections 33334.2 and 33334.3 Rcdevelopmcnt Law (see also "—Stipulation Agreemcnt")
and excluding amounts payable to local taxing agencies pursuant to pass-through agreements (collectively,
the "Pass-Through Agreements") or pursuant to Section 33607.5 or 33607.7 of the Redcvclopmcnt Law
(collectively, [he "Tax Revenues"). See "SGCURITY AND SOURCES OF PAYMENT FOR THE BONDS,"
"Lltvt�T,aT►orvs ON TAx REVENUEs—Pass-Through Agreements and Tax Sharing Payments" and "CBRTAIN
RISKS TO BONDHOLDGRS."
Thc Original Area has a Base Ycar Valuc of $27,485,836 that was established based on the asscsscd
value for 1976-776 Fiscal Ycar and the Added Temtory has a Base Yeaz Value of $656,065,059 that was
established based on the assessed value with respect to the 1982-83 Fiscal Year, each of which were last
equalized prior to thc respective effective datc of the ordinance approving the redcvelopment plan and thc
amendmcnt thereto.
The Added Territory is projected to reach its $500 million tax increment revenue limit in
Fiscal Year 2020-21. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Rcdevelopment
Plan Limitations" "CERTAIN RISKS TO BOND[iOLDERS—Added Territory Projected to Reach Revenue
Limit in Fiscal Year 2021-22" and "THE PROJECT AREA—Redevelopment Plan Limits."
S[ipulation Agreement. On May 15, 1991, a Stipulation for Entry of Judgment, as amcnded (the
"Stipulation") was entcred into among the Redevelopment Agcncy, thc Western Center on Law and Poverty,
Inc. and the California Rural Legal Assistance, whereby, among other things, the Redevelopment Agency
agreed that future indebtedncss would be payable senior to obligations imposed by the Stipulation provided
ccrtain findings were made by thc Redevelopment Agency, except, in cases, such as this transaction, where
debt scrvice savings can be dcmonstrated. Sec "LIMITATIONS ON TAX RGVENLIES—Stipulation Agree►ncnt."
Reserve Fund. As additional security for the payment of the Parity Loans by thc Redcvelopment
Agency, a reservc fund (the "Reserve Fund") was established. The Rescrve Fund is required to be
maintained in the amount cqual to the Rcserve Requirement (as dcfined herein). Amounu on dcposit in the
Reservc Fund will be used for the payment of debt service on the Parity Bonds in the event that amounts on
deposit in thc applicable Interest Account or the Principal Account held under the respective Indenture arc
insufficient therefor. See "SECURITY AND SOURCES OF PAYIvtENT FOR THE BONDS—Reserve Fund."
Following thc issuance of the 2007 Series A Bonds, the Reserve Requiremcnt for the 2007 Serics A
Bonds and the Parity Bonds will bc S .
oboaz��os-z
4
THE 2007 SERIES A 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 2007 LOAN IS NOT A DEBT OF THE FINANCING
AU"I'HORITY 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 2007 SERIES
A BONDS OR THE 2007 LOAN AGRE6MENT ARE LIABLE PERSONALLY WITH RESPECT TO
THE 2007 SERIES A BONDS OR THE 2007 LOAN. THE OBLIGATIONS OF THE
REDEVELOPMENT AGENCY WITH RESPECT TO THE 2007 LOAN IS PAYABLE SOLELY FROM
THE TAX REVENUES (AS DEFINED HEREIN) AS SET FORTH IN THE 2007 LOAN AGREEMENT.
NEITHER THE FINANCING AUTHORITY NOR THE REDEVELOPMENT AGENCY HAS TAXING
POWER.
Bond Insurancc
Payment of the principal and interest on thc 2007 Series A Bonds when due will be insurcd by a
financial guaranry insurancc policy (the "Insurancc Policy") to bc issued simultaneously with thc cxecution
and delivcry of the 2007 Serics A Bonds by MBIA Insurancc Corporation (the "Bond Insurcr"). Scc
"FINANCIAL GUARANTY INSURANCE" and APPENDIX H—"SPECIMEN FINANCIAL GUARANTY INSURANCE
POLICY."
Report of thc Fiscal Consultant
Included as Appcndix A to this Official Statement is a report (thc "Report of the Fiscal Consultant")
prepared by Roscnow Spevacek Group Inc. (the "Fiscal Consultant") which, among othcr things, analyzes the
Tax Revenues generated frocn taxable property within the Project Area and pledged to the repayment of the
Bonds. The findings and projections in thc Report of the Fiscal Consultant are subject to a number of
assumptions that should be reviewed and considered by prospcctive investors. No assurances can be givcn
that the projcctions and expectations discussed in the Report of the Fiscal Consultant will be achievcd.
Actual results may differ materially from the projcctions described therein. See APPEAiDtX A—"RGPORT OF
THB FISCAL CONSULTANf."
Certain Risks to Bondholdcrs
Investment in the 2007 Series A Bonds involvcs risk. For a discussion of ccrtain considerations
rcicvant to an invcstment in the 2007 Series A Bonds, sec "CERTAIN RISKS TO BONDHOLDERS."
Continuing Disclosure
The Redevelopment Agency has agreed to provide, or cause to be provided, to cach nationally
recognized municipal securities information repository or the Municipal Securities Rulemaking Board and
any public or private repository or entity designated by the State as a state rcpository for purposcs of Rulc
15c2-12(b)(5) adopted by the Securities and Exchange Commission certain annual financial information and
operating data and, in a timely manner, notice of certain material events. These covenants have been made in
order to assist the Underwriter in complying with the Securities and Exchange Commission Rule
15c2-12(b)(5). Sce "CONTINUING DISCLOSURG" and APPENDIX F—"FORM OF CONTINUiNG DISCLOSURE
AGRGGMENT" for a description of the specific nature of the annual report and notices of material events and a
summary description of the terms of the disclosure agreement pursuant to which such reports are to be made.
06042�pos-2
The Redevclopment Agency has never failed to comply in all material respects with any prcvious
undcrtakings with regard to said Rule to provide annual reports or notices of material events.
Additional Information
This Official Statement contains summarics of the 2007 Series A Bonds, the security for the 2007
Series A Bonds, the 2007 Indenture, the 2007 Loan Agreemcnt, the Rcdevelopment Law, the Redevelopment
Agency, the Project Area and certain other information relevant to the issuance of the 2007 Series A Bonds.
All referenccs herein to the 2007 Indenture and the 2007 Loan Agrccment are qualified in their entirety by
reference to the complete text thereof and all references to the 2007 Series A Boncis are further qualified by
rcference to thc form thercof contained in the applicable 2007 Indenture. The audited financial statements of
the Rcdevelopment Agency for the Fiscal Ycar ended June 30, 200[5] arc included in APPENDIX B. Thc
proposed form of legal opinion of Bond Counscl for the 2007 Series A Bonds is set forth in APPet�rDlx E.
See APPENDIX �"SLTMMARY OF PRINCIPAL LEGAL DOCLJMBNTS" for definitions of certain words and terms
used hcrein. All capitalized terms used in this Official Statement and not otherwise defined herein have thc
samc meanings as in thc applicablc 2007 Indcnture. The information set forth herein and in the Appendices
hereto has been fumished by the Redevelopment Agency and the City and includes information which has
bccn obtaincd from other sources which arc believed to be reliable but is not guaranteed as to accuracy or
completeness by the Financing Authoriry or the Undcrwriter and is not to be construed as a representation by
the Underwriter. Copies of documents rcferred to hcrein and information concerning thc 2007 Series A
Bonds are available upon written rcquest from the Senior Financial Analyst of the Redevelopment Agency,
73-510 Fred Waring Drive, Palm Desert, Califomia 92260-2578; tclephone: 760-346-0611. The
Redevelopment Agency may impose a charge for copying, mailing and handling.
PLAN OF REFUNDING
Refunding of Prior Bonds
The Financing Authority will loan the procccds of the 2007 Series A Bonds to the Redevelopment
Agency. The Redevelopment Agency will use a portion of thc procecds of the 2007 Loan to prepay certain
amounts that rcmain due with respect to the 1997 Loan Agrccment. The Financing Authority will usc thosc
prepaid loan amounts to refund a portion of the Palm Desert Financing Authority Tax Allocation Revenue
Bonds (Project Area No 1, As Amcnded), Series 1997 in the principal amount of $31,855,000 (the "Prior
Bonds"). Such proceeds of the 2007 Series A Bonds will be deposited in an escrow fund (the "Escrow
Fund") to be held by Wclls Fargo Bank, National Association, as escrow bank (the "Escrow Bank") pursuant
to an Escrow Agreement dated as of January 1, 2007 (the "Escrow Agreement"), by and among the
Financing Authority, the Redevelopment Agency and thc Escrow Bank.
Followin� the refunding of the Prior Bonds, there will be S2,065,000 principal amount of Series
1997 Bonds outstanding which mature on April 1, 2007.
The amounts deposited under the Escrow Agrcement will be held by the Escrow Bank and
invested in noncallable direct obligations of the United States of America, or bonds or other obligations
which are noncallable and for which the full faith and credit of the United States of America are pledged
for the payment of principal and interest, to mature or be withdrawable, as the case may be, not latcr than
thc timc when needed for thc payment or redemption of the Prior Bonds in order to discharge thc pledgc
of the lien securing the Prior Bonds (collectively, "Escrow Securities"). Thc principal of and interest on
such Escrow Securities, when received, will be sufficient to pay the principal or redemption price of,
including premium, and intcrest on the Prior Bond upon redemption thcreof. Upon delivcry of thc 2007
Bonds, the Prior Bonds will be irrevocably called for redemption on April 1, 2007 as specified below.
Sce also "V�RIFICATION OF MATHEMATICAL COMPUTATIONS."
06042�,oa-2
The Prior Bonds to be refunded consist of the following:
Tablc l
$31,855,000
Palm Desert Financing Authority
Tax Allocation Revenue Bonds
(Project Area No 1, As Amended), Series 1997
Dated Date: July 1997
Maturity Date
(Anril 11
2008
2009
ZO10
2011
2012
2014
?018
Amount
$2,290,000
2,255,000
2,505,000
2,495,000
2,755,000
5,830,000
13,725,000
Intcrest
Rate
4.90%
5.00
5.10
5.15
5.20
5.35
5.45
CUSIP
(696617)'
Payment or
Redemption Datc
(April 11
2007
2007
2007
2007
2007
2007
2007
Rcdcmption
Price
102%
102
102
102
102
102
102
Copyright, Amcrican Bankers Association. CUSIP data herein is provided by Standard and Poor's, CUSIP Service Burcau, a
division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and dces not scrve in any way as a
substitute for the CUSIP Service. CUSIP numbers are provided for convenience of reference only. None of the Authority, the
City or the Underwriter take any responsibility for the accuracy of such numbers.
Redevelopmcnt Projects
A portion of the remaining procecds of the 2007 Loan will be used by the Redevelopmcnt Agcncy to
financc ccrtain redcvclopment activities within the Project Area. Sce "THE PRO.TECT AREA—Summary of
Devclopment—Redevelopment Agency Projects."
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
o���sz��o,-z
Estimated Sources and Uses of Funds
The anticipated sourccs and uses of funds rclating to the 2007 Series A Bonds are as follows:
Sources:
Principal Amount of thc 2007 Series A Bonds
Transfcr from Prior Bonds Funds
Plus: Net Original Issuc Prcmium
TOTAL SOURCES
Uses:
Deposit to Escrow Fund
Deposit to Projcct Fund�'�
Costs of Issuance�2�
TOTAL USGS
�'� To be used to finance redevelopment activities in ►he Project Area. See "THE PRo��.Cr Arttn—Summary of Development."
�'� Includcs thc Undcrwritcr's discount, fecs and expenses of Bond Counsel and Disclosurc Counsel, fees and expcnscs of the
Trustee, the Financial Advisor, the Fiscal Consultant and the Verification Agent, printing costs, rating agency fees, bond
insurance and rescrvc fund surcty prcmiums, and other costs rclatcd to thc issuance of the 2007 Scrics A Bonds. For
information regarding the Underwriter's discount for cach scrics of 2007 Series A Bonds, see "U!JUERWRITIN(;.��
�'� A debt service reserve fund surcty bond will be deposited in the Iteserve Fund. Sce "SECURITY A\U SOI;RCf.S UF PAYh1LV'I'
foK'rHt Bouos—Rcscrvc Fund."
Debt Service Schedules
Annual dcbt service for the 2007 Series A Bonds is set forth below.
Bond Ycar
Ending
A ril 1 Principal Interest Total
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
TOTAL
06(Y32�pos-2
....,..,
The tollowing table shows schcdulcd annual dcbt scrvicc on thc Parity Loan Agreements. Scc also
"Prto1GCT AREA—Projccted Tax Incrcmcnt Rcvcnucs and Dcbt Scrvicc Covcrag�Table 8."
Payment
Date
A ril 1
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
TOTAL
Series
1997 Bonds
$3,848,505
$3,848,505
Series
2002 Bonds
$ I ,114,665
1,114,665
1, I 14,665
1,114,665
1,114,665
1, I I 4,665
1,114,665
1,114,665
1,114,665
1,114,665
1, l I 4,665
1,1 l 4,665
1,114,665
1,114,665
1, I 14,665
1,114,665
1,114,665
5,894,665
7,000,665
2,584,415
2,586,650
2,588,530
2,584,800
2,585.460
$44,774,490
' Prcliminary, subject to changc.
Series
2003 Bonds
$950,000
950,000
950,000
950,000
950,000
950,000
950,000
950,000
950,000
950,000
950,000
950,000
950,000
950,000
950,000
950,000
950,000
950,000
950,000
4,390,000
4,388,000
4,387,500
4,388,000
4389,000
$39,992,500
Series
2004 Bonds
$2,037,412.50
1,909,812.50
2,055,812.50
1,919,312.50
2,057,062.50
1,926,212.50
1,983,962.50
1,986,987.50
1,963,587.50
1,956,100.00
1,953,500.00
2,018,425.00
1,910,900.00
1,939,900.00
1,967,700.U0
] ,965,750.00
391,OOU.00
2,430,750.00
1,323,000.00
535,697,187.50
2006
Series Bonds
$4,663,676.00
5,168,349.00
6,167,326.50
5, I 69,259.00
5,168,266.00
5,164,634.00
5,168,269.00
5,167,240.00
5,167,481.00
5,168,410.00
2,914,445.00
2,869,445.00
6,876,682.50
6,830,770.00
6,808,307.50
6,816,307.50
8,390,057.50
1,275,557.50
l ,267,557.50
3,552,557.50
300,807.50
299,057.50
301,837.50
303.775.00
$99,980,075.50
THE 2007 SERIES A BONDS
Gencral
2007 Total Pariry
Series A Bonds Debt Service
Thc 2007 Scries A Bonds will be issued only in fully registered form in denominations of S5,000 and
shall mature on the dates and in the principal amounts and bear interest at the rates as set forth on the insidc
cover of this Official Statement. The 2007 Serics A Bonds will be dated the date of issuance and delivery,
issued in fully rcgistered form, without coupons, and, when issued will be registercd in the namc of Cede &
Co., as nomince for The Depository Trust Company, Ncw York, New York ("DTC"), as registercd owncr of
all 2007 Series A Bonds. Ownership intcrests in the 2007 Serics A Bonds may be purchascd in book-cntry
form only. Purchasers will not receive certificates representing their interests in the 2007 Serics A Bonds
purchascd. Payments of principal and of the interest on the 2007 Series A Bonds will be paid by the Trustcc
to DTC, which is obligated in tum to remit such principal and interest to iu DTC Participants for subsequent
disburscmcnt to the beneficial owncrs of the 2007 Serics A Bonds. See APPENDIx G—"DTC AND THL BOOK-
ENTRY ONLY SYSTEM." Ownership may be changed only upon the registration books maintained by the
Trustee as provided in the 2007 Indcnture.
Interest on the 2007 Series A Bonds shall be payablc semiannually on April 1 and October 1 of each
year, commencing October 1, 2007 (each, an "Interest Payment Date").
oboaz�,-z
Interest on thc 2007 Series A Bonds shall be payable semiannually on April 1 and October 1 of each
year, commencing October 1, 2007 (each, an "Interest Paymcnt Datc").
Interest on the 2007 Series A Bonds will bc payablc on cach Interest Payment Date to the person
whose namc appears on the Registration Books as thc Owncr as of the closc of busincss 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 Rccord Datc; provided, however, that at the written request of the Owner of at least �1,000,000 in
aggregate principal amount of Outstanding 2006 Series A Bonds filed with the Trustee prior to any Record
Datc, interest on such 2006 Series A Bonds shall bc paid to such Owner on cach succeeding Interest Paymcnt
Date by wire transfer of immediately available funds to an account in the United States designated in such
written rcqucst (unlcss and until such request has been revoked in writing).
Rcdemption Provisions
Redemption from Optional Loan Prepayment. If the Redevelopment Agency cxcrciscs its option to
prcpay principal installments of the 2006 Series A Loan pursuant to the 2007 Loan Agreement, thc Rcvenues
dcrivcd from such prcpaymcnt will bc applicd to thc redemption of the 2007 Series A Bonds maturing on or
aftcr April 1, 20 , as a wholc, or in part among maturities as designated in writing by the Financing
Authority and by lot within a maturity, in integral multiples of �5,000 principal amount, on any Interest
Payment Date on or after April 1, 20� at a redemption price equal to [100"/0] of the principal amount of
2007 Scries A Bonds to be rcdccmcd, plus accrucd intcrest thcreon to the date of rcdemption, without
prcmium.
Mandatory Sinking Fund Redemption. The 2007 Series A Bonds maturing on April 1, 20_ (thc
"2007 Scrics A Term Bonds") are also subject to mandatory redemption by lot, on April 1 in cach year
commencing April 1, 20_ from sinking fund payments made by the Financing Authority into the Principal
Account, at a redemption price equal to 100% of the principal amount thcreof to be redccmed, without
premium, plus accrued interest to the date of redemption, in the aggregate respective principal amounts as set
forth below, provided, however, that if some but not all of the 2007 Series A Bonds of a mariu-ity havc bccn
rcdcemcd, the total amount of all future sinking fund payments with respect to the 2007 Series A Term Bonds
of such maturity will be reduced by the aggregate principal amount of such 2007 Series A Term Bonds so
redcemed, to be allocated among such sinking fund payments on a pro rata basis:
2007 Series A Term Bonds MaturinQ April 1, 20
Sinking Fund
Redemption Date Principal Amount
A ril I to be Redeemed
f Maturity.
06(k12�pos-2
10
Purchase in Lieu of Redemption. In lieu of Mandatory Sinking Fund redcmption of thc 2007 Series
A Bonds on April 1 in any year, the 2007 Series A Bonds may be purchased by the Redevelopment Agency
pursuant to the 2007 Loan Agrcement and tendered to the Trustee for cancellation no later than the preceding
January 15.
Notice of Redemption. The Trustee on bchalf and at thc expense of the Financing Authority will
send by first class mail (or such other means acceptable to such Owners or institutions) notice of any
redcmption to the respective Owners of any 2007 Series A Bonds designated for redemption at thcir
respcctive addresses appearing on the Rcgistration Books and to the Securities Depositories and to one or
more Information Services, at least 30 but not more than 60 days prior to the datc fixcd for redemption;
provided, however, that neither any defect or failure to receive any such notice will affect the validiry of thc
proceedings for the redemption of such 2007 Series A Bonds or the cessation of the accrual of related
interest. Such notice is required to state the date of the notice, the redemption date, the redemption place and
the redemption pricc and shall designate the CUSIP numbcrs thc 2007 Series A Bond numbcrs (but only if
less than all of thc Outstanding Bonds are to be redeemed) and the maturiry or maturities of the 2007 Serics A
Bonds (in the event of redemption of all of the 2007 Series A Bonds of such maturity or maturitics in wholc)
of the 2007 Scrics A Bonds to be redeemed, and require such Bonds to bc surrendered at the Trust Office of
the Trustee in Los Angeles, California (or such other location as designated by the Trustee) for redcmption at
the redemption price, giving notice also that further interest on such 2007 Series A Bonds will not accrue or
accrete, as applicablc, from and after the redemption date.
Se%ction of Bonds for Redemp[ion. If less than all of the 2007 Series A Bonds of a maturity are
callcd for redemption, the Trustee will select the 2007 Series A Bonds to be redccmed from all 2007 Series A
Bonds of such maturity not previously called for redemption, by lot in any manner which the Trustee in its
sole discretion deems appropriate under the circumstances.
Partial Redemption of Bonds. In the event only a portion of any 2007 Series A Bond is called for
rcdcmption, then upon surrender of such 2007 Series A Bond the Financing Authority is required to executc
and the Trustee is rcquircd to authenticatc and deliver to thc Owner thercof, at the cxpcnse of thc Financinb
Authoriry, a new 2007 Scries A Bond or 2007 Series A Bonds of thc same tenor and maturity datc, of
authorized denominations in aggrcgatc principal amount cqual to the unredeemed portion of thc 2007 Scries
A Bond to bc redeemed.
Effect of Redemption. From and aftcr the date fixed for redemption, if funds availablc for the
payment of the principal of, intcrest on and premium, if any, on the 2007 Series A Bonds so callcd for
redemption shall have been duly provided, such 2007 Scries A Bonds so called will cease to be entiticd to
any bcnefit under thc 2007 Indenture othcr than the right to receive paymcnt of the redemption price, and no
interest shall accrue thereon from and after the redemption date specified in such notice.
SECURITY AND SOURCES OF PAYMEN'T FOR THE BONDS
Revenucs and Loan Agreements
1�he 2007 Series A Bonds are secured by a first lien on and pledge of the Revenues, which are
defined in the 2007 lndenture to include (i) all amounts payable by the Redevelopment Agency as payments
or prepayments for the 2007 Loan pursuant to the 2007 Loan Agreement; (ii) any procceds of the 2007 Series
A Bonds originally depositcd with the Trustee and all moneys deposited and held from time to time in thc
funds and accounts established under the 2007 ]ndcnture; and (iii) income and gains with respect to the
investment of amounts on deposit in thc funds and accounts established under the 2007 Indcnture, othcr than
amounts payable to thc United States of America pursuant to the tax covcnants contained in the 2007
Indenture. The primary sccuriry for the 2007 Series A Bonds, therefore, consists of amounts payable by the
o�oaz��,s-z
11
Rcdcvelopment Agency under the 2007 Loan Agreement, amounts held in the Rcserve Fund and amounts
hcld by the Trustce under the 2007 Indenture. The 2007 Loan is securcd by a first pledge of and lien on the
Tax Revenues on a parity with the pledge of and lien of the 1997 Loan securing repayment of the S2,065,000
outstanding principal amount of Series 1997 Bonds maturing April 1, 2007, the 2002 Loan, the 2003 Loan,
thc 2004 Loan and the 2006 Loans and any additional parity dcbt that may be incurred subject to the 2007
Loan Agreement (collectively, "Parity Debt"), as more fully described under "—Tax Revenucs." The
Redevelopment Agency may, pursuant to the terms of the 2007 Loan Agreemcnt, the 2002 Loan Agreemcnt,
thc 2003 Loan Agreement, the 2004 Loan Agrecmcnt and the 2006 Loan Agreement, issue additional
obligations securcd by Tax Rcvenues on a pariry with thc 2007 Loan. See "—Parity Debt and Subordinate
Dcbt."
Tax Revenues
"Tax Revenues" is defined in thc 2007 Loan Agrecmcnt to mean monics allocatcd or paid to the
Rcdcvclopment Agency derived from that portion of taxcs lcvied upon taxable property within the Project
Area allocated and paid into a special fund of the Redevelopcnent Agency pursuant to Article 6 of Chapter 6
of the Redevelopcnent Law and Section 16 of Article XVI of the Constitution of the State, exclusive of
amounts placed in the Low and Moderatc lncomc Housing Fund of the Redevelopment Agency pursuant to
Sections 33334.2 and 33334.3 of the Redevelopment Law, and excluding amounts payable to the Affected
Taxing Agencies pursuant to the Pass-Through Agreements or pursuant to Section 33607.5 or 33607.7 of the
Rcdcvclopment Law.
The Redevelopment Agency's receipt of Tax Revenues with respect to the Project Area is subject to
certain limitations (the "Plan Limitations") contained in the Redevelopment Plan on the dollar amount of
taxes which may be divided and allocated to the Rcdevelopment Agency pursuant to the Redevelopmcnt
Plan, as such limitation is prescribed by Section 33333.4 of the Redevclopment Law. See "LIMITATIONS ON
TAX RGVGNUES."
Pursuant to the 2007 Loan A��eement, the Redevelopment Agency covenants to comply with all
requircments of the Redcvelopment Law to insure the allocation and payment to it of thc Tax Revenues, and
furthcr covenants not to enter into any agreement with the County of Riverside (the "Counry") or any other
govcrnmental unit which would have the effcct of reducing the amount of Tax Revenucs available to the
Redevelopment Agency for payment of the 2007 Series A Bonds, unless the Redevelopment Agency has
obtained a rcport of an Independent Rcdevelopcncnt 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), is at least equal to 115% of Maximum Annual Debt Service; and as long as the
[nsurance Policy is in full force and effect, the written consent of the Bond [nsurer. See also "—Pariry Debt
and Subordinatc Debt."
The Redevelopment Agency has no power to levy and collect property taxes, and any property tax
li�nitation, lcgislative measure, voter initiative or provisions of additional sources of income to taxing
agcncies having the effect of reducing the property ta�c rate, could reduce the amount of Tax Revenues that
would otherwise be available to pay debt service on the 2007 Series A Bonds and, consequently, the principal
of, and interest on, the 2007 Series A Bonds. Likcwise, broadcned property tax cxemptions or succcssful
assessment appeals could havc a similar effcct. See "LIMITATIONS ON TAX R�VENULS" and "CERTAIN
RISKS TO BONDHOLDERS."
THE 2007 SERIES A 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
AUTI�ORITY, IS LIABLE THEREFOR. THE 2007 LOAN IS NOT A DEBT OF THE FINANCING
AUTHORITY OR THE STATE OR ANY OF ITS POLITICAL SUBDIVIS[ONS, AND NONE OF THE
o�>oaz��-z
12
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 2007 SERIES
A BONDS OR THE 2007 LOAN AGREEMENT ARE LIABLE PERSONALLY WITH RESPECT TO
THE 2007 SERIES A BONDS OR THE 2007 LOAN. THE OBLIGATIONS OF THE
REDEVELOPMENT AGENCY WITH RESPECT TO THE 2007 LOAN IS PAYABLE SOLCLY FROM
THE TAX REVENUES (AS DEFINED HEREIN) AS SET FORTH IN THE 2007 LOAN AGREEMENT.
NEITHER THE FINANCING AUTHORITY NOR THE REDEVELOPMENT AGENCY HAS TAXING
POWER.
Tax Allocation Financing
Thc Redevelopmcnt Law provides a means for financing rcdevelopment projects based upon an
allocation of taxcs collected within a project area. The taxable valuation of a project area last cqualized prior
to adoption of the redevelopment plan, or base roll, is established and, except for any period during which thc
taxable valuation drops below the base year level and for ccrtain cxceptions described below, thc taxing
agencies thcreaftcr receive the taxes produced by the levy of the thcn current tax ratc upon thc basc roll.
Taxcs collected upon any increase in taxable valuation ovcr the base roll (except such portion gencratcd by
rates levicd to pay bonded indebtedncss approved by the voters on or aftcr January 1, 1989, for the
acquisition or improvement of real property) are allocatcd to a redevelopment agency and may bc plcdged by
a rcdcvelopment agency to the repayment of any indcbtedness incuired in financing or refinancing a
redevelopment project. Tax Revenues consist of a poRion of such taxes. Redevelopment agencies
themselves have no authoriry to levy property taxes and must look specifically to the allocation of taxes
produccd as indicated abovc.
Redevelopment Plan Limitations
The State Legislaturc has in thc past enacted legislation altcring spending limitations or establishing
minimum funding provisions for particular activities. The Redevelopment Agency cannot predict whether
the State Lcgislature will enact other legislation requiring additional or increased future shifts of tax
increment revenues to the State and/or to schools, whether through an arrangement similar to the local
County Education Revenue Augmentation Funds (the "ERAF") or by other arrangements, and, if so, thc
effect of such legislation on future Tax Revenues. A dcscription of such legislation is summarized below.
AB 1290. Pursuant to Section 33607.7 of thc Statc Health and Safcry Code added by Assembly Bill
(Statutes of 1993, Chapter 942) ("AB 1290") a redevelopment plan amendment for any redevclopmcnt plan
adopted prior to January 1, 1994 that increases the limitation on the number of dollars to be allocated to the
redevelopmcnt abency or thc timc limit on thc cstablishing of loans, advanccs and indebtedness, must bcgin
making statutory payments to affected taxing entities that do not have existing pre-AB 1290 tax sharing
agreements. These payments are to begin once any of the original redevelopment plan limitations would
have takcn effcct. The first limit encountered or to be encountered in the Project Area is the debt
cstablishmcnt limit.
T'he AB 1290 payments are computed using the increase in revenue, if any, over the amount of
rcvcnuc gcncratcd by a project area in the year that the debt establishment limit would have been reached. In
cffcct, the year in which the debt establishment limit is met becomes a new "base year" for purposcs of
calculating payments. AB 1290 payments are paid from revenues resulting from the growth in the ncw tax
basc ycar.
Among other amendments to the Law, AB 1290 limits the time for: (i) cstablishing indcbtedness in a
projcct area to the later of 20 years from the date of adoption of the redevelopment plan or January 1, 2004;
(ii) the life of existing rcdevclopmcnt plans to the later of 40 years from the date of adoption or January 1,
oFoazV,�,s-z
13
2009; (iii) paying indcbtedness with tax incremcnt beyond 10 years after thc cxpiration of the rcdcvelopment
plan, except to fund defcrred Low and Moderate Income Housing Fund (the "Housing Set-Asidc")
requircments and to repay indebtedness incurred prior to January 1, 1994. The time limits imposed by
AB 1290 apply individually to each plan as wcll as to specific temtory added by amendments to a
redevelopment plan.
On December 8, 1994, the Ciry Council adopted Ordinance No. 765 amending the Redevelopment
Plan and cstablishing timc limits for the Project Area.
For a summary of the plan amendmcnts and limitations, see "TrIE PROJECT AREA-0riginal Arca-
Summary of Redevelopment Plan Limits-Table 2A" and "-Added Territory-Summary of Redevelopmcnt
Plan Limits-Table 2B." For additional Iegislation affccting plan limits, see "�SB 211" and "-SB 1096."
SB 211. Senate Bill 211 (Chaptcr 741, Statutes of 2001) ("SB 211") was adopted by thc California
Lcgislature and bccame law on January 1, 2002. Among other thiags, SB 211 authorizes a redevelopment
agency that adoptcd a redevelopmcnt plan prior to January 1, 1994, to amend that plan in accordancc with
spccified proccdures to extcnd its effectivcness and reccive tax incremcnt rcvcnucs with respect to thc plan
for not more than 10 years if ccrtain specificd findings are made. If a plan is so amcnded, the requirement for
allocating tax increment revenues to low and moderate income housing is increased from 20% to 30%.
Howevcr, such elimination also triggers statutory tax sharing with those taxing entities that do not have tax
sharing agreements for the period commencing in the year the eliminated plan limit would havc takcn ctfcct.
Tax sharing will be calculated based on the increase in assessed valuation after the year in which the timc
limit would havc otherwise become effectivc. SB 211 also allows redevelopment agencies to amend
rcdevelopment plans to eliminatc the time limit for the establishment of loans, advances and indebtedness
within project areas. However, such an amendment would also require a redevelopment agcncy to bcgin
makinb statutory tax sharing payments to affected taxing entities. Sec "-AB 1290."
On February 27, 2003, pursuant to SB 211 thc Ciry Council adoptcd Ordinancc No. 1035 climinating
the time limit to incur debt within the Project Area. See "LIMITATIONS ON TAX RGVGNUBS-Pass-Throubh
Agreemcnts and Tax Sharing Paymcnts-,Statutory Taz Sharing Payments" and "THE PROJECT AREA-
Original Area-Summary of Redevelopmcnt Plan Limits-Tablc 2A" and "-Added Temtory-Summary of
Redcvclopment Plan Limits-Table 2B" for a summary of the plan amendment and limitations.
SB 1045. Senate Bill 1045 (Chapter 260, Statutcs of 2003) ("SB 1045") was enacted as part of thc
State Fiscal Year 2003-04 budget legislation and required redevelopment agcncics Statcwidc to contributc
S135 million to the ERAF in order to reduce the amount of State funding for schcx�ls. (See also "Ctrt'rA►tv
RISKS TO BONDHOLDERS-State Budget"). In accordancc with SB 1045, the Redevelopment Agcncy
transferred $291,686 to the County by the May 10, 2004 deadline.
In addition, SB 1045 amended the Redevelopment Law to permit redevelopment agcncics to usc a
simplified mcthodology to amend the redevelopment plans to extend by one year thc cffcctivcncss of thc plan
and the time during which a redevclopment agency may repay debt with tax increment revcnucs, and
permitted a redevelopment agency to deduct the amount of ERAF payments in Fiscal Year 2003-04 and in
prior years from the amount of the cumulative tax increment revenues for a project area.
On Deccmber 9, 2004 the City Council adopted Ordinance No. 1082 extending by one year the
cxpiration datc of thc Rcdcvelopment Plan and the time limit to repay debt in the Project Area. Sec "THE
PRo1ECT Ax�A-0riginal Area-Summary of Redevelopment Plan Limits-Table 2A."
SB 1096. Senate Bill 1096 (Chapter 211, Statutes of 2004) ("SB 1096") permits a redevelopment
agency to extend the term of the redevelopment plans effectiveness and the periods within which a
rcdevelopmcnt agcncy may repay indebtedness by up to two additional years, provided thc redevelopment
o�oaz�o�-z
14
agency pays its ERAF obligations for Fiscal Ycars 2004-OS and 2005-06. SB 1096 authorizcs the following
cxtcnsions of redcvelopment plans: (i) for componcnts of a project area that have 10 years or lcss of plan
effectiveness remaining after June 3Q, 2005, a two-year extension is authorized; and (ii) for components of a
project area that have more than 10 years and less than 20 years of plan effectivcness remaining after Junc 30,
2005, a two-year extension is authorized if the legislative body of the redevelopment agency makes certain
findings. For those components of a project area with more than 20 years of plan effectiveness remaining
aftcr June 30, 2005, no extension of timc is authorized under SB 1096.
The Redevelopment Agency paid its ERAF obligation for Fiscal Year 2004-OS in thc amount of
53,887,133 and for Fiscal Ycar 2005-06 in the amount of $3,995,041. Since the Project Arca has more than
20 ycars of plan effectiveness remaining, the Rcdevclopment Agency is not permitted to cxtend thc
repayment provisions within the Project Area pursuant to SB 1096. See "THB PROJECT AREA-0riginal
Arca—Summary of Redevelopment Plan Limits—Table 2A" and "—Added Territory—Summary of
Rcdevclopmcnt Plan Limits—Tablc 2B."
SB 1206. Senate Bill 1206 Chaptcr 595, Statutcs of 2006 ("SB 1206") amends sections of the
Redcvelopment Law to, among other things, revisc the conditions that characterizc a blightcd arca;
standardize thc requirements for mergers of project areas; and prohibit the inclusion of nonblighted parccls in
a redcvclopment project area for thc purpose of obtaining property tax revenue without substantial
justification for inclusion.
Allocation of Taxes
As providcd in the Redevelopment Plan, and pursuant to Article 6 of Chapter 6 of the
Redevclopment Law (commencing with Section 33670 of the California Health and Safety Code) and
Section 16 of Article XVI of the Statc Constitution, taxes levied upon taxable property in the Projcct Area
cach ycar by or for the bencfit of the Statc, Riverside Counry (the "Counry"), the Ciry, any district or other
public corporation (herein collectively referred to as"taxing agencies") for each Fiscal Year beginning after
the cffective dates of the ordinance approving the redevelopment plans and any amendmcnts adding
tcrritory thcreto arc dividcd as follows:
1. To other taxin� a�encies: That portion of thc taxes which would be produced by thc rate
upon which the tax is levied each year by or for each of said taxing agencies upon the total sum of� the
assessed value of the taxable property in the Project Area as shown upon the assessment roll used in
connection with the taxation of such property by such taxing agency last equalized prior to the effective date
of thc applicable ordinance adopting the redcvelopmcnt plan or amending the rcdevelopmcnt plan to add
property into the Project Arca, shall be allocated to, and when collected shall be paid into the funds of the
respective taxing agencies as taxes by or for said taxing agencies on all other property are paid; and
2. To the Redevelopment AQencv: Exeept for taxes which are attributable to a tax rate levy by
a taxing agency for the purpose of producing revenues to rcpay bondcd indebtedness approvcd by the voters
of the taxing agcncy on or after January 1, 1989, which shall be allocated to and when collccted shall bc paid
to thc respective taxing agency and except for statutory pass-through payments, that portion of the levied
taxcs cach year in exccss of thc amounts provided for in paragraph (1) abovc, shall be allocated to, and when
collected, shall be paid into a special fund of the Redevelopment Agency to pay the principal of and interest
on bonds, loans, moneys advanccd to, or indebtcdness (whcther funded, refunded, assumcd, or othcrwise)
incurred by the Rcdevelopment Agency to finance or refinance, in whole or in part, projects and programs for
the Project Area. When said bonds, loans, advances, and indebtedness, if any, and interest thereon, have been
paid, all moneys thcreafter received from taxes upon the taxable property in the Project Arca, shall bc paid
into the funds of the respcctive taxing agencies as taxes on all other properry are paid.
o�cwz�s-z
15
Thc portion of taxes divided and allocated to the Redcvclopment Agency from the Projcct Arca
pursuant to paragraph (2) above shall not excecd a total of $758 million with respect to thc Original Area
and �500 million with respect to the Added Tcrritory (inclusive of pass through paymcnts to affcctcd
taxing agencies and the Housing Set-Aside) cxcept by amendmcnt of the Redevelopment Plan. This limit
docs not apply to, include or prevent the Redevelopment Agency from incurring debt to be paid from the
Housing Set-Aside, or any amounts rcquired to fulfill the Redevelopment Agency's obligations under
scction 33413 of the Redevelopment Law in cxcess of the $600 million limit.
The Redevelopment Agency is authorized to make plcdges of the portion of taxes mentioned in
paragraph (2) above as to specifc advances, loans and indebtcdness as appropriate in carrying out the
Rcdcvelopment Plan in the Projcct Area, subject to the limitations on allocation of taxes, dcbt creation,
and bonded indebtedness contained in the Statc Health and Safety Code and other applicable laws.
Undcr thc provisions of thc Redevelopmcnt Plan, the Redevelopment Agency shall not cstablish
or incur loans, advances, or indebtedness to finance in whole or in part activities in the Project Area
bcyond the dates for thc areas indicated in "THE PROlECT AREA—Redcvclopment Plan Limits—Tablc 2A
and Tablc 2B." Loans, advanccs, or indebtedncss may be repaid over a period of time beyond said time
limits. Thcse limits, however, shall not prevent the Redevelopmcnt Agency from incuning dcbt to bc
paid from the Housing Fund established pursuant to Section 333343 of the Redevelopment Law and the
Redevclopment Plan, or establishing more debt in order to fulfill the Redevelopment Agcncy's
obligations under Section 33413 of the Redevelopmcnt Law and the Redevelopment Plan. This limit
shall not prevent thc Redevelopment Agency from refinancing, refunding or restructuring indebtedness
aftcr the time limit if the indebtedness is not increased and the time during which the indebtedness is to be
rcpaid is not extendcd beyond the time limits contained in the Redevelopment Plan.
The Redevelopment Agcncy may not receive and shall not repay indebtedness with thc procccds
fi-ocn property taxes received pursuant to Section 33670 of the Redevclopment Law and the Redcvclopment
Plan beyond the datcs for the areas indicated in Table 2A and Table 2B, except to repay debt to be paid from
thc Housing Fund established pursuant to the Section 33334.3 of the Redevelopment Law and the
Rcdevclopment Plan, or debt establishcd in order to fulfill thc Redcvclopmcnt Agency's obligations undcr
Scction 33413 of the Redevelopment Law and the Redevelopment Plan.
Rescrvc Fund
General. A Reserve Fund was establishcd as additional security for the payment by thc
Redcvelopmcnt Agency of amounts due undcr the Parity Loan Agreements. The Reserve Fund is required to
be maintaincd by the Trustee in the amount of thc "Reserve Requirement." The Reserve Requirement is
defincd in thc Parity Loan Agreements, as of any date of calculation, as the least of: (i) Maximum Annual
Debt Service; (ii) 125% of average annual debt service on the 2007 Loan and all outstanding Parity Debt; and
(iii) 10% of the proceeds of the applicablc 2007 Loan (i.e. the original Principal Amount of the 2007 Series A
Bonds) and the proceeds of any Parity Dcbt.
The Rcdcvelopmcnt Agcncy pledges and grants a lien and security interest to the Trustcc in thc
Reservc Fund to sccurc the payment obligations of the Redevelopment Agency under the Parity Loan
A��reements. Amounts on deposit in a Reserve Fund may be used for the purpose of making transfers to the
applicable Intcrest Account, Principal Account, in such order, in the event of a deficiency at any time in any
such accounts with respect to the amounts due on the applicable series of Parity Bonds.
oboaz�s-z
16
Parity Debt and Subordinate Dcbt
Issuance of Parity Deb� In addition to the 2007 Series A Bonds, the Redevelopment Agency may,
by supplemental indenture, issue or incur other loans, advances or indebtedness payable from Tax Rcvenucs
or Subordinate Tax Revcnues, on a parity with the 2007 Series A Bonds and the Parity Bonds and refunding
bonds issued solely to finance and refinance redevelopment activities with respect to the Project Area in such
principal amount as shall be determined by the Redevclopment Agency.
The Redevelopment Agency covenants in the 2007 Loan Agreement that it will not incur any
indebtedness payablc from all or any part of the Tax Revenues other than: (i) the 2007 Loan; (ii) additional
Parity Debt subjcct to the conditions describcd bclow, and (iii) any debt secured by a pledge of Tax Revenues
which is subordinate to the plcdge of Tax Revenues created by the Parity Loan Agrccmcnts. The
Redcvclopment Agency has fur[her covenanted in thc 2007 Loan Agreement that it will not amcnd thc
Redevelopment Plan (except for the purpose of extend or eliminating the time limit for the receipt of tax
incrcmcnt, or increasing the limitation on the number of dollars of taxes to be allocated to the Rcdevclopment
Abency) or any of the Pass-Through Agrcements, or enter into any agreement with the Counry or any other
governmental unit, which would have the cffcct of reducing the amount of Tax Revenues available to thc
Redevclopenent Agency for payment of the Pariry Loans unless the Redevelopment Agency has first
obtaincd: (i) a report of an Independent Rcdevclopment Consultant stating that the amount of Tax Revenues
for the then current Fiscal Ycar (calculated on the assumption that such reduction of Tax Rcvcnucs was in
effect throughout such Fiscal Year), plus, at the option of the Redevelopment Agency, the Additional
Revenues, will meet the covcrage tcst sct forth in paragraph (b) below, and (ii) the permission of thc Bond
Insurcr.
Pursuant to the 2007 Loan Agecment, the Redevelopment Agency may issue or incur additional
Parity Debt subject to the following specitic conditions:
(a) No Event of Default has occurred and is continuing under and as defined in the 2007 Loan
Agreement, and the Redevelopment Agency is otherwise in compliance with all covenants set forth in thc
2007 Loan Agreement.
(b) The amount of Tax Revenues for the then current Fiscal Year, as set forth in a Certificate of
the Redevelopment Agency, based on assessed valuation of property in the Project Area as evidcnced in the
writtcn rccords of thc Counry and projected annual Tax Revenues over the term of thc 2007 Loan Agreemcnt
based on currcnt Tax Revenue collections is at least equal to 115% of Maximum Annual Debt Service.
(c) The related Parity Debt Instrument provides that the balance of thc Reserve Fund will be
increased to the new Reserve Requirement effective after the incurrence of such Parity Debt.
(c) The related Parity Debt Instrument provides that any Parity Dcbt that bears current intcrest is
payablc on April 1 and October 1 of any year; and the principal on such Parity Debt is payablc on thc same
date as principal and interest on the 2007 Loan arc payable.
(e) The issuance of such Parity Debt will not cause the Redevelopment Agency to exceed any
applicable limitations contained in the Redevelopment Plan.
(� The Redevelopment Agency delivers to the Trustee a written certificatc ccrtifying that the
conditions precedent to the issuance of such Parity Debt set forth in subparagraphs (i) throubh (v) above havc
been satisfied.
oboaz��,s-z
17
Suburdinate Debt. In addition to the Parity Loans and any Parity Debt, the Redevclopment Agency
may from time to time issue or incur Subordinate Debt (as defined in the 2007 Loan Agreement) in such
principal amount as determined by the Redevelopment Agency, provided that the issuance of such
Subordinatc Debt will not cause the Redcvelopment Agency to exceed any applicable limitations containcd in
the Rcdevclopmcnt Plan.
Investment of Funds
All funds held by thc Trustce under thc 2007 Indenture and the Special Fund hcld by thc
Redevelopment Agency are required to be invested in Permitted Investments. See APPENDIX D attached
hercto for the definition of Permitted Investments. Sce thc audited financial statemcnts of the Rcdevelopmcnt
Agency for the year ended June 30, 2005 attached hereto as APPENDIX B for a description of the
Redcvelopmcnt Agency's investment policy at Junc 30, 2005. All investments, including thc Pcnnitted
Investments contain a certain degree of risk. Such risks include, but are not limited to, a lower rate of return
than expected and loss or delayed reccipt of principal. The occurrence of these events with respect to
amounts held under the 2007 Indcnture or the Special Funds could have a material adverse affcct on the
sccurity for the 2007 Scrics A Bonds.
FINAIVCIAL GUARANTY INSURANCE
The following information has been furnished by the Bond Insurer for use in this OJficial Statement.
Reference is made to APPENDIX H for a.spec•imen of the financia! gzraranty insurance policy to be isst�ed b��
the Bond lnsurer. The Redevelopment Agency makes no repre.sentations as to the accuracy or completene.s.s
orthis information or us to the absence of material adverse changes in this information subseyuent to the
date hereof.
MBIA Insurance Corporation
MBIA Insurance Corporation ("MBIA ') is the principal operating subsidiary of MBlA Inc., a Netiv Yw•k
Stock Exchange listed compuny (the "Company'). The Company is not obligated to pay the debts vJor
cluims against MBIA. MBIA is domiciled in the State of New York and licensed to do business in and subject
to regulation under the laws of all SO states, the District of Columbia, the Commonwealth of Puerto Rico, the
Commonx�ealth of the Northern Muriana Islands, the virgin /slancls of the United Stutes and the Territory oj
Guam. MBIA, either directly or through sufisidiaries, is licensed to do business in the Republic nf Franc•e,
t17e United Kingdom and the Kingdom o.f Spain and is subject to r•egulation under the lativs of those
. jurisclictions.
The principal executive o�ces of MBIA ure loc•ated at 113 King Street, Armonk, New York 10504
and the muin telephone number at that address is (914) 273-4595.
MBIA docs not accept any responsibility for the accuracy or completcncss of this Official Statemcnt
or any information or disclosurc contained herein, or omittcd herefrom, other than with respcct to the
accuracy of the information regarding the Policy and MBIA set forth undcr the heading "FINANCIAL
GUARANTY INSURANCE." Additionally, MBIA makes no rcpresentation regarding the 2007 Serics A Bonds
or the advisability of investing in thc 2007 Series A Bonds.
Regulation
As a financial guaranry insurance company licensed to do business in the State of New York, MBIA is
.sa�bject to the New York /nsurance Law which, among other things, prescribes minimum capital requirements
und contingency reserves against liabilities for MB/A, limits the classes und concentrations ojinve.stments
oboaz��s-2
18
that are made by MBIA and requires the approval qf policy rates and forms thut are employed by MBlA.
State luw also regulates the amount of both the aggregate und individual risks that may be in.sured by MBIA,
the payment of dividends by MBIA, changes in control with respect to MBIA and transactions umong MBIA
and its a�liutes.
The Policy is not covered by the Propercy/Casualty Insurance Securiry Fund specified in Article 76
of the Ncw York Insurancc Law.
Financial Strcngth Ratings of MBIA
Moody's Investors Service, Inc. rates the financial strength of MBIA "Aaa."
Standard & Poor's, a division of The McGraw-Hill Companies, Inc., rates the financial strength of
MBIA "AAA."
Fitch Ratings rates thc financial strcngth of MBIA "AAA."
Each rating of MBIA should be evaluated independently. The ratings reflect the respective rating
agcncy's current assessment of the creditworthiness of MBIA and its abiliry to pay claims on its policies of
insurancc. Any furthcr explanation as to the significance of thc above ratings may be obtained only from the
applicable rating agency.
The abovc ratings are not recommendations to buy, scll or hold the 2007 Series A Bonds, and such
ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision
or withdrawal of any of the above ratings may have an adversc effect on the market price of the 2007 Serics
A Bonds. MBIA does not guaranty the market price of the 2007 Series A Bonds nor docs it guaranty that thc
ratings on the 2007 Series A Bonds will not be revised or withdrawn.
MBIA Financial Information
The tables below present selected financial information of MBIA determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory authorities ("SAP") as well as
selected financial information of MBIA on a consolidated basis determined in accordance with accounting
principlcs gencrally accepted in the United States of America ("GAAP"):
In millions
Admittcd Asscts
Liabilities
Capital and Surplus
In millions
Assets
Liabilities
Equity
June 30, 2006
(Unauditedl
$11,273
6,929
4,344
June 30, 2006
(Unaudited�
S13,388
6,305
7,083
SAP
GAAP
December 31, 2005
(Audited)
S11,037
7,237
3,800
December 31, 2005
(Audited)
� 13,506
6,426
7,080
For further information conceming MBIA, see the consolidated financial statements of MBIA and its
subsidiaries as of December 31, 2005 and December 31, 2004 and for each of the three years in the period
ended December 31, 2005, prepared in accordance with generally accepted accounting principles, included in
ot,c�az��,��-z
19
�
thc Annual Report on Form 10-K of the Company for the year ended Dccembcr 31, 2005 and the
consolidated financial statcmenu of MBIA and its subsidiarics as of June 30, 2006 and for the six month
periods cndecl June 30, 2006 and June 30, 2005 included in the Quatterly Report on Form 10-Q of the
Company for the period ended June 30, 2006, which arc hereby incorporated by reference into this Official
Statement and shall be deemed to be a part hcreof.
Copics of thc statutory financial statccnents filed by MBIA with the State of New York Insurancc
Department are available over the Internet at the Company's web site at http://www.mbia.com and at no cost,
upon requcst to MBIA at its principal executive offices.
Incorporation of Certain Documents by Reference
The following documents filed by the Company with the Securities and Exchange Commission (the
"SEC") are incorporated by reference into this Official Statement:
(1) The Company's Annual Rcport on Fortn 10-K for the year cnded Dcccmber 31, 2005; and
(2) Thc Company's Quartcrly Report on Fonn 10-Q for thc quarter ended Junc 30, 2006.
Any documents, including any financial statements of MBIA and its subsidiaries that are includcd
thcrcin or attached as exhibits thcreto, filcd by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of
thc Exchange Act aftcr the date of thc Company's most rccent Quarterly Report on Form 10-Q or Annual
Report on Fonn 10-K, and prior to the termination of the offering of the 2007 Series A Bonds offcred hereby
shall be dccmed to be incorporated by rcferencc in this Official Statemcnt and to be a part hcreof from thc
respective dates of filing such documents. Any statcment contained in a document incorporated or deemed to
be incorporated by reference herein, or contained in this Official Statement, shall be deemed to be modified
or superscded for purposes of this Of�icial Statcment to the extent that a statemcnt contained hcrein or in any
othcr subsequently filed document which also is or is deemed to be incorporated by reference herein modifics
or supersedes such statement. Any such statement so modificd or superseded shall not be decmed, exccpt as
so modified or superscded, to constitute a part of this Official Statement.
Thc Company files annual, quarterly and special reports, information statcmcnts and othcr
information with the SEC under File No. 1-9583. Copies of the Company's SEC filings (including (1) thc
Company's Annual Report on Form ]0-K for the year ended December 31, 2005, and (2) the Company's
Quarterly Reports on Form 10-Q for the quarters cnded March 31, 2006 and June 30, 2006) are availablc (i)
over the Intemet at the SEC's web site at httU://www.sec.!?ov; (ii) at the SEC's public reference room in
Washington, D.C. (iii) over the Internet at the Company's web site at http://www.mbia.com; and (iv) at no
cost, upon request to MBIA at its principal executive offices.
Fxperts
The financial statements, financial statement schedules and management's assessment of thc
effectiveness of internal control over financial repoRing (which is included in Management's Report on
Internal Control Over Financial Reporting) of MBIA Inc. and subsidiaries and the financial statements of
MBIA Insurance Corporation and subsidiaries incorporated in this Official Statement by reference to MBIA
Inc.'s Annual Report on Form 10-K for the ycar ended December 31, 2005 have been so incorporated in
rcliancc on the reports of PricewatcrhouseCoopers LLP, an independent registercd public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
06042�pos-2
2�
LIMITATIONS ON TAX REVENUES
Article XIII A of the State Constitution
On Junc 6, 1978, Califomia voters approved Proposition 13 ("Proposition 13"), which addcd Article
XI[I A to thc State Constitution ("Articic XI11 A"). Articic XIII A, as amended, limits the amount of any
ud valorem tax on real property to one perccnt of the full cash value thereof, except that additional
ad valorem taxcs may be levicd to pay debt scrvice on (i) indcbtcdncss approved by the voters prior to July 1,
1978, (ii) (as a result of an amendment to Article XIII A approved by State voters on June 3, 1986) on bonded
indebtedness for the acquisition or improvement of real properry which has been approved on or aftcr July 1,
1978 by two-thirds of the voters on such indebtcdness, and (iii) bonded indebtedness incutred by a school
district or community collcge district for the construction, rcconstruction, rehabilitation or replacement of
school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters
of the district, but only if certain accountability measures are includcd in the proposition. Article XI11 A,
amonb other things affects the valuation of rcal property for thc purpose of taxation in that it defines the full
cash property value to mean "the counry assessor's valuation of rcal property as shown on the 1975-76 tax
bill under `full cash value', or thereafter, the appraised value of real property when purchased, newly
constructed, or a change in ownership has occurred after the 1975 assessment." The full cash value may bc
adjusted annually to reflect inflation at a rate not to exceed 2% per year, a reduction in the consumer price
index or comparable local data, or declining property value causcd by damage, destruction or other factors
including a gcncral cconomic downturn.
In the general elections of 1986, 1988 and 1990, California voters approved various measures which
further amendcd Article XIII A. One such amendment generally provides that the purchasc or �-ansfcr of (i)
real property between spouscs or (ii) the principal residcnce and the first S1,000,000 of the full cash value of
other real property beiween parents and children, do not constitute a"purchase" or "change of ownership"
triggering reassessmcnt under Article XIII A. This amendment reduces the property tax revenucs of thc City
and the tax increment of the Redevelopment Agency. Other amendments permitted the Legislature to allow
persons over 55 who sell their residence and on or after November 5, 1986, buy or build another residence of
cqual or lesser value within two years in the same county, to transfcr thc old residcnce's asscsscd valuc to thc
new residence, and permitted the Legislature to authorize each counry under certain circumstances to adopt
an ordinance makinb such transfer or assessed value applicable to situations in which the replacc►ncnt
dwelling purchased or constructed after November 8, 1988, is located within that county and the original
property is located in another county within thc Statc.
In the June 1990 election, the voters of the State approved additional amendments to Article XIII A
permitting the California Legislature to extend the replacement dwelling provisions applicable to persons
over 55 to severely disabled homeowners for replacement dwellings purchased or ncwly constructcd on or
after June 5, 1990, and to exclude &om the definition of "new construction" triggering reassessment
improvcments to certain dwellings for thc purpose of making the dwelling more accessible to severcly
disabled persons. In the November 1990 clection, the voters approved the amenciment to Article X1fI A to
permit the State Legislature to exclude from the definition of "new construction" seismic retrofitting
improvcments or improvements utilizing carthquake hazard mitigation technologies constructed or installed
in cxisting buildings after November 6, 1990.
Both the California Supreme Court and the United States Supreme Court have upheld thc
constitutionality of Articic XIII A.
Challenges [o Article XIII A. On September 22, 1978, the California Supreme Court upheld the
amcndment over challenges on sevcral state and federal constitutional brounds (Amador Vallev Joint
Union High School District v. State Board of Equalization). Thc Court rescrvcd ccrtain constitutional
issucs and the validity of legislation implementing the amendment for future determination in proper
oboaz��„-,
21
cascs. Since 1978, scvcral cascs have been dccided interpreting various provisions of Article XIII A;
howcvcr, none of thcm have questioncd thc ability of rcdcvelopment agencies to use tax allocation
financing. The United States Supreme Court upheld the validity of the assessment procedures of Articic
XIII A in Nordlinger v. Hahn.
The Redevelopment Agency cannot predict whether there will be any future challenges to
California's present system of property tax assessment and cannot evaluate the ultimate effect on the
Redevelopment Agency's receipt of Tax Revcnues should a future decision hold unconstitutional the
method of assessing property.
Implementing Legislation. Legislation enacted by the California Legislature to implemcnt
Anicic XII1 A providcs that all taxable property is shown at full assessed value as described above. In
conformity with this procedure, all taxable property value included in this Official Statemcnt (cxcept as
notcd) is shown at 100% of asscssed value and all general tax rates reflect the �,1 per S 100 of taxable
value. Tax rates for voter approvcd bonded indcbtcdness and pension liability arc also applicd to 100% of
asscssed valuc.
Future assessed valuation growth allowed under Article XIII A(new construction, change of
ownership, 2% annual value growth) will be allocated on the basis of "situs" among the jurisdictions that
serve the tax rate area within which the growth occurs, except for certain utility property assesscd by the
State Board of Equalization. Local a�encies and school districts will share the growth of "base" revenuc
from the tax rate area. Each year's growth allocation becomes part of each agency's allocation the
following year. The Redevelopment Agency is unable to predict the nature or magnitude of future
revcnue sourccs which may be provided by the State to replace lost property tax revenues. Article XIII A
cffectively prohibits the levying of any other ad vUlorem property tax abovc the 1% limit except for taxes
to support indebtcdness approved by thc voters as dcscribed above.
See "CERTAIN RISKS TO BONDHOLDERS—Reduction in Inflation Rate" regarding certain litigation
rclating to property asscssments and the provision of Articic XIII A limiting the annual inflation
adjustment to two perccnt when the assessor tried to "recapture" the tax value of the property by
incrcasing its asscssed value by approximately four perccnt in a single year.
Litigation Regarding 1% Limitation. Section 51 of the Revenue and Taxation Code permits county
assessors who have reduced the assessed valuation of a property as a result of natural disa.sters, economic
downturns or other factors, to subsequently "recapture" such value (up to the pre-dccline value of the
property) at an annual rate higher than 2%, depending on the assessor's measure of the restoration of valuc of
the damaged property. The constitutionaliry of this procedure was challenged in a lawsuit brought in thc
Orangc County Superior Court entit(ed County of Orange v. Orange Counry Assessment .4ppeal.s Board No. 4
and in similar lawsuits brought in other counties, on the basis that the decrease in assessed value crcates a
new "basc year valuc" for purposes of Proposition 13 and that subsequent increases in the assessed value of a
property by more than 2% in a single year violatc Articic XIII A. In 2001, the Orangc County Superior Court
issucd an order declaring the recapture practice to be unconstitutional as applied to the plaintiff taxpayer. On
March 26, 2004, the Court of Appeal held that the trial court erred in ruling that assessed valuc
determinations arc always limited to no more than 2% of thc previous year's asscssed value and reverscd the
judgmcnt of the trial court. On July 21, 2004, the California State Suprcmc Court denied a petition to revicw
thc decision of the Court of Appeal.
Articic XIII B of the Statc Constitution; Appropriation Limitations
An initiative to amend the State Constitution was approved on September 6, 1979 thcreby adding
Article XIII B to the State Constitution ("Article XIII B"). Article XIII B limits the annual appropriations
from the proceeds of taxes of the State and any city, counry, school district, authority or other political
�_�
06042�os-2
22
subdivision of the Statc to the Icvel of appropriations for thc prior fiscal year, as adjusted for changcs in the
cost of living, population and scrvices rendcred by the govcrnmental entity. Ariicle XIII B includcs a
requirement that if an entity's revenues in any year exceed the amount permittcd to bc spent, thc: cxccss
would have to be returncd by revising tax or fee schedules over thc subsequent two ycars.
Effectivc September 30, 1980, the Statc Lcgislature added Section 33678 to the Redevelopment Law
which provides that the allocation of taxcs to a rcdevelopment agency for the purpose of paying principal of,
or interest on, loans, advances or indebtedness incurred for redevelopment activity shall not be deemed the
receipt by such agency of proceeds of taxes within the meaning of Article XIII B, nor shall such portion of
taxes be dcemcd receipt of proceeds of taxcs by, or any appropriation subject to the limitation of, any other
public body within the meaning or the purposc of the Constitution and laws of the State, including Section
33678 of the Redevclopment Law. Two State appellate court decisions have upheld the constitutionality of
Section 33678, and in thc one case in which a petition for rcview was filed in the California Supreme Court,
such petition was denied.
Articles XIII C and XIII D of the State Constitution
On Novembcr 5, 1996, California voters approved Proposition 218—Voter Approval for Local
Government Taxes—Initiative Constitutional Amendment. Proposition 218 added Articles XIII C and XIII D
to the California Constitution, imposing certain vote requirements and other limitations on the imposition of�
new or increased taxes, assessments and property-related fees and charges. The Bonds are secured by
sourccs of revcnucs that arc not subject to limitation by Proposition 218.
Taxation of Unitary Property
AB 454 (Statutes of 1987, Chaptcr 921) provides a revised method of reporting and allocating
property tax revenues gencrated from most State-assessed unitary properties commencing with Fiscal Year
1988-89. Under AB 454, the State reports to each county auditor-controller on the counry-wide unitary
taxable value of each utility, without an indication of the distribution of the value among tax rate arcas.
AB 454 provides two formulas for auditor-controllers to use in order to determine the allocation of unitary
properry taxes generated by the county-widc unitary value, which are: (i) for rcvenue gencrated from thc 1%
tax rate, each jurisdiction is to receive up to 102% of its prior year unitary property tax increment revenue,
howcver, if county-wide revenues gcnerated for unitary properties are greater than 102% of prior ycar
revenucs, each jurisdiction receives a percentage share of the excess unitary revenues equal to the percentage
of each jurisdiction's share of secured property tax revenues; or (ii) for revenue generated from the
application of the debt service tax rate to county-wide unitary taxable value, each jurisdiction is to receive a
percentage share of revenue based on the jurisdiction's annual debt service requirements and the percentage
of property taxes received by each jurisdiction from unitary property taxes.
The provisions of AB 454 apply to all State-asscssed property, except railroads and non-unitary
properties the valuation of which will continue to bc allocated to individual tax rate areas. The provisions of
AB 454 do not constitute an elimination or reversion of ihe method of assessing utilitics by the State Board of
Equalization. AB 454 allows, gencrally, valuation growth or dccline of State-asscssed unitary property to bc
sharcd by all jurisdictions within a county.
The unitary revenue allocation made by the County Auditor-Controller to the Original Area for
1�'iscal Ycar 2005-06 was $300,930 is estimated to be the same for Fiscal Year 2005-06. The unitary rcvcnue
allocation madc by thc County Auditor-Controller to the Added Tcrritory for Fiscal Year 2005-06 was
� 167,752 and is estimatcd to be the same for Fiscal Year 2006-07.
o�aaz�s-z
23
Property Tax Collection Procedures
Classifications. In California, property which is subject to ad valorem taxes is classified as
"secured" or "unsecured." Secured and unsecured property are entered on separate parts of the assessment
roll maintained by the county assessor. The secured classification includes property on which any property
tax levied by the County becomes a lien on that property sufficient, in the opinion of the counry assessor, to
secure payment of the taxes. Every tax which becomes a lien on secured property has priority over all other
liens on the secured property, regardless of the time of the creation of other liens. A tax levied on unsecured
property does not become a lien against the property, but may become a lien on ccrtain other property owned
by thc taxpayer.
Collections. The method of collecting dclinquent taxes is substantially differcnt for the two
classifications of property. The taxing authority has four ways of collecting unsecured property taxes in the
abscncc of timely payment by the taxpayer: (1) a civil action against the taxpayer; (2) filing a certificate in the
office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the
taxpayer; (3) filing a certificate of delinquency for record in the county recorder's office, in order to obtain a
licn on certain property of the taxpayer; and (4) seizure and sale of thc personal property, improvcments or
possessory interests bclonging or asscsscd to the asscssce.
The exclusive means of enforcing the payment of delinquent taxes with respect to property on the
secured roll is the sale of property securing the wxes to the State for the amount of taxes which arc
dclinquent.
Current tax payment practices by the County provide for paymcnt to the Redevelopment Agency of
Tax Revcnues monthly throughout the fiscal year, with the majority of Tax Revenues derived from secured
property paid to thc Redevelopment Agency in mid-Deccmbcr and mid-April, and thc majority of Tax
Rcvenucs derivcd from unsecured property paid to the Redevelopment Agcncy by mid-Novcmber. A tinal
reconciliation is made after the close of the fiscal year to incorporate all adjustments to previously reported
current year taxable values. The difference between the final reconciliation and Tax Revenues previously
allocated to thc Redevelopment Agency is allocated mid-August.
Penalties. A 10% pcnalty is added to dclinquent taxes which have been levied with respect to
property on the secured roll. In addition, property on the securcd roll on which taxes are delinquent is sold to
thc State on or about June 30 of thc fiscal year. Such property may thcreafter be redeemed by payment of the
delinquent taxes and a delinquency penalty, plus a redemption penalty of 1% per month to the time of
redemption and a$15 Redemption Fee. If taxes are unpaid for a period of five ycars or more, the properiy is
deeded to the State and then is sub}ect to sale by the county tax collector. A 10% penalty also applies to the
delinquent taxes on property on the unsecured roll, and further, an additional penalty of 1% per month
accrues with respect to such taxes bcginning the first day of the third month following the delinquency date.
Delinquencies. The valuation of property is determined as of January 1 each year and equal
installments of taxes levicd upon secured property bccome delinquent after the following Dccember 10 and
April 10. Taxes on unsecurcd property arc due April 1. Unsccured taxes enrolled by July 31, if unpaid, are
delinqucnt August 31 at 5:00 p.m. and are subject to penalty; unsecured taxes added to the roll after July 31,
if unpaid, are dclinquent on the last day of the month succeeding the month of enrollment.
Supplemental Assessments. A bill enacted in ] 983, SB 813 (Statutes of 1983, Chapter 498),
provides for the supplemental assessment and taxation of property as of the occurrence of a change in
ownership or completion of new construction. Previously, statutes enabled the assessment of such changes
only as of the next January 1 tax lien date following the change and thus delayed the realization of incrcased
property taxes from the new assessments for up to 14 months. As enactcd, Chapter 498 provides increased
revcnuc to redevclopment agencies to the cxtcnt that supplcmental assessments as a result of new
ob�az��s-z
24
construction or changes of ownership occur within the boundaries of redevelopment projects subsequent to
thc January 1 lien date. To the extent such supplcmental assessments occur within the Project Area, Tax
Revenues may increase.
Property Tax Administrativc Costs
Legislation enacted by the State Legislature authorizcs county auditors to determine pruperty tax
ad►ninistrative costs proportionately attributable to local jurisdictions and to submit invoiccs to the
jurisdictions for such costs. Subsequent legislation specifically includes redevelopment agencies among the
entities that are subject to such charges. Specifically, in 1990 the State legislature enacted SB 2557
(Chapier 466, Statutes of 1990) authorizing counties to charge for the cost of assessing, collecting and
allocating prope�ty tax revenues to local governmcnts jurisdictions in proportion to the tax derivcd revenucs
allocatcd to each. SB 1559 (Chapter 697, Statutes of 1992) explicitly includes redevelopmcnt agencieti
among the jurisdictions which are subject to such charges. The Counry collects property tax administration
costs from the Redevelopment Agency by deducting such costs from tax revenues prior to delivering such
amounts to thc Redcvelopment Agcncy. The County administration fec is also prorated to thc Low and
Moderate Income Housing Fund and to taxing agencies (including the County Capital Fund (the "CIF") that
rcceive a portion of the tax increment revenucs pursuant to tax sharing agreements. For pucposes of
projecting Tax Revenues, the Fiscal Consultant assumes that the administrative fces will remain constant at
the Fiscal Year 2005-06 rates. See also APPENDIX A—"REPORT OF THE FISCAL CONSULTANT."
Origina! Area. For Fiscal Year 2005-06 the Counry's administrative fee in the Original Area was
0.869% of the gross tax increment rcvenues from the Original Arca or $78,987, and for Fiscal Ycar 2006-07
is estimated to bc $77,466.
Added Territory. For Fiscal Year 2005-06, the Counry's adminish-ative fce in thc Addcd Tc►ritory
was 0.101% of the gross tax incrcmcnt revenues paid to the Redcvelopment Agency from thc Added
Temtory or S298,669, and for Fiscal Year 2006-07 is estimated to be $293,492.
Housing Set-Aside
Sections 333342 and 33334.3 of the Redevelopment Law (added by Chapter 1337, Statutcs of 1976)
require rcdevclopment agencies to set aside 20% of all tax incremcnt derived from redevelopment project
areas established after December 31, 1976 in a low- and moderate-income housing fund. Section 33334.2
provides that this low- and modcrate-income housing requiremcnt can be reduced or eliminated if a
redevelopment agency finds annually by resolution, consistent with the housing element of the community's
gcneral plan, the following: (a) that no need cxists in the community to improve, increase, or preserve thc
supply of low- and moderatc-incomc housing, including its share of the regional housing nceds of very low
income households and persons and families of low or moderate income; (b) that some stated percentage less
than 20% of the tax increment is sufficient to meet the housing needs of the communiry, including its share of
the regional housing needs of persons and families of low or moderate income and very low income
households; or (c) that the community is making substantial efforts, consisting of direct financial
contributions of funds from state, local and fcderal sources for low- and moderate-income housing of
cquivalent impact, to meet its existing and projected housing needs (including its sharc of regional housing
nceds). The Redevelopmcnt Agency currently deposits the 20% of gross tax increment revenues in its Low
and Moderate Income Housing Fund. Such funds are not Tax Revenues and are not pledged to the
repaymcnt of the 2007 Loan. Pursuant to the Redevelopment Law, housing sct-aside funds may be pledged
to thc repaymcnt of bonds only to the extcnt procccds of such bonds are uscd (or are uscd to refund bonds, the
procceds of which were used) to finance low and moderate income housing puiposes. See "SECURITY AND
SOLRCGS OF PAYMENT FOR THE BONDS—Allocation of Taxes."
06042�pos-2
25
As amended by AB 315 (Chapter 872, Statutcs of 1991), Section 33334.2 has additional restrictions
on the abiliry to reduce or eliminate the low and moderate income housing requirement. A community can
claim that no necd exists, or can claim that less than 20% of tax increment revenue is sufficient, only if that
claim is consistent with the housing element of the communiry's general plan. The authority for communities
to claim an "equivalent effort" exemption was repealed as of June 30, 1993, except for obligations incurred
prior to May l, 1991, which wcre cntered into with the understanding that the "equivalent effort" exemption
would remain intact. T1�e Redevelopment Agency has made no such findings.
Stipulation Agreement
On May 15, 1991, thc Riverside County Superior Court entered a final judgment incorporating a
Stipulation for Entry of Judgment (the "Stipulation") among the Redevelopment Agency, thc Wcstcm Center
on Law and Poverty, Inc. and California Rural Legal Assistancc in connection wich litigation filed over the
adoption of thc Redevelopment Plan for Project Arca No. 1, As Amended (Ciry of Palm Springs v. All
Persnns /nterested, etc., Case No. Indio 51143). On June 18, 1997 and on September 20, 2002, thc Coun
entered amendments to its 1991 judgment, incotporating Stipulations Amending Stipulation for Entry of
Judgment. Under the tcrms of the Stipulation, as amcnded, the Rcdevelopment Agency has generally agrecd
to usc its 20% housing set-aside funds, and other tax increment revenues, if neccssary, to devclop,
rehabilitate, or otherwisc financially assist a certain number of affordable housing units and to mcet certain
housing needs of the Ciry. Sec "—Housing Set-Aside." The Stipulation, as amended, provides that future
indebtedness incurred by the Redevelopment Agency will be payable on a basis which is prior to the
obligations imposed by the Stipulation, as amended, if thc Rcdevelopmcnt Agency makes a 6nding by
resolution, based upon a report, that the Redevelopment Agency will have sufficient revenues to meet that
indebtedness as well as its obligations under the Stipulation, as amendcd. Under the tcrms of the Stipulation,
as amended, notwithstanding its other tcrms, the Redcvelopmcnt Agency may incur indebtedness and plcdgc
tax increment revenues to refinance its obligations, so long as(i) the total amount of debt service payable in
connection with such refinancing is less than the total amount of debt service remaining to be paid on the
refunded obligations, or (ii) the total amount of debt service payable in connection with such refinancing
rcflccts a present value savings when compared with the total amount of dcbt service rcmaining to be paid on
thc refunded obligations.
Thc total dcbt servicc payable on thc 2007 Scries A Bonds will be less than the total amount of thc
dcbt servicc payable with respeci to thc Prior Bonds being rcfunded, and the total debt servicc payablc on the
2007 Series A Bonds reflects a present value savings compared to the total amount of dcbt service remaining
on thc Prior Bonds rcfunded.
Certification of Redevelopment Agency Indcbtedness
Under the Rcdevclopment Law, redcvelopmcnt agencies must file with the county auditor a
statement of indebtedness for each project area not later than the first day of October of each year. As
described below, the statement of indebtedness controls the amount of tax increment revcnue that will be paid
to thc Redcvelopmcnt Agency in each fiscal year.
Each statcment of indebtedncss is filed on a form prescribed by the State Controller and specifies,
among other things: (i) the total amount of principal and interest payable on all loans, advanccs or
indcbtedness (thc "Dcbt"), both over thc lifc of the Debt and for the current fiscal year, and (ii) the amount of
"available revenue" as of the end of the previous fiscal year. "Available revenue" is calculated by subtracting
the total payments on Debt during thc previous fiscal year from thc total revenues (both tax incrcmcnt
revcnues and other revenues) rcceived during thc prcvious fiscal year, plus any carry forward from the prior
fiscal year. Available revenues include amounts held by thc Redevelopment Agency and irrevocably pledged
to the payment of Debt, but do not includc amounts set asidc for low and modcrate income housing.
06(Y12�pos-2
26
The counry auditor may only pay tax increment revenue to the redevelopment agency in any fiscal
year to thc extent that the total remaining principal and intcrest on all Debt exceeds thc amount of availablc
rcvcnucs as shown on the statement of indcbtedncss.
Thc statemcnt of indebtedness constitutcs prima facie evidence of the indebteciness of the
rcdevelopment agcncy; howcver, the county auditor may dispute the statement of indebtedness in certain
cases Section 33675 provides for eettain time limits controlling any dispute of the statement of indebtedness,
and allows for Superior Court detcrmination of such disputc in the event it cannot bc resolvcd by the
redevelopment agency and thc county. Any such action may only challenge the amount of the Debt as shown
on the statement, and not the validiry of any Dcbt or related contract or the cxpenditures related thereto. No
challenge can be made to payments to a fiscal agcnt in connection with a bond issue or payments to a public
agency in connection with payments by that public agency with respect to a Icasc or bond issue.
Pass-Through Agreements and Tax Sharing Payments
Pass-Through Agreements. Thc Rcdevelopmcnt Agency cntcred into a pass-through a�,neemcnts
with ccrtain local taxing agencies (collectively, the "Pass-Through Agreements"). Pursuant to each such
agrecment, thc Redevelopmcnt Agency is obligated to pay tax increment revenues to each such taxing entity,
other than thc City, that has temtory located within the Project Area in the acnount which the Redevelopment
Agcncy dctermincs is appropriate to alleviatc any financial burden or detriment caused to such taxing entity
as a result of rcdcvelopment activities within the Project Area. Each Pass-Through Agreement provides for a
pass-through of tax increment revenue directly to the related taxing entity. For a description of thc Pass-
Through A�;reemcnts, see APPENDIX A—"REPORT OF THE FISCAL CONSULTANT—Payments to Af'fectcd
1'axing Agcncies."
Statutory Taz Sharing Payments. "I'he Redevelopment Plan for the Project Area was amended by
Ordinancc No. 1035 on March 11, 2004 and therefore is subject to the statutory tax-sharing payments
mandated in the Redevelopment Law, as amended by AB 1290, requiring that a portion of thc tax increment
rcvenues be shared with local taxing agencies. See also "SGCURITY AND SOURCES OF PAYMENT FOR THE
BotvDs—Redevelopment Plan Limitations—AB 1290." These tax-sharing payments are set by statute and are
not negotiatcd. Thc County Auditor-Controller allocatcs all tax increment revenue to the Redevelopment
Agency for payment of tax-sharing payments. This defined tax sharing amount has three Tiers.
Tier 1: Commenccs with the first year that the Project Area receive tax incremcnt revenue
and continucs for the life of thc Project Area. The Tier 1 ta�c-sharing amount is equal to 25% of the
gross tax incremcnt revenue allocated from thc Project Arca net of the Housing Set-Asidc
Requircment. The City may chose to forgo its share of this tier of ta�c-sharing payments.
Tier 2: Commences in the 11 th year after the Redevclopment Agency first receives tax
incremcnt revenuc (i.e. Fiscal Year 2024-25), and is in an amount equal to 21 % of the tax increment
revenue net of the Housing Set-Aside Requiremcnt, derived from thc growth in assessed valuc that is
in excess of the asscssed valuc of the Project Area in the tenth year. Thc City may not reccivc any
portion of the Tier 2 tax-sharing payments.
Tier 3: Commences in the 31st year after the Rcdevelopment Agency first rcceives tax
increment revenues and is an amount equal to 14% of the tax increment revenue net of Housing Sct-
Aside derived from the �owth in assessed valuc that is in exccss of the assesscd value of the Project
Area in the 30th ycar. The City may not rcceive any portion of the Ticr 3 tax-sharing payments.
Thesc three tiers of tax sharing are calculated indcpendcnt of one anothcr and continue from
their inccption through the life of the Project Area.
O6042\pos-2
2%
In the Original Area, the Redevelopmcnt Agency had not previously entercd into any tax sharing
agreements, however, the adoption of Ordinance No. 1035 (discussed bclow) imposed statutory tax-sharing
payments for all those taxing agencies for which the Redevelopcncnt Agency had not previously cntered into
a tax sharing agrcemcnt.
SB 211 Tax Sharing Payments. On March 1 l, 2004, the City Council adopted Ordinance No. 1035
eliminating the time limit to incur debt in the Original Area. Pursuant to SB 211, thc adoption of such an
ordinance requires the Redevelopment Agency to begin making statutory tax sharing payments in the Fiscal
Year following thc expiration of thc original time limit for the incurrence of new indebtcdness. Sce also
"SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Redevelopment Plan Limitations—SB 211."
In accordance with SB 1045, the plan limit for the Original Area was extended by one year. By
extending this limit to July 16, 2016, the Redevclopment Agency caused statutory tax sharing payments to
commence with Fiscal Year 2004-05. The assessed valucs in the last Fiscal Year prior to initiation of the
statutory tax sharing payments are used as the base value for calculation of the tax sharing payments. The
projections of the Fiscal Consultant assume that the Ciry will elect to receive its share of these payments,
however, currcntly, if the City elects not to receivc its share of these tax sharing payments, that portion of the
statutory tax sharinb payment will remain with the Redevclopment Agency for its use. The Counry Auditor-
Controller allocatcs all tax increment revenue to the Redevelopmcnt Agency and it is the responsibility of the
Rcdcvelopmcnt Agency to make the rcquired tax sharing payments.
The Redevelopment Agency has detemuned at this time not to seek subordination of thcse statutory
tax shuing payments from the taxing agencies.
Limitation of Tax Revenues from Certain Increased Tax Rates
An initiative to amend the California Constitution entitled "Property Tax Revenues—Redevelopmcnt
Agcncics" was approvcd by Califomia voters at thc November 8, 1988 general clection. This initiativc
amcnds thc California Constitution to allow the California Legislature to prohibit redcvclopment agencies
frocn receiving any of the property tax revenue raised by increased property tax e-ates imposed by local
governmcnts to makc payments on their bonded indebtedness. The initiative applies to tax rates lcvicd to
finance bonds approved by the voters on or after January 1, 1989. The Redevelopment Agency does not
currently project receiving any tax revenues as a result of general obligation bonds which may have been
approvcd on or after January 1, 1989.
Ballot Initiativcs and Lcgislative vlattcrs
Articics XIIIA, XIIIB, X1IIC and XIIID wcre each adopted pursuant to a measure qualified for thc
ballot pursuant to the State's constitutional initiative process; the State Legislature has in the past enacted
legislation which has altered the spending limitations or established minimum funding provisions for
pa►ticular activities under the Redevelopment Law. From time to iime, other initiative measures could be
adopted by voters of the State or Iegislation enacted by the State Legislature. The adoption of any such
initiativc measures or legislation might place limitations on thc abiliry of thc State, the Rcdevelopmcnt
Agency or local districts to incrcase revenucs, to increase appropriations or on the ability of a landowncr to
complete ihe dcvelopment of properry.
o�oaz�,s-z
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CERTAIN RISKS TO BONDHOLDERS
The following injormation should be considered hy prospective investors in evaluating the 2007
SC'/'IL'S A Bonds. However, the following does not purport to be an exhaustive listing of risks and other
considerations which may be relevant to making an investment decisions with respect tn the 2007 Series A
Bonds. In addition, the order in which the following injormation i.s presented is not intended to reJlect the
relative importance ojany such risks.
Added Territory Projected to Reach Limit in Fiscal Year 2021-22
In Fiscal Year 2005-06, Tax Revenues coming from property within the Added Temtory represented
approximatcly _% of total 1'ax Rcvenues in the Projcct Area. Tax Revenues in the Added Tccritory arc
subject to a maximum of $500,000,000 (cxclusive of ccrtain amounts). See "LIMITATION ON TAX
R1;veNU�s." Accordinbly, Tax Revenues available to pay debt service on the 2007 Loan (and thercforc thc
2007 Series A Bonds) will be substantially reduced aRer the limit in the Added Territory is reached. The
Redevelopment Agcncy expects this limitation will bc reached prior to the final maturity date of thc 2007
Series A Bonds. As stated in thc Report of the Fiscal Consultant, assuming �-owth in the annual assessed
value at ratc equal to 2%, the Added Terntory will rcach its �500,000,000 tax increment limit in Fiscal Year
2021-22. See APPENDIX A—"RGPORT OF TI-IG FISCAL CONSULTANT—Tablc 2B." The Redevelopment
Agency can give be no assurance as to when the gross tax increment limit wi11 for the Added Terrilory wi!l
be reached. The Report of the Fiscal Consultant contains only a projection and if average growth exceeds
2% the Tax Revenue limit for the Added Territory will he reached sooner. Furthermorc, the gross tax
increment limit may be changed by future acts of the State Legislature or amendments to the Redcvelopment
Plan by the Rcdevelopment Agency. See "CLRTA(N RISKS TO BONDHOLDLRS."
In the 2007 Loan Agreement, 1hc Redcvelopmcnt Agency covcnants that on or bcfore June 30 of
cach ycar, commencing Junc 30, 2007, it will submit a Report of an Indcpendent Rcdevclopmcnt Consultant
(as dcfincd in the 2007 Loan Agreement) to the Bond Insurer showing thc total amount of Tax Revcnues
rcmaining available to be received by the Redcvelopment Agency under the cumulative tax incrcmcnt
limitation of the Redevelopment Plan, as well as future cumulative annual debt service with respect to the
2007 Loan and all Parity Debt. Subject to any limitation set forth in the documents that �overn the Pariry
13onds, thc Redevelopment Agency will not accept Tax Rcvenues greater than such annual debt scrvicc in
any year, if such acceptance will cause the amount remaining under the tax increment limit to fall below
remaining cumulative annual dcbt scrvice with respcct to the 2007 Loan and all Pariry Dcbt, except for thc
purpose of depositing such revenucs in escrow for the payment of such debt service or for the prepaymcnt or
redemption of the Outstanding Parity Debt, the 2007 Loan or any Parity Debt. Once it is determined that Tax
Rcvenues available to be rcceivcd by the Rcdevelopment Agency under thc aforementioncd tax incrcmcnt
limitation in an upcoming year will not exceed 110% of aggregate rcmaining debt service on the 2007 Loan
and all outstanding Parity Debt, the Redcvelopment Agency is required to escrow all current and future Tax
Revenucs and use such amounts solely for the purpose of paying dcbt scrvice on thc Outstanding Parity Dcbt,
thc 2007 Loan and all Parity Dcbt. Sec APPGNDIx E—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—Tr1G
LoAtv AGRE�MENT-0ther Covcnants of the Redcvelopment Agency—Annual Review of Tax Rcvenues."
Accuracy of Assumptions
To estimate the revenues available to pay debt service on the Bonds, the Redevclopment Agency has
made certain assumptions with regard to the assessed valuation of taxable properry in the Projcct Area, future
tax ratcs, percentage of taxes collected, the amount of funds available for investment and the interest rate at
which those funcis will be invested. The Redevelopmcnt Agency bclievcs these assumptions to be
rcasonable, but to the extent that the assessed valuation, the tax rates and the percentages collected, are less
than thc Redevelopment Agency's assumptions, the Tax Revenues available to make thc Loan Paymcnts and
oec�a2��,�-z
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thc resulting debt service on the Bonds will, in all likclihood, be less than those projected herein. Sce "DGBT
SERVICE SCi-IEDULE" and "THE PRO.TECT AREA—Debt Service Coverage Projections."
Reduction of Tax Revenues
Tax Rcvenues allocated to the Redevelopment Agcncy, which constitute the primary securiry for the
Bonds, are determined by the incremental assessed value of taxable property in the Project Area, the current
rate or rates at which property in the Project Area is taxed, and the percentage of taxes collected in the Project
Area. Several rypes of events which are beyond the control of the Redevelopment Agency could occur and
cause a reduction in available Tax Revenues. A reduction of taxable values of property in the Project Area or
a reduction of the rate of increase in taxable valucs of property in the Project Area caused by economic or
other factors beyond the control of the Redevelopment Agency (such as a successful appeal by a property
owncr for a rcduction in a property's assesscd value, a reduction of the general inflationary rate, a reduction
in value, or the destruction of property causcd by natural or other disasters) could occur, thereby causing a
reduction in the Tax Revenues that secure the Bonds. Such a reduction in Tax Revenues could have an
adverse impact on the Redevelopment Agency's ability to make timely payment of principal of and interest
on thc Bonds.
Moreover, in addition to the other limitations on Tax Revenues described under "LIMITATIONS ON
TAX RGVENCTES," the State clectorate or Lcgislature could adopt a constitutional or Iegislativc property tax
decrcase with the effect of reducing Tax Revenucs payable to the Redevelopment Agcncy. Therc is no
assurance that the State clectorate or Legislaturc will not at somc future timc approve additional limitations
that could reduce Tax Revenues and adversely affect the security of the Bonds.
Additionally, thc Redevclopment Agency has no power to levy and collect property taxes. The
rcceipt of tax revenues by thc Redevelopment Agency is dependent on thc timely payment of property taxes
by landowncrs within thc Projcct Area. Substantial delinqucncics or other reductions in thc payment of
property taxes on real property in the Project Area by a large number of landowners could have an adversc
cffect on the Redevelopmcnt Agency's ability to make timely debt service payments on the Bonds securcd by
Tax IZevenues derived from the Project Area. Tax revenues allocated to the Redevelopment Agency are
distributed throughout the fiscal year in installmcnts, with a first installmcnt in Deccmber and the sccond
installment in June of the same fiscal year. The payments are adjusted to reflect actual collections.
Reductions in Unitary Valucs
As the resull of the adoption of AB 454 (Chapter 921, Statutes of ] 986), a portion of the County-
wide unitary values assigned to public utilities was allocated to thc Project Area. In Fiscal Ycar, 2005-06,
approximatcly 3.76% of the Tax Revenues in the Original Area and approximately 0.54% of the Tax
Revenues in the Added Teiritory was attributable to such unitary values. Any substantial reduction in the
values of public utility propertics, either because of deregulation of a utiliry industry or for any other reason,
will have an adverse impact on the amount of Tax Revenues. However, any such impact with respect to
utility properties within the Project Area will be lcssened because the impact will be spread on a Counry-wide
basis. For furthcr information conceming unitary values, see "LIMITATIONS ON TAX REVC•NU�S—PropCrty
Tax Collection Proccdures" and "—Taxation of Unitary Property."
Appeals to Assessed Values
There are two basic types of assessment appeals providcd for under State law. The first type of
appeal, commonly referred to as a base year asscssment appcal, involves a dispute on the valuation assigned
by the Counry assessor immediately subsequent to an instance of a change in ownership or complction of
new construction. If the basc year valuc assigned by the County assessor is reduced, thc valuation of the
property cannot increase in subsequent years more than two percent annually unless and until anothcr change
o�uaz��s-z
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in owncrship andlor additional new construction activity occurs. The second type of appcal, commonly
referred to as a Proposition 8 appeal, can result if factors occur causing a decline in the market value of the
property to a Icvel below the property's then current taxable value (escalated base year valuc). Pursuant to
California law, a property owner may apply for a Proposition 8 reduction of the property tax assessment for
such owner's property by filing a written application, in form prescribed by the State Board of Equalization,
with the appropriate counry board of cqualization or asscss►nent appeals board.
In the County, a property owner desiring a Proposition 8 reduction of the assesscd valuc of such
owncr's property in any one year must submit an application to the Riverside County Assessment Appcals
Board (the "Appeals Board"). Applications for any tax year must be submittcd by Scptembcr 15 of such tax
year. Following a review of the application by the Riverside County Assessor's Office (the "County
Assessor"), the County Assessor may offer to the property owner the opportunity to stipulate to a reduccd
assessment, or may confirm the assessment. If no stipulation is agreed to, and the applicant elccts to pursue
thc appeal, the matter is brought before the Appcals Board (or, in some cases, a hearing examiner) for a
hcaring and decision. The Appeals Board generally is required to deternune the outcome of appeals within
two years of each appcal's filing date. Any rcduction in the assessment ultimately grantcd applics only to the
year for which application is madc and during which the writtcn application is filed. The assessed valuc
increascs to its pre-reduction levcl (cscalated to the inflation rate of no more than two percent) following the
ycar for which the reduction application is filed. Howcver, the Counry Assessor has the power to grant a
reduction not only for the year for which application was originally made, but also for the then current ycar
and any intervening years as well. In practice, such a reduced assessment may and often does remain in
effcct bcyond the year in which it is �-anted. See "LIMITAT(ONS ON TAX REVENUGS—PCopCrty Tax
Collection Procedures" and "THE PR01�CT AReA—Assessment Appeals."
An appeal may result in a reduction to the County Assessor's original ta�cable valuc and a tax refund
to the applicant property owner. A reduction in taxable values within the Project Area and the refund of taxes
which may arise out of successful appeals by these owners will affect the amount of Tax Revenues and
Subordinatc Tax Rcvenues availablc to pay debt servicc on the 2007 Series A Bonds.
Reduction in Inflation Rate
As described in greater detail above, Article XIII A of the California Constitution provides that the
full cash valuc base of real property used in determining taxablc value may be adjusted from year to year to
reflect the inflation rate, not to exceed a two percent increase for any given year, or may be reduced to reflect
a reduction in the consumer price index, comparable local data or any reduction in the event of declining
property value causcd by damage, destruction or other factors (as described above). Such measurc is
computed on a calendar year basis. Any resulting reduction in the full cash value basc over thc term of the
2007 Serics A Bonds could reduce Tax Revenues. See "LIMITATIONS ON TAX REVENLJES—AltiClC XIII A Of
thc State Constitution."
Bankruptcy and Foreclosure
The rights of the Owners of the 2007 Series A Bonds and the enforceabiliry of the obligation to makc
payments on the Bonds may be subject to bankruptcy, insolvency, reorganization, moratorium and othcr
similar laws affccting creditors' rights under cuncntly existing law or laws enacted in the future and may also
be subject to the exercise of judicial discretion under certain circumstances. 'fhe opinions of Bond Counsel
as to thc enforceability of the obligation to make payments on the 2007 Series A Bonds will be qualified as to
bankruptcy and such othcr lcgal events. Sec ApPe1Jv►x E—"PROPOSBD FORM OF BOND COUNSEL OPINION."
Furthcr, the payment of the tax incrcment revenues and the ability of thc County to timely foreclosc
the licn of a delinquent unpaid tax may be limited by bankruptcy, insolvency, or other laws generally
affecting creditors' rights or by the laws of the State rclating to judicial foreclosure. Any delay in prosecuting
o�oaz�os-z
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superior court foreclosure proceedings would increase the likelihood of a dclay or default in payment of thc
principal of and interest on the 2007 Series A Bonds and thc possibility of delinquent tax inswllmcnts not
being paid in full.
Delinquencies
If thc Tecter Plan were discontinued, dclinqucncies in thc payment of property taxes and the impact
of bankruptcy proceedings on the legal ability to collect property taxes could have an advcrse impact on the
abiliry of the Redevelopment Agcncy to make timely payments under the 2007 Loan A�-eement. The
valuation of property is determined as of thc January 1 lien date as equalized in August of each year and
equal installments of taxes levied upon secured property become delinquent on the following December 10
and April 10. Taxes on unsecured property are due April I and bccome delinqucnt August 31. Sec "THE
PRo7ECr ARLA—Tax Levies, Collections and Delinquencies."
Statc Budget
The following informution concerning the State's 2005-06 and 2006-07 Fiscal Year Budgets have
been obtained from publicly available information on the State Depurtment ojFinance, the State Treasurer
and the California Legislative Analyst O�ce websites. The e.stimates and projections provided be%w are
based upon various assumptions us updated in the 2006-07 Budget, which may he af�ected by numerou.s
factors, including future economic conditions in the State und the nation, and there can be no ussurunce that
the estimates will be achieved. For f:�rther information and discussion oJ factors underlying the State'.s
projections, .see the aforementioned websites. The Redeve/opment Agenc•y believes such injormation to be
reliable, however, the Redevelopment Agency takes no responsibiliry as to !he accuracy or completenes.s
thereof and has not independently verifred such information.
In connection with its approval of the budget for Fiscal Years 1992-93, 1993-94, 1994-95, 2002-03,
2003-04, 2004-OS and 2005-06, 1he Staie Legislature cnactcd legislation which, among other things,
rcallocated funds from redevelopment agencics to school districts by shifting a portion of each redevclopment
agency's tax increment, net of amounts due to other taxing agencies, to school districts for such fiscal years
for deposit in the Education Revcnue Augmentation Fund ("ERAF"). The amount required to be paid by a
redevclopmcnt agcncy under such Icgislation is apportioncd among all of its rcdevelopment projcct arcas on a
collective basis, and was not allocated separately to individual project areas. In Fiscal Year 2002-03, thc
aggrcgatc amount transferred by redevclopment agencics into ERAF was $1.3 billion, was $250 million for
Fiscal Year 2U04-OS and �250 million for Fiscal Ycar 2005-06. Based on the tax increment revenucs shown
in of the State Controllcr's Annual Report as being rctaincd by thc Redevclopmcnt Agcncy, the
Redevelopment Agency was requircd to pay 52,113,709 into ERAF in Fiscal Year 2003-04 of which
S was amibutable to the Original Area and S was attributablc to the Added Territory,
$3,887,133 in Fiscal Year 2004-OS of which � was attributable to the Original Area and
S was attributable to the Added Teiritory, and $3,995,041 in Fiscal Year 2005-06 of which
S is attributable to the Original Area and $ was attributable to the Added Temiory.
Fisca! Year 2005-06. The 2005-06 Budget Act (the "State 2005 Budget Act") was adopted by the
Legislaturc on July 7, 2005, along with a number of implcmenting measures, and signed by Govcmor
Schwancneggcr on July 11.
The State 2005 Budget Act reflected an improving State fiscal picture brought about by better-
than-expccted growth in General Fund revenues. Thc Statc 2005 Budgct Act funds the Proposition 42
transfer of general fund sales taxes to transpoRation special funds, and included significant increascs in
both K-12 and higher education. Thc State 2005 Budget Act did not use any of the remaining S3.7 billion
in dcficit-financing bonds authorizcd by Proposition 57, and the State prepaid the $1.2 billion VLF "gap"
loan that was duc to local governments in Fiscal Ycar 2006-07 in August 2005.
06042�pos-2
32
At the same time, State 2005 Budget Act included approximately $6 billion in savings and related
budget solutions in order to maintain budgetary balance, including, among other solutions, thc ERAF transf'er
from redevelopment agcncics in the ag�,�regate amount of S25Q cnillion
After taking into account the higher revenues and other offsetting factors (including higher
Proposition 98 funding requirements under current law) the resulting operating shortfall for Fiscal Year
2005-06 was cstimated at �4.9 billion.
Fiscal Year 2006-07. The 2006-07 Budget Act (the "State 2006 Budget Act") was adopted by the
Legislaturc on June 27, 2006 and signed by the Governor on June 30, 2006. The State 2006 Budget Act
assumes Piscal Ycar 2006-07 revenues of $94.4 billion and cxpenditures of �]01.3 billion, resulting in an
operating shon-fall of �7 billion, which partly reflects the prepayment of �2.8 billion in budgetary dcbt
oblibations, lcaving the State Gencral Fund with a ycar-cnd reserve of �2 billion, compared to the $9 billion
year-end reserve in Fiscal Year 2005-06.
The Statc 2006 Budget Act, among othcr things, (i) allocates new revenues to K-12 and community
collcge cducation, increases funding for higher education, and prepays approximately �2.8 billion in
budgetary debt, which is roughly consistent with the Governor's budget revision released on May 13, 2006;
(ii) makes partial repayments of debt; (ii) funds a budget stabilization account; (iv) makes augmentations to
hcalth, resources, corrections and local govemments (including increases in funding for county block grants
for California Work Opportuniry and Responsibility Kids, Child Welfare Services, and foster care; additional
funding for local law enforcement and local flood control; and largely one-time funding to hospitals to
increase patient capacity to meet public health emergencics, such as an avian flu pandemic); and (v) makes
the first payment of a proposed settlemcnt in the amount of �2.9 billion, which will bc paid ovcr six years
commcncing in Fiscal Year 2007-08, rclatcd to a lawsuit involving school funding.
The State 2006 Budget Act does not include any ERAF transfers from redevelopment agencies.
The Rcdevelopmcnt Agency cannot predict whether the State Legislature will cnact future legislation
requiring additional or increased future shifts of tax increment revenues to the Sate and/or to schools, whether
through an arrangcmcnt similar to ERAF or by othcr arrangemcnts, and, if so, the effcct on future Tax
Revenues.
Natural Disastcrs
[Wildfres. The City is located in area where wildfires are a common occurrence. [Discussion of
effects recent Palm Springs Fire- TO COME]. Any natural disaster or physical calamity, including wildfires,
floods, landslides and earthquakes could result in damage within the Project Area. The occurrence of such
cvcnts could adversely impact the value of real property in thc Project Area and resulting Tax Revenues, thc
economy of the City, and, accordingly, the ability of the Redevelopment Agency to make payments under the
Loan Agrccmcnts whcn due.)
Flooding. Flood zones are identified by the Federal Emergency Management Agency ("FEMA").
FEMA dcsignatcs land locatcd in a low- to moderate-risk flood zone (i.e. not in a floodplain) as being within
a Non-Special Flood Hazard Area (a "NSFHA"). FEMA defines an NSFHA as an arca that is in a low- to
moderate-risk flood zone (i.e. not in a floodplain) and has less than a 1% chance of flooding each year. The:
City is located within a NSFHA and severe, concentrated rainfall could result in localized flooding and river
overflows. The City has adopted a Drainageway, Floodway, and Watercourse Ordinance that regulates
deveiopment in flood prone areas by preventing construction in such areas. Development is permitted in
these areas once floodflow hazards are eliminated. Areas in thc City that have received flood control
improvements are those subject to potentially dcstructive floods. Significant capital investments have becn
made in the community where these thrcats occur. The City can make no representation that future maps will
o�oaz�PoS-z
33
not bc reviscd to includc the Ciry within an area dcemed subject to flooding. The occurrencc of flooding in
thc Project Area could result in a reduction in Tax Rcvenues and Subordinate Tax Rcvcnucs. Such a
reduction of Tax Revenues could have an adverse effect on the ability of the Redevelopment Agency ability
to make timcly paymcnts of principal and interest on thc 2007 Loan.
Seismic Factors. Generally, seismic activiry occurs on a regular basis in the State. Periodically, the
magnitude of a single seismic event can cause significant ground shaking and potential damage to property
located at or near the center of such seismic activity. The occurrence of severe scismic activity in the City
could result in damage to roads, infrastructure and other property within the Project Area. The occunence of
such a severe scismic could have a negative impact on assessed values of taxable values of property in the
Project Area and could result in a reduction in Tax Revenues and Subordinate Tax Revenues. Such a
reduction of Tax Revenues or Subordinate Tax Revenues could have an adverse effect on the ability of the
Rcdevelopment Agency ability to make timely payments of principal and interest on the 2007 Loan.
Hazardous Substances
An additional environmental condition that may result in the reduction in the assessed valuc of
property would be the discovery of a hazardous substance that would limit the beneficial use of taxable
property within thc Projcct Area. In gcneral, thc owncrs and operators of a property may be rcquircd by law
to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The
owner or operator may be required to remedy a hazardous substance condition of property whcther or not the
owner or operator has anything to do with creating or handling the hazardous substancc. The effect,
thcreforc, should any of the property within the Project Area be affected by a hazardous substance, could be
to reducc the marketability and valuc of the property by the costs of remedying the condition.
Loss ol' Tax Exemption
In order to maintain the exclusion from gross income for fedcral income tax purposes of the intcrest
on the Bonds, the Redevelopment Agency has covenanted in the Indenture to comply with the applicablc
rcquircmcnts of the Intemal Revcnue Code of 1986, as amcnded. The interest on the 2007 Serics A Bonds
could become includable in gross income for purposes of federal income taxation retroactive to the date of
issuance of such 2007 Series A Bonds as a result of acts or omissions of the Redevelopment Agency in
violation of this or other covenants in the Indcnture applicable to the 2007 Series A Bonds. Thc 2007 Series
A Bonds are not subject to redemption or any increase in interest rates should an event of taxability occur and
will remain outstanding until maturity or prior redemption in accordance with the provisions contained in the
Indcnturc. Sec "TAx MATTERS."
Risk of Tax Audit
In Deccmber 1999, as a part of a larger reorganization of the Internal Revcnue Service (the
"IRS"), thc IRS commenccd operation of its Tax Exempt and Government Entities Division (thc "TElGE
Division"), as the successor to its Employee Plans and Exempt Organizations division. The new TE/GE
Division has a subdivision that is specifically devoted to tax-exempt bond compliance. Public state►nents
by IRS officials indicate that the number of tax-exempt bond examinations (which would include the
issuance of securities such as the 2007 Series A Bonds) is expected to increase significantly under thc
ncw TE/GE Division. There is no assurance that if an IRS examination of the 2007 Series A Bonds was
undertaken that it would not adversely affect the market value of the 2007 Scries A Bonds. See "TAx
MATTGRS."
The Redevelopment Agency has not becn contacted by the IRS regarding the examination of any of
its bond transactions.
06432�pos-2
34
Sccondary Market
There can bc no guarantcc that therc will be a secondary market for the 2007 Serics A Bonds or, if a
sccondary markct exists, that the 2007 Series A Bonds can bc sold for any particular price. Occasionally,
because of general market conditions or because of adverse history or economic prospects connected with a
particular issuc, secondary marketing practices are suspended or terminated. Additionally, prices of issues for
which a market is being made will depend upon then prevailing circumstances. Such prices could bc
substantially different from the original purchase pricc.
THE FINANCING AUTHORITY
The Financing Authoriry is duly organized and existing under a Joint Exercise of Powers Agreement
dated January 26, 1989, by and bctween the Ciry and the Redcvelopment Agency, and under thc provisions
of Chaptcr 5 of Division 7 of Title 1 of the Statc Government Codc. The membcrs of the City Council servc
as the Commission members of the Financing Authoriry. The Financing Authority has no taxing power and
no sourcc of revcnue to pay debt service on thc Bonds other than the Rcvenues. The Financing Authority has
no taxing powcr. Scc "SECURITY AND SOURCGS OF PAYMENT FOR THG BONDS."
THE REDEVELOPMENT AGENCY
Authority, Members and Pcrsonnel
The 12edevelopment Agency was established pursuant to the Redevelopment Law, and was activated
in 1974. The Redevelopment Agency adopted the redevelopment plan for the Project area in July 1991. The
Project Area is thc only project area of the Redevelopmcnt Agency. The Redevelopment Agency has no
taxing power.
Members of thc Ciry Council of the City serve as members of the Redevelopment Agency. The City
Council membcrs arc clected at large for four-year overlapping terms. The current members of the
Redevclopment Agency are set forth on the inside covcr pagc of�this Official Statement.
The Rcdevelopment Agency is administered by a staff selected from the employees of the City and is
undcr the ovcrall direction of Mr. Ortega. Brief resumes of the professional staff of the Rcdevelopmcnt
Agency are set forth below:
Carlos L. Ortega, Executive Director. Mr. Ortega has served as Executive Director of the
Redevclopment Agency since 1983. He was also appointed City Manager in August 2000. From 1980 to
2000, Mr. Ortega served as Assistant City Manager and from 1977 to 1980 as Assistant to the City Manager.
Prior to 1977, he servcd as Interim City Manager for one ycar and Assistant City Manager/Finance Dircctor
(five years) for the City of Coachella, California. Mr. Ortega received a Bachelor of Science degree in
Economics from University of Califomia, Riverside, and has completed graduatc studies in Public
Administration and Management at Univcrsity of California, Riversidc and University of Redlands.
Justin McCarthy, Assistant City Manager for Redevelopment. Mr. McCarthy has servcd as
Assistant City Managcr for Redevelopmcnt sincc November 2001. From 1983 to 1987, Mr. McCarthy was
an analyst in the City of Long Beach implementing redevelopment projects in the downtown central business
district, the port industrial area and Long Beach Airport. From 1987 to 1988 he served as thc Redcvelopment
Managcr for the San Dicgo Southeast Economic Dcvclopmcnt Corporation managing industrial and
commercial projects and from 1988 to 2001 he served as the Deputy Executive Dircctor and Community
oboa2���,s-z
35
Dcvelopment Director for thc City of Commerce. Mr. McCarthy received a Bachelors dcgree in Political
Science and a Masters degree in Public Administration from California State University Long Beach.
Arla K. Scon, Senior Financial Analyst jor Redevelopmenl. Ms. Scott was appointed as Senior
Financial Analyst for Redcvelopment in January 2006 and is responsible for the review, analysis and budget
tnonitoring of the finances and bond issues of the Redevelopment Agency. From 1990 to 2006, she was
e►nployed by JPMorgan Chasc Bank, where shc began in thc Trust Operations Department and was later
promoted to the Treasury and Security Services Department as a Relationship Manager. In that position she
worked in the Municipal and Corporate Debt Department, where she workcd with various municipalities and
corporations serving as a bond trustee. She was later promoted to the Trust Compliance Departmcnt whcre
shc was responsible for reviewing documents, laws and regulations in order to mitigate risk. Shc received a
Bachclor of Business Administration degree in Finance from University of Houston.
Sheila R. Gilligan, Assistant City Manager for Community Services. Ms. Gilligan has served as the
Assistant City Manager for Community Services since 2000. She is responsible for the areas of
Administration (including grants and franchise agreements), Human Resources, City Clerk, Civic Arts,
Marketing and Promotion, Public Info�nation, thc Visitor's lnforcnation Centcr, and spccial events for the
City. Prior to appointment to her cuncnt position, Ms. Gilligan served as the Director of Communiry Affairs
while also scrving as thc City Clerk. Ms. Gilligan served as Ciry Clcrk from 1976 to June, 2001.
Paul S. Gibson, Treasurer/Finance Director. Mr. Gibson has served as Treasurer/Finance Director
of the City since 1988 wherc he is responsible for prcparation of the Ciry budgets and annual financial
reports, administration of debt, investment of surplus cash, collection of business license fees, payroll,
purchasing, accounts payable and oversight of information systems. He has also served as the Treasurer of
the Redevelopmcnt Agency sincc 1988. Mr. Gibson has been employed by the Ciry since June 1985, when
he was hired as the Accounting Supervisor. Prior to joining the City, he served from 1980 to 1985 as the
Accountant-Auditor for the Imperial Counry Auditor-Controllcr's office. Mr. Gibson holds a Bachelor of
Science dcgrce in Accounting from San Diego State University.
David L. Yrigoyen, Director of Redevelopment and Housing. Mr. Yrigoyen was appointed as
Dircctor of Redevelopment and Housing and is responsible for all housing and redevelopment activities
within the City. He has becn employed with the City since 1985 when he servcd as thc Senior Administrative
Assistant to the Redevelopment Agency and thcn was promoted to Redevelopment Manager. From 1982 to
1985, Mr. Yrigoyen worked with the City of Coachella, as the Economic Development Cc�ordinator. Mr.
Yrigoyen receivcd a Bachelor of Arts degree in Political Science from Univcrsity of California, Berkeley, and
a Mastcr of Arts degrcc in Managcment from National University, San Diego.
Rache!!e D. Klassen, Secretary. Ms. Klassen has bcen Secretary of the Redevelopment Agency and
Ciry Clerk since July 1, 2002. She has bcen cmploycd by the City since 1995. In 1997, she began working in
City Clerk's Office; initially as the Records Technician, was appointed Deputy Ciry Clerk in 1998, and then
Ciry Clerk. She received Certified Municipal Clerk status from the Intemational Institute of Municipal
Clerks in October, 2001. As City Clerk, she also serves as Secretary to Housing Authority and the Finance
Authority, with responsibilities of preparing and presenting all agendas and minutcs for same, maintaining all
official City/Agency/Authority records, as wcll as the related duties of the City elections and being availablc
to the public for information on lcgislative and adminislrative actions. Ms. Klasscn holds an Associate in
Arts Degrec, with honors, from Waldorf College, Forest City, lowa, with continuing units obtained at College
ofthc Dcsert.
Veronica Tapia, Redevelopment Accountan[. Ms. Tapia has been employed by the City for morc
than nine years, and for the last two yeazs has scrved as the Accountant for the Redevelopment Agcncy. Ms.
Tapia is responsible for compiling the federal and State mandated reports, thc administration of thc
outstanding bond issues of the Redevelopment Agency, and the overall accounting duties for both thc
06042�pos-2
36
Rcdevelopment Agency and thc Housing Departmcnt. Ms. Tapia received a Bachelor of Science dcgree,
graduating Summa Cum Laudc, in Business and Management from thc University of Redlands and currently
is completing graduatc studies in Management at the University of Redlands.
Powcrs
All powers of thc Redevelopment Agency are vested in its five-member Board. They are charged
with thc responsibility of eliminating blight through the proccss of redevelopment. Gcnerally, this process
culminatcs when the Redevclopmcnt Agcncy disposes of land for development by the private sector. In order
to accomplish this, the Redevclopmcnt Agency has broad authority to acquire, develop, administer, sell or
lcase property, including the right of eminent domain and the authoriry to issue bonds and expcnd their
procccds.
Prior to disposing of land for redevelopment, the Redevelopment Agency must complete the proccss
of acquiring and assembling the necessary sites, relocating residents and businesses. In addition, the
Redcvelopment Agency may demolish dcteriorated improvements, undertake environmental mitigation,
grade and prepare sites for purchase, and in connection with any devclopment can cause streets, highways
and sidewalks to be constructed or reconstructed and public utilities to be installcd.
Rcdevclopmcnt in the State of California is camed out pursuant to thc Community Redcvelopment
Law (Section 33000 et seq. of the Health and Safety Code). Section 33020 of the Redevelopment Law
defincs rcdevelopment as the planning, development, replanning, redesign, clearance, reconstruction or
rehabilitation, or any combination of these, of all or part of a survey area and the provision of such residential,
commcrcial, industrial, public or other structures or spaces as may be appropriate or necessary in the interest
of thc gencral wclfarc, including recreational and other facilities incidental or appurtenant to them.
Thc Rcdevelopmcnt Agency may, out of the funds availablc to it for such purposes, pay for all or
part of the value of the land and thc cost of buildings, facilities, structures or other improvements to be
publicly owned and operated to thc extcnt that such improvements arc of bencfit to thc project area and no
other reasonable means of financing is available.
The Redevelopment Agency must sell or lease remaining property within a project area for
redevelopment by others in strict conformity with the redevelopment plan, and may specify a period within
which such redevclopment must begin and be completed. In accordance with these criteria, the
Rcdevclopment Agcncy has adoptcd a Redcvelopment Plan, as amendcd, in the Project Arca that authorizcs
thc use of thc redevelopmcnt process and proccdures.
Redevelopment Agency Finances
Financia! Statements. The accounts of the Redevelopment Agency arc organized on thc basis of
funds and account groups. The operations of each fund are accounted for with a separate set of self-balancing
accounts that comprise its assets, liabilities, fund equity, revenues and expenditures. The audited financial
statements of the Redevelopment Agency for thc Fiscal Year ending June 30, 200[5] are sct forth in
APpr•tvD1x B. The auditor has consented to the inclusion of its report in this Official Statement. See also
"FINANCIAL STAT'GMENTS."
Retirement Plan. Substantially all full-timc City employees, including employces of thc
Redevclopment Agency, are eligible to participate in retirement br,nefit plans through a contract with the
California Public Employees' Retirement Systcm ("PERS"), a multiple-employer public sector employec
defincd bcnefit pension plan. PERS providcs rctiremcnt and disability benefits, annual cost-of-living
adjustmcnts and death benefits to PERS members and beneficiaries. PERS acts as a common investment and
o�oar��s-z
37
administrative agcnt for participating public entities within the State. PERS is a contributory plan dcriving
funds from employcc contributions as well as from cmployer contributions and eamings from investments.
PERS maintains two pension plans for the City, a Safety Plan (the "Safety Plan") and a
Miscellaneous Plan (the "Miscellaneous Plan" and, together with the Safety Plan, the "PERS Plans"). Thc
City contributes to PERS amounts equal to the recommcnded rates for the PERS Plans multiplied by thc
payroll of those current employccs of the City, including the Rcdevclopment Agency, who are eligiblc undcr
PERS. Thcre arc 19 positions in the Redevelopment Agcncy cligible to participatc in PERS.
For information conceming PERS, including information relating to its financial position and
investments contact PERS directly at CaIPERS, Lincoln Plaza, 400 P Street, Sacramento, California 95814,
telcphonc: 888-225-7377.
Information regarding the contributions made by the City to PERS for the PERS Plans is available in
the City's Comprehensive Annuai Financial Report copics of which are available upon request from thc City
of Palm Dcsert Department 73-510 Fred Waring Drivc, Palm Desert, California 92260-2578; tclephonc:
760-346-0611.
Ot/:er Post Employment Benefits. The City offers thc PERS Hcalth Care Program to its retirces.
The City contributcs S48 per month on behalf of each rctircc eligible for PERS and makcs an additional
contribution towards certain rctirees' premiums undcr a Rctirce Scrvicc Stipcnd program. If the rctircc retires
from both the City and PERS simultaneously, has attained the age of 50 and completed a minimum of 10
ycars of service with the City and satisfies any other requirements specified in such program continued
covcrage for cligible retirees, spouses and/or eligible dependents for the lifctime of the retiree upon
satisfaction of the above-rcferenced criteria. The Retiree Service Stipend is not actuarially funded and thc
assets are accounted for in an agency fund. An actuarial valuation completed for the Retiree Servicc Stipend
program as of July 1, 2002 indicated that the amount of the actuarial liabiliry to current and future liabilitics
for thc City to bc �9,761,065. [UPDATE]
THE PROJECT AREA
Gencral
The Project Area is located in the Ciry and includes approximately 5,820 acres, comprising
approximately 12,825 parcels, zoned for residential, office, commercial, industrial, public and open space
uses. The Project Area incorporates an approximately 70-acre Civic Center campus, including the Sheriff's
and County Library facilities; multifamily rental, townhouse and single-family developments; the Canyons at
Bighorn, a 275-unit luxury custom homc development; and over two million square fect of retail spacc,
including three major retail malls. The Westfield Shoppin�;town (located in the Original Area) was expanded
in 20 to add two parking garages totaling 1,000 parking spaces, the expansion of Macy's, and an additional
40,000 square feet of retail space, including Barnes & Noble. For a map of thc Project Arca scc page viii.
For certain information regarding the City, see APPENDIX C—"GENERAL 1NFORMATION CONCERNTI�G THE
CITY OF PALM DESERT."
Origina! Area. The Original Area comprising approximately 580 acres and 444 parcels is generally
bounded by the City limits on thc west and east, Alessandro Drivc on the north and El Paseo on thc south.
Added Territory. The Added Temtory comprising approximately 5,240 acres and 12,665 parccls is
gencrally boundcd by the Whitcwatcr Storm Channel on the north, the Ciry limits on thc east and south and
the Palm Valley Storm Channel and thc City limits on the west.
06042\pns-2
38
Redevelopment Plan Limits
The Project Arca was formally established with the adoption by the City Council of a redcvclopment
plan (the "Original Plan") for approximately 580 acres (the "Original Area") pursuant to Ordinancc No. 80,
adopted on July 16, 1975. Approximately 5,240 acres (the "Added Territory") were addcd to the Oribinal
Area pursuant to amendments to the Original Plan approved and adopted by the City Council by Ordinancc
No. 275, adopted on November 25, 1981 and Ordinance No. 324, adopted on October 13, 1983 (collectively,
the "Amendments"). The Original Plan, as amended by the Amendments, is referred to as thc
"Redevelopment Plan."
On December 8, 1994, thc Ciry adopted Ordinance No. 765 establishing Plan licnits required by AB
1290 for Project Area No. l, the Original Area and Added Territory. On February 27, 2003 the Ciry adoptcd
Ordinance No. 1035, amcnding thc Rcdevelopment Plan as permitted by SB 211 to eliminate the time limit
on incurring indebtedncss. Pursuant to SB 1045 thc Redevclopment Agency amended the limits of the
Projcct Area by adopting Ordinance No. 1082, adding one year to thc term of effectiveness and thc time limit
to collect tax increment.
Origina! Area. On December 11, 1986, the City adopted Ordinance No. 484 which limits the
amount of tax revenues which can be divided and allocated to the Agency from the Original Project Arca
pursuant to thc Redcvelopment Plan to a maximum of S758,000,000.
Table 2A summarizes the Redevelopment Plan Limits within the Original Area.
Table 2A
Palm Desert Redevelopment Agency
Project Area No. 1— Origina! Area
Summary of Redevelopment Plan Limits
Plan Limit Termination
Receipt of
Tax
Increment
Base Debt Plan and Debt
Year Incurrence Exniration Re�avment
1976-77 None"� 7/16/16� 7/16/26�z�
Revenue Limits
($ in millions)
Gross Tax
lncrement Can
$758
Gross
Net Tax Bonded Amount
Increment Debt Received
N/A $200 $125.881�
(1) Pursuant to SB 211, City Council adoptcd Ordinance No. 1035 on Fcbruary 27, 2003, amending the Redcvelopment Plan to
eliminate the time limit to incur debt.
(2) Pursuant to SB 1045, the Redevelopment Agency amendcd thc Redevelopment Plan through the adoption of Ordinancc ho. 1082
to add one year to the term of eft'ectiveness and the timc limit to collect tax increment.
(3) Rcpresents b�ross tax increment revenues received as of June 30, 2006. Gross tax inerement revenues includes secured, unsecured,
utility and supplemcntal revenue, less property tax administrative costs paid to the County pursuant to SB 2557. Sec
"Ltnu rnTtoxs ov Ta.x Re.venUts—Propeny Tax Administrative Costs: '
Source: Reclevelopmen� Agency.
Added Territory. On January 24, 1991, the City approved the Sixth Amendment to thc
Redevclopment Plan (the "Amenclment") limiting the amount of tax revenues which can be dividcd and
allocated to the Agency from the Added Tcrritory to a maximum of $500,000,000 (exclusive of amounts paid
to any taxing agency, and exclusive of ainounts used to pay debt service, directly or indirectly, on obligations
of the Agency or any taxin�; agency, to finance the acquisition of land or the construction of buildings,
facilities, structures, or improvements of such taxing agencies). Through Fiscal Year 2004-05, the Added
Territory has received $166,120,639 in net tax increment revenue. Both amounts are prior to the allowed
adjustmcnt of dollars rcceived pursuant to Section 33683 of the Rcdevclopment Law which providcs for an
adjustment based on payments made to ERAF. See also "CERTAR�I RISKS TO BONDHOLDERS—State
obcuz�,��-z
39
Budget.") Thc Sixth Amcndmcnt also limits the amount of bonded indebtedness which can be outstanding at
onc time to 5200,000,000 (exclusive of bonds issucd to finance the acquisition of land or thc construction of
buildings, facilities, structures or improvcments of taxing agcncies).
Tablc 26 summarizes the Redevelopment Plan Limits within thc Addcd Tcrritory.
Table 2B
Palm Desert Redcvclopmcnt Agency
Project Area No. 1— Added Territory
Summary of Redevelopment Plan Limits
Plan Limit Tcrmination
Reccipt of
Tax
Increment
Base Debt Plan and Debt
Year Incurrence Exairation Reoavment
1982-83 None�'� 11/25/22 11/25/32
Revenue Limits
($ in millions)
Gross Tax
Increment Net Tax
Cao Increment
SSOO�Z� N/A�j�
Gross
Bonded Amount
Debt Received
$200 � $295.983�`�
(I) Pursuant to SB 211, City Council adopted Ordinance No. ]035 on February 27, 2003, amcnding thc Redevelopment Plan to
eliminate thc timc limit to incur debt.(2) Pursuant to the Sixth Amendment to thc Rcdevelopment Plan adoptcd on January
24, 1991, the lax increment limit Cor the Project Arca is exclusive of amounts paid to taxing agencies and exclusive of amounts
paid directly or indirectly by the Redevelopment Agency or any taxing entity to finance the acquisition of land, construction of
buildings, facilities, structures or improvements for such taxing agencies.
(3) Pursuant to SB 1045, thc Redevelopment Agency amended the Redevelopment Plan through the adoption of Ordinance No. l OR2
to add one ycar to the tertn of effectiveness and the time limit to collect tax increment.
(4) Pursuant to the Sixth Amendment to the Redevelopment Plan, the Bonded Debt Cap excludcs bonds issued to financc the
acyuisition of land, construction of buildings, facilities, structures or improvements to taxing agencies.
(5) Represents b�ross tax increment revenues received as of June 30, 2006. Gross tax increment revenues includes secured, unsecured,
utility and supplemental revenue, less property tax administrative costs paid to thc County pursuant to SB 2557. See
"L�titiTnrioNs o� Tnx Revenues-Property Tax Administrativc Costs."
Source: Redevelnpmen� �lgency.
Controls, Land Usc and Building Restrictions
The Redevelopment Plan for the Project Arca scts forth the principal land uscs permitted and thc
building restrictions to be imposed in project development. It also assigns the Redevelopment Agency and
thc City thcir respective responsibilities in carrying out thc Rcdcvclopment Plan.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
064f2�pos-2
40
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Summary of Development
Redevelopment Agency Projects. The primary objective of the Redevelopment Plan is to correct
infrastructure and traffic circulation deficiencies and promote the rehabilitation of property within thc Project
Arca through the construction of certain public, recreational and open space improvements.
To date the Redevelopment Agency has completed the following projects within the Project Arca:
construction and installation of certain sewer and storm drain improvements and landscaping improvements;
and undergrounding certain utilities, street widening, construction of parking facilities and renovation of
public recreational facilities.
The Redevelopment Agency expects to use a portion of the proceeds from the sale of the
2007 Scrics A Bonds to: construct on and off ramps at Portola Avenue and Interstate 10; widen various
portions of Montcrcy Avcnuc, Portola Avcnuc, Country Club Drive and construct and install various othcr
street improvements throughout the Project Arca; improve frontage roads along Highway 11 l; construct a
sound attcnuation wall along portions of Fred Waring Drive; construct and install landscape, lighting,
parkway and median improvements; construct a bridge on Portola Avenue over the Whitewater Channel;
develop a visitors center (including the Henderson Building, bc�tanical gardens and relatcd public
improvements) at El Paseo and Highway 111; underground utilities; construct a parking structure to
accommodatc a hotcl and related development at the Desert Willow Golf Resort; fund a business facadc
enhancement grant program; and construct a public swimming pool and related athletic facilitics at the
College of the Desert.
Privale Development. In addition to the projects directly sponsored by the Redevelopment Agency
and described above, the following private projects are in various stages of devclopment within the Project
Area including: renovation of scvcral commercial retaiUrestaurant developments on El Paseo, design and
construction of hotel properties near El Paseo in thc Original Area, upgrade and conversation of a mobilc
home park to condominium ownership and construction of a new restaurant at Entrada del Paseo.
Principal Taxpaycrs
The top 10 taxpayers within the Project Area for Fiscal Year 2006-07 own property with an
aggregate value of $569,538,659, representing approximately 11% of the assessed value and % of the
total incremental value of the Project Area for Fiscal Year 2006-07.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
06042�os-2
42
Tablc 4, Tablc 4A and Tablc 4B list thc principal taxpayers and primary
Area, the Original Area and the Added Tcrritory, respectively, based on the Fiscal
value.
Owner
WEA Palm Dcscrt LP
Elisabcth Stcwart
Gardens SPE II
PRU Dcscrt Crossing I-V
Bighorn Development
Harsch Invcstmcnt Realty
May Departmcnt Stores Co.
El Paseo Collection
ROP lnc. - Federated Westem
Sears Roebuck & Co.
SUBTOTAL TOP TGN
All Othcrs
TOTAL
Table 4
Palm Descrt Redevelopment Agency
Project Area No. l- Combined
Principal Taxpayers
Fiscal Year 2006-07
No. of
Parcels
6
349
1
11
170
11
558
12.267
I 2,825
Project Area
Component
Original Area
Added Territory
Added Territory
Original Area
Added Temtory
Original Area
Original Area
Original Arca
Original Arca
Original Area
Primary
Land Use
Commercial
Rcsidential
Commercial
Commercial
Rcsidcntial
Commercial
Commercial
Commercial
Commercial
Commercial
land uses in the Projcct
Year 2006-07 assessed
2006-07 Total Assessed Value���
Amount�2�
$117,156,693
94,645,204
91,234,317
90,505,974
41,495,986
31,646,751
29,681,029
29,945,320
22,543,253
20,684.132
$569,538,659
4,599,874,689
55,169,413,348
(1) Docs not reflect homeowners exemption.
(1) 1ncluJes secured value (54,963,093,354) and unsecured valuc ($206,349,994).
(?) Column does not total duc to independent rounding.
Source: Cuun�v Assessor's OJJice 2006-07 Equnlized Loca/ A.ssessmen� Roll.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
%
227%
1.83
1.76
1.75
0.80
0.61
0.57
0.58
0.44
0.40
11.02%
$8.98
100.00%
o�oaz��s-,
43
Table 4A
Palm Descrt Redevelopment Agency
Project Area No. 1— Original Area
Principal Taxpaycrs
Fiscal Year 2006-07
Owncr
WEA Palm Desen LP
PRU Desert Crossing I-V
Harsch Invcsnncnt Realty
May Department Stores Co.
El Pasco Collcction
Scars Roebuck & Co.
ROP Inc. - Federated Wcstcrn
Dayton Hudson Corp.
SKB PTP
El Paseo Land Co.
SUBTOTAL TOP TEN
All Others
TOTAL
No. of
Parcels
6
11
11
1
1
3
1
43
401
444
Primary Land Use
Commcrcial
Commercial
Commercial
Commcrcial
Commcrcial
Commercial
Commcrcial
Corrunercial
Commercial
Commercial
(1) Does not reflect homeowners exemption.
(2) Includcs sccurcd valuc ($775,429,430) anJ unsccurcd value (S I 13,909,971).
(3) Column does not total due to indcpcndcnt rounding.
Source: Countv A.cses.cor's O/fice 1006-07 Equulized Locu! Assessmen/ Roll.
2006-07 Total Assessed Value���
Amount�Z�
$117,156,693
90,505,974
31,646,751
29,681,029
29,945,320
20,684,132
22,543,253
14,719,176
12,280,378
14,327,544
S383,490,250
505,849,151
S889,339,401
%
2.27%
1.75
0.61
0.57
0.58
0.40
0.44
0.28
0.24
0.28
7.42%
9.79
17.20%
Table 4B
Palm Desert Redevelopment Agency
Project Area No. 1— Added Territory
Principal Taxpayers
Fiscal Year 2006-07
2006-07 Total Assessed Value���
Owner
Elisabcth Stcwart
Gardcns SPE II
Bighorn Development
Nationwide Health Properties
Boslcy, L.
Fcicor TRS
Deep Canyon Partner
Summit Cablc Scrviccs
CC Palm Lake
St. Margret's Episcopal
SUBTOTAL TOP T�N
All Othcrs
TOTAL
No. of
Parccls
349
1
170
3
2
4
5
1
90
2
627
11,754
12,381
Primary Land Use
Rcsidcntial
Commercial
Residential
Rcsidcntial
Residential
Commcrcial
Vacant
Commcrcial
Residential
Institutional
Amount�2j
S94,645,204
91,234,317
41,495,986
16,823,682
12,704,715
12,223,221
11,541,775
10,908,404
9,184,073
9,036.753
S309,762,130
3,970,311.817
$4,280,073,947
%
2.19%
1.73
0.97
0.36
0.30
0.29
0.27
0.25
0.21
0.21
5.99%
76.80
82.80%
( I) Does not reflect homeowners exemption.
(2) Includes securcd value ($4,187,633,924) and unsecured value (592,440,023).
(3) Column Joes not totxl due to indcpendent rounding.
Source: Cuunty Assessor's O(rce 1006-07 Equalrzed Loca! Assessmen! Ro/!.
061k12�pus-2
�
Tax Rates
Within the Statc tax ratcs vary from arca to arca, as well as within a communiry and a project area.
The tax rate for any particular parccl is based upon the jurisdictions levying the tax rate for the arca (a "Tax
Rate Area") in which thc parcel is locatcd. The tax rate applied to incremental taxable values consist of two
components: (i) the general levy rate which may not exceed � 1.00 per S 100 of taxable values in accordance
with Article XIII A of the State Constitution and (ii) the over-ride tax rate that is levied to pay voter approved
indebtedness or contractual obligations that existed prior to the enactment of Proposition XIII. See
"LIMITATION ON TAX REVENUES" and "C[RTAIN RISKS TO BONDHOLDERS-Reduction in Assessed Value."
The over-ride tax rates can decline each year as increasing properiy values reduce the over-ride rate needed to
be levied by the taxing entities to satisfy voter approved dcbt service obligations and as the voter approved
debts is retircd over time.
The taxing entities within a Tax Rate Area each rcceive a proratcd share of thc general levy and thc
revenues resulting from any voter approved ovcr-ridc tax rates. The components that make up the tax ratc
applicable to the Projcct Area are set forth in Table 5 below:
Table 5
Palm Desert Redevelopment Agency
Project Arca No 1
Breakdown of Tax Rate
Fiscal Ycar 2006-07
TaxinQ AQencv
County Gcncral Fund
County Library
County Fire
City of Palm Dcscrt
Dcscrt Sands Unificd School
Desert Community College
County Superintendent of Schools
Riverside County Regional Park and Open Space
Coachella Valley Public Cemetery
Palm Springs Public Cemetery
Dcscrt Hospital
Coachella Vallcy Mosquito Abatcmcnt
Coachclla Valley Recreation and Park
Coachclla Vallcy Watcr District
Coachclla Valley Resource Conservation
Coachclla Valley Water District Improvement District 80
Coachclla Valley Watcr District Storm Water Unit
Rancho Mirage Library
Rancho Mira�;e Fire Asscssment District
1�0'l'AL
Proiect Area No. 1 Tax Rates
Orieinal Area Added Territory
0.28396% 0.28336%
0.02749 0.02885
0.05919 0.06211
0.36502
0.07585
0.04127
0.00429
0.00343
0.02012
0.01380
0.02088
0.02758
0.02221
0.03491
1.00000%
Source: Crry of Pulm Deserl Finance Depu�7ment.
0.02171
0.36904
0.08038
0.04373
0.00430
0.00302
0.00028
0.01322
0.01463
0.01840
0.02921
0.00021
0.00976
0.01730
0.00016
0.00035
1.00000%
06042�pos-2
45
Historical, Current and Projected Tax Revenucs
The Redcvclopment Agency's primary source of funds to make payments with respect to the 2007
Loan and thc Parity Debt is thc Rcdcvelopment Agcncy's share of ad valorem property tax revenucs which
generally result from increases in thc assessed valucs (whether due to annual inflation, thc completion of new
rcal estate developments, or general reassessment of property) within thc Project Area.
The purposc of redevelopment is to revitalize deteriorated or underdeveloped areas within a
community. As new construction progresses, property values normally increase and the ultimate result is a
proportionate incrcase in ad valorem property tax rcvenues.
The total taxable valuc of all properties within a givcn project area on the property assessmcnt roll
last equalized prior to the effcctivc date of the ordinance adopting the redevelopment plan for such project
area and related amendment areas, if any, esWblishes a base from which increases in taxable value are
computed. Thc basc so established for the Origina! Area is the Fiscal Year 1976-77 assessment roll and for
thc Added Territory the Fiscal Year 1982-83 assessment roll. Undcr the Redcvelopment Law, property taxcs
lcvied based upon the amount shown on the basc year asscssment rolls will continuc to be paid to and
retained by all taxing agencies levying property taxes in the Project Area. Taxes levied by the respectivc
taxing agencies on any incrcascs in taxablc value realized in the Projcct Area will be allocatcd to thc
Redevelopment Agency.
It should be undcrstood that this proccdure does not involve the Icvy of any additional taxes, but
provides that revenues produced by thc tax ratcs in effect from year to year are apportioncd to the taxing
agencies levying the taxes and to the Redevelopment Agency on the basis described above. After all loans,
advanccs and othcr indebtcdncss, including interest, incurrcd by thc Redevelopment Agency in connection
with the Project Area have been paid, the tax revenues will be paid to and retained by the respective taxing
agencies in the normal manner. Sec also "CERTAIN RISKS TO BONDHOLDERS—Reduction of Tax Revenues."
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
ot,oaz�P�S-z
46
Tablc 6A prescnts thc abgregate taxable value of all property within the Project Area and thc tax
incrcmcnt rcvcnucs rcccivcd for Fiscal Years ended June 30, 2002 through June 30, 2006.
Table 6A ,
Palm Desert Redevelopment Agency
Project Arca No 1- Original Area
Historical Taxablc Valucs and Tax Increment Revenues
Assessed Value
Local Secured�'�
Utiliry (SBE)
Unsecured
TOTAL ASSF,SSEU VALI;E
Base Year Value
Incremental Value
Percentage Increase
Estimated Revenue�''�
Tax Increment Revenue
Unitary Utility Revenue
County Administration Charge
TOTAL ESTIMA'I'EU RFVENUG
2001-02 2002-03 2003-04
$564,983,710 $582,303,437 $614,105,002
98.628.475 95.533.915 ] 06,856.251
�663,612,185 $677,837,352 $720,961,253
27,485,R36 27.485.836 27.485,836
$636,126,349 $650,351,516 $693,475,417
- 2.24% 6.63%
$6,361,263 $6,503,515 $6,934,754
332,579 288,489 297,098
(]04.8831 (101,7971 (103,877)
$6,588,960 $6,690,207 $7,127,975
2004-OS
$665,801,195
102,344,827
$768,146,022
27.485.836
$740,661,186
6.80°/u
$7,406,602
300,931
(101.6531,
$7,605,880
2005-06
$730,954,568
96, I 84,53 I
$827,139,099
27,485,836
$799,653,263
7.96%
$7,996,533
3 00,93 I
(78,987)
$8.218,477
Actual Receipts
Secured, Unsecured and Unitary Utility $6,646,083 $6,792,005 $7,231,852 $7,707,533 $8,270,799
Suppicmental Payments 104,267 49,849 151,075 200,879 823,767
County Administration Charge (107,137) ( I 01,7971 ( I 03,877) (] 01,6531, (78.9871,
T()'I'AL AC'I'�AL RtC'�IPTS $6,643,213 $6,740,057 $7,279,051 $7,806,759 $9,015,579
(1) Valucs include homcowncrs exemption valucs.
(2) Assuming a 1.0% tax rate.
Sources: Riverside County O�ce oj�he Audilor-Con�ruller und City ojPu(m Deser� Finance Depur�ment.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
06042�os-�
47
Tablc 6B
Palm Desert Redevelopment Agency
Project Area No 1— Added Territory
Historical Taxable Values and Tax Increment Revenues
2001-U2 2002-03 2003-04 2004-OS 2005-06
Assessed Value
Local Secured��� $2,578,872,509 �2,885,218,745 $3,101,000,504 $3,353,983,977 $3,700,665,201
Utility (SBE) — — — — —
Unsecured 60,136,657 67,614,013 79.783.947 79,970,509 79.183.032
TUTALASSGSSF:DVALI;E $2.639,009,166 $2,952,832,758 $3,180,784,451 $3,433,954,486 $3,779,848,233
Base Year Value 656.065,059 656,065.059 656.065.059 656,065,059 656.065.059
Incremental Value $1,982,944,107 $2,296,767,699 $2,524,719,392 $2,777,889,427 $3,123,783,174
AnnualIncrease — 15.83% 9.92% ]0.03% 12.45%
Estimated Revenue�Z�
Tax lncrement Revenue
Unitary Utility Revenue
County Administration Charge
TOTnL ESTIMATFU RLVENUG
$19,826.257 $22,967,677
134,804 136,266
(321,5511 (346,155)
$19,639,510 $22,757,788
$25,247,194 $27,778,894
144,829 142,166
(�64,6721 (368.2401
$25,027,351 $27,552,820
Actual Receipts
Secured, Lnsecured and Unitary Utility $19,961,028 $23,103,974 $25,392,023 $27,921,060
Supplemental Payments 2,011,351 910,786 886,454 1,502,190
County Administration Charge (321.551) (346,155) (364.6721 (368,2401
TOTAL ACTUAL RLCF.IPTS $21,650,828 $23,688,605 $25,913,805 $29,055,010
(1) Values include homeowners cxemption values.
(2) Assuming a 1.0% tax ratc.
Souroes: Riverside County O�ce oJJhe Audilor-Con�rollcr and Ciry ojPa/m Deserr Finunce Deparlmenl.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
$31,237,832
I 67,752
(298.669)
$3 I ,106,915
$31,405,584
5,644,432
(298,669)
S36,751,347
oboaz��-z
48
Tablc 7A and Table 7B summarizc the projcctcd Tax Revenues received by the Projcct Arca, thc
Original Arca and the Addcd Territory, respectivcly, for the Fiscal Years ending June 30, 2007 through June
30, 2011. To date, the County has paid to thc Redevelopment Agency the full amount of Tax Revcnues
expcctcd to be rcccived by thc Redevelopment Agcncy, without regard to delinquencics in tax collcction. S
Taxable Values
Secured�z�
Unsecured�3�
New Developmeat�a�
Total Value
Base Year Value
Taxable Value over Base
Table 7A
Palm Descrt Redevclopment Agency
Project Area No 1— Original Arca
Projection of Incremental Taxable Valuc and Tax Increment Revenuc
Gross Tax Increment Revenue
Unitary Tax Revenue
Gross Revenues
Le.s.r:
SQ 2557 Admin. Fee�s�
Housing Set-Aside Rec�uirement«�
Tax Sharing Payments� �
2006-07 2007-08 2008-09 2009-10 2010-11�'�
$775,429,430 $790,938,019 $825,540,691
113,909,971 114,194,746 114,480,233
— 18,415,600 —
889,339,401 923,548,365 940,020,924
27,485,836 27,485,836 27,485,836
861,853,565 89G,062,529 912,535,088
$842,051,505 5859,402,535
114,766,433 1 I S,OS 3,349
500,000 —
957,317,938 974,455,884
27,485,836 27,485,836
929,832,102 946,970,048
8,618,536 8,960,625 9,125,351
300,930 300,930 300.930
8,842,000 9,181,118 9,344,413
(77,466) (80,437) (81,868)
1,768,400 1,836,224 1,868,883
312.590 380,414 413.073
9,298,321
300,930
9,515,881
(83,370)
I ,903,176
447,366
9,469,700
300.930
9,685.772
(84,859)
1,937,154
48 I .344
Tax Revenues $6,761,010 $6,964,481 $7,062,458 �7,165,339 $7,267,273
(1) Assessed valucs are based on actual data, all remaining information is projccted.
(2) Growth in secured values is projected at 2.00% annually.
(3) Growth in unsecured values is projected at 0.25% annually.
(4) Represcnts valuc of anticipatcd new dcvelopmcnt based upon building permits issucd by thc City bctween and
(5) Rcpresents property tax administrative costs, in the amount equal to 0.869% of the annual gross tax incrcment, that arc
paid ro the County pursuant to SB 2557. See "Lint�'rnTloNs oN Tnx REVEnuGs—Property Tax Administrativc Costs."
(6) For a discussion of the Housing Set-Aside, see "LIMITA7lONS ON TAX REVEVUES—Housing Set-Aside."
(7) Represcnts paymcnts to all taxing entitics payable on a senior basis to payments on the 2007 Series A Bonds and thc Parity
8onds, including statutory paymcnts. See "LlhtrinTioNs or Tnx R�vENues—Pass Through Agreements and Tax Sharing
Payments."
Sources: Riversrde Coun(ti� O�ce oJ�he Audi�or-Cuntroller and Rosenow Spevucek Group Inc.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
o�uaz��s-z
49
Tablc 7B
Palm Desert Redevclopment Agency
Project Arca No 1— Added Territory
Projection of Incremental Taxable Value and Tax Increment Revenue
Taxable Values
,
Secured�`�
Unsecured�31
New Development�'�
Total Value
Base Year Value
Taxable Value over Base
Gross Tax Increment Revenue
Unitary Tax Revenue
Gross Revenues
Less:
SB 2557 Admin. Fee�`�
Housing Sct-Aside Requirement«�
Tax Sharing Payments"�
2006-07 2007-08 2008-09 2009-10
$4,187,633,924 54,271,386,602 $4,568,153,681 �4,723,958,932
92,440,023 92,671,123 92,902,801 93,135,058
- 207.195.438 63.178.605 18.895.175
4,280,073,947 4,427,236,330 4,679,951,657 4,839,753,715
656,065,059 656,065,059 656,065,059 656,065,059
3,624,008,888 3,915, ] 88,105 4,068,170,028 4,180,014, I 06
36,240,089
167.752
36,407,84 I
(293,492)
7,222,870
17,069.129
39,15 I ,881
167,752
39,319,633
(316,965)
7,800,534
18.561,935
40,681,700
167,752
40, 849,452
(329,297)
8, ] 04,031
19.346,237
41,800,141
167,752
41,967,893
(338,3 I 3)
8,325,916
19.919,635
2010-11�'�
$4,837,802,989
93,367,896
22,659,725
18,434,21 I ,087
656,065,059
4,297,765,551
42,977,656
167,752
43,145,407
(347,805)
H,559,520
20,523.318
Tax Revenues $11,822,350 $12,640,199 $13,069,887 S 13,384,029 $ l 3,714,763
(1) Asscsscd valucs arc based on actual data, all remaining information is projectcd.
(2) Growth in secured valucs is projccted at 2.00% annually.
(3) Growth in unsecured valucs is projected at 0.25% annuxlly.
(4) Represcnts value of anticipated new developmcnt based upon building permits issued by the City betwccn _ and
(5) Rcpresents property tax administrative costs, in the amount equal to 0.101% of the annual gross tax incremcnt, that arc
paid to the County pursuant to SB 2557. Sce "LintrrnTioNs oN Tnx REVEnues—Property Tax Administrative Costs."
(6) For a discussion of the Housing Sct-Aside, see "LiMITn7��Ons ON Tnx RF.vEVU�s—Housing Sct-Aside."
(7) Rcprescnts paymcnts to all taxing entities payable on a scnior basis to payments on the 2007 Scries A BonSs and the Parity
Bonds, including statutory paymcnts. See "LiMrrnnoNs oN Tnx RFVENues—Pass Through Agreements and Tax Sharing
Paymcnts."
Sourees: Rh�ero•ide Countv O�ce ojthe Audllor-Conlrol/er uncl Rosenuw Spevacek Group Ine.
Debt Service Coverage Projections
The following Tablc 8 shows schedulcd debt service on the 2007 Series A Bonds and Pariry Bonds,
without regard to any optional rcdemption and estimated coverage. Sec "DEBT SGRVICG SCHEDULE" for the
schcduled semiannual debt service on the 2007 Scrics A Bonds.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
06412�pos-2
50
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ot�oaz�s-z 51
Assessment Appcals
Property tax values dctcrmined by the County Asscssor may be subject to an appeal by the property
owners. Assessmcnt appcals are annually filed with the Assessment Appeals Board for a hearinb and
resolution. The resolution of an appeal may result in a reduction to the County Assessor's original taxable
value and a tax rcfund to the applicant/property owncr. The reduction in futurc Projcct Area taxable values
and thc refund of taxes affects all taxing entities, including the Redevelopment Agency.
Each assessment appeal could result in a reduction of the taxable value of the real property, personal
properiy or possessory interest of the property which is the subject of the appeal. A reduction in such taxable
value would result in a reduction of the rcvenues of the Rcdevelopment Agency available for Tax Rcvcnucs
with respect to the 2007 Series A Bonds. Altematively, an appeal may bc withdrawn by thc applicant or the
Appcals Board may deny or modify the appcal at a hearing or by stipulation.
Of the 10 principal taxpaycrs in the Project Area shown in Table 3, two Sears Roebuck & Co.
("Sears") and El Pasco Collection ("El Pasco") havc appeals outstanding and unresolved with thc County
Asscssor as of September 1, 2006. Sears owns one parcel in thc Original Area and is seeking a reduction to
thc Piscal Year 2005-06 assessed value in the amount of 58,579,199 which, if granted, would result in a
0.17% rcduction in thc aggregate Fiscal Year 2005-06 assessed value within thc Project Arca.
EL Pasco owns one parcel in thc Original Area and is seeking a rcduction to the Fiscal Ycar 2005-06
assessed value in the amount of S885,241 which, if granted, wou(d result in a 0.02% reduction in the
a�;gregatc Fiscal Year 2005-06 assessed valuc within the Project Area.
Origina! Area. Between Fiscal Year 2002-03 through Septcmber 1, 2006 there have bcen 143
asscssmcnt appeals filcd within the Original Area. Of thc appcals filed, 13 resulted in reductions in valuc
(S 10,054,459 or 1.48%), 121 were withdrawn and nine are pending. The pcnding appcals have a combincd
assesscd valuc of S21,633,292 under appeal and include assessment appeals of valuc for Fiscal Ycars
2005-06 and 2006-07.
Added Territory. Betwccn Fiscal Ycar 2002-03 through Septcmber 1, 2006 there have been 161
assessment appeals filed within the Addcd Territory. Of thc appeals filcd, 14 resulted in reductions in value
($6,739,118 or 0.22%), 125 werc withdrawn and 22 are pending. The pending appeals have a combined
assessed value in the amount of $40,669,441 and include appeals of value for Fiscal years 2003-04 throubh
2005-06.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
o�oaz�s-z
52
Tablc 9 summarizes the appeals filed in the Project Area between Fiscal Year 2001-02 and
Scptember l, 2006.
Table 9A
Palm Desert Redevelopment Agency
Project Arca No 1— Original Area
Assessment Appeals
Fiscal Years 2000-01 through September 1, 2006
Roll
Ycar
2006-07
2005-06
2004-OS
2003-04
2002-03
ToTni,
Total
# of
Appcals
Fifcd
i
1R
43
31
50
143
Appeals
VVithdrawn/
No
Appcarance/
Latc File
0
10
43
30
38
121
Appeals
Adjusted/
Reduced/
Stiuulated
0
0
0
I
12
13
Appeals
Pendine
i
8
0
0
0
9
Total
Secured
Assessed
Valuc
$776, I 89,725
azs,�6�,xx2
768,146,022
720,961,253
677.837.352
$3,768,902,234
Total
Requested
Reduction
$86,700
34,747,611
67,858,453
74,452,334
86, I 23,1 14
S263,268,212
Actual
ReducHon
in Assessed
Value
$0
0
0
I 6,569
10,037.890
S 10,054,459
Sources: Rrverside County O�ce ojlhe Audilor-Catlruller und Rosenow Spevucek Group Inc.
Table 9B
Palm Desert Redevclopment Agency
Project Area No 1— Added Territory
Assessment Appeals
Fisca{ Years 2000-01 through September 1, 2006
Roll
Ycar
200Cr07
2005-OG
2004-OS
2003-04
2002-03
ToTn i,
Total
# of
Appcals
Filed
0
17
45
42
57
161
Appeals
Withdrawn/
No
Appearancc/
Late File
0
$
32
39
46
125
Appeals
Ad j usted/
Reduced/
Stiaulated
0
0
t
2
Il
14
Appesls
Pendine
0
9
12
1
0
22
Total
Secured
Asscssed Value
$4,258,751,34A
5.772,744,132
3,433,954,486
3, I 80,784,45 I
2.952.832.758
S 19,559,067,175
Total
Requested
Reduction
SO
19,763,829
30,161,112
36,624,510
48,633.054
S l 35,182,505
Actual
ReducNon
in
Assessed
Value
$0
0
597,381
251,997
5,889.740
$6,739, I 18
Sources: Riversrde Count}• O�ce ojthe Audr�or-Comro!!er und Rosenow Spevucek Group /nc.
Actual
Reduction
% of total
Assessed
Value
0.00%
�.ax
1.48°/a
Actual
Reducdon
% of total
Asscssed
Value
0.00%
0.00
0.02
0.01
0.20
0.22%
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
o�cwz�s-z
53
Pendin�
Reduction
in Assessed
Valuc
sx�,�oo
20,674,907
0
871,685
0
$21,633,292
Pending
ReducHon
in Assessed
Value
SO
16,988,318
14,417,734
9,263,389
0
$40,669,44 I
Pending
ReducNon
% of
Total
Assessed
Value
o.o i
2.50
0.00
0.12
o.00
2.64%
Pending
Reduction
% of
Total
Asscssed
Value
0.00%
0.29
0.42
0.29
0_00
I.OI%
Tablc 10 lists thc principal taxpayers (scc Table 4 above) who have filed such appcals, thc assessed
value, the reduction requestcd and the status of the appeal.
Table 10
Palm Desert Redevelopment Agency
Project Arca No l- Combined
Outstanding Appeals by the Top Ten Taxpayers
Fiscal Years 2000-01 through 2005-06
Total Sccured Applicant
Appeal No. Assessed Opinion
Applicant Year Parcels Value Value
Scars Rocbuck & Co. 2005-06 1 S 17,169,199 $8,590,000
El Paseo Collection 2005-06 2 7,185,241 6,300,000
TOTAL 3 S24,354,440 �14,890,000
Sources: Riverside Counry O�ce ojthe Audr�or-Con�roller und Rosenow Spevucek Group Inc.
7'ax Levies, Collections and Delinquencics
Potential
Reduction
Amount
�8,579,199
885,241
$9,464,440
The County dc�es not track secured tax charges and delinquencies by Project Area.
Thc County has adopted thc Altemative Method of Distribution of Tax Levies and Collections and of
Tax Sale Procccds (the "Teeter Plan"), as provided for in Scction 4701 et. seq. of the State Rcvcnue and
Taxation Code. Under the Teeter Plan, each participating local agency, including cities, levying propeny
taxes in its counry may receive the amount of uncollected taxes credited to its fund in the same manner as if
the amount credited had been collected. In return, the county would receive and retain dclinquent payments,
pcnalties and interest, as collected, that would have been due to the local agcncy. However, although a local
agency could receive the total levy for its property taxes without regard to actual collections, funded from a
reservc established and held by the counry for this purposc, the basic legal liabiliry for property tax
dcficiencies at all times remains with the local agency.
The Teeter Plan cemains in effect unless the County Board of Supervisors orders its discontinuance
or unless, prior to the commencement of any fiscal year of the County (which commences on July 1), thc
County Board of Supervisors receives a petition for its discontinuance joined in by resolutions adopted by
two-thirds of the participating revenue districts in the Counry, in which event, the Counry Board of
Supervisors is to order discontinuancc of the Teeter Plan effective at the commencement of thc subscquent
fiscal ycar. The County Board of Supervisors may, by resolution adopted not later than July 15 of the Fiscal
Ycar for which it is to apply, aftcr holding a public hearing on the matter, discontinue the proccdures under
thc Tectcr Plan with respcct to any tax lcvying agency in the county.
The Rcdevelopment Agency is a participant in the Teeter Plan. See "LIMITATIONS ON TAX
REvclvUEs—Property Tax Collection Procedures."
oFoaz��,s_z
54
TAX MATTERS
[TO BE REVISED BY BOND COUNSEL]
ln thc opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, under
cxisting law, interest on the 2007 Series A Bonds is excluded from gross income for fedcral incomc tax
purposcs undcr Section 103 of the Internal Revcnue Code of 1986, as amended (thc "Code"), and is not an
itcm of tax preference for purposes of the federal alternativc minimum tax imposed on individuals and
corporations. In addition, Bond Counsel is of the opinion that, under existing law, the excess of Accretcd
Value of the Capital Appreciation Bonds over thc original Principal Amount thereof, to the extent that such
cxcess represents interest properly allocated to the Owner of such Capital Appreciation Bonds (the "Excess
Accreted Value"), is cxcluded from gross incomc for federal income tax purposes under the Code, and is not
an itcm of tax preference for purposes of the federal altemative minimum tax imposed on individuals and
corporations. Bond Counsel will express no opinion as to any other federal tax consequcnces regarding the
2007 Scries A Bonds.
The opinion on federal tax mattcrs will be based on and will assume the accuracy of certain
representations and ccrtifications, and continuing compliance with certain covenants, of the Agency and the
Authority that are intendcd to assure the foregoing, including that the 2007 Series A Bonds are and will
remain obligations, the interest on which is excluded from gross income for federal income tax purposes.
Bond Counsel will not indcpcndently verify the accuracy of those rcpresentations and certifications.
The Code prescribes a number of qualifications and conditions for the interest on state and local
govemment obligations to be and to remain excluded from gross income for federal income tax purposes.
Some of these qualifications and conditions require future or continued compliance after issuance of the
obligations for the interest to be and to continue to bc excluded from the date of issuancc. Noncompliance
with these qualifications and conditions by the Authority or the Agency may cause the interest on the 2007
Serics A Bonds to be included in gross income for federal income tax purposcs retroactively to the date of
issuance of the 2007 Serics A Bonds. The Authority and the Agency have covenanted to take the actions
requircd of thcm for thc interest on the 2007 Series A Bonds to be and to remain excluded from gross income
for fedcral income tax pwposes, and not to take any actions that would adversely affect that exclusion.
Undcr the Code, a portion of the interest on thc 2007 Scries A Bonds earned by certain cotporations
►nay be subject to a corporate altemative minimum tax. In addition, intcrest on the 2007 Series A Bonds may
bc subjcct to a branch profits tax imposed on certain foreign corporations doing business in the Unitcd States
and to a tax imposed on excess net passive income of certain S corporations.
Under thc Code, the cxclusion of interest from gross income for federal income tax pucposcs may
have certain adverse federal income tax consequences on items of income, deduction or credit for certain
taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and
Railroad Retirement bcnefits, those that are deemed to incur or continue indebtedness to acquire or can-y tax-
exempt obligations, and individuals otherwisc eligible for the eamed incomc tax credit. The applicabiliry and
cxtent of thesc and othcr tax consequences will depend upon the particular tax status or other tax items of thc
owners of the 2007 Series A Bonds. Bond Counsel will express no opinion regarding those conscquences.
Any excess of the stated redemption price at maturiry of the 2007 Series A Bonds over the initial
offcring price to the public of thc 2007 Scries A Bonds set forth on the inside cover of this Official Statement
is "original issuc discount" Such original issuc discount accruing on a 2007 Series A Bond is treatcd as
intcrest cxcluded from the �-oss incomc of the owner thereof for fedcral income tax purposes and excmpt
from California personal income tax. Original issue discount on any 2007 Series A Bond purchased at such
initial offering price and pursuant to such initial offering will accrue on a semiannual basis over the term of
the 2007 Series A Bond on the basis of a constant yield method and, within cach semiannual period, will
accrue on a ratable daily basis. The amount of original issue discount on such a 2007 Series A Bond accruing
06042�os-2
55
during each period is added to the adjusted basis of such 2007 Series A Bond to determine taxable gain upon
disposition (including sale, redemption or payment on maturity) of such 2007 Series A Bond. The Code
includes ccrtain provisions relating to the accrual of original issue discount in the case of purchasers of thc
2007 Series A Bonds who purchase the 2007 Series A Bonds other than at the initial offering price and
pursuant to the initial offering. Any person considering purchasing a 2007 Series A Bond should consult his
or her own tax advisors with respect to the tax consequences of ownership of bonds with original issuc
discount, including the treatment of purchasers who do not purchase in the original offering and the original
offering price, the allowance of a deduction for any loss on a sale or other disposition, and the treatmcnt of�
accrued original issue discount on such bonds under federal individual and corporate alterative minimum
taxes.
If the 2007 Serics A Bonds were offered and sold to the public at a pricc in cxccss of thcir statcd
redemption price (the principal amount) at maturiry, that excess constitutes "premium." For iederal incomc
tax purposcs, that premium is amortized over the period to maturiry of the 2007 Series A Bonds, bascd on thc
yield to maturity of the 2007 Series A Bonds, compounded semiannually. No portion of that premium is
dcductible by thc owncr of a 2007 Scries A Bond. For purposes of detcrmining the owner's gain or loss on
thc salc, redcmption (including redemption at maturity) or other disposition of a 2007 Serics A Bond, thc
owner's tax basis in the 2007 Series A Bond is rcduced by the amount of premium that accrues during the
period of owncrship. As a result, an owner may realizc taxablc gain for fedcral income tax purposes from thc
salc or other disposition of a 2007 Series A Bond for an amount equal to or less than the amount paid by the
owncr for that 2007 Series A Bond. A purchascr of a 2007 Series A Bond in the initial public oi%ring at the
price for that 2007 Series A Bond stated on the inside cover of this Official Statement who holds that 2007
Scries A Bond to manu-ity will realizc no gain or loss upon the retiremcnt of that 2007 Scries A Bond.
Owners of the 2007 Serics A Bonds should consult thcir own tax advisers as to thc detcrmination for federal
income tax purposes of the amount of premium properly accruable in any period with respect to the 2007
Scries A Bonds and as to other federal tax consequenccs and the treatmcnt of premium for purposes of statc
and local taxes on, or based on, incomc.
Purchasers of the 2007 Series A Bonds at other than their original issuance at ihe respective prices
indicated on the inside cover of this Official Statement should consult their own tax advisers regarding other
tax considerations such as the consequences of market discount or premium.
In the further opinion of Bond Counsel, interest on the 2007 Series A Bonds is exempt from personal
income taxation imposed by the State of California.
A copy of the proposed form of Bond Counsel's final approving opinions with respect to the 2007
Series A Bonds is attached hereto as APPENDIx E.
APPROVAL OF LEGAL PROCEEDINGS
Ceitain legal matters incident to the authorization, issuance and sale of the 2007 Series A Bonds are
subject to the approval of Richards, Watson & Gershon, A Professional Corporation Los Angelcs, California,
Bond Counscl. A copy of the proposcd form of Bond Counscl's opinion is containcd in APPGNDIX E to this
Official Statement, and thc final opinion will be made available to the owners of the 2007 Serics A Bonds at
thc time of delivery of the 2007 Serics A Bonds. Certain legal matters will be passed upon for thc Financing
Authority and the Redevclopmcnt Agency by thcir General Counscl, Richards, Watson & Gershon, A
Prof'essional Corporation, and by Lofton & Jennings, San Francisco, California, Disclosure Counsel.
Bond Counsel will also deliver a supplemental opinion as to the accuracy in all enaterial respects of
the descriptions contained in this Of�icial Statement of the Bonds, and Bond Counsel's federal and State tax
opinions. Except as expressly described in said opinion, Bond Counscl is not passing upon and undcrtakes
o�oaz��5-z
56
no responsibiliry for the accuracy, complctcncss or fairncss of the information containcd in this Official
Statcmcnt.
Bond Counsel and Disclosure Counscl will each rcceive compensation from thc Redcvc[opmcnt
Agcncy that is contingent upon the sale and delivery of thc 2007 Scries A Bonds.
ABSENCE OF MATERIAL LITIGATION
Ccncral
Therc is no litigation pending, noticc of which has bccn servcd, or known to the Financing
Authority or the Rcdevelopment Agency conceming the validity of the 2007 Indenturc or thc 2007 Serics
A Bonds or the issuance and dc�ivery thcreof, the existence of thc Financing Authority or the
Redevclopment Agency, the title of the offcers thereof who shall execute the 2007 Series A Bonds to
their respective offices, the pledge of Revenues to the payment of the 2007 Series A Bonds, or the pledge
of Tax Rcvenues to the paymcnt of the 2007 Loan.
Other Matters
ln the rcgular course of the business, thc Financing Authority and the Redevelopment Agcncy arc
cach partics to a variety of pending and threatencd lawsuits and administrative proceedings, in addition to
those specifically discussed herein. Neither the Financing Authoriry nor the Redevelopment Agency
bclicves that any such lawsuits or proceedings will have a material adverse effect on the operations or
financial condition of the Financing Authority and the Redevelopment Agency, respectively.
FINANCIAL ADVISOR
Del Rio Advisors, LLC, Modesto, Califomia, has served as Financial Advisor to the Financing
Authority and the Redevelopment Agency with respect to the sale of the 2007 Scries A Bonds. The Financial
Advisor has assisted the Financing Authority and the Redevelopment Agency in the review of this Official
Statcment and in othcr matters relating to the planning, structuring, execution and delivery of the 2007 Scries
A Bonds. The Financial Advisor has not independently verified any of the data contained herein or
conductcd a detailcd invcstigation of the affairs of the Financing Authority and the Redcvelopment Agency to
detcrmine the accuracy or completcness of this Official Statement. Due to their limited participation, the
Financial Advisor assumes no responsibility for the accuracy or completeness of any of the information
contained herein.
The Financial Advisor will receive compensation from the Redevelopment Agency contingent upon
the salc and dclivery of the 2007 Series A Bonds.
CONTINUin'G DISCLOSURE
The Redevelopment Agency has covenanted in the Continuin�; Disclosure Agreement dated
, 2006, by and among the Redevelopment Agency, thc Trustee, and MuniFinancial Inc., as
Dissemination Agent for the benefit of the holders and bencficial owners of thc 2007 Series A Bonds to
provide certain financial information and operating data relating to the Redevclopment Agency each ycar by
not latcr than the date which is six months following the end of the Fiscal Year, commencing with the report
for the 2006-07 Fiscal Year (the "Annual Report"), and to provide notices of the occurrence of certain
cnucncrated evcnts, if material. The Annual Report and notices of material evenu will be filed by thc Trustcc
obcriz�,-z
57
as Dissemination Agent with each nationally Recognizcd Municipal Securities Information Repository and
with any thcn existing State Repository, if any. Currently, there is no State Rcpository. The covenants sct
forth in the Continuing Disclosure Agreement havc been made by the Redevelopment Agency in order to
assist the Underwriters in complying with Securities and Exchange Commission Rulc I Sc2-12(b)(5). The
specific naturc of thc inforenation to be containcd in thc Annual Rcport and the notices of material events is
sct forth in APPet�rDlx F—"FORM OF CONTINUING DISCLOSURE AGREEMGNT."
The Redevclopmcnt Agcncy has never failed to comply in all matcrial respects with any prcvious
undertakin�;s with regard to said Rule to provide annual rcports or notices of material events.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
Upon delivcry of the 2007 Scries A Bonds, Grant Thornton LLP, Minneapolis, Minnesota (thc
"Verification Agent"), will deliver a report stating that it has reviewed and confirmed the mathematical
accuracy of certain computations relating to the adequacy of the funds and/or securities deposited in the
Escrow Securities and the interest thereon, if any, to pay, when due, the redemption price and interest on the
Prior Bonds on the specified payment or redemption date thereof.
UNDERWRITING
Pursuant to the terms of a Bond Purchase Agreement dated . 2006 (the "Purchase
Agreement"), among the Financing Authority, the Redevelopment Agency and Stone & Youngberg LLC (the
"Undcrwriter"), thc Underwritcr will purchase all of thc 2007 Series A Bonds, if any are purchascd, howevcr,
the obligation of the Underwriter to make such purchase is subject to certain terms and conditions set forth in
the Purchase Agreement. The Underwriter purchased the 2007 Series A Bonds, at a price of S
(representing the principal amount of the 2007 Series A Bonds, plus an original issue premium in the amount
of $ and less an Underwriter's discount in the amount of $ ).
The public offering prices of the 2007 Series A Bonds may be changed from time to time by the
Underwritcr. The Underwriter may of%r and se112007 Series A Bonds to certain dealers and others at a price
lower than the offering price stated on the inside cover page hereof.
RATINGS
Moody's Investors Scrvice ("Moody's") and Standard & Poor's Ratings Services, a division of the
McGraw Hill Companies ("S&P") have assigned their ratings of "Aaa" and "AAA," respectively, to the 2007
Serics A Bonds with the understanding that upon delivery of the 2007 Series A Bonds the Insurance Policy
will bc issucd by the Bond Insurer. See "FINANCIAL GUARANTY INSURANCE" and APPENDiX H-"SPECIMEN
F[NANCIAL GUARANTY INSURANCG POLICY." A rating reflects only the view of the agency giving such
rating and is not a recommendation to buy, sell or hold the 2007 Series A Bonds. An explanation of the
significancc of the rating may be obtained from Moody's at Moody's ]nvestors Scrvicc, 99 Church Strcet,
Ncw York, New York ] 0007 and from S&P at Standard & Poor's, 55 Water Street, Ncw York, New York
10041. There is no assurance that such ratings will continue for any given period of time or that they will not
bc reduced or withdrawn cntirely by S&P or Fitch, if in their individual judgment circumstances so warrant.
T'he Redevelopment Agency has not undertaken any responsibility to oppose any such proposed revision or
withdrawal. Any such revision or withdrawal of a rating may havc an adverse ef%ci on the marketabiliry or
markct price of the 2007 Series A Bonds.
o�,�z��o�-z
58
FINANCIAL STATEMENTS
The audited financial statements of the Redcvelopment Agency for Fiscal Year [2004-OS],
prcpared by Lance, Soll and Lunghard LLP, independent certified public accountants, in accordancc with
Governmental Accounting Standards Board guidelines, are included as APPGNDIX B attached here[o.
Lance, Soll and Lunghard LLP has consented to the inclusion of its report in APP[NDIX B, and has not
undcrtaken to update its report or take any action intended or likely to elicit information conccrning thc
accuracy, completeness or fairness of statements made in this Official Statement and no opinion is
cxpresscd by Lance, Soll and Lunghard LLP with respcct to any evcnt subsequent to the date of its report.
MISCELLANEOUS
All of the preceding summaries of the 2007 Scrics A Bonds, thc 2007 Tndenture, the 2007 Loan
Agreement, the Rcdevelopment Law, thc Redevclopment Plan, the Project Area, other applicablc legislation,
agrccments and other documents are made subjcct to the provisions of the 2007 Series A Bonds and such
documents, respectively, and do not purport to be complete statements of any or all of such provisions.
Refercnce is hereby made to such documents on file with the Rcdcvelopment Agency for further information
in connection therewith.
Any statements madc in this Official Statement involving matters of opinion or of cstimates, whethcr
or not expressly stated, are set forth as such and not as representations of fact, and no representation is made
that any of thc cstimatcs will bc realizcd.
The execution and delivery of this Official Statement by the Chief Administrative Officer of the
Financing Authority has been duly authorized by the Financing Authority.
PALM DESERT FINANCING AUTHORITY
I' ,
Carlos L. Ortega, Chief Administrative Officer
Ohp42�Os-2
59
APPENDIX A
REPORT OF THE FISCAL CONSULTANT
OG042��s-2
A-1
APPENDiX B
REDEVELOPMENT AGENCY AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
06(M2�pos-2
B-1
APPENDIX C
GENERAL INFORMATION COn`CERNING THE CITY OF PALM DESERT
The follox�ing in.fvrmution concerning the City of Palm Desert, the County oj Riverside and
surrounding ureas is included onlv for the purpose of supplying general information regarcling the
cnmmunity.
Ovcrvicw
The City of Palm Desert (the "City"), incorporated in November 26, 1973 as a general law city,
bccamc a chartcr city through the adoption of Ordinance 858 by the City Council on January 8, 1998. The
City is located in the Coachella Valley and is approximately mid-way between the cities of Indio and Palm
Springs, 117 miles cast of Los Angelcs, 118 miles northcast of San Diego and 515 miles southcast of San
Francisco.
Thc City occupies an area of approximately 26 square miles. Elevation of the City is 243 feet and
thc mcan tcmperaturc is 73.1 dcgrecs. Exccpt in summcr, the weather is mild and annual avcragc rainfall is
3.38 inches. According to the State Department of Finance, the City population as of January 1, 2006 was
approximatcly 49,539, an incrcase of approximately 19.5% sincc 2000, attributable in part to territorial
anncxation.
Government
Thc Ciry Council is comprised of five mcmbers, elected at large for four-year staggcred tcrms evcry
two years. The general municipal election is conducted in November of even-numbered years, consolidated
with the Statewide General Election and councilmembers are sworn in and take office at the first meeting in
Dccembcr following each election. There is currcntly one vacancy on the City Council.
The City Council selccts one of its members to serve as Mayor for a one-year term and appoints a
City ;vlanager to conduct the day to day business of the Ciry and the City Clerk. The City Attomcy is
appointed by City Council. The Ciry operates as"Contract City" utilizing, primarily, agreements with other
govern►nental entities, private companies and individuals to provide services. Contracted services include
police and fire protection provided through the Counry, animal control, health services, legal scrvices and
landscape maintcnancc.
The City Council also serves as the governing board of thc Financing Authority, thc Redevelopmcnt
Agency, the Housing Authority and the Parking Authority and the City Manger servcs as the Chief
Administrative Officer of the Financing Authoriry and the Executive Director of the Redevelopment Agency,
the Housing Authority and the Parking Authority. The Ciry Attorney and the City Clerk also servc as the
General Counsel and Secretary, respectively, of the Redevelopment Agency and these Authorities. The
current members of the City Council and key administrativc personnel of the City arc listed in Table C-1
and Table C-2, respectively:
oboaz�,�-z
C-1
TABLE C-1
CITY OF PALM DESERT
City Council Members
Name Office
Jim Ferguson Mayor
Richard S. Kclly Mayor Pro Tcm
Jean M. Benson Councilmembcr
Robcrt A. Spiegcl Councilmember
Vacant Councilmember
�
�2)
Term Exoires
Novembcr 2006���
November 2008
November 2006���
Novcmber 2008
November 2008�'�
Occuvation
Attomcy
Rctired GTE Executive
Retircd Travel Industry Profcssional
Rctired Retail Industry Executive
Thc tertns for thesc membcrs of the �inancing Authonty anJ City Council expire in November 20(16. 'I he persons clectcd xt thc Novcmber 2006
Statew•ide Venerai C•lechon will be swom in and take office necember 14, 2006.
This vacxncy will be filled at the November 2006 Statewide Cieneral Election. The person eiected to fill this position w�ll be swom m and wke
ofTice on [�ccmbcr 14, 2W6.
TABLE C-2
CITY OF PALM DESERT
Kcy Administrative Personnel
Namc
Carlos L. Ortega
Justin McCarthy
Paul S. Gibson
David L. Yrigoyen
Rachclle D. Klasscn
Population
Position
Ciry Managcr
Assistant City Managcr
Treasurer/Finance Director
Dircctor of Rcdevelopmcnt and Housing
City Clcrk
Between 2000 and 2006, the City's population increased by a total of 8,089 or approximatcly
19.5%. In addition to permancnt residents, the Ciry has approximately 15, 000 seasonal residential residents
who live three to six months in thc City, primarily during the winter months. Table C-3 illustratcs the
population of the City, the County and the State for 2000 and 2002 through 2006.
Table C-3
C1TY OF PALM DESERT AND RIVERSIDE COUNTY AND STATE OF CALIFORNIA
POPULATION
Ycar
(January 1)
2000
2002
2003
2004
2005
2006
Citv of Palm Dcsert
41,450
42,900
44,300
45,610
49,595
49,539
Riversidc Countv
1,557,800
1,645,300
1,719,000
1,807,858
1,888,311
1,953,330
State of California
34,207,000
35,037,000
35,591,000
36,271,091
36,728,196
37,172,015
Sources: Unrted Sla�e.r Deparlmenl of Conrmerce, Bureau of lhe Cen.sus jor 2000 and Stu�e oJCulijornia Depar�men� ojFinunce
jor remarning}•eurs.
06042�pos-2
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Labor Forcc and Employment
The main sources of revenue in the Ciry are derived from tourism and sales tax. Historically, thc
unemploymcnt rate in the City has been lower than that for thc County and the State.
Table C-4 table represents the labor pattems in the City, the Counry, the State, and the United States
from 2001 through 2005.
Table C-4
CITY OF PALM DESERT, RIVERSIDE COUNTY,
STATE OF CALIFORNIA AND UNITED STATES
CIVILIAN LABOR FORCE, EMPLOYMENT, A1�D UNEMPLOYMENT
2001 through 2005
Year and Area
2U01
City
County
State
United Statcs
2002
Ciry
Counry
State
Unitcd Statcs
2003
City
Counry
Statc
United States
2004
City
Counry
State
United States
Labor Forcc Emt�lovment Unemnlovment
20,000
711,200
17,150,100
141,815,000
19,400
672,500
16,217,500
135,073,000
600
38,700
932,600
6,742,000
21,100
749,800
17,326,900
144,863,000
21,900
781,600
17,414,000
146,510,000
22,800
812,000
17,552,300
147,401,000
20,300
702,300
16,165,100
136,485,000
21,100
732,300
16,223,500
137,736,000
22,100
764,900
16,459,900
139,252,000
800
47,500
1,161,800
8,378,000
Unemploymcnt
Ratc
3.1%
5.4
5.4
4.8
3.6
6.3
6.7
5.8
800 3.6
49,300 6.3
1,190,500 6.8
8,774,000 6.0
700
47,100
1,092,400
8,149,000
3.3
5.8
6.2
5.5
2005
City 24,000 23,300 700 2.8
Counry 849,640 806,700 42,900 5.1
State 17,695,600 16,746,900 948,700 5.4
Unitcd States 149,321,000 141,730,000 7,591,000 5.1
Sources: CulJorniu Sta�e F,mpiny�ment Developnrenf Deparlment und U S. Depar�ment ojLahor, Bureau nf Lahor Stutrstic.�.
06042�pus-2
C-3
Table C-5 dcscribes the largest cmployers in the City.
Tablc C-5
CITY OF PALM DESERT'
LARGEST EMPLOYERS
(As of January 1, 2006)
Companv
Product/Scrvice
Numbcr of
Emnlovees
JW Marriott Desert Springs Resort
Sccuritas Security Svc USA Inc.
Collcge of the Dcscrt
Marriott's Desen Spas Villas
Sunshinc Landscapc
Desert Vallcy Industries
Mamott Owncrship Rcsorts Inc.
Sunrise Colony Co.
Foundation For the Retarded
Time Warner Cable
Bighorn Golf Club
Springs At the Fountains
Macy's Wcst
Monterey Palms Health Care
Fountains At the Carlotta
Indian Ridge Country Club
Williams Mcchanical Inc.
Palm Valley Country Club
Koala Tce Printing
Hospitality
Security Scrviccs
Education
Hospitality
Landscaping Services
Business Support Services
Hospitality
Golf Course Community
Social Services
Telecommunications
Golf Rcsort
Convalescent and Nursing Care
Retail
Hcalthcare
Convalescent and Nursing Care
Golf Course Community
Plumbing
Golf Coursc Community
Screcn Printing
j' Fedcral and State Govemmcnt not included.
Source: America's Labor Markcl Infortnation System (ALMIS).
Commercial Activity
1,300
700
630
500
500
400
300
250
236
220
220
200
200
200
200
200
200
200
200
A sales tax is imposed on retail sale or consumption of personal property. Sales tax revenucs are
detem►incd by the total taxablc transactions within a jurisdiction and distributed by the State Board of
Equalization to the jurisdiction where the sale took place. Sales taxes collected from merchants with no
permanent place of business (i.e., manufacturers, construction contractors, etc.) are accumulated to a
Countywide or State-wide (out-of-state businesses) pool and distributed to cities and counties in proportion to
their collections from all sales taxpaycrs.
The value and volume of these taxable transactions are dcpendent on economic conditions and other
factors. Such factors included the level of inflation affecting the price of goods and services subject to thc
sales tax, the rate of population growth in the general area, the characteristics of retail developments, such as
thc relative sizc of ►narket scrvice areas, the scnsitivity of the types of businesses within the City to changes in
the economy, and competing retail establishments outside 1he City. A deterioration of economic conditions
and other factors influencing taxable sales gcneratcd in the City, may reduce the City's sales tax rcvenues.
Table C-6 summarizes taxable transactions in thc City for calendar years 2000 through 2004.
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C-4
TABLE C-6
CITY OF PALM DESERT
Taxable Retail Sales Data
Calendar Ycars 2000 to 2004
($ in 000's)
2000 2001
RCTAIL STORES
Apparel Stores �92,192 593,792
Gencral Merchandisc 269,776 272,856
Food Stores 55,817 52,282
Eating & Drinking Placcs 153,970 155,911
Homc Furnishings and Appliances 128,899 125,130
Building Matcrials and Farm 57,865 64,251
Impiements
Auto Dealers and Auto Supplies 8,108 8,825
Scrvice Stations 25,807 22,633
Other Rctail Stores 227,591 220.252
TOTAL RETAIL STORES 1,020,025 1,015,932
All Othcr Outicts 197,961 195,137
2002 2003
S97,924 $108,829
278,583 307,186
51,738 52,461
148,228 152,508
129,623 135,694
54,111 56,180
6,904 8,211
23,930 39,146
228,286 243,474
1,019,327 1,103,689
190,058 193,041
2004'
$132,831
340,277
47,455
167,315
155,921
68,737
5,862
45,585
264,129
1,228,112
205.1 �4
TOTALALLOUTLGTS 51,217,986 �1,211,069 $1,209,385 S1,296,730 S1,433,296
� Most recent annual data available.
Source: Stule Board o%Equulizu[ion.
Construction Activity
In Fiscal Year 2005-06, the City issued construction permits valued in excess of $269 million. This
total amount, approximately 41% consisted of new single family construction and approximatcly 1.6%
consisted of new multifamily construction. A five-year history of building permits and valuation appcars in
Table C-7.
Tablc C-7
CITY OF PALM DESERT
BUILDING PERMITS AND VALUATIONS 2001-2005
Residential
Numbcr of Units
Ycar Sin�lc Familv Multifamilv
2001 255 411
2002 221 310
2003 237 101
2004 325 111
2005 100 135
Valuation
($ in 000's)t
$120,073.2
100,486.0
86,387.6
103,738.2
78,130.9
t includcs valuc of individual units, altcrations and additions.
Source: Consrruction Industry Research Board, Building Permi( Survey.
Nonresidential
Valuation
($ in 000's)f
536,319.0
41,413.7
20,123.0
43,112.1
92,535.4
Total
� 156,392.0
141,899.7
106,510.6
146,850.3
170,663.3
06042\pus-2
G5
Effcctive Buying Incomc
"Effcctive buying income" ("EBl") is a classification developed exclusivcly by Sales 8c Marketing
Manugement magazine to distinguish it from other sources reporting income statistics. EBI is defined as
"money income" less personal tax and nontax payments - a number oftcn referred to as"disposable" or
"after-tax" income. Money income is the aggegate of wages and salaries, net facm and nonfarm self-
employment income, interest, dividends, net rental and royalty income, Social Security and railroad
retirement income, other rctirement and disabiliry income, public assistance income, unemployment
compcnsation, Veterans Administration payments, alimony and child support, military family allotments, net
winnings from gambling and other periodic income. Money income does not include money rcceived from
thc sale of property (unless the recipient is engaged in the business of selling property); the value of "in-kind"
income such as food stamps, public housing subsidies, medical care, employer contributions for persons, ctc.;
withdrawal of bank deposits; money borrowed; tax refunds; exchange of money between relatives living in
the samc houschold; gifts and lump-sum inheritances, insurance payments, and other rypes of lump-sum
receipts. EBl is computed by deducting from money income al] personal income taxes (federal, statc and
local), personal contributions to social insurance (Social Security and federal retirement payroll deductions),
and taxes on owner-occupied nonbusiness real estate.
The total EBI for thc Ciry, as reportcd by Sales & Marketing Managcment in its 2005 Survey nJ'
Buying Power, was $1,295,785 and the median household EBI was S42,769. The 2005 Ciry mcdian
houschold EBI of S42,769 compares that of S33,357 for the City of Palm Springs; $39,287 for thc Ciry of
Ontario; S51,803 for thc Ciry of Corona; $53,205 for thc City of Temecula; and S39,414 for the City of Los
Angcics.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
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Table C-8 prescnts the latest available total effectivc buying income and median household effcctivc
buying incomc for the City, the County, the State and the nation.
Tablc C-8
CITY OF PALM DESERT, RIVERSIDE COUNTY,
STATE OF CALIFORNIA AND UNITED STATES
EFFECTIVE BUYING INCOME
Year
and Area
2000
City
Counry
Statc
Unitcd States
2001
City
County
Statc
Unitcd States
2002
City
County
State
United States
2003
City
Counry
State
United Statcs
20U4
City
Counry
Statc
United Statcs
Total Effective
Buying Incomc
(� in 000's)
S 1,109,327
25,144,120
652,190,282
5,230,824,904
1,008,568
23,617,301
650,521,407
5,303,481,498
1,184,128
25,180,040
647,879,427
5,340,682,818
],238,323
27,623,743
674,721,020
5,466,880,008
1,295,785
29,468,208
705,108,410
5,692,909,567
Suurces: Salcs & Marketing Managemcnt, 2001 through 2005 Surveys �(Buying Power.
Utilitics
Median Household
Effective
Buvine Income
546,046
39,293
44,464
39,129
37,975
3 7,480
43,532
38,365
42,299
38,691
42,484
38,035
41,699
39,321
42,924
38,201
42,769
40,275
43,915
39,324
Water, sewage treatment and wastcwater disposal are provided by the Coachella Valley Watcr
District. Southern California Gas Company supplies natural gas to the City and elecuic power is provided by
the Southem California Edison Company. Telephone service is available through Verizon. Cablc telcvision
service is provided by Time W amer.
o�oa2�5-z
C-7
Transportation
Inter-City transportation is provided by Greyhound Bus which provides service from its connection
points in thc City to its lincs outside of the Ciry in addition to thc community owncd and operated Sunlinc
Bus System which provides service throughout the entire Coachella Valley. Intra-City transportation is
provided by Tel-a-Ride and local taxi firms. The City's central highways are California Highway 1 I 1 and 74
which conncct to US [ntcrstate 10 and to California Highway 63 and 86.
Shipping is provided by numerous truck carriers which have overnight service to Los Angeles,
San Francisco, San Diego and Phoenix. Rail transportation is provided by the Southern Pacific Railroad
located in Indio, 10 milcs east of the Ciry, and by Amtrak, which has two stations located in Coachella
Valley.
A full service airport is located in Palm Springs, 12 miles northwest of the City, with approximatcly
seven carriers providing service. The airport has an 8,500 foot runway and general aviation facilities. There
is also a private airport in Bermuda Dunes, eight miles northeast of the City.
Community Scrvices
Thc Ciry of Palm Desert provides both police and fire protection through contracts with the Counry
of Rivcrsidc.
The Riverside County Public Library Systcm provides library services to the City. The Ciry also
operatcs a 43,000 square foot public library on the College of the Dcsert campus which is jointly used by thc
public and the College of the Desert.
Education, Culture and Recreation
Public school education is provided by the Desert Sands Unificd School District (the "School
District"). The School District provides preschool through grade 12 education to students living in the City
and the communities of Indian Wells, lndio, La Quinto, Rancho Mirage and Bermuda Dunes. The School
District and operates 17 clementary schools, six middle schools, three comprehcnsive high schools, one
independent study/alternative school and a continuation high school.
Thc College of the Descrt, the Coachclla Valley Community College is located in the City. A
satellitc campus of Califomia Staie University, San Bcmardino is also located on the College of the Descrt
Campus.
Cultural facilities in the Ciry include thc 1,127 seat McCallum Thcater for the Performinb Arts
located in Bob Hope Cultural Center, the 1,200 acre Living Desert Zoo and Gardens, and the Art in Public
Places (a museum without walls featuring more than 130 works of art throughout the City).
Recreation programs for residents of the City and other neighboring communities arc offered through
the Coachella Valley Recreation and Park District (the "Park District"). The Park District providcs
rccrcational activitics and programs ranging from tiny tots programs, kids clubs and summer day camp, to
d•ance, health and fimess and music instruction, to the senior games.
The Desert Willow Golf Resort, two championship 18-hole, public golf course, is located on
approximately 540 acres in the northcrn area of the City. This golf course also features a 33,000 square foot
clubhouse with restaurant, dining and banquet facilities. The City also is home to five other public golf
courses and resorts and 20 private or semi-private golf clubs and resorts.
oboaz��5-z
C-8
APPENDIX D
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
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D-1
APPENDIX E
PROPOSED FORM OF BOND COUNSEL OPINION
060�i2�pos-?
E-1
APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT
The Continuing Disclosure Agreement (the "Disclosure Agreement") is executed and dclivered by
the Palm Desert Redevelopment Agency (the "Redevclopment Agency"), Wells Fargo Bank, National
Association (the "Trustee") and MuniFinancial, Inc. (the "Dissemination AgenP') in connection with the
issuance of the S principal amount of Palm Desert Financing Authority Tax Allocation Refunding
Rcvcnuc Bonds (Project Area No. 1, As Amcnded) 2007 Series A(the "Bonds"). The Bonds are bcing
executed and delivered pursuant to an Indcnturc of Trust dated as of January 1, 2007 (the "Indenture"), by
and between the Palm Desert Financing Authority (the "Financing Authority") and the Trustee. The
Financing Authority will loan the proceeds of thc Bonds to the Rcdevelopment Agency pursuant to a Loan
Agreement made and entercd into as of January I, 2007. Thc Redevelopment Agency covenants and agrces
as follows:
SECTION 1. Puroose of this Disclosure A�reemcnt. This Disclosure Agrecmcnt is being executcd
and dclivcred by the Redevclopment Agency for ihe benefit of the Holders and Beneficial Owners of the
Bonds and in order to assist the Participating Underwriter in complying with Securities and Exchange
Commission ("SEC") Rule 15c2-12(b)(5). The Redevelopment Agency acknowledges that the Financing
Authoriry has undertaken no responsibiliry with respect to any reports, notices or disclosures provided or
required under this Disclosure Agreement, and has no liability to any person, including the owners of the
Bonds, with respect to any reports, noticcs or disclosures.
SECTION 2. Definitions. In addition to thc dcfinitions sct forth in the Indenturc, which apply to any
capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following
capitalized terms shall have the following meanings:
"Annual Report" shall mean any annual rcport provided by thc Redevelopment Agency pursuant to,
and as described in, Sections 3 and 4 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or
consent with respcct to, or to dispose of owncrship of, any Bonds (including persons holding Bonds through
nominces, depositorics or other intcrmcdiaries) or (b) is treated as the owner of any Bonds for fedcral income
tax putposes.
"Central Post Office" shall mean the Disclosure USA website maintained by the Municipal Advisory
Council of Texas or any successor thereto, or any other organization or method approved by the staff or
members of the Securities and Exchange Commission as an intermediary through which issuers may, in
compliance with the Rule, make filings required by this Disclosure Agreement.
"Dissemination Agent" shall mean MuniFinancial, Inc., acting in its capacity as Dissemination
Agent hercunder, or any succcssor Dissemination Agent dcsignated in writing by the Redevelopmcnt Agcncy
and which has filed with the Trustee a written acceptance of such designation.
"Fiscal Year" shall mean with respect to the Redevelopment Agency, the period beginninb on July 1
of' each year and ending on the next succeeding June 30, or any twclve month or fifry-two week period
thereafter selected by the Redevelopment Agcncy with notice of such selection of change in fiscal year to be
provided as set forth herein.
o�oa2��s-z
F-1
"Holders" shall mean either the registered owners of the Bonds, or, if the Bonds are registcrcd in the
namc of Thc Dcpository Trust Company or another recognizcd depository, any applicable participant in its
dcpository system.
"Listed Event" shall mean any of the evcnts listcd in Section 5(a) of this Disclosure Agreemcnt.
"National Repository" shall mean any Nationally Rccognized Municipal Securities lnformation
Rcpository for purposes of the Rule. A list of the current National Repositories approved by the S.E.C. may
be found at the S.E.C. website: http://www.sec.gov/info/municipaUnrmsir.htm.
"Participating Underwriter" shall mcan Stone & Youngberg LLC, as thc original underwriter of the
Bonds required to comply with the Rule in connection with offering of the Bonds.
"Rcpository" shall mean each National Rcpository and cach State Repository, if any.
"Rule" shall mean Rulc 15c2-12(b)(5) adopted by thc Securities and Exchange Commission undcr
the Securitics Exchange Act of 1934, as the same may be amended from time to time.
"State" shall mean thc State of California.
"Statc Repository" shall mean any public or private repository or entity designated by thc State as a
statc repository for the purpose of the Rule and recognized as such by the Securities and Exchange
Commission. As of the date of this Disclosure Agreement, there is no State Repository.
SECTION 3. Provision of Annual Renorts.
(a) The Redevelopment Agency shall, not later than six months after thc end of' the
Redevelopment Agency's Fiscal Year (which cutrently is June 30), commencing with the report for the
2006-07 Fiscal Year, provide to each Repository an Annual Report which is consistent with the requircments
of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as
separate documcnts comprising a package, and may include by reference other information as provided in
Section 4 of this Disclosure�Agreement; provided that the auditcd financial statements of the Rcdevelopment
Abency may be submitted separately from the balance of the Annual Report. The Redcvelopment Agency
shall providc a written certification with each Annual Repon fumished to the Dissemination Agent and thc
Trustee to the cffect that such Annual Report constitutes the Annual Report required to be fumished by the
Redevelopment Agency hereunder. The Dissemination Agent and ihe Trustee may conclusively rely upon
such certification of the Redevelopment Agency. If the Redevelopment Agency's Fiscal Year changes, it
shall give notice of such change in the same manncr as for a Listcd Event under Section 5(c).
(b) lf the Dissemination Agent is other than thc Redevelopment Agcncy, then not later than
fiftecn (15) Busincss Days prior to said date, the Redevelopment Agcncy shall provide the Annual Report to
thc Dissemination Agcnt. If thc Disscmination Agent is unable to verify that an Annual Report has been
provided to thc Repositories by the date required in subsection (a), the Disscmination Agent shall send a
notice to the Municipal Securities Rulemaking Board and the State Repository, if any, in substantially the
form attachcd as E�chibit A to this Disclosure Agreement.
(c) The Dissemination Agent shall:
(i) detcrmine each year prior to the date for providing the Annual Report the name and
address of each Repository;
oboaz�s-z
F-2
(ii) file the Annual Report with each Repository by the date requircd thercfor by
Section 3(a) and file any noticc of a listcd Event, if requested by the Rcdevclopment Agcncy, as soon as
practicable following receipt from the Redevelopment Agency of such notice; and
(iii) if thc Dissemination Agent is othcr than the Redevelopment Agency, file a repoct
with the Redevelopment Agency ccrtifying that the Annual Report has been provided pursuant to this
Disclosurc Agrcement, stating the date it was provided and listing all the Repositories to which it was
provided.
(d) Notwithstanding any other provision of this Disclosure Agreement, thc Ciry and the
Dissemination Agent reservc the right to makc any of the aforementioncd filings through the Ccntral Post
Office.
SECTION 4. Content of Annual Reports. Thc Redevelopmcnt Agency's Annual Report shall
contain or incorporate by referencc the following:
(a) The audited financial statements of the Redcvelopment Agency, presented in accordance
with gcnerally accepted accounting principles as promulgated to apply to governmental entities Commission
from time to time. If the audited financial statements of ihc Redevelopment Agency are not available by the
time the Annual Report is required to be filed as described above, the Annual Report shall contain unaudited
financial statements in a format similar to the financial statemcnts contained in the final Official Statemcnt,
and the auditcd financial statements shall be filed in the same manner as the Annual Report whcn they
become available.
(b) Unless otherwise provided in the audited financial statements fled on or prior to the annual
filing dcadline for Annual Reports provided in Section 3 above, financial information and operating data with
respect to the Redevelopment Agency for the preceding Fiscal Year, substantially similar to that providcd in
the following tables and charts in the Official Statement:
(i) Table 4—"Palm DeseR Rcdevelopmcnt Agency Project Area No. 1- Combined—
Principal Taxpayers;" (Table 4A—"Palm Descrt Redevelopment Agency Project Area No. 1-
Original Area—Principal Taxpayers;" and Table 4B—"Palm Desert Rcdevelopment Agency Projcct
Area No. 1- Added Territory—Principal Taxpaycrs;"] and
(ii) Table 6A—"Palm Desert Redevelopment Agency Projcct Area No. 1- Original
Arca—Historical Taxable Values and Tax Incrcment Revenucs;" and Table 6B—"Palm Desert
Redevelopmcnt Agency Project Arca No. 1- Added Territory—Historical Taxable Values and Tax
Increment Revenues."
(c) The outstanding principal amount of Bonds, for the preceding Fiscal Year.
Such annual information and operating data described above may be included by specific reference
to other documents, including official statements of debt issues of the Redevelopment Agency or related
public entities, which have been submitted to each of the Repositories or the Securities and Exchangc
Commission; providecl, that if the documents included by reference is a final official statement, it must be
available from the Municipal Securities Rulcmaking Board; and provided furcher, that the Redevclopmcnt
Agency shall clearly identify each such other document so included by reference.
06(}42�os-2
F-3
SECTION 5. Revortins of Si�nificant Events.
(a) Pursuant to the provisions of this Section 5, the Redcvelopment Agency shall givc, or causc
to bc givcn, notice of the occurrencc of any of the following cvents with respect to the Bonds, if matcrial:
(i) principal and interest payment delinquencies.
(ii) non-paymcnt related defaults.
(iii) modifications to rights of Bondholdcrs.
(iv) optional, contingent or unscheduled bond calls.
(v) defeasances.
(vi) rating changcs.
(vii) adversc tax opinions or evcnts advcrsely affecting the tax-exempt status of the
Bonds.
(viii) unscheduled draws on the Rcserve Fund reflecting financial difficultics.
(ix) unscheduled draws on the credit enhancements rcflecting financial difficulties.
(x) substitution of the credit or liquidity providers or their failure to perforcn.
(xi) release, substitution or salc of property securing repaymcnt of the Bonds.
(xii) Significant amendmcnts to the land use regulations or entitlements of the City of
Palm Desert within the Project Area which would adversely affect development of property therein.
(b) The Trustee shall, promptly upon obtaining actual knowledge of the occurrence of any of the
Listed Eve:nts contact the Disclosure Representative, inform such person of the event, and request that the
Rcdevclopment Agency promptly notify the Dissemination Agent in writing whether or not to repon the
cvent pursuant to subsection (� and promptly notify the Trustce in writing whether or not to report the evcnt
to the Owners (unless notice to the Owners is required by the Indenture). For purposes of this Disclosurc
Agreement, "actual knowledge" of the occurrence of such Listed Events shall mean actual knowledge by the
officer at thc Trust Office of the Trustee with regular responsibiliry for the administration of thc Indenturc.
(c) Whenever the Redcvelopment Agency obtains knowledge of the occurrence of a Listed
Event, whcther because of a notice from the Trustec pursuant to Section 5(b) or otherwise, ihc
Redevelopment Agency shall as soon as possible determine if such event would be material under applicable
fcderal sccurities laws.
(d) If the Redevelopment Agcncy determines that knowledge of the occurrence of a Listcd
Evcnt would be material under applicable fedcral securities laws, the Redevelopment Agency shall promptly
notify the Dissemination Agent and the Trustee in writing. Such notice shall instruct the Disscmination
Agent to file a notice of such occunence with the Municipal Securities Rulemaking Board and the State
Repository, if any. Notwithstanding the foregoing, notice of Listed Events describcd in subsections (a)(iv)
and (a)(v) nced not be given under this subsection any earlier than the noticc (if any) of the underlying event
is givcn to Holders of affected Bonds pursuant to the Indenture.
06042�pos-2
F�
(c) lf in response to a requcst undcr subscction (b), the Rcdevelopment Agency determines that
the Listed Evcnt is not material, the Redevelopment Agency shall so notify the Dissemination Agent and the
1�rustee in writing and instruct the Dissemination Agent and the Trustee not to report the occurrence.
SECTION 6. Tcrmination of Renortine Oblieation. The obligations of the Redevclopmcnt Agency
under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or paymcnt in
full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the
Rcdcvelopment Agency shall give notice of such termination in the same manncr as for a Listcd Evcnt under
Section 5(c).
SECTION 7. Dissemination AQcnt. The Rcdcvelopment Agency may, from time to time, appoint or
engagc a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and
may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent.
Thc Dissemination Agent shall not be responsiblc in any manncr for thc content of any noticc or repon
prcpared by the Redevelopment Agency pursuant to this Disclosure Agreement.
The initial Dissemination Agent shall be the MuniFinancial, Inc.
Thc Disscmination Agent may resign its duties hereunder at any time upon written notice to the
Redevelopment Agency.
SECTION 8. Amendment. Notwithstanding any other provision of this Disclosure Agreement, the
parities may a►ncnd this Disclosure Agreement (and the Trustec and the Dissemination Agent shall agrce to
any a►nendmcnt so requestcd by the Redcvclopment Agency provided that neither the Trustec nor thc
Dissemination Agent shall be obligated to entcr into any such amendment that modifics or increases its duties
or obligations hereunder} only if:
(a) the amendment is made in connection with a change in circumstances that arises from a
change in legal requircments, change in law, or change in identity, nature, or status of thc Redevelopment
Agcncy, or typc of business conducted;
(b) this Disclosure Agreement, as amended, would have compiled with the requirements of' the
Rulc at thc time of sale of thc Bonds, after taking into account any amenciments or intcrpretations of the Rule,
as well as any change in circumstances;
(c) thc amendmcnt does not materially impair the interests of the Owners, as detcrmined by
parties unaffiliated with the Redevelopment Agency (such as, but without limitation, the Redevelopment
Agcncy's bond counsel) or by Owner's consent pursuant to Section 7.01 of the Indcnture; and
(d) the annual financial information containing (if applicable) the amended operating data or
financial information will cxplain, in narrative form, the reasons for the amendmcnt and the "impact" (as that
word is used in the letter from the staff of the Securities and Exchange Commission to the National
Association of Bond Lawyers dated June 23, 1995) of the change in the rype of operating data or financial
information bcing providcd.
SECTION 9. Additional Information.
(a) The Redevelopment Agcncy ab�rees to provide public information concerning the Bonds and
the Rcdcvelopment Agcncy to any Holder or Beneficial Owner making a written request thcrefor.
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(b) Nothing in this Disclosure Agrcemcnt shall be deemed to prevcnt the Redevclopment
Agcncy from disseminating any other information, using the mcans of dissemination set forth in this
Disclosure Agrecment or any other means of communication, or including any other information in any
Annual Report or notice of occurrcnce of a Listcd Event, in addition to that which is requircd by this
Disclosure Agreement. If the Redevelopment Agcncy chooses to include any inforrnation in any Annual
Rcpon or notice of occurrence of a Listed Event in addition to that which is specifically rcquired by this
Disclosurc Agrcement, the Redcvelopment Agcncy shall have no obligation under this Disclosure Agrcemcnt
to updatc such information or include it in any future Annual Report or notice of occurrence of a Listed
Evcnt.
SECTION 10. Default. In the even to a failure of the Redevelopment Agency to comply with any
provision of this Disclosure Agreement, the Trustee shall, at the written direction of any Participating
Underwriter or the Owners of a majority in aggregate principal amount of Outstanding Bonds (but only to thc
extent funds have been provided to it or it has becn otherwise indcmnified to its satisfaction from any cost,
liability, expense or additional charges of the Trustee whatsoever, including, without limitation, fees and
expenscs of its attorneys), or any Owner may, take such actions as may be necessary and appropriatc,
including seeking mandate or specific performance by court order, to cause the Redevelopment Agency, the
Trustec or the Dissemination Agent, as the case may be, to cocnply with its obligations under this Disclosure
Agrecment; providcd that any such action may bc institutcd only in the Fedcral or State Court located in the
County of Los Angeles, State of California and no remedy other than specific performance may be sought or
grantcd. A default under this Disclosure Agreement shall not be deemed an Event of Default under the
Indcnturc or thc Loan Agrecment, and the sole remedy undcr this Disclosurc Agreement in the event of a
failure of the Redevelopment Agcncy, the Trustee or the Dissemination Agent to comply with this Disclosure
Agrcement shall be an action to compel performance.
SECTION 11. Duties. Immunities and Liabilities of Dissemination Aeent. The Dissemination Agent
shall have only such dutics as are specifically set forth in this Disclosure Agreement, and the Redevelopmcnt
Agency agrees to indemnify and save the Dissemination Agent and the Trustee, their officers, directors,
employees and agcnts, harmless against any loss, expense and liabilities which it may incur arising out of or
in thc exercise or performance of its powers and duties hereunder, including the costs and expenses
(including attomeys fees) of defending against any claim of liability, but excluding liabilities due to the
Dissemination Agent's or Trustce's negligence or willful misconduct. The Dissemination Agcnt may rely on
and shall be protected in acting or refraining from acting upon any direction from the Issuer or an opinion of
nationally recognized bond counsel. The Dissemination Agent and the Trustee shall be paid compensation by
the Redevelopment Agency for its services provided hereunder in accordance with its schedule of fccs as
amendcd from time to time and all expenscs, lcgal fees and advances made or incurred by the Dissemination
Agent in the performance of its duties hereunder. The Dissemination Agent and the Trustee shall have no
duty or obligation to review any information provided to them by the Redevclopment Agcncy hereunder and
shall not be deemed to be acting in a fiduciary capaciry for the Financing Authority, the Redevelopment
Agency, the Owners, or any other parry. The obligations of the Redevelopment Agency under this Section
shall survive resig�ation or rcmoval of the Dissemination Agent and payment of the Bonds. No person shall
havc any right to commence any action against thc Dissemination Agent seeking any remedy other than to
compel specific performance of this Disclosure Agreement. The Dissemination Agent shall not be liable
under any circumstances for monetary damages to any person for any breach of this Disclosure Agrcement.
SECTION 12. Beneficiaries. This Disclosure Agrcemcnt shall inure solely to the benefit of thc
Redevclopment Agency, the Participating Underwriter, the Dissemination Abent and Holders and Beneficial
Owners from time to time of the Bonds, and shall create no rights in any othcr person or entity.
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SECTION 13. Notices. Notices should be sent in writing to the following addresscs. Thc following
information may be conclusivcly relied upon until changed in writing.
Redevelopment Agency: Palm Dcsert Redevelopment Agency
73-510 Fred Waring Drivc
Palm Desert, Califomia 92260
(760) 346-0611
(760)346-0574 Fax
Trustee: Wells Fargo Bank, National Association
700 South Flower Street, Suite 500
Los Angeles, California 90017-4104
(213)630-6237
(213)630-6215 Fax
Disscmination Agency: MuniFinancial, Inc.
27368 Via lndustrial, Suite 10
Tcmecula, California 92590
(909)587-3500
(909) 587-3510 Fax
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SECTION 14. Counteraarts. This Disclosure Agreement may bc exccuted in scveral counterpares,
each of which shall be an original and all of which shall constitute but one and the same instrument.
Datc: . 2007
PALM DESERT REDEVELOPMENT AGENCY OF
�
Authorized Officer
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustec
I�
Authorized Officcr
MLJNIFINANCIAL, INC.,
as Disscmination Agent
:
Authorized Officcr
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EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT'
Name of Obligatcd Party: Palm Dcsert Redevelopmcnt Agency
Name of Bond Issue: Palm Descrt Financing Authority Tax Allocation Refunding Revcnuc
Bonds (Project Area No. 1, As Amended) 2007 Series A
Datc of Issuance: , 2007
NOTICE IS HEREBY GIV�N that ihc Pal►n Desert Redevclopment Agency (the "Rcdevclopment
Agency") has not providcd an Annual Report with respect to the abovc-named Bonds as required by
Scction 3 of thc Continuing Disclosure Agreement dated , 2007, by and among the Redevelopment
Agcncy, the Trustee and the Dissemination Agcnt executed by the Disscmination Agent for thc benefit of thc
Holders and Beneficial Owners of the above-referenced bonds. The Redevelopment Agency anticipates that
thc Annual Report will be filed by .
Dated:
WEL,LS FARGO BANK, NATIONAL ASSOCIATION,
as Trustce, on behalf of the Redevelopment Agency
By:
Its:
cc: Executive Director, Palm Desert Redevelopment Agency
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APPENDIX G
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The information in this Appendi,z G c�ncerning The Depository Trust Company, New Ynrk, Netiti�
York ("DTC') and DTC's book-entry system has been obtained from DTC and the Redevelopment Agency
take.s no responsibiliry for the completeness or uccuracy thereof. The Redevelopment Agency cunnot and
does not give any assurances that DTC, DTC Participants or Indirect Participants will distribule to the
Beneficial Chvners (a) payments of interest, principal nr premium, if any, with respect to the 2007 Series A
Bonds, (b) certificates represerrting ownership interest in or other confirmation or ownership interest in the
Z007 Series A Bond.s, or (c•) redemption or other notices sent to DTC or Cede 8c Co., its nominee, as the
registered owner of the 2007 Series A Bonds, or that they will so do on a timely basis, or that DTC, DTC
Participants or UTC lndirect Purticipants wi!! act rn the manner described in this Appendix. The c•urrent
"Rules" upplicable to DTC are on ftle with the Securities and Exchange Commission and the current
"Yrocedures " ojDTC to be jollowed in dealrng with DTC Purtrcipants are orr frle with DTC.
The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the
2007 Series A Bonds. The 2007 Scries A Bonds will be issued as fully-registered securities registered in the
name of Cedc & Co. (DTC's partncrship nomince) or such other namc as may be requestcd by an authorized
rcprescntative of DTC. One fully-registercd security certificate will be issued for each maturity of thc 2007
Series A Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.
DTC, thc world's largest depository, is a limited-purpose trust company organized undcr thc New
York Banking Law, a"banking organization" within the meaning of the New York Banking Law, a mcmbcr
of thc Federal Reservc System, a"clearing corporation" within the meaning of the New York Uniform
Commcrcial Codc, and a"clearing agency" registered pursuant to the provisions of Section 17A of thc
Securitics Exchange Act of 1934. DTC holds and provides asset servicing for over 22 million issues of U.S.
and non-U.S. cquity issucs, corporatc and municipal debt issues, and money market instruments from over
100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-
trade settlement among Direct Participants of sales and other securities transactions in deposited securities,
through electronic computerized book-entry transfers and pledges betwcen Direct Participants' accounts. This
eliminates thc nced for physical movement of securities certificates. Direct Participants includc both U.S. and
non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and cenain other
organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation
("DTCC"). DTCC, in turn, is owncd by a numbcr of Direct Participants of DTC and Members of thc
National Securities Clearing Corporation, Govemment Securities Clearing Corporation, MBS Clearing
Corporation, and Emerging Markets Clearing Corporation, (respectively, "NSCC", "GSCC", "MBSCC", and
"EMCC", also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock
Exchangc LLC, and the National Association of Sccurities Dcalcrs, Inc. Access to the DTC system is also
available to others such as both U.S. and non-U.S, securities brokers and dealers, banlcs, trust companies, and
clearing coiporations that clear through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). DT'C has Standard & Poor's highest rating: AAA. The DTC
Rules applicable to its Participants are on file with the Securities and Exchange Commission. More
information about DTC can be found at www.dtcc.com and www.dtc.org.
Purchascs of the 2007 Series A Bonds undcr the DTC system must be made by or through Direct
Pacticipants, which will receive a credit for the 2007 Series A Bonds on DTC's records. The ownership
interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct
and Indirect Participants' records. Bcneficial Owncrs will not receive written confirmation from DTC of
thcir purchase. Beneficial Owners are, however, expected to receive written confirmations providing details
of thc transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2007
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Series A Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their
ownership interests in the 2007 Series A Bonds, except in the event that use of the book-entry systcm for the
2007 Scrics A Bonds is discontinucd.
To facilitate subsequent transfers, all 2007 Series A Bonds deposited by Direct Participants with
DTC are registered in the name of DTC's partnership nomince, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of the 2007 Scries A Bonds with DTC and
iheir registration in the name of Cede & Co. or such other DTC nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owncrs of the 2007 Series A Bonds;
DTC's records reflect only the identiry of the Direct Parlicipants to whose accounts such Bonds are credited,
which may or may not be the Bcneficial Owners. The Dircct and Indirect Participants will remain responsible
for keeping account of their holdings on bchalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Panicipants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners
will be governed by arrangements among them, subject to any slatutory or regulatory requirements as may be
in effect from time to time. Beneficial Owners of the 2007 Series A Bonds may wish to take certain steps to
augment the transmission to them of notices of significant events with respect to the 2007 Series A Bonds,
such as redemptions, tenders, defaults, and proposed amendmenis to the Indenturc. For cxample, Beneficial
Owners of thc 2007 Scries A Bonds may wish to ascertain that the nominee holding the 2007 Serics A Boncis
for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the altemative, Beneficial
Owncrs may wish to provide their names and addresses to the registrar and request that copies of notices bc
provided directly to them.
Redemption notices shall be sent to DTC. The conveyance of notices and other communications by
DTC to DTC Participants, by DTC Participants to Indirect Participants and by DTC Participants and Indircct
Participants to Beneficial Owncrs will bc governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. Any failure of DTC to advise any DTC
Participant, or of any DTC Participant or Indirect Participant to notify a Beneficial Owner, of any such notice
and its content or effect will not affect the validity of the redemption of the 2007 Series A Bonds called for
redemption or of any other action premised on such notice. Redemption of portions of the 2007 Serics A
Bonds by the Redevelopment Agency will reduce the outstanding principal amount of Bonds held by DTC.
In such event, DTC will implemcnt, through its book-cntry system, a redemption by lot of interests in the
2007 Series A Bonds held for the account of DTC Participants in accordance with its own rules or othcr
agreements with DTC Participants and then DTC Participants and Indirect Participants will implcment a
redemption of the 2007 Series A Bonds for the Beneficial Owncrs. Any such selection of Bonds to be
redcemed will not be governed by the Indenture and will not be conducted by the Redevelopment Agency or
the Trustee.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to thc
2007 Scries A Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under
its usual procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consentin�; or voting rights to those Direct Parlicipanis to whose
accounts the 2007 Series A Bonds are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Payments of principal of, premium, if any, and interest evidenced by the 2007 Series A Bonds will
be made to Cede & Co., or such other norriinee as may be requested by an authorized representative of DTC.
DTC's practice is to credit Direct Patticipants' accounts upon DTC's receipt of funds and coc7esponding
detail information from the Redevelopment Agcncy or the Trustee, on payable date in accordance with their
respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be
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govemcd by standing instnictions and customary practiccs, as is the case with securities hcld for the accounts
of customers in bearer form or registered in "street name," and will be the responsibility of such Participant
and not of DTC (nor its nominee), the Trustce, or the Redevelopment Agency, subject to any statutory or
rcgulatory requircments as may be in effect from time to time. Payment of principal of, premium, if any, and
interest evidenccd by the 2007 Series A Bonds to Cede & Co. (or such other nominee as may bc requcsted by
an authorized represcntative of DTC) is thc responsibility of the Redevelopmcnt Agency or the Trustce,
disburscment of such payments to Direct Participants will be the responsibility of DTC, and disbursement of
such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
NEITHER THE REDEVELOPMENT AGENCY NOR THE TRUSTEE WILL HAVE ANY
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 OWNEAS OR THE
SELECTION OF BONDS FOR REDEMPTION.
Neither thc Redevclopment Agency nor the Trustee can give any assurances that DTC, DTC
Paiticipants, Indirect Participants or others will distribute payments of principal of, premium, if any, and
interest on the 2007 Serics A Bonds paid to DTC or its nominee, as the registered Owner, or any redemption
or othcr notice, to the Beneficial Owncrs or that they will do so on a timely basis or that DTC will serve and
act in a manner described in this Official Statement.
DTC may discontinue providing its services as depository with respect to the 2007 Series A Bonds at
any time by giving reasonable notice to the Redevelopment Agency or the Trustee. Under such
circumstances, in 1he event that a successor depository is not obtained, Bond certificates are required to be
printed and delivered.
The Redevelopment Agency may decide to discontinue use of the system of book-entry transfers
t}u-ough DTC (or a successor securities depository). In that event, Bond certificates will be printed and
delivcrcd.
]n the event that the book-entry system is discontinued as described abovc, thc requiremcnts of thc
Indenture will apply. The foregoing information concerning DTC conceming and DTC's book-entry system
has been provided by DTC, and neilher the Redevelopmcnt Agency nor thc Trustee takc any responsibility
for the accuracy thereof.
The Redevelopment Agency and the Trustee cannot and do not give any assurances that DTC, the
Participants or others will distribute payments of principal, intcrest or premium, if any, evidenced by thc 2007
Series A Bonds paid to DTC or its nominee as the registered owner, or will distribute any redemption notices
or othcr noticcs, to the Beneficial Owners, or that thcy will do so on a timely basis or will scrve and act in the
manner described in this Official Statement. Neither the Redevelopment Agency nor the Trustee are
responsible or liable for the failure of DTC or any Participant to make any payment or give any notice to a
Bcneficial Owner with respect to the 2007 Scrics A Bonds or an error or delay rclating thcrcto.
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APPENDIX H
SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY
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