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Home My WebLink AboutRes SA-RDA 061 and 06-62 - Housing Non-Housing - Refunding BondsRESOLUTION N0. SA-RDA 061 RESOLUTION N0. SA-RDA 062 SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY STAFF REPORT REQUEST: ADOPT RESOLUTION NO. SA-RDA obl AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND PURCHASE CONTRACT, AN OFFICIAL STATEMENT, AN ESCROW AGREEMENT, AND OTHER DOCUMENTS IN CONNECTION WITH THE SUCCESSOR AGENCY'S ISSUANCE OF TAX ALLOCATION REFUNDING (HOUSING) BONDS AND TAKING RELATED ACTIONS, AND RESOLUTION NO. SA-RDA 062 AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND PURCHASE CONTRACT, AN OFFICIAL STATEMENT, AN ESCROW AGREEMENT, AND OTHER DOCUMENTS IN CONNECTION WITH THE SUCCESSOR AGENCY'S ISSUANCE OF TAX ALLOCATION REFUNDING (NON-HOUSING) BONDS AND TAKING RELATED ACTIONS SUBMITTED BY: Janet Moore, Finance Officer Veronica Tapia, Senior Management Analyst DATE: December 8, 2016 CONTENTS: • Resolution No. SA-RDA-o61 (for Housing Refunding Bonds) • Bond Purchase Contract (for Housing Refunding Bonds) • Escrow Agreement (for Housing Refunding Bonds) • Preliminary Official Statements (for Housing Refunding Bonds) • Resolution No. SA-RDA- 062 (for Non-Housing Refunding Bonds) • Bond Purchase Contract (for Non-Housing Refunding Bonds) • Escrow Agreement (for Non-Housing Refunding Bonds) • Preliminary Official Statements (for Non-Housing Refunding Bonds) • Post Issuance Compliance Procedures • Continuing Disclosure Compliance Procedures Recommendation By Minute Motion that the Successor Agency Board: (i) Adopt Resolution SA-RDA ob� authorizing the execution and delivery of a Bond Purchase Contract, an Official Statement, and Escrow Agreement, and other documents in connection with the Successor Agency's issuance of Tax Allocation Refunding (Housing) Bonds and taking related actions; and G�RUA' Verunica l'apia��\'ord Fdes Stafl'Repnns�Suecessor Agency�llebi Refimding5iaf:�repun fm JA rrso nppro��m� POS 12-8-16 Re<-ised'lIIU I I_'ril6 Jocz Staff Report (Successor Agency) Approving Execution of Documents Related to Refunding Bonds December 8, 2016 Page 2 of 6 (ii) Adopt Resolution SA-RDA o62 authorizing the execution and delivery of a Bond Purchase Contract, an Officia! Statement, and Escrow Agreement, and other documents in connection with the Successor Agency's issuance of Tax Allocation Refunding (Non-Housing) Bonds and taking related actions. Executive Summary On October 13, 2016, the Successor Agency adopted Resolution No. SA-RDA-059 and Resolution No. SA-RDA-60, authorizing the Successor Agency's issuance of bonds (the "Refunding Bonds") to refund outstanding bond debt incurred by the former Palm Desert Redevelopment Agency (the "Former Agency"). The Oversight Board adopted related resolutions on October 17, 2016 (the "OB Resolutions") approving the issuance of the Refunding Bonds. The State Department of Finance (the "DOF") has completed their review and approved the issuance of Refunding Bonds on December 1, 2016. By prior actions under Resolution No. SA-RDA-059 and Resolution No. SA-RDA-60, the Successor Agency Board has already approved forms of indentures pursuant to which the Refunding Bonds will be issued. Several key documents need to be executed in connection with the refunding transaction, including: Bond Purchase Contracts (dictates the actual sale of the bonds); Escrow Agreements (establishes escrow funds with trustee to defease bonds); Preliminary Official Statements (provides material information to investors); and Continuing Disclosure Certificates (dictates future reporting requirements to investors). If, in light of continuing market changes, the required debt service savings cannot be achieved for a portion of the outstanding debt, the attached Resolutions authorize the Executive Director to direct the continuation of the refunding transaction excluding any and all portions that do not achieve savings at this time. In that case, the documents will be modified to reflect these changes. Backqround Four Series of Refundinq Bonds Gontemplated — Housing/Non-Housing and Taxable/Tax-Exempt Before its dissolution, the Former Agency entered into multiple agreements (the "Loan Agreements") with the Palm Desert Financing Authority (the "Authority") and incurred loans (the "Agency Loans"), including: (i) housing loans (the "Housing Loans") to finance and refinance affordable housing projects, and (ii) non-housing loans (the "Non-Housing Loans") to finance and refinance other projects for each of the Former Agency's four redevelopment project areas. The Authority is a joint powers agency established in 1989, with the City and the Former Agency as members, to assist the City and the Former Agency with respect to the financing of public capital improvements and other projects. To provide funds for the Agency Loans, the Authority issued various series of G'•rda`Veronica Tapia�N'ord Files`,Staff Reporu�.Successor Agenry�.Debt Refunding��S�a(f report for SA reso approving POS I?-N-16 ReviseA �I'l10 120116 docx Staff Report {Successor Agency) Approving Execution of Documents Related to Refunding Bonds December 8, 2016 Page 3 of 6 bonds (the "Authority Bonds") For the repayment of the Housing Loans, the Former Agency pledged the portion of tax increment revenues that were deposited into the Low and Moderate Income Housing Fund (the "Housing Set-Aside"). For the repayment of the Non-Housing Loans related to each project area, the Former Agency pledged the tax increment revenues generated from each project area, exclusive of the Housing Set-Aside and amounts due to some of the taxing entities for pass-through payments. The moneys repaid by the Former Agency (and, now, the Successor Agency) for the Agency Loans are pledged by the Authority for the repayment of debt service on the Authority Bonds. The Successor Agency intends to issue four series of Refunding Bonds, consisting of: (i) a series of tax-exempt bonds (i.e., the interest earned by the bondholders is excluded from gross income for federal and state income tax purposes) to refund a portion of the outstanding Housing Loans, (ii) a series of taxable bonds to refund the remainder of the outstanding Housing Loans (i.e., interest earned by bondholder is subject to federal income tax, but not state income tax), (iii) a series of tax-exempt bonds to refund a portion of the outstanding Non-Housing Loans, (iv) a series of taxable bonds to refund most of remainder of the outstanding Non-Housing Loans. (One of the outstanding Non-Housing Loans, incurred in 2007 (the "2007 PA1 Loan"), is not subject to optional prepayment before its final maturity on April 1, 2018. Because no savings can be achieved from the refunding of the 2007 PA1 Loan, it cannot be included in this refunding pursuant to HSC Section 34177.5). For the Refunding Bonds that will be issued to refund the Housing Loans (the "Housing Refunding Bonds"), the Successor Agency will pledge a portion of the property tax revenues deposited in the Redevelopment Property Tax Trust Fund ("RPTTF", i.e., tax increment) created under the redevelopment dissolution act, in an amount equal to the dollar amount that would have been the Housing Set-Aside if the Former Agency had never been dissolved (the "Housing Portion"). For the Refunding Bonds that will be issued to refund the Non-Housing Loans (the "Non-Housing Refunding Bonds"), the Successor Agency will pledge the property tax revenues deposited into the RPTTF, exclusive of the Housing Portion and certain pass-through payments. Documents Presented for Approval By adopting the attached resolutions, the Successor Agency will be authorizing the execution and delivery of the following key documents for the refunding: one set of Bond Purchase Contract, Escrow Agreement, Preliminary Official Statement, and Continuing Disclosure Certificates for the Housing Refunding Bonds; and one set for the Non-Housing Bonds. Also presented for approval are proposed Continuing Disclosure Compliance Procedures and Tax-Advantaged Bonds Post-Issuance Compliance Procedures. Bond Purchase Contract: Pursuant to each Bond Purchase Contract, the Underwriter (Stifel, Nicolaus & Company, Incorporated) will agree to buy the related Refunding G RD�\�\'cronica �1'apia�.N'oid I�ilex�S�afl'Reports:Successur Agency�llebt Re(undingStatFrepurt for SA reso approving POS 12-H-16 Revised THO I 12816 docc Staff Report (Successor Agency) Approving Execution of Documents Related to Refunding Bonds December 8, 2016 Page 4 of 6 Bonds at specified prices and interest rates, subject to the receipt of certain opinions, certificates and other conditions. The Bond Purchase Contract will be presented to the authorized officers of the Successor Agency for approval and execution as soon as the Underwriter has completed the offering to the investors and the pricing of the Refunding Bonds. The attached resolutions specify the maximum underwriter's discount and other financing parameters that must be met before moving forward on the transactions Escrow Agreement: The Escrow Agreements will provide for the establishment of defeasance escrow funds, to be maintained by U.S. Bank National Association, as trustee and escrow agent. Upon issuance of the Refunding Bonds, a portion of the proceeds will be deposited in each escrow fund. Moneys deposited in the escrow funds will be used to pay principal, interest and redemption price of the refunded bonds through their respective redemption dates. Pending disbursement, most of the moneys deposited in the escrow funds will be invested in escrow securities (in the form of non- callable securities issued by the U.S. Treasury). The sufficiency of the moneys deposited in the escrow funds to pay the refunded bonds will be verified by a report to be prepared by certified public accountants Preliminary Official Statement: A Preliminary Official Statement has been prepared to provide material information to investors regarding the terms and the security of each of the Housing Refunding Bonds and the Non-Housing Refunding Bonds. The Preliminary Official Statement contains descriptions of the legal and financial aspects of the Refunding Bonds, as well as a summary of various related legal documents. Certain information which will be determined upon the pricing of the related Refunding Bonds (such as the final principal amount, the interest rates and the redemption dates) are either omitted or noted as "preliminary, subject to change" in the Preliminary Official Statement. The Underwriter will use the Preliminary Official Statement to market the Refunding Bonds to the potential investors. Once the Refunding Bonds have been priced, the final pricing information will be inserted into each Preliminary Official Statement, thereby converting it to an Official Statement. The UndenNriter will then distribute the Official Statements to the individuals and institutions that placed orders to buy the Refunding Bonds from the Underwriter. Continuing Disclosure Certificate: Under the Continuing Disclosure Certificates, the Successor Agency will agree to provide an annual report containing certain information relevant to the security of the Refunding Bonds, to be filed on the EMMA system (the internet-based information repository maintained by the Municipal Securities Rule Making Board for municipal bonds issued in the United States), to make such information available to the investors. The Successor Agency will also agree to disclose and make filings upon the occurrence of enumerated events (such as a rating change on the Refunding Bonds). Continuing Disclosure Compliance Procedures: The Continuing Disclosure Compliance Procedures, being presented in a separate staff report for consideration and approval, formalize the process by the City and its related public entities to comply with bond continuing disclosure obligations pursuant to Federal Securities Law. (i RUA��\�aunica'I'apia'�1'ord Files'.SIafTRepons Sueceswi .Agencv:DeM Refunding•$�ntiicpon for SA reso appru.�ing POS 12-8-16 Revised �1'IIO I 12RIG docx Staff Report (Successor Agency) Approving Execution of Documents Related to Refunding Bonds December 8, 2016 Page 5 of 6 Tax-Advantaged Bonds Post Issuance Compliance Procedures: The Post- Issuance Compliance Procedures, also being presented in a separate staff report for consideration and approval, will help the City and its related public entities to monitor compliance with applicable federal tax requirements. These procedures advance recent IRS objectives and serve as a measure of added internal control to assist in preventing violations from occurring, or timely correcting identified violations, to ensure the continued tax-advantaged status of the applicable bonds. Authorization to Proceed with Refundinq in Part If, in light of continuing market changes, the required debt service savings cannot be achieved for a portion of the outstanding debt, the attached resolutions authorize the Executive Director to direct the continuation of the refunding transaction excluding any and all portions that do not achieve savings at this time. In that case, the documents will be modified to reflect these changes. Fiscal Analvsis Interest rates have climbed significantly since Election Day. The table below shows the estimated savings based on bond market conditions as of November 28, 2016: Net Present Value Outstanding Expected Total Debt Savings as Principal to be Service Savings Average Annual Percentage of Prior Refunded (") from Refunding (*) Savings (*) Issue Refunding of Housing Loans Refunding of Non-Housing Loans Grand Total �� $ thousands $52,165 $216,262 $268,427 $4,335 $30,815 $35,150 $288 $1,232 $1,520 4.69% 8.89% 8.07% Due to the changing market conditions and compared to the Plan of Refunding and Savings Analysis that was forwarded to DOF, total debt service savings have been reduced by over $13.8 million and average annual savings have been reduced by approximately $440 thousand per year. However, the overall savings are still significant by generally accepted market standards�'�. (1) Generally net present value savings in excess of 3.00% are considered significant. The Government Finance Officers Association, in their best practices white paper titled "Analyzing and Issuing Refunding Bonds" from February 2011, reports that "one test often used by issuers to assess the appropriateness of a refunding is the requirement specifying the achievement of a minimum net present value (NPV) savings. A common threshold is that the savings (net of all issuance costs and any cash co�iribution io the refunding), as a percentage of the refunding bonds exceeds 3-5%". G'�RUA��Veronica Tapia�M'ord Piles�.StaffRepons�Successo� Agency`Debt Refundinti•StafTrepon for SA reso approving POS 12-8-16 Revised �I'HO I 12816 docx Staff Report (Successor Agency) Approving Execution of Documents Related to Refunding Bonds December 8, 2016 Page 6 of 6 The savings will become moneys available for enforceable obligations, as approved on the ROPS or, if not needed for ROPS-approved obligations, for disbursement to taxing entities through the semi-annual RPTTF distribution process. Submitted by: ' � l. ,' � � � eronica Tapia, Senior nagement Analyst an M. Moore, Finance Officer Approval: Lauri Aylaian, Executive Director �1`�C�S.'J��'�f{�Q��. KP�� , ��'Sf�i��, -� 1 �c � �;, ��Y,�,� v{.X�,< <�i �lc-�s : nl �� a�.�._...�..]�� 5��-�A � �� ,:__.�'� �� __.�.�... �i��i��i ��'. /�.�, . -___-____ �ri��nal oaa ��: v�� t:ity � �,r�'s C)�e� G�.\rda\Veronica Tapia\Word Files\StaffReports\Successor Agency�Debt Refunding\Staff report for SA reso approving POS 12-8-I6 Revised iH0 112816.docx RESOLUTION NO. sA-xDA 061 A RESOLUTION OF THE BOARD OF DIRECTORS TO THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND PURCHASE CONTRACT, AN OFFICIAL STATEMENT, AN ESCROW AGREEMENT AND OTHER DOCUMENTS IN CONNECTION WITH THE SUCCESSOR AGENCY'S ISSUANCE OF TAX ALLOCATION REFUNDING (HOUSING) BONDS AND TAKING RELATED ACTIONS RECITALS: A. The former Palm Desert Redevelopment Agency (the "Former Agency") was a duly constituted redevelopment agency pursuant to provisions of the Community Redevefopment Law (the "Redevelopment Law") set forth in Section 33000 et seq. of the Health and Safety Code ("HSC") of the State of California (the "State"). B. The Former Agency undertook to redevelop four project areas (collectively, the "Project Areas"). C. The Former Agency and the City of Palm Desert (the "City") executed and delivered a Joint Exercise of Powers Agreement, dated as of January 26, 1989 (the "Joint Powers AgreemenY'), which Joint Powers Agreement created and established the Palm Desert Financing Authority (the "Authority"). D. To finance and refinance affordable housing projects, the Former Agency entered into certain loan agreements, including the following (together, the "Loan Agreements"): (i) the 2002 Housing Project Loan Agreement, dated as of August 1, 2002, by and among the Former Agency, the Authority and BNY Western Trust Company (as succeeded by U.S. Bank National Association), as trustee, pursuant to which the Former Agency incurred a loan (the "2002 Loan"); and (ii) the 2007 Housing Project Loan Agreement, dated as of February 1, 2007, by and among the Former Agency, the Authority and Wells Fargo Bank, National Association (as succeeded by U.S. Bank National Association), as trustee, pursuant to which the Former Agency incurred a loan (the "2007 Loan," and together with the 2002 Loan, the "Agency Loans"). E. To provide funding for the Agency Loans, the Authority issued two series of bonds (collectively, the "Authority Bonds"): (i) the Authority's Tax Allocation (Housing Set- Aside) Revenue Bonds, Series 2002, and (ii) the Authority's Tax Allocation (Housing Set- Aside) Refunding Revenue Bonds, Series 2007. G'�rda'�\'eronica 7�apia�NbrJ Fileti.titaR Reporls�Successor Agency`d)ebt Refimding'�Palm Uesen tiA - 2017 refunJing - SA reso approving housing POS 13PA Re�� 12-I-16 doc� RESOLUTION NO. sA-RDa o61 F. As of the date of this resolution, a portion of the principal amount of each Agency Loan (and, correspondingly, an equivalent portion of the principal amount of each series of the Authority Bonds) remains outstanding. G. Pursuant to AB X1 26 (enacted in June 2011), and the State Supreme Court's decision in California Redevelopment Association, et al. v. Ana Matosantos, et al. , 53 Cal. 4th 231 (2011), the Former Agency was dissolved as of February 1, 2012, the Successor Agency of the Palm Desert Redevelopment Agency (the "Successor Agency") was constituted, and the Oversight Board to the Successor Agency (the "Oversight Board") was established. H. Pursuant to HSC Section 34177.5(a), the Successor Agency is authorized to issue bonds (the "Refunding Bonds") to refund the Agency Loans, to provide savings to the Successor Agency, provided that: (i) the total interest cost to maturity on the Refunding Bonds plus the principal amount of the Refunding Bonds shall not exceed the total remaining interest cost to maturity on the refunded Agency Loans, plus the remaining principal of the refunded Agency Loans; and (ii) the principal amount of the Refunding Bonds shall not exceed the amount required to defease the refunded Agency Loans, to establish customary debt service reserves and pay related costs of issuance. I. The Successor Agency desires to issue Refunding Bonds to refund the outstanding Agency Loans to achieve debt service savings. J. The Refunding Bonds will be issued under the authority of HSC Section 34177.5 and Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the "Refunding Bond Law"). K. The Board of Directors previously adopted Resolution No. SA-RDA-059, on October 13, 2016 (the "SA Bond Approval Resolution"), approving the issuance of the Refunding Bonds an Indenture (the "Indenture"), by and between the Successor Agency and U.S. Bank National Association, as trustee, in substantially the form attached to the SA Bond Approval Resolution. L. Pursuant to HSC Sections 34177.5(fl and 34180, the issuance of the Refunding Bonds is subject to the Oversight Board's prior approval. M. The Oversight Board adopted Resolution No. OB-153 on October 17, 2016 (the "Oversight Board Resolution"), approving the issuance of the Refunding Bonds. N. The State Department of Finance ("DOF") issued its letter, dated December 1, 2016, providing the DOF's approval of the Oversight Board Resolution. 2 G'rda�Verunica �Capia��l'ord Files�titafPRepons�Successor Agency\Debi Refunding`Palm llesen tiA - 2017 rcfunding - SA reso approving housing POS I3PA Rev I'_-I-le docx RESOLUTION NO. sA-xnA o6i O. The Refunding Bonds will be issued in one or more series, and will consist of a combination of tax-exempt bonds (the "Tax-Exempt Bonds") and taxable bonds (the "Taxable Bonds"). NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE SUCCESSOR AGENCY TO 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. Refundinq Bonds. This Board of Directors hereby confirms its approval of the issuance of the Refunding Bonds in an aggregate principal amount not to exceed $60,000,000 pursuant to the SA Bond Approval Resolution. Section 3. Bond Purchase Contract. The sale of the Refunding Bonds pursuant to a Bond Purchase Contract (the "Bond Purchase ContracY'), by and between the Successor Agency and Stifel, Nicolaus & Company, Incorporated ( the "Underwriter") is hereby approved; provided, that such sale shall be subject to the following parameters: (i) the terms of the Refunding Bonds shall be in compliance with the savings parameters set forth in clauses (A) and (B) of the Recital H of this Resolution, (ii) the true interest cost of the Tax-Exempt Bonds shall not exceed 4.00 percent, (iii) the true interest cost of the Taxable Bonds not exceed 4.25 percent; and (iv) the Underwriter's compensation (i.e., underwriter's discount), exclusive of any original issue discount, for the Refunding Bonds shall not exceed 0.5 percent of the aggregate principal amount of the Refunding Bonds. The Bond Purchase Contract, in the form on file with the Secretary of the Successor Agency, is hereby approved. Subject to the parameters set forth above, each of the Chair of this Board, the Vice Chair of this Board, the Executive Director and the Finance Officer of Successor Agency (the "Authorized Officers," each an "Authorized Officer"), acting individually, is authorized, for and in the name and on behalf of the Successor Agency, to execute and deliver the Bond Purchase Contract, with changes therein as the Authorized Officer executing the same may require or approve (such approval to be conclusively evidenced by the execution and delivery thereofl. Section 4. Escrow Aqreement. The Housing Bonds Escrow Agreement (the "Escrow AgreemenY') relating to the refunding and defeasance of the Agency Loans and the Authority Bonds, substantially in the form on file in the office of the Secretary of the Successor Agency, is hereby approved. Each Authorized Officer, acting individually, is hereby authorized and directed, for and in the name and on behalf of the Successor Agency, to execute and deliver the Escrow Agreement, in substantially such form, with changes therein as the Authorized Officer executing the same may require or approve (such approval to be conclusively evidenced by the execution and delivery thereofl. Section 5. Preliminary Official Statement. The Preliminary (the "Preliminary Official Statement") relating to the Refunding Bonds, form on file in the office of the Secretary of the Successor Agency, i Each Authorized Officer, acting individually, is hereby authorized and the name and on behalf of the Successor Agency, to cause the Official Statement substantially in the � hereby approved. directed, for and in Preliminary Official (i �rda�•\'eronica'lapia`.\Vord FJes�Siall'Reports�tiuccessor Agency',Debt Re(undingil'alm Desen SA - 2017 re(unding - SA reso approving housing POti 13PA Rev 1'_-I-16 doc� RESOLUTION NO. sA-xna obi Statement in substantially said form, with such additions or 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, as amended (the "Rule"). The Underwriter is hereby authorized to distribute copies of the Preliminary Official Statement to persons who may be interested in the purchase of the Refunding Bonds. Section 6. Official Statement. Each Authorized Officer, acting individually, is hereby authorized and directed, for and in the name and on behalf of the Successor Agency, to cause the Preliminary Official Statement to be brought into the form of a final Official Statement and to execute the final Official Statement and such additional documents prior to or concurrently with the signing of the final Official Statement as such Authorized Officer may deem necessary or appropriate to verify the accuracy thereof. The distribution and use of the Official Statement by the Underwriter in connection with the sale of the Refunding Bonds are hereby approved. Section 7. Continuinq Disclosure Certificate. The Continuing Disclosure Certificate (the "Continuing Disclosure Certificate") with respect to the Refunding Bonds, substantially in the form attached as an appendix to the draft Preliminary Official Statement on file in the office of the Successor Agency Secretary, is hereby approved. Each Authorized Officer, acting individually, is hereby authorized and directed, for and in the name and on behalf of the Successor Agency, to execute and deliver the Continuing Disclosure Certificate in substantially such form, with changes therein as the Authorized Officer executing the same may require or approve (such approval to be conclusively evidenced by the execution and delivery thereo�. The appointment of Willdan Financial Services as the initial Dissemination Agent under the Continuing Disclosure Certificate is hereby approved. Section 8. Authorization to Proceed with Refundinq in Part. In the event that the Executive Director and the Financial Officer, in consultation with the Successor Agency's municipal advisor, determine that a portion of the Agency Loans (the "Uneconomic Portion") cannot be refunded concurrently with the other portion, because refunding the Uneconomic Portion would not be in compliance with requirements of Health and Safety Code Section 34177.5(a) and the parameters set forth herein, the Executive Director is hereby authorized to direct the continuation of the refunding transaction without the Uneconomic Portion. The Authorized Officers are authorized to execute, on behalf and in the name of the Successor Agency, the Indenture and each of the documents authorized hereby, with the applicable modifications to exclude the Uneconomic Portion Section 9. Continuing Disclosure Compliance Procedures. Reference is hereby made to Resolution No. (the "City Resolution") adopted by the City Council of the City on December 8, 2016, pursuant to which the Continuing Disclosure Compliance Procedures (the "Continuing Disclosure Compliance Procedures") were adopted. It is hereby affirmed that the Successor Agency adopts such Continuing Disclosure Compliance Procedures. With respect to the Successor Agency's continuing disclosure undertakings, each reference in the Continuing Disclosure Compliance Procedures to the City, the City Manager and the Finance Director shall be read as, respectively, the Successor Agency, the Successor Agency's Executive Director and the Successor 4 (i •.rda�.�'e�omca'iapia�\1'ord Piles.StaR�Repuns`.Suaessor Agencv�Uebt Re(widing]'alm Ueurt S.A - 2017 refunding - SA « so approving housinq POS l31'A Re�� 12-IJ6 docx RESOLUTION NO. sA-RDA o6i Agency's Finance Officer. The Executive Director, consultation with bond counsel, is authorized to amend the Compliance Procedures from time to time Section 10. Tax-Advantaged Bonds Post-Issuance Compliance Procedures. Reference is hereby made to the Tax-Advantaged Bonds Post-Issuance Compliance Procedures (the "Post-Issuance Tax Compliance Procedures") also adopted pursuant to the City Resolution. It is hereby affirmed that such Post-Issuance Tax Compliance Procedures will be applicable to the Tax-Exempt Bonds. The Executive Director, consultation with bond counsel, is authorized to amend the Post-Issuance Tax Compliance Procedures from time to time. Section 11. Other Acts. The members of this Board, the Chair, the Vice Chair, the Executive Director, the Finance Officer and all other officers of the Successor Agency, are hereby authorized, jointly and severally, to execute and deliver any and all necessary documents and instruments and to do all things (including, but not limited to, obtaining bond insurance or other types of credit enhancement, engagement of a verification agent for the defeasance escrows) which they may deem necessary or proper to effectuate the purposes of this Resolution. Any such previous action taken by such officers are hereby ratified and confirmed. APPROVED and ADOPTED this 8th day of December, 2016. AYES: NOES: ABESENT: ABSTAIN: JAN HARNIK, CHAIR ATTEST: RACHELLE D. KLASSEN, SECRETARY SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY G� rda �'erunica Tapia ��'ord Filei SiafT Repuns'Succeuoi Agency�.Deb� Refunding�Yalm Desen SA - 2017 re(unding - SA rcso appruving housing POS BI'A Re�- 12-I-Ib docs Draft Jor Drsc•ussion Purposes �)nly StrudlrnK Yocca Carlson & Kuuth $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS 2017 SERIES H-A $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAXABLE TAX ALLOCATION REFUNDING BONDS 2017 SERIES H-B BOND PURCHASE CONTRACT , 201 Successor Agency to the Palm Desert Redevelopment Agency 73510 Fred Waring Drive Yalm Ucsert, California 92260 Attention: Executive Director Ladies and Gentlemen: Stifel, Nicolaus 8i Company, Incorporated (the "Underwriter") offers to enter into this Bond Purchase Contract (this "Purehase Contract") with the Successor Agency io the Palm Desert Redevelopment Agency (the "Ageney"). This offer is made subject to the Agency's acceptance by execution of this Purchase Contract and delivery of the same to the iJnderwriter on or before 1 1:59 p.m., California time, on the date hereof; and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Agency at any time prior to such acceptance. Upon the Agency's acceptance hereof; the Purchase Contract will be binding upon the Agency and the Underwriter. Capitalized terms that are used in this Purchase Contract and not otherwise defined have the respective meanings given to such terms in the Indenture (as such term is defined herein). Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations set forth in this Purchase Contract, the Underwriter agrees to purchase f'rom the Agency, and the Agcncy agrees to sell and deliver to the Underwriter, all (but not less than all) of: (i) the $ Successor Agency to the Palm Desert Redevelopment Agency 'I'ax Allocation Refunding Bonds 2017 Series H-�i (thc "Series H-A Bonds") at a purchase price of $ (being an amount equal to the principal amount of the Scries II-A Bonds plus/less a net original issue prcmium/discount of $ and less an Underwriter's discount of $_); and (ii) the $ Successor Agency to the Palm Desert Redevelopment Agency Taxable Tax Allocation Refunding Bonds 2017 Scries f�-B (the '`Series H-B Bonds" and, togcther with the Series H-A Bonds, the "Bonds") at a purchase price of $ (bcing an amount equal to the principal amount of the Series �i-I3 Iionds plus/less a net original issue premium/discount of $ and less an Underwriter's discount of $_). [The Agency acknowledges that the Underwriter will at Closing (as such term is defined herein), on behalf of the Agency, wire a portion of the purchase price in the amounts of: (a) $ , as the premium for the Policy (as such term is defined herein); and (b) $ , as the premium ior the Reserve Policy (as such term is defined herein), directly to the [nsurer (as such term is defined herein).J (c) By all necessary official action, the Agency has: (i) duly authorized the preparation and delivery of the Preliminary Official Statement and the preparation, execution and delivery of the Official Statement; (ii) duly authorized and approved the execution and delivery of, and the performance of its obligations under, the Bonds and the Agency Agreements; and (iii) duly authorized the consummation by the Agency of all other transactions contemplated by the Agency Resolution, the Agency Agreements, the Preliminary Official Statement and the Official Statement. When executed and delivered, the Agency Agreements (assuming due authorization, execution and delivery by and enforceability against the other parties thereto) will be in full force and effect and each will constitute legal, valid and binding agreements or obligations of the Agency, enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally, the application of equitable principles, the exercise of judicial discretion and the limitations on legal remedies against public entities in the State. (d) At the time of the Agency's acceptance hereof and at all times subsequent thereto up to and including the time of the Closing, the information and statemcnts in the Official Statement do not and will not contain any untrue statement of a material fact or omit to state a material fact that is required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that no representation is made with respect to information relating to DTC (as such term is defined herein), DTC's book-entry system)[, the Policy, the Reserve Policy or the Insurer]). (e) As of the date hereof, except as described in the Preliminary Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body that is pending against, and notice of which has been served on and received by, the Agency, or, to the best knowledge of the Agency, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the Agency, or the titles of its members or officers; (ii) in any way question or affect the validity or enforceability of the Agency Agreements, the Bonds or the exclusion of the interest on the Series H-A Bonds from federal taxation or of the interest on the Bonds from State taxation; or (iii) in any way question or affect the Purchase Contract or the transactions contemplated by the Purchase Contract, the Official Statement, or any other agreement or instrument to which the Agency is a party relating to the Bonds. (� There is no consent, approval, authorization or other order of, filing or registration with, or certification by, any regulatory authority that has jurisdiction over the Agency that is required for the execution and delivery of this Purchase Contract and the other Agency Agreements or the consummation by the Agency of the other transactions that are contemplated by the Official Statement or the Agency Agreements. (g) Any certificate that is signed by any official of the Agency who is authorized to do so shall be deemed a representation and warranty by the Agency to the Underwriter as to the statements made therein. (h) The Agency is not in default, and at no time has the Agency defaulted in any material respect, on any bond, note or other obligation for borrowed money or any agreement under which any such obligation is or was outstanding. (i) If any event occurs of which the Agency has knowledge between the date of this Purchase Contract and the date of the Closing that might or would cause the Official Statement, as 4 then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact that is required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the 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 Official Statement, the Agency will cooperate with the Underwriter in causing the Official Statement to be amended or supplemented in a form and in a manner that is approved by the Underwriter. All cxpenses that are thereby incurred will be paid by the Agency, and the Underwriter will file, or cause to be filed, the amended or supplemented Ofticial Statement with the MSRB's Electronic Municipal Market Access database ("EMMA"). (j) The Agency will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order: (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate; and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions. The Agency will not be required to execute a general or special consent to service of proces� or to qualify to do business in connection with any such qualification or determination in any jurisdiction. (k) The Agency is not in any material respect in breach of or default under: (i) any applicable constitutional provision, law or administrative regulation of any state or of the United States, or any agency or instrumentality of either; (ii) any applicable judgment or decree; or (iii) any loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument to which the Agency is a party, which breach or default has or may have an adverse effect on the ability of the Agency to perform its obligations under the Agency Agreements, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the adoption, execution and delivery of the Agency Agreements, if applicable, and compliance with the provisions on the Agency's part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument to which the Agency is a party, 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 property or assets of the Agency or under the terms of any such law, regulation or instrument, except as may be provided by the Age��cy A�reements. (1) Except as set forth in the Ofticial Statement under the caption ["CONTINUING DISCLOSURE,]" the Agency has complied in all material respects with its continuing disclosure undertakings in the past five years. (m) The financial statements relating to the reccipts, expenditures and cash balances of the Agency as of June 30, 201 [5] attached as an appendix to the Official Statement fairly represent the receipts, expenditures and cash balances of the Agency as of such date. Except as disclosed in the Ofiicial Statement or otherwise disclosed in writing to the Underwriter, there has not been any materially adverse change in the financial condition of the Agency or in its operations since June 30, 201 [5] and there has been no occurrence, circumstance or combination thereof that is reasonably expected to result in any such materially adverse change. 5 (n) The Agency will refrain from taking any action, or permitting any action to be taken, with regard to which the Agency may exercise control, that results in the loss of the tax-exempt status of the interest on the Series H-A Bonds under federal law or of the interest on the Bonds under State law. Section 6. The Closing. (a) At 8:00 A.M., California time, on _, 2017, or on such earlier or later time or date as may be agreed upon by the Underwriter and the Agency (the "Closing"), the Agency shall deliver, or cause to be delivered, to the Trustee the Bonds in definitive form, registered in the name of Cede & Co., as the nominee of The Depository Trust Company, New York, New York ("DTC") (so that the Bonds may be authenticated by the Trustee and credited to the account that is specified by the Underwriter under DTC's FAST procedures). Prior to the Closing, the Agency shall deliver, at the offices of Richards, Watson & Gershon, A Professional Corporation ("Bond Counsel") in Los Angeles, California, or at such other place as is mutually agreed upon by the Underwriter and the Agency, the other documents that are described in this Purchase Contract. On the date of the Closing, the Underwriter shall pay the purchase price of the Bonds as set forth in Section 1 of this Purchase Contract in immediately available funds to the order of the Trustee. (b) The Bonds shall be is�ued in fully registered form and shall be prepared and delivered as one Bond for each maturity registered in the name of a nominee of DTC. It is anticipated that CUSIP identification numbers will be inserted on the 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 Underwriter to accept delivery of the Bonds in accordance with the terms of thi� Purchase Contract. Section 7. Conditions to Underwriter's Obligations. The Underwriter has entered into this Purchase Contract in reliance upon the representations and warranties of the Agency contained herein and to be contained in the documents and instruments to be delivered on the date of the Closing, and upon the performance by the Agency of its obligations to be performed hereunder and under such documents and instruments to be delivered at or prior to the date of the Closing. The Underwriter's obligations under this Purchase Contract are and shall also be subject to the following conditions: (a) The representations and warranties of the Agency that are contained in this Purchase Contract shall be true and correct in all material respects on the date of this Purchase Contract and on and as of the date of the Closing as if made on the date of the Closing. (b) As of the date of the Closing, the Official Statement shall not have been amended, modified or supplemented, except in any case as may have been agreed to by the Underwriter. (c) (i) As of the date of the Closing, the Agency Resolution and the Agency Agreements shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to by the Agency and the Underwriter; and (ii) the Agency shall perform or shall have performed all of its obligations that are required under or specified in the Agency Resolution and the Agency Agreements to be performed at or prior to the date of the Closing. (d) As of the date of the Closing, all necessary official action of the Agency relating to the Agency Agreements, the Agency Resolution and the Official Statement shall be in full force and effect and shall not have been amended, modified or supplemented in any material respect. 3 (e) Subsequent to the date of thi� Purchase Contract, up to and including the date of the Closing, there shall not have occurred any change in the financial affairs of the Agency, as described in the Official Statement, which in the reasonable professional judgment of the Underwriter materially impairs the investment quality of the Bonds. (� As of or prior to the date of the Closing, the Underwriter shall have received each of the following documents: (A) Certitied copies of the Agency Resolution. (B) Duly executed copies of the Agency Agreements. (C) The Preliminary Official Statement and the Official Statement, with the Official Statement duly executed on bchalf of the Agency. (D) An approving opinion of Bond Counsel, dated the date of the Closing, as to the validity of the Bonds and the exclusion of interest on the Series H-A Bonds from federal taxation and of interest on the Bonds from State income taxation, addressed to the Agency, substantially in the form attached as an appendix to the Official Statement, and a reliance letter with respect thereto addressed to the Underwriter. (E) A supplemental opinion or opinion� of Bond Counsel, dated the date of the Closing, addressed to the Underwriter, to the effect that: ( I) The Purchase Contract has been duly executed and delivered by thc Agency and (assuming due authorization, execution and delivery by and enforceability against the Underwriter) is valid and binding upon the Agency, subject to laws relating to bankruptcy, intiolvency, rcorganization or creditors' rights generally and to the application of equitable principles; (2) The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (3) Thc statements contained in the Official Statement on the cover and under the captions ["INTRODUCTION," "REFUNDING PLAN," "THE BONDS" (excluding therefrom the statements pertaining to DTC), "SECURITY FOR THE BONDS" and "TAX MATTERS," and in Appendices A and B], excluding any material that may be treated as included under such captions by cross-reference, insofar as such statements expressly summarize certain provisions of thc Bonds, the Agency Agreements and the t�orm and content of Bond Counsel's final approving opinion, are accurate in all material respects; and (4) The Authority's Tax Allocation (Housing Set-Aside) Revenue Bonds, Series 2002 and Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds, Series 2007 of the lndenture have been defeased in accordance with the provisions of the instruments pursuant to which they were issued. (F) An opinion of the Agency's General Counsel, dated the date of the Closing, addressed to the Agency and the Underwriter, substantially in the form attached hereto as Exhibit D. 7 (G) An executed Rule 15c2-12 certificate of the Agency, dated the date of the Preliminary Official Statement, substantially in the form attached hereto as Exhibit B. (H) An executed closing certificate of the Agency, dated the date of the Closing, substantially in the form attached hereto as Exhibit C. (1) The opinion of counsel to the Trustee, addressed to the Agency and the Underwriter, substantially to the effect that: (1) The Trustee is a national banking association that is duly organized, validly existing and in good standing under the laws of the United States of America, having full powers and authority and being qualified to enter into, accept and administer the trust created under the Indenture and to enter into the Indenture; and (2) The Indenture has been duly authorized, executed and delivered by the Trustee, and, assuming due authorization, execution and delivery by the Agency, the Indenture constitutes the legal, valid and binding agreements of the Trustee, enforceable in accordance with its terms, subject to laws relating in bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and the application of equitable principles if equitable remedies are sought. (J) The opinion or opinions of counsel to the Escrow Agent, addressed to the Agency and the Underwriter, substantially to the effect that: (1) The Escrow Agent is a national banking association that is duly organized, validly exititing and in good standing under the laws of the United States of America, having full powers and authority and being qualified to enter into, accept and administer the trust created under the Escrow Agreement and to enter into the Escrow Agreement; and (2) The Escrow Agreement has been duly authorized, executed and delivered by the Escrow Agent and, assuming due authorization, execution and delivery by the Agency, the Escrow Agreement constitutes the legal, valid and binding agreements of the Escrow Agent, enforceable in accordance with its terms, subject to laws relating in bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and the application of equitable principles if equitable remedies are sought. (K) A certificate, dated the date of the Closing, in form and substance acceptable to the Underwriter and Bond Counsel, of an authorized officer of officers of the Trustee to the effect that the Trustee is duly authorized to enter into the Indenture, has accepted the duties imposcd by the Indenture and is authorized to carry out such duties, and that the Trustee has duly authenticated the Bonds. (L) A certificate or certificates, dated the date of the Closing, in form and substance acceptable to the Underwriter and Bond Counsel, of an authorized officer of officers of the Escrow Agent to the effect that the Escrow Agent is duly authorized to enter into the Escrow Agreement, has accepted the duties imposed by the Escrow Agreement and is authorized to carry out such dutics. (M) A certificate, dated the date of the Closing, in form and substance acceptable to the Underwriter and Bond Counsel, of an authorized officer of officers of the Authority to the : effect that: (1) the Authority is duly authorized to enter into the Escrow Agreement; (2) the Escrow Agreement (assuming due execution and delivery by the other parties thereto) constitutes the valid and binding obligation of the Authority; and (3) the execution and delivery of the Escrow Agreement and compliance with the provisions thereof will not conflict with or constitute a breach of or default under any applicable law, decision, administrative rule or regulation of the State of California, the United States, any department, division, agency or instrumentality of either thereof or any applicable court, or under any instrumcnt to which the Authority is a party or is otherwise subject or bound in a manner that would materially adversely affect the Authority's performance thereunder. (N) Evidence of required filings with the California Debt and Investment Advisory Commission. (0) A copy of the executed Blanket Issuer L,etter of Representations by and bctween the Agency and DTC relating to the book-entry system. (P) An executed verification report relating to Authority's Tax Allocation (Housing Set-Aside) Revenue Bonds, Series 2002 and Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds, Series 2007, among other matters. (Q) Evidence that the ratings that have been as�igned to the Bonds as of the date of the Closing are as set forth in the Official Statement. (R) A certified copy of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authori�es the execution and delivery of the Indenture and the authentication and delivery of the Bonds by the Trustee. (S) A certified copy of the general resolution of the Escrow Agent authorizing the execution and delivery of certain documents by certain officers of the Escrow Agent, which resolution authorizes the execution and delivery of the Escrow Agreement. (T) An opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, counsel to the Underwriter, addressed to the Underwriter and in form and substance satisfactory to the Underwriter. (U) A report of Lumesis as to compliance by the Agency and related entities with their respective continuing disclosure undertakings. (V) A Tax Certificate with respect to maintaining the tax-exempt status of thc Series H-A Bonds, duly executed by the Agency, together with Form 8038-G, duly executed by the Agency. (W) An letter of Best Best & Krieger LLP, as Disclosure Counsel, to the effect that, based upon an examination that they have made, and without having undertaken to determine independently or assuming any responsibility for the accuracy or completeness or fairness of the statements contained in the Ofiicial Statement, as a matter of fact and not opinion, such counsel advises that, in its capacity as Disclosure Counsel, no fact� came to the attention of the attorneys in such tirm rendering legal services in connection with sueh representation that caused such counsel to believe that the Official Statement as of its date and as of the Closing (except for. (1) the expressions 9 of opinion, the assumptions, the projections, the financial statements, or other financial, numerical, economic, demographic or statistical data contained in the Official Statement; (2) any CUSIP numbers or information relating thereto; (3) any information with respect to DTC and DTC's book- entry system; [and (4) any information with respect to the Policy, the Reserve Policy and the Insurer]) contained or contains any untrue statement of a material fact or omitted or omits to state any material fact nccessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (X) A letter from the State Department of Finance approving the issuance of the Bonds. (Y) A certified copy of the resolution of the Agency's Oversight Board approving the issuance of the Bonds. (Z) A certificate of Keyser, Marston & Associates, the Agency's fiscal consultant, relating to the information provided by such party in the Official Statement, in form and substance satisfactory to the Underwriter and Bond Counsel. (AA) [ADD CERTIFICATION BY OTHER PARTY TO CDA, AS NEEDED] (BB) [Evidence satisfactory to the Underwriter of the issuance of the Policy and the Reserve Policy by the Insurer. (CC) Evidence satisfactory to the Underwriter that the Trustee shall have received the Reserve Policy from the Insurer, which Reserve Policy constitutes a Qualified Reserve Account Credit Instrument under and as defined in the Indenture. (DD) An opinion of counsel to the Insurer, in form and substance satisfactory to the Underwriter and Bond Counsel, with respect to, among other matters, the Policy and the Reserve Policy, and disclosures relating thereto and to the Insurer in the Official Statement. (EE) A certificate of the Insurer, in form and substance satisfactory to the Underwriter and Bond Counsel, with respect to, among other matters, the Policy and the Reserve Policy.) (FF) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Bond Counsel may reasonably request to evidence compliance by the Agency with legal requirements, the truth and accuracy, as of the date of the Closing, of the representations of the Agency contained herein and of the Official Statement and the due performance or satisfaction by the Agency at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Agency. All of the opinions, letters, certificates, instruments and other documents that are mentioned in this Purchase Contract shall be deemed to be in compliance with the provisions of this Purchase Contract if, but only if, they are in form and substance satisfactory to the Underwriter. If the Agency is unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds as set forth in this Purchase Contract, or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the �1 Underwriter nor the Agency shall be under any further obligations hereunder, except that the respective obligations of the Agency and the Underwriter that are set forth in Section 11 of this Purchase Contract shall continue in full force and effect. Section 8. Conditions to Agency's Obligations. The performance by the Agency of its obligations under this Purchase Contract is conditioned upon: (i) the performance by the Underwriter of its obligations hereunder; and (ii) receipt by the Agency of opinions addressed to the Agency, receipt by the Underwriter of opinions addressed to the Underwriter and the delivery of certificateti on the date of the Clotiing by persons and entities other than the Agency. Section 9. Termination Events. The Underwriter shall have the right to terminate the Underwriter's obligations under this Purchase Contract to purchase, accept delivery of and pay for the Bonds by notifying the Agency of its election to do so if, after the execution hereof and prior to the Closing, any of the following events occurs: (a) the marketability of the Bonds or the market price thereof, in the reasonable opinion of the Underwriter, has been materially and adversely affected by any decision that is issued by a court of the United States (including the United States Tax Court) or of the State, by any ruling or regulation (final, temporary or proposed) that is issued by or on behalf of the Department of the Treasury of the United States, the Internal Revenue Service, or other governmental agency of the United States, or any governmental agency of the State, or by a tentative decision or announcement by any member of the House Ways and Means Committee, the Senate Finance Committee, or the Conference Committee with respect to contemplated legislation or by legislation enacted by, pending in, or favorably reported to either the House of Representatives or either House of the Legislature of the State, or formally proposed to the Congretis of the United States by the President of the United States or to the Legislature of the State by the Governor of the State in an executive communication, affecting the tax status of the Agency or the City of Palm Desert, their property or income, their debt or contractual obligations (including the Bonds) or the interest thereon or any tax exemption granted or authorized by the Internal Revenue Code of 1986, as amended; (b) the United States becomes engaged in hostilities that result in a declaration of war or a national emergency, or any other outbreak of hostilities occurs, or a local, national or international calamity or crisis occurs, financial or otherwise, the effect of such outbreak, calamity or crisis being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds; (c) there occurs a general suspension of trading on the New York Stock Exchange or the declaration of a general banking moratorium by the United States, New York or State authorities; (d) a stop order, ruling, regulation or official statement by, or on behalf of, the SEC is issued or made to the effect that the issuance, offering or sale of the Bonds or obligations similar to the Bonds is or would be in violation of any provision of the Securities Act of 1933, as then in effect, the Securities Exchange Act of 1934, as then in effect, or the Trust Indenture Act of 1939, as then in effect; (e) legislation is enacted by the House of Representatives or the Senate of the Congress of the United States ofi America, a decision by a court of the United States of America is rendered or a ruling or regulation by or on behalf of the SEC or other governmental agency having m jurisdiction of the subject matter is made or proposed to the effect that the Bonds are not exempt from registration, qualification or other similar requirements of the Securities Act of 1933, as then in effect, or of the Trust Indenture Act of 1939, as then in effect; (� in the reasonable judgment of the Underwriter, the market price of the Bonds, or the market price of obligations of the general character of the Bonds, might be materially and adversely affected because additional material restrictions that are not in force as of the date hereof are imposed upon trading in securities generally by any governmental authority or by any national securities exchange; (g) the Office of the Comptroller of the Currency, The New York Stock Exchange, or other national securities exchange, or any governmental authority, imposes, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increases materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, or financial responsibility requirements of the Underwriter; authorities; (h) a general banking moratorium is established by federal, New York or State (i) any legislation, ordinance, rule or regulation i� introduced in or enacted by any governmental body, department or agency in the State or a decision of a court of competent jurisdiction within the State is rendered, which, in the reasonable opinion of the Underwriter, after consultation with the Agency, materially adversely affects the market price of the Bonds; (j} any federal or State court, authority or regulatory body takes action that materially and adversely affects the collection of revenues that are pledged under the Indenture; (k) any rating of the Bonds or the Insurer is downgraded, suspended, withdrawn or placed on credit watch or similar status by a national rating service, which, in the reasonable opinion of the Underwriter, materially adversely affects the marketability or market price of the Bonds; (1) an event occurs which in the reasonable opinion of the Underwriter requires a supplement or amendment to the Official Statement and: (i) the Agency refuses to prepare and furnish such supplement or amendment; or (ii) in the reasonable judgment of the Underwriter, the occunence of such event materially and adversely affects the marketability of the Bonds or renders the enforcement of the sale contracts of the Bonds impracticable; (m� an order, decree or injunction that is issued by any court of competent jurisdiction, or order, ruling, regulation (final, temporary or proposed), official statement or other form of notice or communication that is issued or made by or on behalf of the SEC, or any other governmental authority having jurisdiction of the subject matter, to the effect that: (i) obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Indenture iti not exempt from qualitication under the Trust Indenture Act of 1939, as amended; or (ii) the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including any or all underlying obligations, as contemplated hereby or by the Official Statement, is or would be in violation of the federal securities laws as amended and then in effect; 12 (n) additional material restrictions that are not in force as of the date hereof shall have bcen imposed upon trading in securities generally by any domestic governmental authority or by any domestic national securities exchange, which are matcrial to the marketability of the Bonds; or (o) the commencement of any action, suit or proceeding described in Section 5(e). Section 10. Changes in Off'icial Statement. After the Closing, the Agency will not adopt any amendment of or supplement to the Official Statement to which the Underwriter shall reasonably object in writing. Within 90 days after the Closing or within 25 days following the "end of the underwriting period" (as such term is defined below), whichever occurs first, if any event relating to or affecting the Bonds, the Trustee or the Agency occurs as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in any material respect in the light of the circumstances existing at the time that it is delivered to a purchaser, the Agency will forthwith prepare and furnish to the Underwriter an amendment or supplement that 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 that the Official Statement is delivered to a purchaser, not misleading. Thc Agency will cooperate with the Underwriter in the filing by the Underwriter of such amendment or supplement to the Official Statement with the MSRB. As used herein, the term "end of the underwriting period" means the later of such timc as: (i) the Agency delivers the Bonds to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Notwithstanding the foregoing, unless the Underwriter gives notice to the contrary, the "end of the underwriting period" will be the date of the Closing. Any notice that is delivered pursuant to this provision will be written notice dclivered to the Agency at or prior to the date of the Clo�ing and will specify a date (other than thc date of the Closing) to be deemed the "end of the underwriting period." Section 11. Payment of Expenses. (a) The Underwriter shall bc under no obligation to pay, and the Agency shall pay the following expen�e� incident to the performance of the Agency's obligations hereunder: (i) the fees and disbursements of Bond Counsel; (ii) the cost of printing and delivering the Bonds, the Preliminary Official Statement and the Official Statement (and any amendment or supplement that is prepared pursuant to Scction 10 of this Purchase Contract); (iii) the fees and disbursements of accountants, advisors and any other experts or consultants retained by the Agency, including the Agency's general counsel; and (iv) any other expense� and costs of the Agency that are incident to the performance of its obligations in connection with the authorization, issuance and sale of the Bonds, including out-of-pocket expenses and regulatory expenses, reimbursement to the Underwriter for any meals and travel for Agency e►nployees or officers that were paid for by the Underwriter, cost� 13 relating to the issuance of the Policy and the Reserve Policy and any other expenses agreed to by the parties. (b) The Underwriter shall pay all expenses incurred by it in connection with the public offering and distribution of the Bonds including, but not limited to: (i) all advertising expenses in connection with the offering of the Bonds; and (ii) all out-of-pocket disbursements and expenses incurred by the Underwriter in connection with the offering and distribution of the Bonds (including, without limitation, the fees and expenses of its counsel and MSRB, CUSIP Bureau, California Debt and Investment Advisory Commission and California Public Securities Association fees, if any), except as provided in clause (a) above or as otherwise agreed to by the Underwriter and the Agency. Section 12. Notices. Any notice or other communication to be given to the Agency under this Purchase Contract may be given by delivering the same in writing to the Agency at the address that is set forth on the first page of this Purchase Contract, and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to: Stifel, Nicolaus & Company, Incorporated One Montgomery Street, 35th F7oor San Francisco, California 94104 Attention: Jim Cervantes Section 13. Survival of Representations, Warranties, Agreements. All of the Agency's representations, warranties and agreements that are contained in this Purchase Contract yhall remain operative and in full force and effect regardless of: (a) any investigations made by or on behalf of the Underwriter; or (b) delivery of and payment for the Bonds pursuant to this Purchase Contract. The agreements contained in this Section and in Section 1 1 shall survive the termination of this Purchase Contract. Section 14. Benefit; No Assignment. This Purchase Contract is made solely for the benefit of the Agency and the Underwriter (including their successors and assigns), and no other person shall acquire or have any right hereunder or by virtue hereof. The rights and obligations created by this Purchase Contract are not subject to assignment by the Underwriter or the Agency without the prior written consent of the other parties hereto. Section 15. Severability. In the event that any provision of this Purchase Contract is held to be invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision of this Purchase Contract. Section 16. Counterparts. This Purchase Contract 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 Contract by signing any such counterpart. Section 17. Governing Law. This Purchase Contract shall be governed by the laws of the State. � [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] � Section 18. Effectiveness. This Purchase Contract shall become effective upon the execution of the acceptance hereof by an authorized officer of the Agency, and shall be valid and enforceable as of the time of such acceptance. Very truly yours, STIFEL, NICOLAUS & COMPANY, INCORPORATED B y: Title: Authorized Officer Accepted: SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY By: Title: Executive Director Time of Execution: California Time � EXHIBIT A MATURITY SCHEDULE $ SUCCESSOR AGENCY TO THE Principal Payment Date (October 1) PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS 2017 SERIES H-A Principal $ Coupon c�. Yield * Tcrm Bond. �`' Priced to tirst optional rcdemption date of l, 20_ at par. A-1 �Io Price $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAXABLE TAX ALLOCATION REFUNDING BONDS 2017 SERIES H-B Principal Payment Date (October 1) Principa[ $ Coupon C/c Yield * Term Bond. "� Priced to first optional redcmption date of 1, 20_ at par. A-2 C/c Price EXHIBIT B RULE 15c2-12 CERTIFICATE $ * SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS 2017 SERIES H-A $ * SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAXABLE TAX ALLOCATION REFUNDING BONDS 2017 SERIES H-B The undersigned hereby certifies and represents that the undersigned is the duly appointed and acting representative of the Successor Agency to the Palm Desert Redevelopment Agency (the "Agency"), and as such is duly authorized to execute and deliver this Certificate on behalf of thc Agency, and further hereby certifies and reconfirms on behalf of the Agency as follow�: (1) This Certificate is delivered in connection with the offering and sale of the above captioned bonds (the "Bonds") in order to enable the underwriter of the Bonds ro comply with Securities and Exchange Commission Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the "Rule"). (2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement, setting forth information concerning the Bonds and the Agency ithe "Preliminary OfCcial StatemenY'). (3) As used herein, "Permitted Omissions" means the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bond� depending on such matters, all with respect to the Bondti. (4) The Preliminary Ofiicial Statement is, except for the Permitted Omissions, deemed final within the meaning of the Rule, and the information therein is accurate and complete except for the Permitted Omissions. Dated: _, 201 * Preli�niiiur�•; subject to cha�tge. SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY By: Title: Executive Director : EXHIBIT C CLOSING CERTIFICATE OF THE AGENCY $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS 2017 SERIES H-A $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAXABLE TAX ALLOCATION REFUNDING BONDS 2017 SERIES H-B The undersigned hereby certifies and represents that the undersigned is the duly appointed and acting representative of the Successor Agency to the Palm Desert Redevelopment Agency (the "Agency"), and is duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of the Agency as follows: (i) The representations, warranties and covenants of the Agency that are contained in the Bond Purchase Contract, dated _, 201_ (the "Purchase ContracY'), by and between the Agency and Stifel, Nicolaus & Company, Incorporated, as underwriter, are true and correct and in all material respects on and as of the date of the Closing, with the same effect as if made on the date of the Closing. (ii) The Agency Resolution is in full force and effect at the date of the Closing and has not been amended, modified or supplemented, except as agreed to by the Agency and the Underwriter. (iii) The Agency has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied on or prior to the date of the Closing. (iv) The statements and descriptions in the Official Statement that pertain to the Agency do not contain any untrue or misleading statement of a material fact and do not omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading. Capitalized terms used but not defined herein have the meanings given to such terms in the Purchase Contract. Dated: _, 20 I _ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY By: Title: Executive Director G1 EXHIBIT D OPINION OF GENERAI. COUNSEL _, 201 _ Successor Agency to the Stifel, Nicolaus & Company, Incorporated Palm Desert Redevelopment Agency One Montgomery Street, 35th F7oor 7�i510 Fred Waring Drive San Francisco, California 94104 Palm Desert, California 92260 $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS 2017 SERIES H-A $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAXABLE TAX ALLOCATION REFUNDING BONDS 2017 SERIES H-B Ladies and Gentlemen: In my capacity as the General Counsel to the Successor Agency to the Palm Desert Rcdevelopment Agency (the "Agency"), in connection with the issuance by the Agency of the above-referenced bonds (the `Bonds"), I have examined such documents, certificates and records as I have deemed relevant and necessary as the basis for the opinion set forth herein. Capitalized terms that are used and not otherwise defined herein have the same meanings as assigned to them in the Bond Purchatie Contract, dated _> 201_ (the "Purchase Contract"), by and between Stifel, Nicolau� & Company, Incorporated, as underwriter, and the Agency. Relying on my examination described above and pertinent law and subject to the limitations and qualifications set forth hereinafter, 1 am of the following opinion: l. Thc Agency is a redevelopment succes�or agency that is duly organized and existing under the laws of the State of California, and has all necessary power and authority to adopt the Agency Resolution and to enter into and perform its duties under the Agency Agreements. 2. Resolution Nos. and of the Agency (collectively, the "Agency Resolution") have been duly adopted at meetings of the Board of Directors of the Agency that were duly called and held on October 13, 2016 and _, 201_ pursuant to law, with all required public notice and at which a quorum was present and acting throughout. The Agency Resolution is in full force and effect and has not been amended or repealed. 3. The Agency has duly authorized, executed and delivered the Agency Agreements. Assuming due authorization, execution and delivery by the other parties thereto, as necessary, the Agency Agreements constitute legal, valid and binding agreements of the Agency enforceable � against the Agency in accordance with their terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, debt adjustment, fraudulent conveyance or transfer, moratorium, reorganization or other laws affecting the enforcement of creditors' rights generally and equitable remedies if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and limitations on remedies against public agencies. 4. Except as disclosed in the Official Statement, there is no action, suit or proceeding before or by any court, public board or body pending (with service of process having been accomplished on the Agency) or, to the best of my knowledge, threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence or powers of the Agency or the titles of its officers to their respective offices; (b) in any way question or affect the validity or enforceability of the Agency Agreements or the Bonds; (c) render illegal, invalid or unenforceable the Agency Agreements or the transactions contemplated thereby, or any other agreement or instrument related to the issuance of the Bonds to which the Agency is a party; or (d) have a material adverse effect on the ability of the Agency to make payments of principal of and interest on the Bonds when due. 5. The execution and delivery of the Agency Agreements and compliance with the provisions of each thereof will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States or any department, division, agency or instrumentality of either thereof, any applicable court or administrative decree or order or any loan agreement, note, resolution, indenture, trust agreement, contract, agreement or other instrument to which the Agency is a party or is otherwise subject or bound in a manner that would materially adversely affect the Agency's performance under the Agency Agreements. The opinion is based on such examination of the laws of the State of California as I have deemed relevan[ for the purposes of this opinion. I have not considered the effect, if any, of the laws of any other jurisdiction upon matters covered by this opinion. I have assumed the genuineness of all documents and signatures, presented to me. I have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in such documents. I express no opinion as to the status of the Bonds, the interest thereon or the Agency Agreements under any federal securities laws or any state securities or "Blue Sky" law or any federal, state or local tax law. Without limiting any of the foregoing, I express no opinion as to any matter other than as expressly set forth above. I am furnishing this opinion as General Counsel to the Agency. Except for the Agency, no attorney-client relationship has existed or exists between me and the addressees hereof in connection with the Bonds or by virtue of this opinion. This opinion is rendered solely in connection with the financing described herein, and may not be relied upon by you for any other purpose. I disclaim any obligation to update this opinion. This opinion shall not extend to, and may not be used, quoted, referred [o, or relied upon by any other person, firm, corporation or other entity without my prior written consent. Respectfully submitted, D-2 HOUSING BONDS ESCROW AGREEMENT by and among PALM DESERT FINANCING AUTHORITY, SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY and U.S. BANK NATIONAL ASSOCiATION, as Trustee and Escrow Agent Dated as of January 1, 2017 Relating to Defeasance of: Palm Desert Financing Authority Tax Allocation (Housing Set-Aside) Revenue Bonds, Series 2002, and Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds, Series 2007 (and corresponding prepaymcnt of loans under Loan Agreements, by and among the Authority, the former Palm Desert Redevelopment Agency and the trustee thereundcr) 1�812-OW3\1992060v4.Joc RWG DRAFI': I 1/28/2016 TABLE OF CONTENTS Page Section 1. Section 2. Section 3. Section 4. Section 5. Section 6. Section 7. Section 8. Section 9. Section 10. Section 11. Section 12. Section 13. Section 14. Section 15. Section 16. Section 17. Section 18. Section 19. Section 20. Section 21. Section 22. Section 23. Section 24. Definitions: ........................................................................................................... 3 Escrow Agent's Acceptance of Duties . ................................................................4 Incorporation of Prior Indentures . ........................................................................4 Escrow Funds Deposits .........................................................................................4 Maintenance of Escrow Funds ..............................................................................5 Payment of Refunding Requirements ................................................................... 6 Verification........................................................................................................... 6 Compliance with Prior Indentures and this Agreement ........................................6 TaxCovenant ........................................................................................................ 6 Defeasance and Redemption Notices . ..................................................................7 Defeasance of Refunded Bonds ............................................................................ 7 Discharge of 2002 Loan and 2007 Loan ...............................................................7 Natureof Lien ....................................................................................................... 7 Amendments. ........................................................................................................ 7 Compensation of Escrow Agent . .......................................................................... 8 Resignation or Removal of Escrow Agent; Appointment of Successor . ............ 8 Limitation of Powers and Duties . ....................................................................... 10 lndemni�cation . .................................................................................................. 10 Limitation of Liability . ....................................................................................... 10 Closing of Escrow Funds; Termination of Agreement ....................................... 11 GoverningLaw . .................................................................................................. 1 1 Severability. ........................................................................................................ 11 Successor Deemed Included in References to Predecessors . ............................. 12 Counterparts. ....................................................................................................... 12 Appendix A — Refunding Requirements Appendix B — Escrow Securities Appendix C— Form of Defeasance Notice (2007 Bonds) 1 28 1 2-0003\ 1992060v4.Joc ESCROW AGREEMENT This Escrow Agreement (this "Agreement"), dated as of , 2016, is by and among the Palm Desert Financing Authority, a joint exercise of powers agency duly organizcd and existing pursuant to the laws of the State of California (the "Authority"), the Successor Agency to the Palm Desert Redevelopment Agency, a public entity existing under the laws of the Statc of California (the "City"), and U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, as trustee under the Prior Indentures and Loan Agreements described below and escrow agent hereunder (the "Escrow Agent"). RECITALS: A. The former Palm Desert Redevelopment Agency (the "Former Agency") was a duly constituted redevelopment agency pursuant to provisions of the Community Redevelopment Law set forth in Section 33000 et seq. of the Health and Safety Code ("HSC") of the State of California (the "State"). B. The Former Agency undertook a program to redevelop four project areas (the "Projcct Areas"). C. The Former Agency and the City of Palm Desert (the "City") executed and delivered a Joint Exercise of Powers Agreement, dated as of January 26, 1989 (the "Joint Powers Agreement"), which Joint Powers Agreement created and established the Authority. D. To finance and refnance affordable housing projects, the Former Agency entered into the loan agreements, including the following (together, the "Loan Agreements"): (i) the 2002 Housing Project Loan Agreement, dated as of August 1, 2002, by and among the Former Agency, the Authority and BIVY Western Trust Company (as succeeded by U.S. Bank National Association), as trustee, pursuant to which the Former Agency incurred a loan (the "2002 Loan"); and (ii) the 2007 Housing Project Loan Agreement, dated as of February 1, 2007, by and among the Former Agency, the Authority and Wells Fargo Bank, National Association (as succeeded by U.S. Bank National Association), as trustee, pursuant to which the Former Agency incurred a loan (the "2007 Loan," and together with the 2002 Loan, the "Agency Loans"). E. To provide funding for the Agency Loans, the Authority issued two series of� bonds: (i) Authority's Tax Allocation (Housing Set-Aside) Revenue Bonds, Series 2002, in the original principal amount of $12,400,000 (the "2002 Bonds"), pursuant to the Indcnture of Trust, datcd as of August 1, 2002 (the "2002 Indenture"), by and between the Authority and BNY Western Trust Company (as succeeded by U.S. Bank National Association), as trustee; i 2x i 2-oa�3� i yyzc�o� a.d�,� (ii) The Authority's Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds, Series 2007, in the original principal amount of $86,155,000 (the "2007 Bonds," and together with the 2002 Bonds, the "Prior Bonds"), pursuant to the Indenture of Trust, dated as of February 1, 2007 (the "2007 Indenture," and together with the 2002 lndenture, the "Prior Indentures"), by and between the Authority and Wells Fargo Bank, National Association (as succeeded by U.S. Bank National Association), as trustee. F. Pursuant to the Prior Indentures, the Prior Bonds are secured by "Revenues," consisting of amounts repaid by the Former Agency (as succeeded by the Successor Agency") for the Agency Loans. G. Pursuant to AB X 1 26 (enacted in June 201 1), and the State Supreme Court's decision in California Redevelopment Associatinn, et al. v. Ana Matnsnntos, et nl., 53 Cal. 4th 231 (2011), the Former Agency was dissolved as of February 1, 2012, the Successor Agency was constituted. H. The Successor Agency has determined to issue its Tax Allocation Refunding Bonds, 2017 Series H-A, in the aggregate principal amount of $ (the "2017H-A Bonds"), pursuant to an Indenture, dated as of January 1, 2017 (the "2017 Indenture"), by and between the Successor Agency and U.S. Bank National Association, as trustee. I. The 2017A Bonds are being issued to effect a refunding of all of the outstanding 2002 Bonds and the concurrent discharge of the 2002 Loan. J. The Successor Agency has determined to issue its Taxable Tax Allocation Refunding Bonds, 2017 Series H-B, in the aggregate principal amount of $ (the "2017H-B Bonds" and, together with the 2017H-A Bonds, the "2017 Bonds"), pursuant to the 2017 Indenture. K. The 2017H-B Bonds are being issued to effect a refunding of all of the outstanding 2007 Bonds and the concurrent discharge of the 2007 Loan. L. Pursuant to the 2017 Indenture and this Agreement, the Successor Agency will also cause to be transferred to the Escrow Agent, a portion of the sale proceeds of 2017 Bonds, together with other moneys, for the deposit into the escrow funds (the "Escrow Funds") to be established under this Agreement, to effect the defeasance of the outstanding 2002 Bonds and the 2007 Bonds (and the concurrent discharge of the 2002 Loan and the 2007 Loan). M. Pursuant, and subject, to the terms of the Prior Indentures, if therc has been deposited with the Escrow Agent, to be held in escrow, cash or qualified securities (or a combination thereo� which shall provide suffcient moneys to pay and redeem any portion of the outstanding Prior Bonds through maturity or a designated redemption date, then the Authority's obligations with respect to such Prior Bonds shall be discharged and the lien with respect to such Prior Bonds under the Prior Indentures shall cease (except for the payment thereof from the moneys held in escrow by the Escrow Agent} and such Prior Bonds shafl be defeased. N. The Authority and the Successor Agency are entering into this Agreement in order to provide for the proper and timely application of the proceeds from the 2017 Bonds and 2 I 2812-(HN)3\ I 992060v4.doc other moncys toward the defeasance and the payment and redemption of the 2002 Bonds and the 2007 Bonds. 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 otherwise indicates, words expressed in the singular shall include the plural and vice versa. 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: "2002 Bond Redemption Date" means April 1, 2017. "2002 Refunding Requirement" means an amount sufticient to pay the principal, intere�t and the redemption premium (if any) with respect to the Refunded 2002 Bonds on the 2002 Bond Redemption Date as set forth in Appendix A. "2007 Bond Redemption Date" means October 1, 2017. "2007 Refunding Requirement" means an amount sufficient to pay the principal, inlerest and the redemption premium (if any) with respect to the Refunded 2007 Bonds on the 2007 Bond Redemption Date as set forth in Appendix A. "2017H-A Escrow Fund" means the fund by that name established by the Escrow Agent pursuant to Section 4. "2017H-B Escrow Fund" means the fund by that name established by the Escrow Agen[ pursuant to Section 4. "Bond Counsel" mcans Richards, Watson & Gershon, A Professional Corporation, or such other attorney or firm of attorneys of nationally recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Code selected by the Authority and the Successor Agency. "Closing Date" means _, 2016, the date on which the 2017 Bonds are being issued. "Code" means the Internal Revenue Code of 1986, as amended. "Escrow Funds" means, collectively, the 2017H-A Escrow Fund and the 2017H-B Escrow Fund. "Escrow Securities" means the Investment Securities described in A�pendix B to be deposited in the Escrow Funds. "Investment Securities" means noncallable direct obligations of the United States of America, or bonds or other obligations which are noncallable and the payment of principal and 3 I 28l 2-0W 3\ 1992060v4.doc interest of which are unconditionally and fully guaranteed by the United States of America, to mature or be withdrawable, as the case may be, not later than the time when needed for the payment and redemption of the Refunded Bonds in order to discharge the pledge and lien securing the Refunded Bonds. "Redemption Dates" means, together, the 2002 Bond Redemption Date and the 2007 Bond Redemption Date. "Refunded 2002 Bonds" means the 2002 Bonds to be defeased, paid and redeemed, pursuant to this Agreement, as further described in A�pendix A. "Refunded 2007 Bonds" means the 2007 Bonds to be defeased, paid and redeemed, pursuant to this Agreement, as further described in Appendix A. "Refunded Bonds" means, together, the Refunded 2002 Bonds and the Refunded 2007 Bonds. "Refunding Requirements" means, together, the 2002 Refunding Requirement and 2007 Refunding Requirement. Section 2. Escrow A�ent's Acceptance of Duties. The Escrow Agent hereby accepts the duties and obligations expressly provided in this Agreement and agrees that the irrevocable instructions to the Escrow Agent contained herein are in a form satisfactory to it. Section 3. Incorporation of Prior Indentures. The applicable and necessary provisions of the Prior Indentures, including redemption provisions and defeasance provisions set forth in Articles N and XII of the 2002 Indenture and Articles IV and XII of the 2007 Indenture, are incorporated herein by reference. Section 4. Escrow Funds De�osits. (a) There is hereby created and established with the Escrow Agent, a special and irrevocable trust fund designated the "2017H-A Escrow Fund," to be held by the Escrow Agent separate and apart from all other funds of the Authority, the Successor Agency or the Escrow Agent and used only for the purposes and in the manner provided in this Agreement. The 2017H-A Escrow Fund constitutes a special and irrevocable trust fund for purposes of effecting the concurrent defeasance of the Refunded 2002 Bonds and the discharge of the 2002 Loan. On the Closing Date, there shall be transferred and deposited into the 2017H-A Escrow Fund the following amounts (the sum of which shall be $ ): (i) The Authority shall cause to be transferred to the Escrow Agent a portion of the proceeds of the 2017A Bonds for deposit in the 2017H-A Escrow Fund, in the amount of $ ; (ii) The Escrow Agent shall also release and transfer $ from the Revenue Fund established under the 2002 Indenture to the 2017H-A Escrow Fund; and 4 1 ?8 I 2-000"?\ 19920fi0v4.doc (iii) The Escrow Agent shall also release and transfer � from the Reserve Fund established under the 2002 Indenture to the 2017H-A Escrow Fund. (b) There is hereby created and established with the Escrow Agent, a special and irrevocable trust fund designated the "2017H-B Escrow Fund," to be held by the E�crow Agent separate and apart from all other funds of the Authority, the Successor Agency or the Escrow Agent and used only for the purposes and in the manner provided in this Agreement. The 2017H-B Escrow Fund constitutes a special and irrevocable trust fund for purposes of effecting the concurrent defeasance of the Refunded 2007 Bonds and the discharge of the 2007 Loan. On the Closing Date, there shall be transferred and deposited into the 2017H-B Escrow Fund the following amounts (the sum of which shall be � ): (i) The Authority shall cause to be transferred to the Escrow Agent a portion of the proceeds of the 2017 Bonds for deposit in the 2017H-B Escrow Fund, in ihe amount of $ ; (ii) The EScrow Agent shall also release and transfer $ from the Revenuc Fund established under the 2007 Indenture to the 2017H-B Escrow Fund; and (iii) The Escrow Agent shall also release and transfer � from the Reserve Fund established under the 2006 Trust Agreement to the 2017H-B Escrow Fund. Section 5. Maintenance of Escrow Funds. (a) The Escrow Agent, upon receipt of the moneys described in Section 4(a), shall immediately: (i) invest $ of such moneys in the Escrow Securities set forth in A�pendix B, (ii) deposit such securities in the 2017H-A Escrow Fund, and (iii) hold the remaining S as cash in the 2017H-A Escrow Fund. (b) The Escrow Agent, upon receipt of the moneys described in Section 4(b), shall immediately: (i) invest � of such moneys in the Escrow Securities set forth in A�pendix B, (ii) deposit such securities in the 2017H-B Escrow Fund, and (iii) hold the remaining $ as cash in the 2017H-B Escrow Fund. (c) All proceeds received upon the maturity of the Escrow Securities, including interest earnings thereon, shall be retained in the related Escrow Fund. The Escrow Agent is hereby authorized and empowered to deposit uninvested monies held hereunder from time to time in a demand deposit account, without payment of interest thereon as provided hereunder, established at commercial banks that are corporate affiliates of the Escrow Agent. (d) Notwithstanding the foregoing or any other provision of this Agreement to the contrary, at the written request of the Successor 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 a Escrow Fund and to substitute Investment Securities. The foregoing may be effected only if: (i) thc substitution of Investment Securities for the substituted Escrow Securities occurs simultaneously; (ii) the amounts of and dates on which the anticipated moneys from such Escrow Fund to be available for the payment or redemption of the related Refunded Bonds on each payment or 5 i zx � z-000��i 99�obo�•a.a�� redemption date identified in A�pendix A will not be diminished or postponed thereby, as shown in the certification (described below) of an independent certifed public accountant; (iii) the Escrow Agent shall receive the unqualified opinion of counsel to the effect that the Successor Agency has the right and power to effect such disposition and substitution; and (iv) 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 such Escrow Fund will, together with other moneys available for such purpose, be sufficient to pay the Refunding Requirement. Any cash received from the disposition and substitution of Escrow Securities pursuant to this Section to the extent that, as shown in such certifcation, such cash will not be required, in accordance with the 2017 Indenture and this Agreement, at any time for the payment when due as provided in Section 6, shall be transferred to the Successor Agency. Section 6. Payment of Refundin� Requirements. (a) The 2002 Bond Redemption Date shall be April 1, 2017. However, because the 2002 Bond Redemption Date falls on a Saturday, the payment of redemption price to Owners of the Refunded 2002 Bonds will be made on the immediately following Business Day (the "2002 Redemption Payment Date"). On the 2002 Redemption Payment Date, the Escrow Agent shall disburse the amount indicated on Appendix A for application toward the payment and redemption of the Refunded 2002 Bonds for the equal and ratable benefit of the owners of the Refunded 2002 Bonds. (b) The 2007 Bond Redemption Date shall be October 1, 2017. However, because the 2007 Bond Redemption Date falls on a Saturday, the payment of redemption price to Owners of the Refunded 2007 Bonds will be made on the immediately following Business Day (the "2007 Redemption Payment Date"). On the April l, 2017 interest payment date and on the 2007 Bond Redemption Date respectively, the Escrow Agent shall disburse the amount indicated on Appendix A for application toward the payment or redemption of the Refunded 2007 Bonds for the equal and ratable benefit of the owners of the Refunded 2007 Bonds. Section 7. Verification. The Successor Agency has caused schedules to be prepared relating to the sufficiency of the funds deposited in the Escrow Funds to pay the Refunding Requirements. The Successor 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. Com�liance with Prior Indentures and this Agreement. The Escrow Agent 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, interest and redemption premium (if any) with respect to the Refunded 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 under the Prior Indentures, shall be limited to the application, in accordance with this Agreement, of moneys in the Escrow Funds (including the Escrow Securities and interest earnings thereon, if any) available for the purposes of and in accordance with this Agreement. Section 9. Tax Covenant. Notwithstanding any other provision of this Agreement, the Authority and the Successor Agency hereby covenant that no part of the proceeds of 6 I 28l 2-0003\ I 992060v4.Joc 2017H-A Bonds or of the moncys or funds hcld by thc Escrow Agent hereunder shall be uscd, and that thc Authority and the Successor Agency 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 2017H-A 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 execution and delivery of the 2017H-A Bonds. None of the Authority, the Successor Agency nor the Escrow Agent shall transfer or otherwise dispose of moneys and securities held in the Escrow Fund except as set forth in this Agreement; provided that the Escrow Agent may effectuate the transfer of such moneys to a successor Escrow Agent in accordance with the provisions of Section 16 relating to the transfer of rights and property to successor Escrow Agents. Section 10. Defeasance and Redemption Notices. As soon as practicable upon the Escrow Agent's receipt of moneys for deposit in the Escrow Funds pur5uant to Section 4, the Escrow Agent shall send notices of defeasance to the registered owners of the Refunded Bonds and each bond insurer of the Refunded Bonds (as indentified in the Prior Indentures), substantially in the form set forth in Appendix C. No later than the 30 days (but not more than 60 days) before each Redemption Date, the Escrow Agent shall also send notices of redemption for the applicable Refunded Bonds in accordance with the Indentures, with copies to the applicable bond insurers. Section 11. Defeasance of Refunded Bonds. Concurrently with the deposit of the moneys in the Escrow Funds pursuant to Section 4 of this Agreement, the Refunded Bonds shall no longer be deemed to be "Outstanding" and unpaid within the meaning and with the cffect expressed in the Prior lndentures. Section 12. Discharge of 2002 Loan and 2007 Loan. (a) Concurrently with the deposit of the moneys in the 2017H-A E�crow Fund pursuant to Section 4(a) of this Agreement, the 2002 Loan shall be deemed discharged pursuant to Section 1 1.03 of the 2002 Loan Agreement. (b) Concurrently with the deposit of the moneys in the 2017H-B Escrow Fund pursuant to Section 4(b) of this Agreement, the 2007 Loan shall be discharged pursuant to Scction 11.03 of the 2007 Loan Agreement. Section 13. Nature of Lien. The trusts hereby created shall be irrevocable. The owners of the Refunded 2002 Bonds shall have an express lien on all of the moneys (including any securities) in the 2017H-A Escrow Fund, including the earnings thereon, until paid out, used and applied in accordance with this Agreement. The owners of the Refunded 2007 Bonds shall have an express lien on all of the moneys (including any securities) in the 2017H-B Escrow Fund, including the earnings thereon, until paid out, used and applied in accordance with this Agreement. Section 14. Amendments. This Agreement shall not be repealed, revoked, altered, amcnded without the written consent of all of the registered owners of the unpaid Refunded Bonds and the written consent of the Escrow Agent, the Successor Agency and the Authority; 7 I 38l 2-0(xl3\ 1992060� 4.doc provided, however, that the Authority, the Successor Agency and the Escrow Agent may, without the consent of or notice to, such registered owners, enter into such amendment to this Agreement, if such amendment shall not materially adversely affect the rights of such registered owners and 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 owners of the Refunded Bonds, any additional rights, remedies, powers or authority that may lawfully be granted to, or conferred upon, such owners or the Escrow Agent; (c) To transfer to the Escrow Agent and make subject to this Agreement, additional funds securities or properties; (d) To conform the Agreement to the provisions of any law or regulations governing the tax-exempt status of the Refunded Bonds, as applicable, and the 2017H-A Bonds in order to maintain their tax-exempt status; and (e) To make any other change determined by the Successor Agency to be not materially adverse to the owners of the Refunded Bonds. The Escrow Agent shall be entitled to rely exclusively upon an opinion of Bond 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 owners of the Refunded Bonds, or that any instrument executed hereunder complies with the conditions and provisions of this Section. Section 15. Compensation of Escrow A�ent. In consideration of the services rendered by the Escrow Agent under this Agreement, the Successor 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 Successor Agency, including all reasonable expenses, charges, counsel fees and other disbursements incurred by it or by its attorneys, agents and employees in and about the performance of their powers and duties hereunder, from any moneys of the Successor Agency and the Authority lawfully available therefor and the Escrow Agent shall have no lien whatsoever upon any of the moneys in the Escrow Funds (including any securities therein) for the payment of such proper fees and expenses. Section 16. Resi�nation or Removal of Escrow A en� t=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 Authority and the Successor Agency 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 owners of the Refunded Bonds or by the Successor 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 Authority and the Successor Agency and signed by the 8 1 ?812-0003\ 1992060v4.doc registered owners of a majority in principal amount of the Refunded Bonds. The Escrow Agent may also be removed at any time by the Authority and the Successor Agency with not less than 30 days' written notice to the Escrow Agent and the registered owners of the Refunded Bonds. In the event the Escrow Agent hereunder shall resign or be removed, or be dissolved, or shall be in the course of distiolution 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 a receiver appointed by a court, a successor Escrow Agent may be appointed by the owners of a majority in principal amount of the Refunded Bonds, by an instrument or concurrent instruments in writing, signed by such owners, or by their attorneys in fact duly authorized in writing; provided, nevertheless, that in any such event, the Successor Agency shall appoint a temporary Escrow Agent to fill such vacancy until a successor Escrow Agent shall be appointed by the owners of a majority in principal amount of the Refunded Bonds, and any such temporary Escrow Agent so appointed by the Successor Agency shall immediately, and without further act, be superseded by the Escrow Agent so appointed by such owners. In the event that no appointment of a successor Escrow Agent, or a temporary successor Escrow Agent, shall have been made by such owners or the Authority, pursuant to the foregoing provisions of this Section, within 30 days after written notice of the removal or resignation of the Escrow Agent has been given to the Authority and the Successor Agency, the owner of any of the Refunded 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, af�ter such notice, if any, as it shall deem proper, appoint a successor Escrow Agent. No successor Escrow Agent shall be appointed unless such succe5sor Escrow Agent shall be a national banking association or 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. Every �uccessor Escrow Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor and to the Authority and the Successor Abency, 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, the Authority or the Successor Agency, execute and deliver an instrument tran�ferring 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 moneys held by it to its successor. Should any transfer, assignment or instrument in writing from the Authority or the Successor 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 Authority or the Successor 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 il may he consolidated, or any entity resulting from any merger, conversion, consolidation or tax-free izKi�-��iyy�o�o��a.�i�� 0 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 Authority and the Successor 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 17. L,imitation 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 Section 5. Thc 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 18. Indemnification. To the extent permitted by law, the Authority and the Successor Agency hereby assume liability for, and hereby agree (whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and keep harmless the Escrow Agent and its 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 Authority, the Successor 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 Funds, the acceptance of the moneys and any securities deposited therein, transfer or other application of moneys by the Escrow Agent in accordance with the provisions of this Agreement; provided, however, that the Authority and the Successor 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 agents, employees or servants. In no event shall the Successor Agency, the Authority or the Escrow Agent be liable to any person by reason of the transactions contemplated hereby other than as set forth in this Section. The indemnities contained in this Section shall survive the termination of this Agreement and removal or resignation of the Escrow Agent. Section 19. Limitation of Liabilitv. The Escrow Agent and its 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 Funds, the acceptance of the moneys or securities deposited therein, the sufficiency of the moneys or any securities held hereunder to accomplish the payment and redemption of the Refunded Bonds, or any payment, transfer or other application of moneys or any 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 Escrow Agent shall incur no liability for losses arising from any investment made in accordance with this Agreement. The recitals of fact contained in the Recitals of this Agreement, shall be taken as the statements of the Authority and the Successor Agency, and the Escrow Agent assumes no responsibility for the correctness thereof. The Escrow Agent makes no representation as to the sufficiency of any securities purchased pursuant hereto, and any moneys to accomplish the payment and redemption of the Refunded Bonds, pursuant to the Prior Indentures or to the validity of this Agreement as to the Authority or the Successor Agency and, except as otherwise provided herein, the Escrow Agent shall incur no 128 I 2-O W 3\ 1992060e 4.doc 10 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 or willful misconduct, and the duties and obligations of the Escrow Agent shall be determined by the expre�s provisions of this Agreement. Anything in this Agreement notwithstanding, the Escrow Agent �hall not be liable for any consequential (i.e., special or indirect) losses or damages in performing its duties or in exercising its rights or power pursuant to this Agreement. The Escrow Agent may consult with counsel, who may or may not be counsel to the Successor Agency or the Authority. 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 nationa]]y 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 Authority or the Successor Agency. Whenever the Escrow Agent deems 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 ils 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 20. Closin� of Escrow Funds; Termination of Agreement. (a) Upon completion of disbursements from the 2017H-A Escrow Fund to redeem and pay the Refunded 2002 Bonds on the 2002 Bond Redemption Date pursuant to Section 6(a) of this Agreement, all moneys (if any) remaining in the 2017H-A Escrow Fund shall be transferred to the Debt Service Fund established under the 2017 Indenture. Thereafter, the 2017H-A Escrow Fund shall close. (b) Upon completion of disbursements from the 2017H-B Escrow Fund to redeem and pay the Refunded 2007 Bonds on the 2007 Bond Redemption Date pursuant to Section 6(b) of this Agreement, all moneys (if any) remaining in the 2017H-B Escrow Fund shall be transferred to the Debt Service Fund established under the 2017 Indenture. Thereafter, thc 2017H-B Escrow Fund shall closc. (c) This Agreement shall terminate upon the closing of the 2017H-B Escrow Fund. Scction 21. Governinr Law. This Agreement shall be governed by the law of the Stale of California. Section 22. Severabilitv. lf any one or more of the covenants or agreements provided in this Agreement on the part of the Authority, the Successor Agency, 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 contained herein and shall in no way affect the validity �f the remaining provisions of this Agreement. ll i �s � �-oa�3�i yy�o�o�a.a�� Section 23. Successor Deemed Included in References to Predecessors. All the covenants, promises and agreements contained in this Agreement by, or on behalf of, the Authority, the Successor Agency or the Escrow Agent shall bind and inure to the benefit of their respective successors and assigns, whether so expressed or not. Section 24. 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. 12 I 2812-0003\ 1992WOv4.doc (Housi�lg Bonds Escrnw AKreenient) 1N WITNESS WHEREOF, the parties hereto have each caused this Agreement to be executed by their duly authorized of�cers as of the date first written above. PALM DESERT FINANCING AUTHORITY : Chief Administrative Officer SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY : Executive Director U.S. BANK NATIONAL ASSOCIATION, as Escrow Agent : Authorized Officer I 2812-0(H)3\ I 993060v4.doc APPENDIX A REFUNDING REQUIREMENTS I. Refunded 2002 Bonds: Redemption Redemption Date Principal Interest Premium Disbursement April 1, 2017 $ 8,095,000* $198,139.38 -- $8,293,139.38 * Consists of the following Refunded 2W2 Bonds to be paid or redeemed on the 2002 Redemption Date: Maturity Date Interest Redemption (October 1) Principal Ratc Pricc 2017 $375,000 4.400�/c 100�/r 2018 395,000 4.500'% ] 00 2019 4 l 5.000 4.625 �I ] 00 2020 435,000 4.700�7� ] 00 2021 455,000 4.8(?0�/c ] 00 2022 475,000 4.900�% ] 00 2031 5,545,000 5.000�� ] 00 II. Refunded 2007 Bonds: Payment or Redemption Redemption Date Principal Interest Premium Disbursement April l, 2017 $1,041,218.75 -- $1,041,218.75 October 1, 2017 $44,070,000* $1,041,218.75 -- 45,1 1 1,218.75 * Consists of the folluwing Refundcd 2W7 Bonds to be paid or redeemed on the 2007 Redemption Date: Maturity Date Interest Redemption (()ctober I ) Principal Rate Price 2017 $6,395,000 5.(HH)"I� 100�I 2018 6,720,0(H) 5.000 100 2019 7,065.000 5.000 100 2020 2,525,0(x) 5.000 100 2021 2.650,000 4.125 100 2022 2,760,000 5.000 100 2023 2,905,000 5.000 ] 00 2024 3,055,000 4.250 100 2025 :�,190,0(� 4.250 100 2026 3,330.000 4.250 l00 2027 3,475.i)00 4.250 100 l 2812-0003\ 199Z(Xi0e4.doc APPENDIX B ESCROW SECURITIES L 2017H-A Escrow Fund: On the Closing Date, thc Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of $8,293,139.38 Securities Type Maturity Principal Amount II. 2017H-B Escrow Fund: Coupon Expected Receipt at Maturity (including principal and interest) On the Closing Date, the Escrow Agent shall use � of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the required disbursement of: (i) $1,041,218.75 on April 1, 2017, and (ii) $45,111,218.75 on October 1, 2017. Expected Receipt at Maturity (including principal and Securities Type Maturity Principal Amount Coupon interest) I 2812-0003\ I 992(Xi(h�4.doc APPENDIX C Form of NOTICE OF DEFEASANCE with reference to PALM DESERT FINANCING AUTHORITY Tax Allocation (Housing Set-Aside) Revenue Bonds, Series 2002, and Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds, Series 2007, as described herein This Notice is being given on behalf of the Palm Desert Financing Authority (the "Authority") to the owners of the bonds identified in Exhibit 1(the "Bonds"), issued pursuant to two Indentures of Trust (the "Indentures"), each by and between the Authority and U.S. Bank National Association, as successor trustee (the "Trustee"). Pursuant to the Indentures, the lien with respect to the Bonds under the Indentures has been discharged through the irrevocable deposit of cash and certain securities (consisting of non- callable United States Treasury Obligations) in escrow funds (the "Escrow Funds"), and held pursuant to a Housing Bonds Escrow Agreement, dated as of January 1, 2017 (the "Escrow Agreement"), by and among the Authority, the Successor Agency to the Palm Desert Redevelopment Agency and the Trustee. Such deposit into the Escrow Funds has been calculated to provide sufficient moneys to pay the outstanding principal and unpaid accrued interest due on the Bonds to (and including) their respective final payment or redemption dates, as identified in Exhibit I. As a result of the deposit into the Escrow Funds, the Bonds are deemed to have been paid and defeased in accordance with the respective indentures. Obligations of the Authority to the owners of the defeased Bonds are hereafter limited to the application of moneys in the Escrow Funds for the principal and interest payment (including redemption price, as applicable) on the Bonds as the same become due and payable as described above. Dated: , 2017 U.S. BANK NATIONAL ASSOCIATION, as Trustee 1281 ?- W 03\ 1992060c�4. doc EXHIBIT I (to Notice of Defeasance) 1. Tax Allocation (Housing Set-Aside) Revenue Bonds, Series 2002, issued under Indenture of Trust, dated as of August l, 2002 CUSIP* Date on which Remaining (Base: Principal will be Maturity Date Principal Interest Rate 696617) Redeemed 10/1/2017 $375,000 4.400�I� KY4 4/1/2017 10/1/2018 395,000 4.SOO�I� KZ1 4/1/2017 10/1/2019 415,000 4.62S�Ic LAS 4/1/2017 10/1/2020 435,000 4.700�I� LB3 4/I/2017 10/ 1/2021 455,000 4.800°lo LC 1 4/ 1/2017 10/1/2022 475,000 4.900�I; LD9 4/1/2017 10/1/2031 5,545,000 S.00O�I� LE7 4/1/2017 2. Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds, Series 2007, issued under Indenture of Trust, dated as of February 1, 2007 CUS1P* Date on which Remaining (Base: Principal will be Maturity Date Principal Interest Rate 696617) Paid or Redeemed 10/1/2017 $6,395,000 5.000"I� XN4 10/1/2017 10/1/2018 6,720,000 5.000 XP9 10/1/2017 10/1/2019 7,065,000 5.(}00 XQ7 10/1/2017 10/1/2020 2,525,000 5.000 XRS 10/I/2017 10/ 1/2021 2,650,000 4.125 XS 3 10/ 1/2017 10/ I/2022 2,760,000 5.000 XT 1 10/ 1/2017 10/1/2023 2,905,000 5.000 XU8 10/1/2017 10/1/2024 3,055,000 4.250 XV6 10/1/2017 ] 0/ 1/2025 3,190,000 4.250 X W4 10/ 1/2017 ]0/1/2026 3,330,000 4250 XX2 10/1/2017 ]0/1/2027 3,475,000 4.250 XYO 10/1/2017 I 28 I 2-0(x)3\ 199'_060v4.doc Maturity Date (October 1) $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS $ � Tax Allocation Refunding Bonds 2017 Series H-A MATURITY SCHEDULE Principal Amount Interest Rate Yield Price �I Term Bond Maturing , 20_ Yield $ Taxable Tax Allocation Refunding Bonds 2017 Series H-B Maturity Date (October 1) Principal Amount Interest Rate Yield �Ic Term Bond Maturing , 20_ Yield �/r, Pricc: Price �/r, Pricc: , CUSIP"�: CUSIPt' , CUSIP'`: CUSIP`' � Prcliminary, subject to change. '' Copyright 2017, American Bankcrs Association. CUSIP� is a registered trademark of thc American Bankcrs Association. CUSIP data contained in the Of�ficial Statement is providcd by CUSIP Glohal Services Bureau, operated by Standard & Poor's. This data is not intended to create a database and docs not servc in any way as a substitute for CUSIP Global Services. CUS1P numbers have becn assigned by an independent company not affiliated with the Succcssor Agency and are included solely for the convenience of the holders of the Bonds. None of the Successor Agency, the Financial Advisor or the Underwriter takes any responsibility for thc selcction or uses of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as included in the Ofticial Statement. The CUSIP numbcr for a spccific mawrity is suhject to being changed after thc issuancc of the Bonds as a result of various subseyuent actions including, but not limited to, a refunding in wholc or in part or as a resuh of the procurement of secondary market portfolio insurancc or other similar enhancement by investors that is applicable to all or a portion of ccrtain maturities of the Bonds. SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS CITY COUNCII, AND SUCCESSOR AGENCY GOVERNING BOARD Jan Harnik, Mayor` Sabby Jonathan, Mayor Pro Tem# Kathleen Kelly, Council Member-elect Gina Nestande, Council Member-elect Susan Marie Weber, Council Member SUCCESSOR AGENCY/CITY STAFF Lauri Aylaian, Executive Director/City Manager Janet Moore, Finance Officer/Finance Director Veronica Tapia, Senior Management Analyst Rachelle D. Klassen, Secretary/Ciry Clerk PROFESSIONAL SERVICES Bond Counsel Richards, Watson & Gershon, A Professional Corporation Los Angeles, California Disclosure Counsel Bcst Best & Krieger LLP Riverside, California Municipal Advisor Del Rio Advisors, LLC Modesto, California Fiscal Consultant Keyser Marston Associates, Inc. Los Angeles, California Trustee and Escrow Agent U.S. Bank National Association Los Angeles, California Verification Agent Grant Thornton LLP Minneapolis, Minnesota ' Subject to City Council reorgani�ation after election certification on December 8, 2016. GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Nn Offering May Be Made Except by this Official Statement. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as havin� been authorized. Nn Unlawful Offers or So[icitations. This Of�ficial Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offcr or solicitation is not authorized or in which the person making such �rr�� or solicitation is not qualificd to do so or to any person to whom it is unlawful to makc such offcr or solicitation. Effective Date. This Official Statement speaks only as of its date and the information and expressions of opinion contained in this Ofticial Statemcnt are suhject to change without notice. Neither the delivery of this Official Statcment nor any sale of the Bonds will, under any circumstances, create any implication that there has been no change in the affairs of thc Successor Agency or the Redcvclopment Project since the date of this nfficial Statement. Use of this Official Statement. This OfCicial Statement is submitted in connection with the salc of the Bonds referred to in this Ofticial Statement and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract with the purchasers of the Bonds. Preparation of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. The information and expressions of opinions in the Official Statement are subject ro change without notice and ncithcr the dclivery of this Official Statement nor any salc of Bonds shall, under any circumstances, creatc any implication that there has been no change in the affairs of the Successor Agency since its datc. This Official Statement is submitted in connection with the sale of the Bonds and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the Succcssor Agency. All summaries of the Bonds, the Indenture and other documents, are made subject to the provisions of such documents and do not purport to bc complete statements of any or all of such provisions. Reference is hereby made to such documents on filc with thc Successor Agency for furthcr information. See "INTRODUCTION - Summary Not Definitivc." The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwritcr has reviewed the information in this Official Statement in accordance with, and as part of, its responsihilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Stabilization of and Changes to Offering Prices. The Underwriter may overallot or take other steps that stabilize or maintain the market price of the Bonds at levels above that which might otherwise prevail in the open markct. If commenced, the Underwritcr may discontinue such market stabilization at any time. The Underwriter may offer and scll the Bonds to certain dealers, dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover pages of this Official Statement, and those public offering prices may be changed from time to time by the Underwriter. Bonds are Exempt from Securities I.aws Registration. The Bonds have not been registered under the Securities Act of 193�i, as amended, or the Sccurities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)(2) of the Securitics Act of 1933 and Section 3(a)(12) of the Securities Exchange Act of 1934. Estimates and Projections. Certain statements included or incorporated by reference in this Official Statement constitutc "forward-looking statements" within thc mcaning of the United States Private Securities Liti�ation Reform Act of 1995, Section 21 E of the United States Securities Exchange Act of 19:i4, as amendcd, and Section 27A of thc United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimatc," "budget" or other similar words. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. WHILE THE SUCCESSOR AGENCY HAS AGREED TO PROVIDE CERTAIN ON-GOING FINANCIAL AND OTHER DATA PURSUANT TO A CONTINUING DISCLOSURE CERTIFICATE (SEE "CONCLUDING INFORMATION — Continuing Disclosure"). THE SUCCESSOR AGENCY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR. Website. The City of Palm Desert maintains an Internet website, but the information on the website is not incorporated in this Ofticial Statemcnt. TABLE OF CONTENTS INTRODUCTION .................................................. 1 The Successor Agency and the Former Agency......................................................... 1 TheCity ............................................................. 2 Authority and Purpose ....................................... 2 Tax Allocation Financing Under the Dissolution Act ............................................ 2 The Redevelopment Project Areas .................... 3 Security for the Bonds ....................................... 3 Municipal Bond Insurance ................................ 4 Legal Matters .................................................... 5 Professional Services ........................................ 5 Offering of the Bonds ........................................ 5 Summary Not Definitive ................................... 5 THE FINANCING PLAN ...................................... 6 The Refunding Plan ........................................... 6 Estimated Sources and Uses of Funds .............. 7 THEBONDS .......................................................... 8 General Provisions ............................................ 8 Redemption....................................................... 9 Scheduled Debt Service on the Bonds ............ 12 SECURITY FOR THE BONDS .......................... 13 Tax Allocation Financing ................................ 13 Tax Revenues .................................................. 13 Pledged Tax Revenues .................................... 14 Redevelopment Property Tax Trust Fund........................................................... 14 Recognized Obligation Payment Schedules................................................... 16 Reserve Account ............................................. 18 No Additional Dcbt Other Than Refunding Bonds ....................................... 18 PROPERTY TAXATION IN CALIFORNIA ......................................... 18 TH� SUCCESSOR AGENCY ............................. 21 Government Organization ............................... 21 Successor Agency Powers ............................... 22 Dissolution Act Milestones ............................. 22 Successor Agency Accounting Records and Financial Statements ........................... 22 Stipulation Agreement .................................... 23 Plan Limitations .............................................. 23 THE PROJECT AREAS ...................................... 24 Description of the Project Areas ..................... 24 LandUsc ......................................................... 25 Assessed Valuations and Tax Revenues ......... 26 Major Taxpayers ............................................. 27 Assess►T�ent Appeals ........................................ 28 Pass-Through Agreements .............................. 28 Statutory Tax Sharing Payments ..................... 29 Outstanding Indebtedness ............................ TAX REVENUES AND DEBT SERVICE COVERAGE ............................................ 30 RISK FACTORS .................................................. 34 Factors Which May Affect Pledged Tax Revenues................................................ LEGAL MATTERS .......................................... Enforceability of Remedies ......................... Approval of Legal Proceedings ................... Tax Matters .................................................. No Litigation ............................................... CONCLUDING 1NFORMATION ................... Ratings on the Bonds ................................... The Municipal Advisor ................................ Continuing Disclosure ................................. Underwriting................................................ Additional Information ................................ References................................................... Execution..................................................... APPENDiX A- SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE ................................... APPENDIX B- CITY OF PALM DESERT INFORMATION .............................. APPENDIX C - FISCAL CONSULTANT'S REPORT.......................................... . APPENDIX D- CITY OF PALM UESERT AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR EIVDED JUNE 30, 2015......, APPENDIX E- FORM OF CONTINUING DISCLOSURE CERTIFICATE....... APPENDIX F- PROPOSED FORMS 0[-� BOND COUNSEL OPINiONS........ APPENDIX G - THE BOOK-ENTRY SYSTEM .......................................... 29 34 38 38 39 39 44 44 44 44 44 45 45 45 46 ... A-1 ... B-1 ... C-1 ... n- � ... E-1 .... F-1 ... G-1 � REGIONAL MAP [TO COME] MAP OF PROJECT AREAS [TO COME] OFFICIAL STATEMENT SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS $ « $ . Tax Allocation Refunding Bonds Taxable Tax Allocation Refunding Bonds 2017 Series H-A 2017 Series H-B This Official Statement, which includes the cover page, inside cover pages and appendices (the "Official Statement"), is provided to furnish certain information concerning the sale of the Successor Agency to the Palm Desert Redevelopment Agency Tax Allocation Refunding Bonds, Series 2017 A(Tax-Exempt) ("2017 Series H- A Bonds") and Taxable Tax Allocation Refunding Bonds, 2017 Series H-B Bonds (Federally Taxable) ("2017 Series H-B Bonds," and together with the 2017 Series H-A Bonds, the "Bonds"). INTRODUCTION This lntroduction contain,s nnly u brief description of this issue und does not purport to be complete. The lntroduction is subject in all respects tm m�re complete infnrmation in the entire O�ciul Statement and the offering of the Bonds to potential investnrs is made only by means of the entire O�cial Statement and the documents summarized in the O�cial Statement. Potential investors must read the entire O�ciul Statement to obtain information essentiul to the making nf an infnrmed investment decision (see "R/SK FACTORS"). Fnr definitions of certain capitulized terms used in the Official Statement and not otherw�ise defined, und the terms relatin� to the Boncls, see the summary included in APPEND/X A-"SUMMARY OF CERTAIN PROVISlONS OF THE INDENTURE. " The Successor Agency and the Former Agency The Palm Desert Redevelopment Agency (the "Former Agency") was established in 1974 by the City Council (the "City Council") of the City of Palm Desert (the "City") pursuant to the Community Redevelopment Law (the "Redevelopment Law"), constituting Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State of California (the "State"). In June 2011, Assembly Bill No. 26 ("AB X1 26") was enacted as Chapter 5, Statutes of 2011, together with a companion bill, Assembly Bill No. 27 ("AB X1 27"). A lawsuit was brought in the California Supreme Court, California Redevelopment Association, et al. v. Matosantos, et al., 53 Cal. 4th 231 (Cal. 2011), challenging the constitutionality of AB X 1 26 and AB X 1 27. In its December 29, 2011 decision, the California Supreme Court largely upheld AB X 1 26, invalidated AB X 1 27, and held that AB X 1 26 may be severed from AB X 1 27 and enforced independently. As a result of AB X 1 26 and the decision of the California Supreme Court in the California Redevelopment Association case, as of February 1, 2012, all redevelopment agencies in the State were dissolved, including the Former Agency, and successor agencies were designated as successor entities to the former redevelopment agencies to expeditiously wind down the affairs of the former redevelopment agencies. The primary provisions enacted by AB X 1 26 relating to the dissolution and wind down of former redevelopment agency affairs are Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code of the State. There have been multiple amendments to Parts 1.85 since its original enactment, including those pursuant to Assembly Bill No. 1484 ("AB 1484"), enacted in June 2012 as Chapter 26, Statutes of 2012, and Senate Bill No. 107 ("SB 107") enacted in September 2015, as Chapter 325, Statutes of 2015. The provisions of Parts 1.8 and 1.85 as amended, is referred to in this Official Statement as the "Dissolution Act." The Redevelopment Law, as amended by the Dissolution Act, is sometimes referred to in the Official Statement as the "Law." � Preliminazy, subjcct to changc. Pursuant to Section 34173 of the Dissolution Act, the City Council adopted Resolution No. 2011-76 on August 25, 2011, electing for the City to serve as the Successor Agency to the Palm Desert Redevelopment Agency (the "Successor Agency"). Upon the February 1, 2012 dissolution of the Former Agency, the Successor Agency was established. The Successor Agency is governed by a five-member Board of Directors consisting of the Mayor and the members of the City Council. The Mayor acts as the chair of the Successor Agency. See "THE SUCCESSOR AGENCY." Section 34173(g) of the Dissolution Act expressly affirms that the Successor Agency is a separate public en[ity from the City, that the two entities shall not merge, and that the liabilities of the Former Agency will not be transferred to the City nor will the assets of the Former Agency become assets of the City. See "THE SUCCESSOR AGENCY." The City The City of Palm Desert (the "City") is located in the County of Riverside (the "County") within the area known as the Coachella Valley. The City is situated approximately midway between the cities of Indio and Palm Springs, 117 miles east of Los Angeles, 118 miles northeast of San Diego and 515 miles southeast of San Francisco. According to the State Department of Finance, the City population as of January 1, 2016 was approximately 49,3SS. The Bonds are not an obligation of the City. For certain information with respect to the City, see APPENDIX B—"CITY OF PALM DESERT INFORMATION." Authority and Purpose The Bonds are being issued pursuant to the Constitution and laws of the State, including Article 11 (com►nencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State (the "Refunding Law"), the Law and an lndenture dated as of January 1, 2017 (the "Indenture") by and between the Successor Agency and U.S. Bank National Association, as trustee (the "Trustee"). The Former Agency entered into certain loan agreements with the Palm Desert Financing Authority (the "Authority") to finance and refinance redevelopment projects, including affordable housing projects, of the Former Agency. The Authority issued bonds to fund such loans. The 2017 Series H-A Bonds and the 2017 Series H-B Bonds are being issued to prepay the loans (the "Prior Loans") incurred by the Former Agency and cause a corresponding defeasance of the following bonds issued by the Authori[y (collectively, the "Refunded Bonds"): • $12,100,000 Tax Allocation (Housing Set-Aside) Revenue Bond, Series 2002(the "2017 Series H-A Refunded Bonds"), which are outstanding in the principal amount of $8,095,000; and the �86,155,000 Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds, Series 2007 (the "2017 Series H-B Refunded Bonds," which are outstanding in the principal amount of �44,070,000. See "THE FINANCING PLAN." Additionally, certain pass-through payments pursuant to negotiated tax sharing agreements and tax sharing statutes are payable on a senior basis to the Bonds. See "THE PROJECT AREAS — Pass-Through." Tax Allocation Financing Under the Dissolution Act Prior to the enactment of AB X I 26, the Redevelopment Law authorized the financing of redevelopment projects through the use of tax increment revenues. This method provided that the taxable valuation of the property within a redevelopment project area on the property tax roll last equalized prior to the effective date of the ordinance which adopted the redevelopment plan (or with respect to a later added component area of a project area, the effective date of the ordinance adopting the amendment to thc redevelopment plan) became the base year valuation. Assuming the taxable valuation never drops below the base year level, the Taxing Agencies, as defined in the Official Statement, thereafter received that portion of the taxes produced by applying then current tax rates to the base year valuation, and the redevelopment agency was allocated the remaining portion produced by applying then current tax rates to the increase in valuation over the base year. Such 2 incremental tax revenues allocated to a redevelopment agency were authorized to be pledged to the payment of agency obligations. Under the Dissolution Act, moneys will be deposited from time to time in a Redevelopment Property Tax Trust Fund (the "Redevelopment Property Tax Trust Fund" or "RPTTF"') held by a county auditor- controller with respect to a successor agency, which are equivalent to the tax incremen[ revenues that were formerly allocated under the Redevelopment Law to the redevelopment agency and formerly authorized under the Redevelopment Law to be used for the financing of redevelopment projects using current assessed values on the last equalized roll on August 20 each year. See "SECURITY FOR THE BONDS - Tax Allocation Financing" for additional information. The Dissolution Act provides that any bonds to be issued by the Successor Agency will be considered indebtedness incurred by the Former Agency, with the same legal effect as if the bonds had been issued prior to the effective date of AB X1 26, in full conformity with the applicable provision of the Redevelopment Law that existed prior to that date, and will be included in the Successor Agency's Recognized Obligation Payment Schedules (each a"Recognized Obligation Payment Schedule" or "ROPS") in accordance with the requirements of the Dissolution Act. See "SECURITY FOR THE BONDS Recognized Obligation Payment Schedules." The Redevelopment Project Areas There are four redevelopment project areas within the City which are identiiied below: • Project Area No. 1, as Amended ("PA 1" or "Project Area No. 1") • Project Area No. 2("PA 2" or "Project Area No. 2") • Project Area No. 3("PA 3" or "Project Area No. 3") • Project Area No. 4("PA 4" or "Project Area No. 4") PA 1, PA 2, PA 3 and PA 4 are collectively hereinafter referred to as the "Project Areas," or each individually a"Project Area." The Project Areas contain approximately 11,771 acres, which comprises approximately 68% of the total acres in the City. See "THE PROJECT AREAS" and "THE SUCCESSOR AGENCY" for additional information. Security for the Bonds For the security of the Bonds, the Successor Agency grants a pledge of and lien on all of the Pledged Tax Revenues. Before dissolution, a redevelopment agency was generally required to establish and maintain a Low and Moderate Income Housing Fund (the "Housing Fund") and deposit not less than 20 percent of the tax increment allocated to such redevelopment agency (the "Housing Set-Aside") into the Housing Fund. (The remaining 80 percent of tax increment not required to be deposited into Housing Fund is referred to in this Official Statement as the "80 Percent Portion.") The redevelopment agency was to use moneys deposited into the Housing Fund for authorized low and moderate income housing purposes. The Refunded Bonds were issued to finance and reiinance low and moderate income housing projects, and secured by a pledge of the Housing Set-Aside. The Dissolution Act authorizes refunding bonds, including the Bonds, to be secured by a pledge of moneys deposited from time to time in the RPTTF. The Dissolution Act has eliminated the Housing Fund and the requirement to deposit the Housing Set-Aside into such fund. The moneys deposited into the RPTTF now include the property tax revenues which would have been the 80 Percent Portion and the Housing Set-Aside. The Pledged Tax Revenues pledged to pay the Bonds consist of a portion of the amounts deposited from time to time in the RPTTF, equal to the amount which would have been the Housing Set-Aside. On or about the same time that the Bonds will be issued, the Successor Agency plans to issue two other series of bonds (the "2017 IVon-Housing Refunding Bonds") to refund certain other outstanding debt incurred by the Former Agency. The 2017 Non-Housing Refunding Bonds, upon issuance, will be secured by a lien and pledge on moneys deposited into the RPTTF, less the portion pledged for the Bonds and less certain other amounts. "Tax Revenues" are defined under the Indenture as: (a) All property taxes deposited from time to time into the RPTTF (consisting of all property tax revenues that would have been allocated to the Former Agency pursuant to subdivision (b) of Section 16 of Article XVI of the Constitution of the State and that are deposited and administered in accordance with the provisions of the Dissolution Act). (b) ln the event tha► the provisions of the Dissolution Act are invalidated because of a final judicial decision or a change in law, such that property tax revenues described above are no longer deposited into the RPTTF, then Tax Revenues shall mean all revenues derived from taxes levied on properties that would havc been allocated to the Former Agency pursuant to Section 16(b) of Article XVI of the California Constitution. "Pledged Tax Revenues" are defined under the lndenture as the portion of the Tax Revenues required to be deposited by the County Auditor-Controller into the RPTTF that is equal to the dollar amount that the Former Agency would have been required to deposit in the Housing Fund pursuant to Sections 33334.2 and 33334.3 of the Law, if the Former Agency had not been dissolved and such provisions were applicable in each fiscal year that the Bonds remain Outstanding. Although the amount of the Pledge Tax Revenues are calculatcd without regard to payments required pursuant to Pass-Through Agreements and Statutory Tax Sharing payments, any amounts due thereunder will be paid prior to the payment of debt service on the Bonds; provided, however, if there are insufficient Pledged Tax Revenues to make a debt service p�yment on the Bonds, amounts due under subordinate Pass-Through Agreements shall not be made prior to the payment of debt service on the Bonds. DISCUSSIONS HEREIN REGARDING PLEDGED TAX REVENUES NOW REFER TO THOSE MONEYS DEPOSITED BY THE COUNTY AUDITOR-CONTROLLER INTO THE REDEVELOPMENT PROPERTY TAX TRUST FUND EQUAL TO SUCH PLEDGED TAX REVENUES. See "PROPERTY TAXATiON IN CALIFORNIA" and "THE PROJECT AREAS - Pass-Throubh Agreements" and "- Statutory Tax Sharing Payments." The Successor Agency may not issue additional bonds payable on a basis senior to the Bonds. The Successor Agency may issue additional bonds payable from Pledged Tax Revenues on parity with the Bonds ("Parity Obligations"), but solely to refinance the Bonds if certain conditions are satisfied. See "SECURITY FOR THE BONDS No Additional Debt Other Than Refunding Bonds." The Successor Agency has covenanted to include in each ROPS the amounts required for debt service payments for the Bonds in the manner prescribed in the Indenture, and to transfer Pledged Tax Revenues to the Trustee for deposit into the Debt Service Fund at the times required by the Indenture. Sec "SECURITY FOR THE BONllS." The Bonds do not constitute a debt or liability of the City, the County of Riverside (the "County"), the State or of any of its political subdivision, other than the Successor Agency. The Successor Agency shall only be obligated to pay the principal of the Bonds, or related interest, from the funds described in the Official Statement, and neither the faith and credit nor the taxing power of the City, the County or the State pledged to the payment of the principal of or the interest on the Bonds. The Successor Agency has no taxing power. Municipal Bond Insurance The Successor Agency has applied for a municipal bond insurance policy and will decide whether to purchase such policy in connection with the offering of the Bonds. Such information will be included in the Official Statement. 4 Legal Matters The Bonds are being offered when, as and if issued, subject to the approval as to their legality by Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, as Bond Counsel. Bond Counsel's proposed approving opinions, and certain tax consequences incident to the ownership of the Bonds, including certain exceptions to the tax treatment of interest, are described more fully under the heading "LEGAL MATTERS." Certain legal matters will be passed on for the Successor Agency by Best Best & Krieger LLP, as Disclosure Counsel, by Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, as General Counsel to the Successor Agency, and for the Underwriter by their Counsel, Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California. Professional Services U.S. Bank IVational Association will act as Trustee with respect to the Bonds. Del Rio Advisors, LLC, Modesto, California (the "Municipal Advisor") advised the Successor Agency as to [he �nancial structure and certain other financial matters relating to the Bonds. Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California serves as Underwriter's Council. Offering of the Bonds Authority for Issuance. The Bonds are to be issued and secured pursuant to the lndenture, as authorized by Resolution No. SA-RDA-59 of the Successor Agency adopted on October 13, 2016, respectively, the Refunding Law and the Law. The Successor Agency's Oversight Board (the "Oversight Board") approved the action taken by the Successor Agency to refinance the Refunded Bonds on October 17, 2016. The State Department of Finance approved the Oversight Board action by letter dated December 1, 2016. Summary Not Definitive The summaries and references contained in the Official Statement with respect to the Indenture, the Bonds and other statutes or documents do not purport to be comprehensive or definitive and are quali�ed by reference to each such document or statute, and references to the Bonds are qualified in their entirety by reference to the form thereof included in the lndenture. Copies of the documents described in the Ofiicial Statement are available for inspection during the period of initial offering of the Bonds at the offices of the Financial Advisor, Del Rio Advisors, LLC, 1325 Country Club Drive, Modesto, CA 95356, telephone (209) 543-8704. Copies of these documents may be obtained after delivery of the Bonds from the Successor Agency at 73510 Fred Waring Drive, Palm Desert, California 92260. THE FINANCING PLAN The Refunding Plan Redemption of Refunded Bonds. On the Closing llate, a portion of the proc:eeds of each series of the Bonds will be transferred to the Trustee, as prior trustee, for the Refunded Bonds (the "Prior Trustee") for deposit into separate escrow accounts (together, the "Escrow Accounts") as provided for each series of Refunded Bonds, under a certain Housing Bonds Escrow Agreement, dated as of January 1, 2017 (the "Fscrow Agreement") delivered by and among the Successor Agency, the Authority and the Prior Trustee. Most or all of the amount deposited in the Escrow Account for the 2017 Series H-A Refunded Bonds, together with other available moneys, will be invested in Escrow Securities as set forth in the Escrow Agreement. The moneys (including those derived from the Escrow Securities) in such Escrow Account are irrevocably pledged for the payment of the $8,095,000 outstanding 2017 Series H-A Refunded Bonds to be redeemed in full on April 1, 2017 at a redemption price equal to ]00°Ic of the principal amount of the 2017 Series H-A Refunded Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium. Most or all of the amount deposited in the Escrow Account for the 2017 Series H-B Refunded Bonds, together with other available moneys, will be invested in Escrow Securities as set forth in the Escrow Agreement. The moneys (including those derived from the Escrow Securities) in such Escrow Account are and irrevocably pledged for the payment of the $44,070,000 outstanding 2017 Series H-B Refunded Bonds through to October 1, 2017, on which date, all of 2017 Series H-B Refunded Bonds will be paid or redeemed in full at a redemption price equal to 100�Io of the principal amount of the 2017 Series H-B Refunded Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium. The sufficiency of the amounts deposited in the Escrow Accounts for such purpose will be verified by the Verification Agent as described below. The lien of the Refunded Bonds will be discharged, terminated and of no further force and effect upon the deposit with the Prior Trustee of the amounts required pursuant to the Escrow Agreement. The amounts held by the Prior Trustee for the respective Refunded Bonds in the Escrow Accounts are pledged solely to the payment of amounts due and payable by the Successor Agency with respect to the Refunded Bonds. The funds deposited in the Escrow Accounts for the Refunded Bonds will not be available for the payment of debt service on the Bonds. Verifications of Mathematical Computations. Grant Thornton LLP will verify from the information provided to them the mathematical accuracy as of the date of the closing on the Bonds of (1) the computations contained in the provided schedules to determine that the cash listed in the schedules prepared by the Underwriter, to be held in the Escrow Accounts, will be sufficient to pay, when due, the principal, redemption premium and interest requirements of the Refunded Bonds, and (2) the computation of yield on the 2017 Series H-A Bonds contained in the provided schedules used by Bond Counsel in its determination that the interest with respect to the 2017 Series H-A Bonds is exempt from federal taxation. : Estimated Sources and Uses of Funds The following is a summary of the anticipated sources and uses of funds relating to the Bonds: Sources of Funds: Par Amount of Bonds Net Original Issue Premium/(Original Issue Discount) Underwriter's Discount Funds Held for thc Rcfundcd Bonds TOTAL SOURCES OF FUNDS: Series H-A Series H-B Total $ $ $ $ Uscs of Funds: Transfcr to Escrow Accounts Costs of Issuancc�� TOTAL USES (.)F FUNDS: $ $ $ $ �� Costs of issuance include fees and expenses of Bond Counsel, the Municipal Advisor, Disclosure Counsel, Verification Agent, Trustee and Escrow Agent, premium for bond insurance (if any), premium for debt service resen�e insurance policy (if any), costs of printing the Of[icial Sta[ement, rating fee and other costs of issuance of the Bonds. THE BONDS General Provisions Repayment of the Bonds. The Bonds of each series shall be delivered in fully registered for►n, numbered from one upwards in consecutive numerical order, and shall be executed and delivered in integral multiples of $5,000 and will be dated as of the date of delivery (the "Closing Date"). Interest on the Bonds is payable at the rates per annum set forth on the inside cover page of the Official Statement. Interest on the Bonds will be computed on the basis of a year consisting of 360 days and twelve 30-day months. Interest on the Bonds will be payable on each April 1 and October 1, commencing April 1, 2417 (each an "Interest Payment Date"). The Bonds shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after the 1 Sth calendar day of the month preceding an Interest Payment Date (a "Record Date") and on or before [he following Interest Payment Date, in which even[ it shall bear interest from such interest Payment Date, or (b) 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 Uate; provided, however, that if, at the time of authentication of any Bond, interest with respect to such Bond is in default, such Bond shall bear interest from the Interest Paymen[ Date to which interest has been paid or made available for payment with respect to such Bond. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Indenture, by the person in whose name it is registered, in person or by that person's duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer. Whenever any Bond or Bonds is surrendered for transfer, the Successor Agency shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds of the same Series H-And like tenor, maturity and total maturity 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 Successor Agency, except that [he 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 register the transfer or exchange of any Bond during the 15 days preceding any date established by the Trustee for selection of Bonds for redemption or any Bonds which have matured or been selected for redemption. Bonds may be exchanged at the Trust Office for the same aggregate principal amount of the Bond of the same maturity of other au[horized denominations. The cost of printing any Bonds and any services rendcred or expenses incurred by the Trustee in connection with any such exchange shall be paid by the Successor Agency, 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. No such exchange shall be required to be m�de during the 15 days preceding any date established by the Trustee for selection of Sonds for redemption or any Bonds which have matured or been selected for redemption. The foregoing provisions regarding the transfer and exchange of the Bonds app[y only if the book- entry system is discontinued. So [ong as the Bonds are in the book-entry system of The Depository Trust Company ("DTC") as described below, the rules of DTC will apply for the transfer and exchange of Bonds. Book-F.ntry System. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. Interest on and principal of the Bonds will be payable when due by wire of the Trustee to DTC which will in turn remit such interest and principal to DTC Participants, which will in turn remit such interest and principal to Beneficial Owners of the Bonds (see APPENDIX G-"THE BOOK-ENTRY SYSTEM."). As long as DTC is the registered owner of the Bonds and DTC's baok-entry method is used for the Bonds, the Trustee will send any notices to Bond Owners only to DTC. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Successor Agency or the Trustee. Under such circumstances, if a 8 successor securities depository is not obtained, Bonds are required to be printed and delivered as described in the Indenture. The Successor Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, the Bonds will be printed and delivered as described in the indenture. Redemption Optional Redemption of the Bonds. The 2017 Series H-A Bonds maturing on or before October 1, 20_ shall not be subject to optional redemption prior to their maturity. The 2017 Series H-A Bonds maturing on or after October 1, 20_ shall be subject to redemption as a whole or in part from such maturities as the Successor Agency shall designate, prior to their maturity at the option of the Successor Agency on any date on or after October 1, 20_, from funds derived by the Successor Agency from any source, at a redemption price equal to [ 100] percent of the principal amount of the 2017 Series H-A Bonds to be redeemed, together with interest accrued thereon to the date fixed for redemption, without premium. The 2017 Series H-B Bonds maturing on or before October 1, 20_ shall not be subject to optional redemption prior to their maturity. The 2017 Series H-B Bonds maturing on or after October 1, 20_ shall be subject to redemption as a whole or in part from such maturities as the Successor Agency shall designate prior to the redemption date, or such shorter period as agreed to by the Trustee in its discretion), prior to [heir ma[urity at the option of the Successor Agency on any date on or after October l, 20_, from funds derived by the Successor Agency from any source, at a redemption price equal to [ 100] percent of the principal amount of the 2017 Series H-B Bonds to be redeemed, together with interest accrued thereon to the date fixed for redemption, without premium. Mandatory Sinking Account Redemption. The 2017 Series H-A Bonds maturing on October 1, 20_ and October 1, 20_ are also subject to redemption prior to their stated maturity, in part by lot, from Sinking Account Installments deposited in the Sinking Account on October 1 of each year commencing October 1, 20_ and October 1, 20_, respectively, at the principal amount thereof and interest accrued thereon to the date fixed for redemption, without premium, according to the following schedules: 2017 Series H-A Bonds maturing October 1, 20 Redemption Date Sinking Account (October 1) Installment 20_ (Maturity) 2017 Series H-A Bonds maturing October 1, 20 Redemption Date Sinking Account (October 1) Installment 20_ (Maturity) 0 The 2017 Series H-B Bonds maturing on October I, 20_ and October 1, 20_ are also subject to redemption prior to their stated maturity, in part by lot, from Sinking Account Installments deposited in the Sinking Account on October 1 of each year commencing October 1, 20_ and October 1, 20_, respectively, at the principal amount thereof and interest accrued thereon to the date fixed for redemption, without premium, according to the following schedules: 2017 Series H-B Bonds maturing October 1, 20 Redemption Date Sinking Account (October 1) Installment 20_ (Maturity) 2017 Series H-B Bonds maturing October 1, 20 Redemption Date Sinking Account (October 1) Installment 20, (Maturity) In lieu of redemption of any Term Bond, upon the Successor Agency's written request, the Trustee may apply amounts on deposit in the Debt Service Fund or the Sinking Account at any time, for the purchase of such Term Bonds at public or private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as the Successor Agency may determine in its discretion, but not in excess of the principal amount thereof. No Bonds shall be so purchased by the Trustee with a settlement date more than 60 days prior to the redemption date. The principal amount of any Term Bonds so purchased by the Trustee in any 12 month period ending 30 days prior to any Principal Payment Date in any year will be credited towards and will reduce the principal amount of such Term Bonds required to be redeemed on such Principal Payment Date in such year. Selectinn of Bonds for Redemptinn. With respect to the redemption of Outstanding Bonds of a series, whenever less than all of the Outstanding Bonds of a maturity are called for redemption at any one time, thc Trustee will select the Bonds to be redeemed, from the Outstanding Bonds of such maturity not previously selected for redemption, by lot; provided, that if� less than all of the Outstanding Term Bonds of any maturity are called for optional redemption, each future Sinking Account Installment with respect to such Term Bonds will be reduced on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, so that the total amount of Sinking Account Installment payments (with respect to such Term Bonds) to be made after the optional redemption will be reduced by an amount equal to the principal amount of the Term Bonds so redeemed, as will be designated by the Successor Agency to the Trustee in writing. Nntice of Redemption; Cancellation of Redemption. The Trustee, on behalf of the Successor Agency, will send notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the bond registration books of the Trustee, to the Securities Depository and the Municipal Securities Rulemaking Board (via the Electronic Municipal Market Access System), not more than 60 days and not less than 30 days prior to the date fixed for redemption; provided that neither the failure of any Owner to receive any redemption notice sent to such Owner nor any defect in the notice so sent will not affect the sufficiency of the proceedings for redemption. The Successor Agency will have the right to rescind any optional redemption by written notice of rescission. Any notice of optional redemption will be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption. � Neither such cancellation nor lack of available funds will constitute an event of default under the Indenture. The Trustee will send notice of rescission of such redemption in the same manner as the original notice of redemption was sent. So long as DTC is the sole registered owner of the Bonds, notices of redemption (and notices of cancellation of redemption) will be sent to UTC and not to any beneficial owners. See "Book-Entry Only System." E ect of Redemption. From and after the date fixed for redemption, if notice of such redemption will have been duly given and funds available for the payment of such redemption price of the Bonds so called for redemption will have been duly provided, no interest will accrue on such Bonds from and after the redemption date specified in such notice. Such Bonds, or parts thereof redeemed, will cease to be entitled to any lien, benefit or security under the Indenture. � y � .i�i 0 m a� s bd i�i 0 � u .� i..l I�^ Vl .a a C 'O � 7 "O � s u � � � .� � v 'l. �y G :� O F u u .� V Y f L v L7 'J. � C 7 �i � � � .` u U, r c N JI L C C0 �V C .` L' u u .� F. u f r � C r � c 0 � Q x .: L. U n O N vl � u n�.� W .� e .L iir r 7 Y ,,,� � �'q � � � a a o � °C 0 �`c Q� J .` 3 u � � U t F ti J �. _ � v; N SECURITY FOR THE BONDS Tax Allocation Financing Prior to the enactment of the Dissolution Act, the Redevelopment Law authorized the iinancing of redevelopment projects through the use of tax increment revenues. First, the assessed valuation of the taxable property in a project area (or, if applicable, a later added component area), as last equalized prior to adoption of the redevelopment plan (or, as applicable, the adoption of the amendment to the redevelopment plan adding such component area), (or for a later added component area of a project area, the adoption of the redevelopment plan amendment adding such component area), was established and became the base roll. Thereafter, except for any period during which the assessed valuation drops below the base year level, the Taxing Agencies (defined below), on behalf of which taxes are levied on property within the project area, receive the taxes produced by the levy of the then current tax rate upon the base roll. Taxes collected upon any increase in the assessed valuation of the taxable property in a project area over the levy upon the base roll could be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing the redevelopment project. Redevelopment agencies themselves had no authority to levy taxes on property. The Dissolution Act now requires the County Auditor-Controller to determine the amount of property taxes that would have been allocated to the Former Agency had the Former Agency not been dissolved using current assessed values on the last equalized roll on August 20, and to deposit that amount in the RPTTF for the Successor Agency established and held by the County Auditor-Controller pursuant to the Dissolution Act. Such funds, or portions thereof distributed to the Successor Agency, are deposited by the Successor Agency in its Recognized Obligation Retirement Fund (the "Recognized Obligation Retirement Fund"). The Dissolution Act provides that any bonds authorized to be issued by the Successor Agency pursuant to its terms will be considered indebtedness incurred by the dissolved Former Agency, with the same legal effect as if the bonds had been issued prior to effective date of AB X 1 26, in full conformity with the applicable provision of the Redevelopment Law that existed prior to that date, and will be included in the Successor Agency's ROPS. Successor agencies have no power to levy property taxes but must receive an allocation of taxes as described above. See "RISK FACTORS." Tax Revenues As provided in the redevelopment plans for the Project Areas (each a"Redevelopment Plan") and pursuant to Article 6 of Chapter 6 of the Redevelopment Law, and Section 16 of Article XVI of the Constitution of the State, taxes levied upon taxable property in the Project Areas each year by or for the benefit of the State, for cities, counties, districts or other public corporations (collectively, the "Taxing Agencies" and each individually a"Taxing Agency") for i`iscal years beginning after the effective date of the ordinance approving the Redevelopment Plan, will be divided as follows: (a) To Taxin�A eg ncies: That portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of the Taxing Agencies upon the total sum of the assessed value of the taxable property in a Project Areas as shown upon the assessment roll used in connection with the taxation of such property by such Taxing Agency last equalized prior to the effective date of the ordinance adopting a Project Areas' Redevelopment Plan, or the respective effective dates of ordinances approving amendments to such Redevelopment Plan that added territory, as applicable (each, a"base year valuation"), will be allocated to, and when collected will be paid into, the funds of the respective Taxing Agencies as taxes by or for the Taxing Agencies on all other property are paid; and (b) To the Former A ency/Successor A�encX: Except for that portion of the taxes in excess of the amount identi�ed in (a) above which are attributable to a tax rate levied by a Taxing Agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of and the interest on, any bonded indebtedness approved by the voters of the Taxing Agency on or after January I, 1989 for the acquisition or improvement of real property, which portion shall be allocated to, 13 and when collected shall be paid into, the fund of that Taxing Agency, that portion of the levied taxes each year in excess of such amount, annually allocated wi[hin the redevelopment plan limit, when collected will be paid into a special fund of the Former Agency/Successor Agency. Section 34183 of the Dissolution Act effectively eliminates the January 1, 1989 date from this paragraph. Additionally, the language clarifed that effective September 22, 2015, debt service override revenues approved by the voters for the purpose of supporting pension programs, capital projects, or programs related to the State Water Project, which are not pledged to or needed for debt service on successor agency obligations are allocated and paid to the entity that levies the override and will not be deposited into the RPTTF. Tax revenues generated as set forth under (b) above and allocated to the Successor Agency constitute a portion of the Pledged Tax Revenues, as that term is used in the Official Statement. The Tax Revenues do not include any override revenues. Pledged Tax Revenues "Pledged Tax Revenues" are defined under the Indenture as the portion of the Tax Revenues required to be deposited by the County Auditor-Controller into the RPTTF that is equal to the dollar amount that the Former Agency would have been required to deposit in the Housing Fund pursuant to Sections 333342 and 33334.3 of the Law, if the Former Agency had not been dissolved and such provisions were applicable in each fiscal year that the Bonds remain Outstanding. DISCUSSIONS HEREIN REGARDING PLEDGED TAX REVENUES NOW REFER TO THOSE MONEYS DEPOSITED BY THE COUNTY AUDITOR-CONTROLLER INTO THE REDEVELOPMENT PROPERTY TAX TRUST FUND EQUAL TO SUCH PLEDGED TAX REVENUES. Although the amount of the Pledge Tax Revenues are calculated without regard to paymenis required pursuant to Pass-Through Agreements and Statutory Tax Sharing payments, any amounts due thercunder will be paid prior to the payment of debt service on the Bonds; provided, however, if there are insufficient Pledged Tax Revenues to make a debt service payment on the Bonds, amounts due under subordinate Pass-Through Agreements shall not be made prior to the payment of debt service on the Bonds. See "Redevelopment Property Tax Trust Fund — Disbur.sement from Redevelopment Propertv Tux Trust Fu�icl." The Bonds are special obligations of the Successor Agency. The Bonds do not constitute a debt or liability of the City, the County, the State or of its political subdivision, other than the Successor Agency. The Successor Agency shall only be obligated to pay the principal of the Bonds, or the interest thereon, from the funds described in the Official Statement, and neither the faith and credit nor the taxing power of the City, the County, the State or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Successor Agency has no taxing power. The State Legislature has amended the Uissolution Act several times. The Successor Agency expects, but cannot guarantee, that the processes for funding of enforceable obligations prescribed by any new legislative change in the Dissolution Act will not interfere with its administering of the Tax Revenues in accordance with the Indenture and will effectively result in adequate Pledged Tax Revenues for the timely payment of principal of and interest on the Bonds when due. Redevelopment Property Tax Trust Fund Deposits to the Redevelopment Property Tax Trust Fund. Section 34172 of the Dissolution Act provides that, for purposes of Section 16 of Article XVI of the State Constitution, the RPTTF shall be deemed to be a special fund of the Successor Agency to pay the debt service on indebtedness incurred by the Former Agency or the Successor Agency to finance or refinance the redevelopment projects of the Former Agency. Disbursements from the Redevelopment Property Tax Trust Fund. The Redevelopment Law authorized redevelopment agencies to make paymen[s [o Taxing Agencies to alleviate any financial burden or detriments to such Taxing Agencies caused by a redevelopment project. The Former Agency entered into agreements with the Taxing Agencies for this purpose ("Pass-Through Agreements"). Additionally, because of amendments to the redevelopment plans, there are Statutory Tax Sharing payments with respect to each Project Area. See "THE PROJECT AREAS - Pass-Through Agreements" and "- Statutory Tax Sharing Payments"). 14 Typically, under the RPTTF distribution provisions of the Dissolution Act, a county auditor-controller is to distribute funds for each six-month period in the following order specified in Section 34183 of the Dissolution Act: (i) first, subject to certain adjustments (as described below) for subordinations to the extent permitted under the Dissolution Act (if any, as described below under "THE PROJECT AREAS - Pass- Through Agreements" and "- Statutory Tax Sharing Payments") and no later than each January 2 and June 1, to each local taxing agency and school entity, to the extent applicable, amounts required for pass-through payments such entity would have received under provisions of the Redevelopment Law, as those provisions read on January 1, 2011, including negotiated pass-through agreements and statutory pass-through obligations; (ii) second, on each January 2 and June l, to the successor agency for payments listed in its ROPS, with debt service payments (and amounts required to replenish the related reserve funds, if any) scheduled to be made for tax allocation bonds having the highest priority over payments scheduled for other debts and obligations listed on the Recognized Obligation Payment Schedule; (iii) third, on each January 2 and June 1, to the successor agency for the administrative cost allowance, as defined in the Dissolution Act; and (iv) fourth, on each January 2 and June 1, to taxing entities any moneys remaining in the RPTTF after the payments and transfers authorized by clauses (i) through (iii), in an amount proportionate to such taxing entity's share of property tax revenues in the tax rate area in that fiscal year (without giving effect to any pass-through obligations that were established under the Redevelopment Law). The Dissolution Act requires county auditor-controllers to distribute from the RPTTF amounts required to be distributed under the Pass-Through Agreements and Statutory Pass-Through to the taxing entities on each January 2 and June 1 before amounts are distributed by the County Auditor-Controller from the RPTTF to the Successor Agency's Redevelopment Obligation Retirement Fund, unless: (i) pass-through payment obligations have been made subordinate to debt service payments for the bonded indebtedness of the Former Agency, as succeeded to by the Successor Agency; (ii) the Successor Agency has reported, no later than the September 1 and June 1 preceding the applicable January 2 and June 1 distribution date, that the total amount available to the Successor Agency from the RPTTF allocation to the Successor Agency's Redevelopment Obligation Retirement Fund, from other funds transferred from the Former Agency and from funds that have or will become available through asset sales and all redevelopment operations is insuf�cient to fund the Successor Agency's enforceable obligations, pass-through payments and the Agency's administrative cost allowance for the applicable ROPS period; and (iii) the State Controller has concurred with the Successor Agency that there are insufficient funds for such purposes. If the requirements set forth in clauses (i) through (iii) of the foregoing paragraph have been met, the Dissolution Act provides for certain modifications in the distributions otherwise calculated to be distributed on the applicable January 2 or June 1 property tax distribution date (as adjusted for weekends and holidays). To provide for calculated shortages to be paid to the Successor Agency for enforceable obligations, the amount of the deficiency will first be deducted from the residual amount otherwise calculated to be distributed to the taxing entities under the Dissolution Act after payment of the Successor Agency's enforceable obligations, pass- through payments and the Successor Agency's administrative cost allowance. If such residual amount is exhausted, the amount of the remaining deficiency will be deducted from amounts available for distribution to the Successor Agency for administrative costs for the applicable ROPS period in order to fund the enforceable obligations. Finally, funds required for servicing bond debt may be deducted from the amounts to be distributed under subordinated Pass-Through Agreements, in order to be paid to the Successor Agency for enforceable obligations, but only after the amounts described in the previous two sentences have been exhausted. The Dissolution Act provides for a procedure by which the Successor Agency may make statutory pass-through payments subordinate to the Bonds. The Successor Agency has not undertaken any procedures to obtain such subordination of the statutory pass-through payments and, therefore, statutory pass-through payments are senior 15 to the Bonds as described below. The Successor Agency cannot guarantee that this process prescribed by the Dissolution Act of administering the Tax Revenues and the subordinations provided in the Pass-Through Agreements will effectively result in adequate Pledged Tax Revenues for the payment of principal and interest on [he Bonds when due. See [he captions "THE PROJECT AREAS - Pass-Through Agreements" and "- Statutory Tax Sharing Payments" and "R1SK FACTORS - Recognized Obligation Payment Schedule." Recognized Obligation Payment Schedules Enforceab[e Obligations. The Dissolution Act requires successor agencies to prepare and approve, and submit to the successor agency's oversight board and the State Department of Finance for approval, a ROPS for each prescribed period pursuant to which enforceable obligations (as defined in the Dissolution Act) of the successor agency are listed, together with the source of funds to be used to pay for each enforceable obligation. As defined in the Dissolution Act, "enforceable obligation" includes bonds, including the required debt service, reserve set-asides, and any other payments required under the indenture or similar documents governing thc issuance of the outstanding bonds of the former redevelopment agency, as well as other obligations such as loans, judgments or settlements against the former redevelopment agency, any legally binding and enforceable agreement that is not otherwise void as violating the debt limit or public policy, contracts necessary for the administration or operation of the successor agency, and amounts borrowed from the Low and Moderate Income Housing Fund and from the city. A reserve may be included on the ROPS and held by the successor agency when required by the bond indenture or when the next property tax allocation will be insufficient to pay all obligations due under the provisions of the bond for the next payment due in the following half of the calendar year (see APPENDIX A—"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE"). The Successor Agency has covenanted to request such reserves as described below. Under the Dissolution Act, the categories of sources of payments for enforceable obligations listed on a ROPS are the following: (i) the Low and Moderate Income Housing Fund (however, as discussed under "INTRODUCTION — Security for the Bonds," the Low and Moderate Income Housing Fund was eliminated under the Dissolution Act), (ii) bond proceeds, (iii) reserve balances, (iv) administrative cost allowance, (v) the RPTTF (but only to the extent no other funding source is available or when payment from property tax revenues is required by an enforceable obligation or otherwise required under the Dissolution Act), or (vi) other revenue sources (including rents, concessions, asset sale proceeds, interest earnings, and any other revenues derived from the former redevelopment agency, as approved by the oversight board). Other than amounts deposited in the RPTTF allocable to the Project Areas and amounts held in funds and accounts under the Indenture, the Successor Agency does not expect to have any other funds available to pay the Bonds. The Dissolution Act provides that only those payments listed in the ROPS may be made by the Successor Agency from the funds specified in the ROPS. Required Approva[s. As provided in SB 107, the ROPS with respect to each Fiscal Year (which is segregated into six-month periods beginning July 1 and January 1(each, a"ROPS Payment Period"), must be submitted by the Successor Agency, after approval by the Oversight Board, to the County Auditor-Controller, the State Department of Finance, and the State Controller by each February 1(unless a Last and Final ROPS has been approved as described below). For information regarding procedures under the Dissolution Act relating to late ROPS and implications thereof on the Bonds, see "RISK FACTORS Recognized Obligation Payment Schedule." Pursuant to SB 107, commencing on January 1, 2016, successor agencies that have received a Finding of Completion and the concurrence of the Department of Finance as to the items that qualify for payment, among other conditions, may at their option, file a"Last and Final" ROPS schedule (the "Last and Final ROPS"). If approved by the State Department of Finance, the Last and Final ROPS will be binding on all parties, and the Successor Agency will no longer submit a ROPS to the Department of Finance or the Oversight Board. The county auditor-controller will remit the authorized funds to the Successor Agency in accordance with the approved Last and Final ROPS until each remaining enforceable obligation has been fully paid. A successor agency may submit no more than two requests to amend an approved Last and Final ROPS. The 16 Successor Agency plans to evaluate its outstanding obligations from time to time, to determine whether (and if so, when) it would file a Last and Final ROPS. Debt Service. The Successor Agency has made a covenant in the Inden[ure to include in each ROPS to be submitted after the effective date of the Indenture a request for the County Auditor-Controller to disburse from the RPTTF to the Successor Agency on each RPTTF Disbursement Date, the following amounts: (i) the interest payment coming due with respect to the Outstanding Bonds �nd Parity Obligations (if any) during such ROPS Payment Period; (ii) for any ROPS Payment Period which covers payments from January through June of a calendar year, at least one-half (but, at the discretion of the Successor Agency, may be up to all) of the principal amount (including maturing principal and any Sinking Account Installment) coming due with respect to the Bonds and Parity Obligations (if any) on October 1 of such calendar year (the "Principal Reserve"); (iii) for any ROPS Payment Period which covers payments from July through December of a calendar year, an amount equal to the principal amount (including maturing principal and any Sinking Account Installment) coming due with respect to the Bonds and Parity Obligations (if any) on October 1 of such calendar year, less the Principal Reserve already received in connection with the immediately prior ROPS Payment Period and deposited with the Trustee; and (iv) amounts, if any, required to replenish the Reserve Account (including payments to the provider of any Qualified Reserve Credit Instrument for draws on such Qualified Reserve Credit Instrument), as required pursuant to the Indenture, and to replenish the reserve accounts of any Parity Obligations (if any). The Successor Agency shall also include on the periodic ROPS for approval by the Oversight Board and State Department of Finance, to the extent necessary and permitted under the Dissolution Act, the amounts to be held as a reserve until the next ROPS Payment Period, as contemplated by California Health and Safety Code Section 34171(d)(1)(A), if the next property tax allocation is projected to be insufficient to pay all obligations due under this Indenture during that next ROPS Payment Period. To that end, whenever the Successor Agency is preparing a ROPS, the Successor Agency shall, based on information obtained from the County Auditor- Controller, review the amount of dollars deposited in the RPTTF on the two immediately prior RPTTF Disbursement Dates. For the purposes of complying with this paragraph (i.e., projecting whether the next property tax allocation will be sufficient to pay all obligations due under this Indenture during the next ROPS Period), the Successor Agency shall assume that the property tax revenue colleciion (and thus, the dollar amount to be deposited in the RPTTF) will be consistent with the pattern shown during the last two ROPS Payment Periods, but without any assumed increase to the assessed value of the taxable properties in the Project Areas. Upon the Successor Agency's receipt of Tax Revenues on each RPTTF Disbursement Date, the Successor Agency shall apply the Pledged Tax Revenues pursuant to the ROPS (as approved by the State Department of Finance) and deposit the Pledged Tax Revenues received for the payment of debt service of the Bonds and any Parity Obligations and any replenishment of the Reserve Account and Parity Reserve Accounts into the Special Fund established and held by the Successor Agency. During each Bond Year, the Successor Agency shall deposit such moneys in the Special Fund until such time as the amount so deposited in a fund designated the "Special Fund" is at least equal to the sum of (i) the aggregate amount required to be transferred to the Trustee pursuant to the Indenture for such Bond Year, and (ii) the aggregate amount required by the governing documents of the Parity Obligations to be transferred for the debt service payment and replenishment of the Parity Reserves. In addition to the foregoing, from the moneys received by the Successor Agency as part of the January 2, 2017 RPTTF disbursement, the Successor Agency shall promptly deposit $ into the Special Fund for application toward debt service on the Bonds. Such amount represents moneys received by the frl Successor Agency pursuant to a listing on the ROPS for the "ROPS 16-17B" period (i.e., the ROPS Payment Periai covering January 2017 through June 2017) [hat would have been used for debt service for the Prior Loans if the Prior Loant were not refunded. The Successor Agency has no power to levy and collect taxes, and various factors beyond its control could affect the amount of Pledged Tax Revenues available in any six-month period (or otherwise) to pay the principal of and interest on the Bonds. See "RISK FACTORS." Reserve Account A Reserve Account has been established under the Indenture to be held by the Trustee to further secure the timely payment of principal of and interest on the Bonds. Within the Reserve Account, a separate subaccount (each a"Reserve Subaccount") has been established for each series of Bonds. The Reserve Requirement for each Reserve Subaccount is equal to the least of (i) ten percent of the sum of the original stated principal amounts of the Bonds of such series at issuance, (ii) 125 percent of Average Annual Debt Service of the Outstanding Bonds of such series or (iii) Maximum Annual Debt Service of the Outstanding Bonds of such serics. Moneys in (or available to) each Reserve Subaccount will be used and withdrawn by the Trustee solely for the purpose of (i) replenishing the Interest Account, the Principal Account or the Sinking Account in such order, in the event of any deficiency at any time in any of such accounts or for the purpose of paying the interest on or principal of the related series of Bonds in the event that no other money in the Special Fund or the Uebt Service Fund is lawfully available therefor, or (ii) making the final payments of principal of and interest on the related series of Bonds. Each Reserve Subaccount secures only the Bonds of the related series, and will no[ secure any other series of Parity Obligations that may be issued pursuant to the terms of the Indenture (see "No Additional Debt Other Than Refunding Bonds" below). The Indenture provides that in lieu of a cash deposit, the Successor Agency may sa[isfy all or a portion of [he Reserve Requirement for a series of Bonds by means of a Qualified Reserve Account Credit Instrument (see APPENDIX A-"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE"). The Successor Agency has applied for a debt service reserve insurance policy to satisfy such requirement. The Successor Agency will decide whether to purchase such policy in connection with the offering of the Bonds. No Additional Debt Other Than Refunding Bonds The Successor Agency covenants that it will not incur any additional obligations payable, either as to principal or interest, from the Pledged Tax Revenues, that will have any lien upon the Pledged Tax Revenues on a parity with or superior to the lien under the Indenture for the Bonds; except that the Successor Agency may: (a) incur Parity Obligations to refund then outstanding Bonds (or Parity Obligations issued after the Closing Date pursuant to the Indenture), if (i) aggregate debt service on such proposed Parity Obligations will be lower than the aggregate debt service on the Bonds (or Parity Obligations) being refunded; (ii) the scheduled final maturity date of such proposed Parity Obligations will not be later than the scheduled final maturity date of the Bonds or other Parity Obligations being refunded; and (iii) the issuance of such Parity Obligations shall be in compliance with California Health and Safety Code Section 34177.5 (but only to the extent that such provision of the Dissolution Act is applicable and then in effect); or (b) incur Obligations which will have a lien on Pledged Tax Revenues junior to the Bonds; or (c) incur Obligations that will be payable in whole or in part from sources other than the Pledged Tax Revenues pledged under the Indenture. PROPERTY TAXATION IN CALIFORNIA Manner in Which Property Valuations and Assessments are Determined (Article XI!). On June 6, 1978, California voters approved an amendment (commonly known as both Proposition 13 and thc Jarvis-Gann Initiative) to the State Constitution which imposes certain limitations on taxes that may be levied against real property. This amendment, which added Article XIIIA to the State Constitution, among other things, defines full cash value of property to mean "the county assessor's valuation of real 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." This full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2�I� per year, or any reduction in the consumer price index or comparable local data, or any reduction in the event of declining property value caused by substantial damage, destruction or other factors. The amendment further limits the amount of any ad valorem tax on real property to 1% of the full cash value of that property, except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978 and on any bonded indebtedness for the acyuisition or improvement of real property which is approved after July 1, 1978 by two-thirds of the votes cast by voters voting on such indebtedness. See "SECURITY FOR THE BONDS - Tax Revenues," "Property Tax Rate" below and "RISK FACTORS - Factors Which May Affect Tax Revenues - Reduction in Inflationary Rate." In the general election held November 4, 1986, voters in the State approved two measures, Propositions 58 and 60, which further amend the terms "purchase" and "change of ownership," for purposes of determining full cash value of property under Article XIIIA, to not include the purchase or transfer of (1) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children. Proposition 60 amends Article XIIIA to permit the Legislature to allow persons over age 55 who sell their residence and buy or build another of equal or lesser value within two years in the same county (or in certain cases, another county), to transfer the old residence's assessed value to the new residence. Proposition 8 Adjustments. Proposition 8, approved in 1978, provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide, and such methodology has been upheld by the California courts. During the recent recession, the County made significant blanket assessed value reductions throughout the County pursuant to Proposition 8 from the maximum amount that could be assessed on property. Unsecured and Secured Property. In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." The secured classification includes property on which any propeRy tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other propeRy owned by the taxpayer. Every [ax which becomes a lien on secured property, arising pursuant to State law, has priority over all other liens on the secured property, regardless of the time of the creation of the other liens. Property in the Project Areas are assessed by the Riverside County Assessor except for public utility property which is assessed by the State Board of Equalization. The valuation of secured property is determined as of January 1 each year for taxes owed with respect to the succeeding Fiscal Year. The tax rate is equalized during the following September of each year, at which time the tax rate is determined. Secured and unsecured property is entered on separate parts of the assessment roll maintained by the county assessor. The method of collecting delinquent taxes it substantially different for the two classiiications of property. Property taxes on the secured roll are due in two installmcnts, on November 1 and February 1 of the fiscal year. If unpaid, such taxes become delinquent on September 10 and April 10, respectively, and a]0% penalty attaches to any delinquent payment in addition to a$38.63 cost on the second installment, which is the cost for fscal year 2016/17. On July 1 of each fiscal year any property which is delinquent will become defaulted. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus a redemption penalty of 1.5% per month to the time of redemption, together with any other charges permitted by law. If taxes are unpaid for a period of five years or more, the property is subject to sale by the County Tax Collector. The exclusive means of enforcing the payment of delinquent taxes with respect to 19 property on the secured roll is the sale of the property securing the taxes for the amount of taxes which are delinquent. The County utilizes a mechanism for the distribution of tax increment revenue to the former redevelopment agencies that has a similar effect on the Agency's tax increment revenues as the device known as the Teeter Plan (Section 4701 et seq. of the California Revenue and Taxation Code). The Teeter Plan allows counties to distribute secured property tax revenue to participating jurisdictions without regard to delinquencies by maintaining a reserve fund to cover delinquencies and allocating revenue based on the original secured roll, retaining all delinquent tax payments and penalties. Under the mechanism used by the County to distribute tax increment revenue to the former redevelopment agencies, the County pays one-half of the taxes from the net taxable assessed valuation appearing on the equalized roll to each agency's RPTTF on January 2 and the other one-half on June 1; delinquencies are not deducted from the RPTTF revenue, and delinquent tax payments and defaulted tax redemptions, penalties and interest are not added to RPTTF revenue. Consequently, the Successor Agency is not affected by delinquent tax payments. Property taxes on the unsecured roll become delinquent, if unpaid on August 31. A lO�Ic penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of 1.5% per month begins to accrue on November 1 of the fiscal year. The County has four ways of collecting delinquent unsecured personal property taxes: (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) tiling a certificate of delinquency for record in the County Recorder's Office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. Supplemental Assessments. Legislation adopted in 1984 (Section 75, et seq. of the Revenue and Taxation Code of the State of California) provides for the supplemental assessment and taxation of property at its full cash value as of the date of a change of ownership or the date of completion of new construction (the "Supplemental Assessments"). To determine the amount of the Supplemental Assessment the County Auditor- Controller applies the current year's tax rate to the supplemental assessment roll and computes the amount of taxes that would be due for the full year. The taxet due are then adjusted by a proration factor to retlect the portion of the tax year remaining as determined by the date on which the change in ownership occurred or the new construction was completed. Supplemental Assessments become a lien against the real property on the date of the change of ownership or completion of new construction. Unitary Property. Commencing in the 1988/89 Fiscal Year, the Revenue and Taxation Code of the State of California changed the method of allocating property tax revenues derived from state assessed utility properties. It provides for the distribution of state assessed values to tax rate areas by a county-wide mathematical formula rather than assignment of state assessed value according to the location of those values in individual tax rate areas. Commencing with the 1988/89 Fiscal Year, each county has established one county-wide tax rate area. The assessed value of all unitary property in the county has been assigned to this tax rate area and one tax rate is levied against all such property ("Unitary Revenues"). The property tax revenue derived from the assessed value assigned to the county-wide tax rate area shall be allocated as follows: (1) each jurisdiction will be allocated up to 29c of the increase in Unitary Revenues on a pro rata basis county-wide; and (2) any decrease in Unitary Revenues or increases less than 2�I�, or any increase in Unitary Revenues above 2�Io will be allocated among jurisdictions in the same proportion of each jurisdiction's Unitary Revenues received in the prior year to the total Unitary Revenues county-wide. Legislation adopted in 2006 (SB 1317, Chapter 872) provides that, commencing with Fiscal Year 2007/08, certain property related to new electrical facilities shall be allocated entirely to the county in which such property is located and property tax revenues derived from such property shall be allocated to such county and certain Taxing Agencies with such county. 20 Property Tax Rate. The difference between the $1.00 general tax levy provided under Article XIIIA tax rate and those actually levied (referred to as the "tax override rate") represents the tax levied by overlapping entities to pay debt service on bonded indebtedness approved by the voters. Section 34183 of the Dissolution Act effectively eliminated the tax override rate from the calculation of Tax Revenues with respect to tax override rates authorized by voters for the purpose of repaying bonded indebtedness for the acquisition or improvement of real property. Future Tax Revenues have been projected by applying a tax rate of $1.00 per $] 00 of taxable value general levy to incremental taxable values. Administrative Costs. In 1990, the Legislature enacted SB 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. SB 1559 (Chapter 697, Statutes of 1992) explicitly includes redevelopment agencies among the jurisdictions which are subject to such charges. In addition, Sections 34182(e) and 34183(a) of the Dissolution Act allow administrative costs of the County Auditor-Controller for the cost of administering the provisions of the Dissolution Act, as well as the foregoing SB 1559 amounts, to be deducted from property tax revenues before moneys are deposited into the RPTTF. For Fiscal Year 2016/17, the County administrative fees charged to the Project Areas including administration of the RPTTF were $1,013,000. In total, the fees represent approximately 1.10�I� of gross Tax Revenues. THE SUCCESSOR AGENCY Government Organization The Former Agency was established by the City Council in 1974 pursuant to the Redevelopment Law. In June 2011, AB X 1 26 was enacted, together with a companion bill, AB X 1 27. A lawsuit was brought in the California Supreme Court, California Redevelopment Association, et al. v. Matosantos, et al., 53 Cal. 4th 231 (Cal. Dec. 29, 2011), challenging the constitutionality of AB X 1 26 and AB X 1 27. In its December 29, 2011 decision, the California Supreme Court largely upheld AB X 1 26, invalidated AB X 1 27, and held that AB X 1 26 may be severed from AB X1 27 and enforced independently. As a result of AB X1 26 and the decision of the California Supreme Court in the California Redevelopment Association case, as of February 1, 2012, all redevelopment agencies in the State were dissolved, including the Former Agency, and successor agencies were designated as successor entities to the former redevelopment agencies to expeditiously wind down the affairs of the former redevelopment agencies. Section 34173(g) of the Dissolution Act expressly affirms that the Successor Agency is a separate public entity from the City, that the two entities shall not merge, and that the liabilities of the Former Agency will not be transferred to the City nor will the assets of the Former Agency become assets of the City. Successor Agency Board Members Jan Harnik, Chuirx Sabby Jonathan, Vice-Chair Kathleen Kelly, Director-elect Gina Nestande, Director-elect Susan Marie Weber, Director Term Expires November 2018* November 2018* Novembcr [2020] November [2020] November [2020] The City Manager serves as the Successor Agency's Executive Director, the City's Finance Director serves as the Successor Agency's Finance Officer and the City Clerk serves as the Successor Agency Secretary. The costs of such functions, as well as additional services performed by City staff are allocated annually to the Successor Agency, within certain limitations established by the Dissolution Act. Such reimbursement is subordinate to payment on any outstanding bonds of the Successor Agency. ' Subject to City Council reorganization af�ter election certification on Decemher 8, 2016. 21 Successor Agency Powers Pursuant to the Dissolution Act, the Successor Agency is a separate public body from the City and succeeds to the organizational status of the Former Agency but without any legal authority to participate in redevelopment activities, except to complete any work related to an approved enforceable obligation. The Successor Agency is tasked with expeditiously winding down the affairs of the Former Agency, pursuant to the procedures and provisions of the Dissolution Act. Under the Dissolution Act, many Successor Agency actions are subject to approval by the Oversight Board, as well as review by the State Department of Finance. California has strict laws regarding public meetings (known as the Ralph M. Brown Act) which generally make all Successor Agency Board and Oversight Board meetings open to the public in similar manner as City Council meetings. Dissolution Act Milestones Section 34179.5 of the Dissolu[ion Act established a due diligence review process for determining the unobligated balances that redevelopment agencies had available as of June 30, 2012 to remit to their respective county auditor-controllers for distribution to affected Taxing Agencies within project areas of the former redevelopment agencies. The Successor Agency has remitted to the County Auditor-Controller all of the unobligated balances as determined by the State Department Finance. On May 15, 2013, the Successor Agency received its Finding of Completion from the State Department of Finance. Receipt of the Finding of Completion allows the Successor Agency to do several things, among them, developing a Long Range Property Management Plan (Described below) and spending proceeds of bonds issued prior to December 31, 2010, all requiring approval of the Oversight Board. After receiving the finding of completion, each successor agency is required to submit a Long Range Property Management Plan (a "Long Range Property Management Plan") detailing what it intends to do with its inventory of real property interests. Permissible uses include: sale of the property, use oi the property to fulfill an enforceable obligation, retention of the property for future redevelopment, and retention of the property for governmental use. The State Department of Finance approved the Successor Agency's Long Range Property Management Plan on June 2, 2014 and an amendment to the Long Range Property Management Plan on December 9> 2015. Successor Agency Accounting Records and Financial Statements The activities of the Successor Agency are reported as a iiduciary [rust fund, which is in accordance with guidance issued by the State Department of Finance on September 19, 2012 and available on its website relating to redevelopment dissolution (www.dof.ca.�ov/redevelopment) under the category of "Common RDA Dissolution Questions and Answers," interpreting Section 34177(n) of the Law concerning certain successor agency postaudit obligations. The State Department of Finance's website is not in any way incorporated into this Official Statement, and [he Successor Agency cannot take any responsibility for, nor make any representation whatsoever as to, the continued accuracy of the Internet address or the accuracy, completeness, or timeliness of information posted there. In addition, from time to time, the State Department of Finance changes its guidance without notice. The City's financial statements for the Fiscal Year ended June 30, 2015, which include information regarding the Successor Agency, are attached as "APPENDIX D" to this Official Statement and have been audited by White Nelson Diehl Evans LLP, Irvine, California. The City's audited financial statements are public documents and are included within this Ofiicial Statement without the prior approval of the auditor. White Nelson Dieht Evans LLP has not been engaged to perform, and has not performed, since the date of its report inc[uded in the Official Statement, any procedures on the financial statements addressed in that report. White Nelson Diehl Evans LLP also has not performed any procedures relating to this Official Statement. 22 Stipulation Agreement On May 15, 1991, the Riverside County Superior Court entered a final judgment incorporating the terms of a Stipulation for Entry of Judgment ("Original Stipulation") in Case No. 51124 and a Stipulation for Entry of Judgment pursuant to Settlement Agreement and Mutual Release ("Settlement Agreement") in Case No. 51124, among the Former Agency, the City, the Western Center on Law and Poverty, Inc., California Rural Legal Assistance, and others. On June 18, 1997 and on September 20, 2002, the Riverside County Superior Court amended the judgment, incorporating Stipulations Amending Stipulation for Entry of Judgment. The judgment, as amended (the "Judgment"), generally required the Former Agency to use 20�I� of its tax increment revenues, and additional tax increment revenues if necessary, to develop, rehabilitate, or otherwise financially assist affordable housing units and to meet certain housing needs of the City. Before dissolution, the Former Agency used its Housing Set-Aside (see "INTRODUCTION — Security for the Bonds") to fulfill its obligations under the Judgment. The Refunded Bonds were used to finance and refinance affordable housing projects that satisfied the requirements of both the Judgment and the Redevelopment Law provisions relating to the Housing Set-Aside. Accordingly, the Former Agency pledged, and used, the Housing Set-Aside for the repayment of the Prior Loans relating to the Refunded Bonds. Under the terms of the Judgment, the Former Agency was permitted to incur indebtedness and pledge 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 reflects a present value savings when compared with the total amount of debt service remaining to be paid on the refunded obligations. While the Dissolution Act has eliminated the Housing Fund and the requirement to deposit the Housing Set-Aside into such fund, the Successor Agency continues to recognize the Judgment as its enforceable obligation. On its ROPS, the Successor Agency has included line items designated as "Stipulation Judgment Case No. 51 124," listing the amounts necessary to fuliill its obligations under the Judgment (after taking into account the amounts already listed for the repayment of the Refunded Bonds). While the DOF originally approved such line items, the DOF changed its position beginning with ROPS 14-15A (i.e., covering the period commencing July 1, 2014). On August 14, 2014, the Successor Agency filed an action, Successor Agency to the Palm Desert Redevelopment Agency v. Michael Cohen, Sacramento Superior Court Case No. 34-2014-00167698 (the "Successor Agency Lawsuit"), seeking to compel the DOF to permit payment of the affordable housing obligations mandated by the Judgment. Subsequently, in view of the fact that there were similar cases pending in the California Third District Court of Appeal, the Successor Agency took action to have the Successor Agency Lawsuit dismissed without prejudice, pending resolution of those similar cases. Under the Indenture, Pledged Tax Revenues is defined as the portion of property tax revenues required to be deposited into the RPTTF that is equal to the amount that the Former Agency would have been required to deposit into the Housing Fund, if the Former Agency had not been dissolved. The amount of Pledged Tax Revenues available to repay the Bonds will not depend on the outcome of the Successor Agency's dispute with the DOF regarding the Judgment. Plan Limitations In accordance with the Redevelopment Law, redevelopment plans were required to include certain limits on the financing of redevelopment projects. These limits could include a time limit on the life of the redevelopment plan, a time limit to incur debt, a time limit on the receipt of Tax Revenues and the repayment of debt, and a limit on the amount of bonded indebtedness outstanding at any time. SB ]07 clarifies that the former tax increment limits in redevelopment plans no longer apply for purposes of paying approved enforceable obligations such as the Bonds. 23 THE PROJECT AREAS Description of thc Project Areas As described in the Official Statement, there are four Project Areas totaling 11,771 acres and encompasses 68�Io of the total acres in the City. The following table provides information on assessed and incremen[al value of each Project Area. TABLE 1 BY PROJECT AREA LAND USE BY A5SESSED VALUE (2016/17) Pr�iect Areas Project No. 1 Project No. 1 1982 Addcd Area Projecl No. 2 Project No. 3 Projcct No. 4 Total All Project Arcas Sourcc: Fiscal Consultant's Rcport. Acreaae 580 5,240 2,927 764 2�60 2016-17 Asse.ssed Value $ 1,058,238,219 5.278,508,068 1,686,803,5 I 2 564,855,842 I ,990,188,034 $10,578,593,675 Less Rase Value S 27,485,836 656,065,059 102,157,447 149.523,255 587.192,21 R S l ,i22,423,815 2016-17 Incremental Assessed Value $ I .030,752,383 4,622,443,009 I,584,646.00S 415,332.SA7 1,402.995,R l 6 S9,OS6. I 69,860 Specific information about each Project Area and its redevelopment plan is set forth below. �7� of Incremental Value l 1.i8�1c S 1.04 17.50 4S9 I 5.49 I OO.OU�I Project Area No. l. The Project Area No. 1 was formally established with the adoption by the City Council of a redevelopment 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 Territory") were added to the Original Area pursuant to amendments to the Original Plan approved and adopted by the City Council by Ordinance No. 275, adopted on November 25, 1981 and Ordinance No. 324, adopted on October 13, 1983 (collectively, the "Amendments"). The Original Plan, as amended by the Amendments, is referred to as the "PA 1 Redevelopment Plan." The Project Area No. 1 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; a Sheriffs dispatch center; County Library facilities; multifamily rental, townhouse and single-family developments; the Canyons at Bighorn, a 275-unit luxury custom home development; and over two million square feet of retail space, including three major retail mall�. The Westficld Shoppingtown (locatcd in the Original Area) was expanded in January 2003 to add two parking garages totaling 1,000 parking spaces, the expansion of Macy's, and an additional 40,000 square feet of retail space, including Barnes & Noble. The Project Area also includes the Gardens on EI Paseo, EI Paseo Village and the Shops on EI Paseo which include over 200,000 square feet of luxury retail tipace. Luxury retail brands within the EI Paseo are include, Apple, Saks Fifth Avenue, TUMI, Kate Spade, Eileen Fisher and Louis Vuitton. Project Area No. 2. On July 1S, 1987, the Redevelopment Plan for Project Area No. 2 was adopted by the City of Palm Desert pursuant to the adoption of Ordinance No. 509. Project Area No. 2 encompasses approximately 2,927 acres (68,230 parcels including timeshare parcels) of residential, hotel/resort, office and undeveloped uses. Project Area No. 2 is generally bounded by the Palm Desert City limits and lnterstate 10 to the north, Gerald Ford Drive to the east, Country Club Drive and Hovley Lane to the south and Portola and Monterey Avenues to the west. Project Area No. 3. The Redevelopment Plan for Project Area No. 3 was adopted by the City on July 17, 1991 pursuant to the adoption of Ordinance No. 652. Project Area No. 3 is located in the City and includes approximately 764 acres, comprising 1,531 parcels, zoned for residential, office, commercial, industrial, public and open space uses. Project Area No. 3 is generally bounded by Ponola Avenue and Cook Street to the west, 24 and Carlo[ta Drive to [he east, Hovley Lane and Running Springs Drive to the north and the Whitewater River Channel to the south. The Portola Country Club is not within Project Area No. 3. Project Area No. 4. The Redevelopment Plan for Project Area No. 4 was adopted by the City on July 19, 1993 pursuant to the adoption of Ordinance No. 724. Project Area No. 4 includes approximately 2,260 acres, comprising ]0,556 parcels, zoned for residential, office, commercial, industrial, public and open space uses. Project Area No. 4 is generally bounded by Eldorado Drive to the west, running southward to the boundary of the City of Indian Wells, then eastward to the corner boundary between the county line and the City of Indian Wells. The western boundary follows this line southward to Fred Waring Drive, which is also the southern boundary of the City limits. The eastern boundary of Project Area No. 4 is Washington Street and the northern boundary is County Club Drive. Land Use Land use within the Project Areas is predominantly residential, encompassing 73.62�Ic of all uses by assessed value. The following table shows land use among all Project Areas by assessed value. Land Use Residential: Single Family Condominium Multi Family Other Commercial: Retail Office Hotcl/Motcl Othcr Timeshares Industrial Miscellaneous Public Unsecured Totals TABLE 2 ALL PROJECT AREAS LAND USE BY ASSESSED VALUE (2016/17) Number of Assessed % of Parcels Value Total 9,674 $ 4,949,379,078 46.79% 9,543 2,333,511,057 22.06 387 296,411,443 2.80 1,893 208,772,900 1.97 306 $ 989,963,416 9.36�% 365 345,358,835 326 22 226,270,805 2.14 533 246,939,701 233 69,397 $ 408,890,790 3.87 185 177,114,542 1.67 255 146,350,978 1.38 502 - 0.00 1,476 249,630.130 2.36 94,538 $10,578,593,675 100.00% Sourcc: Fiscal Consultant's Report. 25 Assessed Valuations and Tax Revenues Total assessed value of the Project Areas, together with assessed values of the constituent areas comprising the Project Areas between fiscal years 2007/08 and 2016/17 are shown in the tables below. TABLE 3 ALL PROJECT AREAS CURRENT AND HISTORICAI, VALUATIONS 2005/06 through 2016/17 FY 2007-08 2008-09 2009-10 2010-I1 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 Secured Value 9.652.979.2 l 3 10.117,866.i65 9.709.045,177 9,214,357,136 8,853,491,405 8.839.633,215 9,090,410.899 9,597,498.735 10,070.986,68 I 10.326,33S,i72 Unsecured Value $305.989.337 343,044.906 327,469,966 3 I 9,604,911 303.821,693 248.989.726 291,714.523 257.8 I 7,R82 26I,573,49A 252.25 8.103 Sourcr. Fiscal Consultant's Rcport. Total Value 9,958,968,550 l 0A60.911.471 10,036,515,143 9,533,962,047 9.157,3 I 3,068 9.08A,622,941 9,382,125.422 9,855,31 G.617 ] 0,332,560,170 I0.57R,593,675 Less Base Vdlue $ I ,522,423,815 I .522,423,R 1 S I ,522,423,R I 5 1.522,423,R 15 I .522,423,R I S 1.522,42:i,R I 5 l ,i22.423.8I5 I ,522.423,815 I ,522,423,R I 5 I .522.423.8 I S Increment $8,436,544,735 8,938,487,656 8„514,091.328 8,011,538.232 7,634,889.283 7,566,199,126 7,859,701.607 8,332,892.802 8,810,136.355 9,OS6, I 69,860 Percentage Chanae 5.9�7c -4.7 -59 -4.7 -0.9 �.9 6.0 5.7 2.8 For a detailed description of current and historical assessed value in each Project Area see APPENDIX C — "FISCAL CONSULTANT'S REPORT." Actual Tax Revenues paid to the Former Agency or available to the Successor Agency from the Project Areas for fiscal years 2011/12 through 2015/16 are shown below. TABLE 4 ALL PROJECT AREAS HISTORIC TAX REVENUES RECEIPT 1. Rcported Asscssed Value'�': Secured Unsecured IL Total Project Valuc Li:ss Basc Ycar Value Total Incremental Value Tax Ratc to Computc Tax Increment 111. Computed Gross Tax Increment Unitary Tax Total Compured Levy IV. Tax Allocation: Allocated Tux Increment"' Unitary Tax Total Tax Bascd on Collections Variancc From Co�tiputcd [xvy 7r Collections �xr Cuunty Zoii-i2 $8.853,491,405 3U3,§Z 1 693 9,157.313,(�8 I .522,423,815 7,634,8R9,3R3 i .oa» 76.350,940 I,OSS,430 77,406,370 76,395,366 _, .__.I O55 430 77.450.79fi 44,4?S I(H1.17r 2012-13 S$,$39,633,215 24R,989,7?6 9,oxx,622,941 1. 522.423.815 7.S 66.199. l 26 � .000�r� 75,666,465 --.-. 1,017 138 76,683.fiO3 75,666,4fi5 i,o».i �x 76.G83,603 0 I OOA`I 2013-14 59,090.410.R99 291 J 14,523 9,382. I 25.422 1,522,423,81 S 7.859.701.607 � .ocx»� 78,597,016 1.067.949 79,664,965 78.597.016 I .(�,7.949 79,664,965 0 100.09c 2014-15 59,597,498.735 257,R 17,R82 9,855,316.617 1,522,42 �,R I $ 8.3 i2.892.R02 i .000�i� R3,334.07H I,(KJ.I,101 84,4?5,179 83,334.078 I,09I,I0I --84.4?5,179 0 I 00.07r: 2015-16 S 10.070.986.681 261,573 4t�y I 0,:� 12,560.170 1,522 423 � I S K.R10,I �G.�SS I .0(x)�% 88.108.759 1, I S2,(��3 89.260.85? 88, I UK.759 I . I S2.(�-i 89,260,85? 0 I OOA7 '�' Anwunts shown are as reporteJ by the County AuJitor-Controller in August of each fiscal year. ''' Amounts represent the annual tax incremcnt revenucs apportioned to the Agcncy and do not exclude County administrativc charges, intcrest camings, supplemental laxes, set asides or tax sharing allocations. ''' The Counry allocates tax increment revenucs on a Tecter Plan based on adjusted computed levy. Source: Fiscal Consultant's Rcport. � L � � CC .i�.� x � F t. 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J ^�y O.� C O � � C i�i V v � � 7J = :/1 'l, l U[-� C.J U I- U C.J C.) fY �2S h Q'S� � ,�y ,�� y �O v7 �C � � cv-; v-, v�, j - C N N N � � > � xx:� _ � � ti c c c � � � � � y y � � V C J C � CC 'J C ^ _ :J :J J ,.N `� f7 - � F V%' � .� .� C � �_. . _ z -� '� � � � � Y J J I J� C _ C `� �y O a C C C 7 s e� U� �,� � c C �=-- oo n �=. 3�� c ` � c �u c T T >, s o 3 C � �� `v ��o � z �. t� V � t� va � o� E Ef- c E u� u 1) ll� _ aaa� 3i3��' s ��"� 2 ��v c�: �� u �Q� �;Q c ZZa.�= o��° _.��v �- ` � y � � � r °S'on'' � °'v i,'>',Q� u � � � h � � > � p L c c � � � � _ - - � ��>3� 3 2� h»�su � � N Assessment Appeals As of October 1 2016, there were a total 189 pending appeals filed in the last 6 years by property owners in the Project Areas as shown below. The total value of property under appeal for all years is $1,363,543,560. Some appeals have been filed for multiple years for the same property. A summary of all pending appeals is shown below. TABLE 6 ALL PROJECT AREAS SECURED ASSESSMENT APPEALS FISCAL YEAR 2009/10 through 2015/16�� Total No. of Appeals 2009-10 to 2015-16 2,506 Fiscal Year Endine June 30 2016 2015 2014 2013 2012 2011 2010 Total Number of Appeals 121 40 23 3 0 2 0 189 �� Includes secured asscsscd valuations only. Source: Fiscal Consultant's Report. Average Assessed Est. No. of Valuation No. of Pending Pending Appeals Reduction Aaaeals Allowed 15.77'% 189 30 Combined Value Under PendinQ Appeals $ 62:i,732,885 402,209,739 330,065,062 7,253,306 0 2,2R2,S68 0 $1,365,54�i,560 Estimated Reduction on Pending Appeals (FY 2017-18 AV) $15,236,000 9,826,000 8,063,000 0 0 55,000 0 $33,357A00 There are appeals pending for three of the largest property owners included in TABLE 4-"TEN LARGEST TAXPAYERS." The Successor Agency cannot predict the outcome of any pending appeals. For Fiscal Years 2009/10 to 2015/16, 14.39� of all appeal filings were reduced or stipulated, 78.1 �Io of the appeals were withdrawn or denied and 7S% of the appeals remain open. For the period reviewed by the Fiscal Consultant, properties that were the subject of assessment appeal filings resulted in an overall average reduction in assessed value of 15.77�I�. This average reduction is incorporated by the Fiscal Consultant in the projections of Tax Revenues. See APPENDIX C—"Fiscal Consultant's Report." Pass-Through Agreements Pursuant to prior Section 33401(b) of the Redevelopment Law, a redevelopment agency was authorizcd to enter into an agreement to pay Tax Revenues to any Taxing Agency that has territory located within a Project Area to alleviate any financial burden or detriment caused by the Project Area. These agreements are commonly referred to as "tax sharing agreements" or "pass-through agreements." Any payments made by the Successor Agency to a Taxing Agency pursuant to a pass-through agreement shall be paid prior to the payment of debt service on the Bonds; provided, however, payments on subordinated pass-through agreements shall not be made prior to the payment of debt service on the Bonds if there are insufficient Tax Revenues to pay debt service on the Bonds. In addition, pursuant to former Section 33676 of the Redevelopment Law, any affected taxing agency that had not entered into a tax sharing agreement with the redevelopment agency prior to the adoption of a redevelopment plan could elect, by resolution adopted prior to the adoption of a redevelopment plan, to receive the portion of Tax Revenues attributed to one or both of the following: No. ot Resolved Appeals 2009-10 to 2015-16 2,317 No. of Successful Appeals 2009-10 to 2015-16 359 28 (a) Increases in the rate of tax imposed for the benefit of the taxing agency which levy occurs after the tax year in which the ordinance adopting the redevelopment plan becomes effective; and (b) lncreases in the assessed value of the taxable property in the redevelopment project area, as the assessed value is established by the assessment roll last equalized prior to the effective date of the ordinance adopting the redevelopment plan pursuant to subdivision (a) of Section 33670, which are, or otherwise would be, calculated annually pursuant to subdivision (� of Section 110.1 of the Revenue and Taxation Code. Payments due under Section 33676(b) are referred to in the Official Statement as "inflationary growth." For a description of the Former Agency's Pass-Through Agreements, See APPENDIX C"Fiscal Consultant's Report." Since dissolution, the County Auditor-Controller calculates and pays directly to the Taxing Agency any amounts due under a Pass-Through Agreement. Statutory Tax Sharing Payments Certain provisions were added to the Redevelopment Law by the adoption of AB 1290 in 1994. If a new redevelopment project was formed by a redevelopment plan adopted on or after January 1, 1994 or if new temtory was added to a redevelopment project on or after January 1, 1994, under Section 33607.5 of the Redevelopment Law, any affected taxing entity, including the City, would share in the Tax Revenues generated by such added area pursuant to a statutory formula ("Statutory Tax Sharing"). In addition, a redevelopment agency, on or after January 1, 1994 amended a redevelopment plant to delete the time limit to incur indebtedness in a redevelopment project (pursuant to Section 33333.6(e) of the Redevelopment Law, as amended pursuant to SB 211) or increased the total amount of Tax Revenues to be allocated to the project area or increased the duration of the Redevelopment Plan and the period for receipt of tax increment, Statutory Tax Sharing is required under Section 33607.7 of the Redevelopment Law with all affected Taxing Agencies not already a party to a tax sharing agreement, once the original limitations were reached. The Successor Agency has not taken any proceedings to subordinate the payment of Statutory Tax Sharing Amounts to the Bonds. With respect to moneys deposited in the RPTTF, the payment of Statutory Tax Sharing amounts shall be made prior to the payment of debt service on the Bonds. Since dissolution, the County Auditor-Controller calculates and pays directly to the taxing entities the Statutory Tax Sharing amounts. Outstanding Indebtedness Following the issuance of the Bonds, there will be no indebtedness of the Authority or the Successor Agency outstanding and payable from Pledged Tax Revenues on a senior basis to the Bonds. CeRain obligations of the Successor Agency under tax sharing agreements are payable on a senior basis to the Bonds. See "THE PROJECT AREAS — Pass-Through Agreements" and "Statutory Tax Sharing Payments." Concurrently with the issuance of the Bonds, the Successor Agency will be issuing its Tax Allocation Refunding Bonds 2017 Series A, in the principal amount of � (the "2017 Series A Bonds") and Taxable Tax Allocation Refunding Bonds 2017 Series B, in the principal amount of $ (the "2017 Series B Bonds," and together with the 2017 Series A Bonds, the "2017 Non-Housing Bonds") to refund certain outstanding non- housing obligations of the Successor Agency. Under the indenture for the 2017 Non-Housing Bonds, the pledge securing the 2017 Non-Housing Bonds includes money deposited in the RPTTF, less: (i) the administrative costs of the County Auditor-Controller deducted as required by Health and Safety Code Section 34183(a); (ii) amounts payable to affected taxing entities pursuant [o the Law (including payments under HSC Sections 33676, 33607.5 or 33607.7 and the Pass-Through Agreements), except to the extent such payment to a taxing entity has been subordinated to the 29 2017 Non-Housing Bonds, (iii) the Housing Portion (defined below), and (iv) amounts repayable by the Successor Agency with respect to certain loan incurred by the Successor Agency (including any reimbursement to the bond insurer for draws on the related bond insurance policy and the debt service reserve surety bond), which loan was related to the Authority's Tax Allocation Revenue Bonds (Project Area No. 1, As Amended), 2007 Series A. "Housing Portion" refers to the portion of the property tax revenues required to be deposited by the County Auditor- Controller into the RPTTF that is equal to the dollar amount that the Former Agency would have been required ta deposit into the Low and Moderate Income Housing Fund pursuant to Sections 333342 and 33334.3 of the Law, if the Former Agency had not been dissolved. In other words, Housing Portion is the same as the "Pledged Revenucs" pledged for thc Bonds under the Indenture. See APPENDIX C—"REPORT OF FISCAL CONSULTANT." TAX REVENUES AND DEBT SERVICE COVERAGE As shown in Table 7 and 8, the actual amounts received by the Successor Agency depends on the realization of certain assumptions relating to the Pledged Tax Revenues. The Fiscal Consultant has projected taxable valuation and Tax Revenues in the Project Areas. Table 7 reflects taxable value and Pledged Tax Revenues assuming no growth on the tax base. Table 8 includes certain tax base growth assumptions as presented below. The Successor Agency believes the astumptions upon which the projections are based are reasonable; however, some assumptions may not materialize and unanticipated events and circumstances may occur (see `RISK FACTORS"). Therefore, the actual Tax Revenues received during the forecast period may vary from the projections and the variations may be material and could affect the Successor Agency's ability to timely pay principal of and interest on the Bonds. Following is a discussion of assumptions used in the projection of Tax Revenues: Baseline Assumption (a) The values of unsecured personal property and state assessed utility propeRy and the amount of unitary revenues have been maintained throughout the projections at their 2016/17 levels. (b) A tax rate of �1.00 per $100 of assessed value applied to the taxable property in the Project Areas has bcen used to determine Tax Revenues. (c) Projected Pledged Tax Revenues do not include a deduction for property tax collection administrative costs charged by County. (d) Projected Pledged Tax Revenues do not ref7ect delinquencies. (e) Projected Pledged Tax Revenues do not reflect any potential future Proposition 8 adjustments. (f� Projected Pledged Tax Revenues do not reflect any potential decreases resulting from pending assessment appeals. Sec "THE PROJECT AREAS - Assessment Appeals." (g) Projected Pledged Tax Revenues do not include supplemental property taxes. (h) Projected gross Tax Revenues do not include a deduction for payments due to Taxing Agencies under the Pass-Through Agreements and Tax Sharing Statutes, including subordinate payments. Growth Assumption for Table 8 (a) The secured roll is assumed to increase 2�I� annually for inflation. See "Property Taxation in California - Manner in Which Property Valuations and Assessments are Determined (Article XIIIA)." 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'b 'C y i. 6i H > LJ °" °� z L 6� Z � c S "' y U � � `c y Q w � '.7 U O F L J 7 f/; � 0 'l. /: � U U � � N � F" � �:i 0 F" U Q w x � a � � � 3 0 a� .fl 'v � � L U y � v: � � �� L � �3 � > � � s > � � � V: -� 0 � � 3 a� a� �'"y 7 � C � � � a� :� � � x > � o � �� :� �, �� 3 � O � � v -O � :; a� � � C O � L � � � � � .L X "' :C � � � � � � U bA C b � � a � b � a� � U � N = � � a. .�? N � � H a � U � � � Q (r, (r, RISK FACTORS The purc{iuse of the Boncls invnlve,s investment rLsk. If a risk f'actor materializes to u s��cient �IeKree, it could cleluy� or prevent puyment of principal of anc!/nr interest on the Bonds. Serch risk fuctors include, but nre not iimited to, the.followinK mutters ancl shoulc! be considerect, ulong tivith other information in this Officictl Stutement, by potentiul inve.stor,s. Factors Which May Affect Pledged Tax Revenues The ability of the Successor Agency to pay principal of and interest on the Bonds depends on the timely receipt of Pledged Tax Revenues as projected in the Official Statement (see "TAX REVENUES AND DEBT SERVICE COVERAGE"). Projections of Pledged Tax Revenues are based on the underlying assumptions relating to Tax Revenues of the Project Areas. Tax Revenues allocated to the Successor Agency (which constitute the ultimate source of payment of principal of and interest on the Bonds, as discussed in the Official Statement) are determined by the amount of incremental valuation of taxable property in the Project Areas, taxed at a rate of $1.00 per $100 of assessed value (1%) and the percentage of taxes coliected in the Project Areas, adjusted to reflect prior claims on the Tax Revenues. A number of factors which may affect Tax Revenues, and conseyuently result in a reduc[ion in Pledged Tax Revenues, are outlined below. Reductions in Assessed Va[ue. Tax Revenues allocated to the RPTTF are determined by the amount of incremental taxable value in the Project Areas taxed at a rate of $1.00 per $100 of assessed value (1`'Ic). The reduction of taxable values of property in the Project Areas caused by economic factors beyond the Successor Agency's control, such as relocation out of the Project Areas by one or more major property owners> sale of property to a non-profit corporation exempt from property taxation, or the complete or partial destruction of such property caused by, among other eventualities, earthquake or other natural disaster, could cause a reduction in the Pledged Tax Revenues that provide for the repayment of and secure the Bonds. Such reduction of Pledged Tax Revenuet could have an adverse effec[ on the Successor Agency's ability to make timely payments of principal of and interest on the Bonds. Article XIIIA. Pursuant to the California voter initiative process, on June 6, 1978, California voters approved Proposition 13 which added Article XIIIA to the California Constitution. This amendment imposed ceRain limitations on taxes that may be levied against real property to 1% of the full cash value of the propeRy, adjusted annually for inflation at a rate not exceeding 2% annually. Full cash value is determined as of the 1975/76 assessment year, upon change in ownership (acquisition) or when newly constructed (see "- Property Taxation in California" for a more complete discussion of Article XIIIA). Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by substantial damage, destruction or other factors, and to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in other special c�rcumstances. Reduction in Inflationary Rate. The annual inflationary adjustment, while limited to 2�Ic, is determined annually and may not exceed the percentage change in the California Consumer Price Index (CCPI). 34 Because the Revenue and Taxation Code does not distinguish between positive and negative changes in the CCPI used for purposes of the inflation factor, there was a decrease of 0.237% in 2009/10 — applied to the 2010/11 tax roll — reflecting the actual change in the CCPI, as reported by the State Department of Finance. For each fiscal year since Article XIIIA has become effective (the 1978/79 fiscal year), the annual increase for inflation has been at least 2% except in nine fiscal years as shown below: Tax Roll Percentage 1981 /82 1.000% 1995/96 1.190 1996/97 1.110 1998/99 1.853 2004/OS 1.867 2010/11 (0.237) 2011/12 0.753 2014/ 15 0.454 2015/16 1.998 2016/17 1.525 Proposition 8 Adjustments. Proposition 8, approved in 1978, provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide. This methodology has been approved by the Fourth District Court of Appeals in a case in which the California Supreme Court declined further review. See "PROPERTY TAXATION IN CALIFORNIA." If Proposition 8 adjustments are made by the County Assessor in future years because of declines in the fair market value of properties caused by the lack of real estate development in the area generally, Pledged Tax Revenues may be adversely affected and as a possible consequence may have an adverse effect on the Successor Agency's ability to pay debt service on the Bonds. Assessment Appeals. Assessment appeals may be �led by property owners seeking a reduction in the assessed value of their property. After the property owner files an appeal, the County's Appeals Board will hear the appeal and make a determination as to whether or not there should be a reduction in assessed value for a particular property and the amount of the reduction, if any. To the extent that any reductions are made to the assessed valuation of such properties with appeals currently pending, or appeals subsequently �led, Tax Revenues, and correspondingly, Pledged Tax Revenues will be reduced. Such reductions may have an adverse effect on the Successor Agency's ability to pay debt service on the Bonds. As of October 2016, there were 189 pending appeals iiled within the last five years by property owners within the Project Areas relating to $1,365,543,560 of current year or prior years' assessed value (see "THE PROJECT AREAS - Assessment Appeals"). To the extent these appeals are resolved in favor of the property owner, Pledged Tax Revenues will be reduced. Earthquake, Flood and Other Risks. Any natural disaster or other physical calamity, including earthquake, may have the effect of reducing Pledged Tax Revenues through reduction in the aggregate assessed valuation within the boundaries of the Project Areas. Wildfires. The City is located in area where wild�res are a common occurrence. While there have not been any wildiires in the City, the occurrence of any natural disaster or physical calamity, including wildfires, floods, landslides and earthquakes, could result in damage within the Project Areas. The occurrence of such events could adversely impact the value of real property in the Project Areas, Pledged Tax Revenues, the economy of the City, and, accordingly, the ability of the Redevelopment Agency to make timcly payments of principal of and interest on the Bonds. 35 Floodin�. Flood zones are identified by the Federal Emergency Management Agency ("FEMA"). FEMA designates land located 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 area that is in a low- to moderate-risk flood zone (i.e. not in a floodplain) and has less than a 1�Io 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 development in flood prone areas by preventing construction in such areas. Development is permitted in these areas once floodflow hazards are eliminated. Areas in the City that have received flood control improvements are those subject to potentially destructive floods. Significant capital investments have been made in the community where these threats occur. The City can make no representation that future maps will not be revised to include the City within an area deemed subject to flooding. The occurrence of flooding in the Project Areas could result in a reduction in Pledged Tax Revenues. Such a reduction of Pledged Tax Revenues could have an adverse effect on the ability of the Successor Agency ability to make timely payments of principal and interest on the Bonds. Seismic Factors. Generally, seismic activity occurs on a regular basis in the State. Periodically, the magnitude of a single seismic event can cause significant ground shaking and potential damage to property located at or near the center of such seismic activity. The occurrence of severe seismic activity in the City could result in damage to roads, infrastructure and other property within the Project Areas. The occurrence of such a severe seismic could have a negative impact on assessed values of taxable values of property in the Project Areas and could result in a reduction in Pledged Tax Revenues. Such a reduction of Pledged Tax Revenues could have an adverse effect on the ability of the Successor Agency ability to make timely payments of principal and interest on the Bonds. Hazardous Substances. An additional environmental condition that may result in the reduction in the assessed value of parcels would be the discovery of a hazardous substance that would limit the beneficial use of a property within the Project Areas. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releascs of hazardous substances. The owner (or operator) may be required to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the Project Areas be affected by a hazardous substance would be to reduce the marketability and value of the property, perhaps by an amount in excess of the costs of remedying the condition. The Successor Agency can give no assurance that future development will not be limited by these conditions. Certain Bankruptcy Risks. The enforceability of the rights and remedies of the Owners of the Bonds and the obligations of the Successor Agency may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the Owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights. Limited Ob[igations. The Successor Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provision of additional sources of income to Taxing Agencies having the effect of reducing the property tax rate must necessarily reduce the amount of Tax Revenues, and consequently, Pledged Tax Revenues that would otherwise be available to pay the principal of, and interest on the Bonds. �� Interpretation of and Future Changes in the Law; Voter Initiatives. The Redevelopment Law and the Dissolution Act are complex bodies of law and their application to the Successor Agency, the Redevelopment Plan and the Project Areas may be subject to different interpretations by the Successor Agency, the Department of Finance, the County Auditor-Controller, Taxing Agencies and other interested parties, including with respect to Pass-Through Agreements and Statutory Tax Sharing obligations and enforceable obligations. Since the effectiveness of the Dissolution Act, the State Department of Finance and various successor agencies have from time to time disagreed about the interpretation of different language contained in the Dissolution Act, as well as whether or not the State Department of Finance has exceeded its authority in rejecting items from ROPS submitted by successor agencies, as evidenced by numerous lawsuits. While the Successor Agency has covenanted in the Indenture to preserve and protect the security of the Bonds and the rights of the Bondholders (see APPENDIX A—"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE"), any such action taken by the Successor Agency could incur substantial time and cost that may have a detrimental effect on the Successor Agency's ability to timely pay debt service on the Bonds. Moreover, the Successor Agency cannot guarantee the outcome of any such action taken by the Successor Agency to preserve and protect the security of the Bonds and the rights of the Bondholders. In addition to the existing limitations on Tax Revenues described in this Official Statement under "PROPERTY TAXATION IN CALIFORNIA," the California electorate or Legislature could adopt future limitations with the effect of reducing Pledged Tax Revenues payable to the Successor Agency. Real Estate and General Economic Risks. Tax Revenues available for payment of any indebtedness of the Successor Agency are based upon the latest actual assessed values for the 2016/17 Fiscal Year. Redevelopment of real property within the Project Areas by the City, as well as private development in the Project Areas, may be adversely affected by changes in general economic conditions, fluctuations in the real estate markets and interest rates, unexpected increases in development costs, changes in or new governmental policies including governmental policies to restrict or control certain kinds of development and by other similar factors. If development and redevelopment activities in the Project Areas encounters significant obstacles of the kind described in the Official Statement or other impediments, the economy of the area in and around the Project Areas could be adversely affected, causing reduced taxable valuation of property in the Project Areas a reduction of the Tax Revenues and a consequent reduction in Pledged Tax Revenues available to repay the Bonds. Due to the decline in the general economy of the region, owners of property within the Project Areas may be less able or less willing to make timely payments of property taxes, causing a delay or reduction of Tax Revenues and consequently a reduction in Pledged Tax Revenues available to repay the Bonds. Recognized Obligation Payment Schedule. The Dissolution Act provides that only those payments listed in the ROPS may be made by the Successor Agency from the funds specified in the ROPS. The Dissolution Act requires successor agencies to prepare and approvc, and submit to the successor agency's oversight board and the State Department of Finance for approval, a ROPS pursuant to which enforceable obligations (as defined in the Dissolution Act) of the successor agency are listed, together with the source of funds to be used to pay for each enforceable obligation. Tax Revenues will not be distributed from the RPTTF by the County Auditor-Controller to the Successor Agency's Redevelopment Obligation Retirement Fund without a duly approved and effective ROPS obtained in suf�cient time prior to the January 2 or June 1 distribution dates, as applicable. See "SECURITY FOR THE BONDS - Recognized Obligation Payment Schedules." In the event the Successor Agency were to fail to �le a ROPS with respect to any six-month period, the availability of Pledged Tax Revenues to the Successor Agency could be adversely affected for such period. The Successor Agency has covenanted to take all actions required under the Dissolution Act to include scheduled debt service on the Bonds as well as any amount required under the Indenture to replenish the Reserve Account of the Debt Service Fund, in ROPS for each six-month period of a Fiscal Year and to enable the County Auditor-Controller to distribute from the RPTTF to the Successor Agency's Redevelopment Obligation Retirement Fund on each January 2 and June 1 amounts required for the Successor Agency to pay principal of, and interest on, the Bonds coming due in the respective six-month period of a Fiscal Year, including listing a reserve on the ROPS to the extent required by the Indenture or when the next property tax allocation is projected to be insufficient to pay all obligations due under the provisions of the Bonds for the next fc�l payment due in the following six-month period (see APPENDIX A—"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE"). The Dissolution Act also contains certain penalties in the event the Successor Agency does not timely submit a Recognized Obligation Payment Schedule for a Fiscal Year. Speciiically, a ROPS must be tiubmitted by the Successor Agency, after approval by the Oversight Board, the County Auditor-Controller, the State Uepartment of Finance, and the State Controller no later than February 1 of each year. If the Successor Agency does not tiubmit an Oversight Board-approved ROPS by such deadlines, the City will be subject to a civil penalry equal to $10,000 per day for every day the schedule is not submitted to the State Department of Finance. Additionally, the Successor Agency's administrative cost allowance is reduced by 25�Io if the Successor Agency does not submit an Oversight Board-approved ROPS by the lOth day after the February 1 deadline with respect to a ROPS for the subsequent annual period. The Successor Agency has submitted all ROPS, duly approved by the Oversight Board, in a timely manner. 2017 Series H-A Bonds Loss of Tax Exemption. As discussed under the caption "LEGAL MATTERS - Tax Matters," interest on the 2017 Series H-A Bonds could become includable in gross income for purposcs of federal income taxation retroactive to the date the 2017 Series H-A Bonds were executed and delivered as a result of future acts or omissions of the Successor Agency in violation of its covenants contained in the Indenture. Should such an event of taxability occur, the 2017 Series H-A Bonds are not subject to special redemption or any increase in interest rate and will remain outstanding until maturity. In addition, Congress has considered in the past, is currently considering and may consider in the future, legislative proposals, including some that carry retroactive effective dates, that, if enacted, would alter or eliminate the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the 2017 Series H-A Bonds. Prospective purchasers of the 2017 Series H-A Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. The Successor Agency can provide no assurance that federal tax law will not change while the 2017 Series H-A Bonds are outstanding or that any such changes will not adversely affect the exclusion of the interest on the 2017 Series H-A Bonds from gross income for federal income tax purposes. If the exclusion of the interest on the 2017 Series H-A Bonds from gross income for federal income tax purposes were amended or eliminated, it is likely that the market price for the 2017 Series H-A Bonds would be adversely impacted. IRS Audit of Tax-Exempt Bond Issues. The Internal Revenue Scrvice has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the 2017 Series H-A Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the 2017 Series H-A Bonds might be affected as a result of such an audit of the 2017 Series H-A Bonds (or by an audit of similar bonds). Secondary Market. There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected wi[h a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from [he original purchase price. LEGAL MATTERS Enforceability of Remedies The remedies available to the Trustee and the Owners of the Bonds upon an event of default under the Indenture or any other document described in the Official Statement are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. The 38 various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified to the extent that the enforceability of certain legal rights related to the Bonds and the Indenture are subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. Approval of Legal Proceedings Richards, Watson & Gershon, A Professional Corporation, as Bond Counsel, will render opinions with respect to the Bonds which state that the Indenture is a valid and binding obligation of the Successor Agency and enforceable in accordance with its terms. The legal opinions of Bond Counsel will be subject to the effect of 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. See "APPENDIX F" for the proposed forms of Bond Counsel's opinions with respect to the Bonds. The Successor Agency has no knowledge of any fact or other information which would indicate that the Indenture is not so enforceable against the Successor Agency> except to the extent such enforcement is limited by principles of equity and by state and federal laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. Certain legal ma[ters will be passed on for the Successor Agency by Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, as Successor Agency Counsel. Best Best & Krieger LLP, Riverside, California, will also pass on certain legal matters for the Successor Agency as Disclosure Counsel. Certain legal matters will be passed on for the Underwriter by its counsel, Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California. Fees payable to Bond Counsel, Disclosure Counsel and Underwriter's Counsel are contingent upon the sale and delivery of the Bonds. Tax Matters 2017 Series H-A Bonds The Internal Revenue Code of 1986, as amended (the "Code"), establishes certain requirements which must be met subsequent to the issuance and delivery of the 2017 Series H-A Bonds for interest thereon to be and remain excluded from gross income for federal income tax purposes. Noncompliance with such requirements could cause interest on the 2017 Series H-A Bonds to be included in gross income for federal income tax purposes retroactive to their date of issue. These requirements include, but are not limited to, provisions which limit how the proceeds of the 2017 Series H-A Bonds may be spent and invested, and generally require that certain investment earnings be rebated on a periodic basis to the United States of America. The Successor Agency has made certifcations and representations and has covenanted to maintain the exclusion of the interest on the 2017 Series H-A Bonds from gross income for federal income tax purposes pursuant to Section 103(a) of the Code. In the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, under existing law and assuming the accuracy of such certifications and representations by the Successor Agency and compliance with such covenants, (i) interest on the 2017 Series H-A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Code, and (ii) the 2017 Series H-A Bonds are not "speciiied private activity bonds" within the meaning of Section 57(a)(5) of the Code and, therefore, interest on the 2017 Series H-A Bonds is not a preference item for purposes of computing the alternative minimum tax imposed by Section 55 of the Code. Bond Counsel is also of the opinion that interest on the 2017 Series H-A Bonds is exempt from State of California personal income taxes. Bond counsel expresses no opinion as to any other tax consequences regarding the 2017 Series H-A Bonds. Under [he Code, a portion of the interest on the 2017 Series H-A Bonds earned by certain corporations may be subject to a federal corporate alternative minimum tax. In addition, interest on the 2017 Series H-A Bonds may be subject to a federal branch profits tax imposed on certain foreign corporations doing business in 39 the United States and to a federal tax imposed on excess net passive income of certain S corporations. The exclusion of interest from gross income for federal income tax purposes may have certain adverse federal income tax consequences on items of income, deduction or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations, and individuals eligible for the e�u-ned income tax credit. Bond Counsel will express no opinion regarding these and other such consequences. Bond Counsel has not undertaken to advise in the future whether any circumstances or events occurring after the date of issuance of the 2017 Series H-A Bonds may affect the tax status of interest on the 2017 Series H-A Bonds. Legislation affecting tax-exempt obligations is regularly considered by the United States Congress and may also be considered by the State legislature. Court proceedings may also be filed, the outcome of which could modify the tax treatment of obligations such as the 2017 Series H-A Bonds. No assurance can be given that legislation enacted or proposed, or actions by a court, after the date of issuance of the 2017 Series H-A Bonds, will not contain provisions which could eliminate, or direc[ly or indirectly reduce the benefit of the exclusion of interest on the 2017 Series H-A Bonds from gross income for federal income tax purposes, or have an adverse effect on the market value or marketability of the 2017 Series H-A Bonds. For example, recent presidential and legislative proposals would eliminate, reduce or otherwise alter the tax benefits currently provided to certain owners of state and local government bonds, including proposals that would result in additional federal income tax on taxpayers that own tax-exempt obligations if their incomes exceed certain thresholds. lnvestors in the 2017 Series H-A Bonds should be aware that any such future legislative actions (including federal income tax reform) may retroactively change the treatment of all or a portion of the interest on the 2017 Series H-A Bonds for federal income tax purposes for all or certain taxpayers. In such event, the market value of the 2017 Series H-A Bonds may be adversely affected and the ability of holders to sell their 2017 Series H-A Bonds in the secondary market may be reduced. The 2017 Series H-A Bonds are not subject to special mandatory redemption, and the interest rates on the 2017 Series H-A Bonds are not subjec[ [o adjustment, in the event of any such change. Investors should consult their own tinancial and tax advisors to analyze the importance of these risks. Certain requirements and procedures contained or referred to in relevant documents may be changed and certain actions may be taken, under the circumstances and subject to the terms and conditions set foRh in such documents, upon the advice or with the approving opinion of nationally recognized bond counsel. Bond Counsel expresses no opinion as to any 2017 Series H-A Bond, or the interest thereon, if any such change occurs or action is taken upon the advice or approval of bond counsel other than Richards, Watson & Gershon, A Professional Corporation. If the issue price of a 2017 Series H-A Bond (the �rst price at which a substantial amount of the bonds of a maturity are to be sold to the public) is less than the stated redemption price at maturity of such 2017 Seriet H-A Bond, the difference constitutes original issue discount, the accrual of which is excluded from gross income for federal income tax purposes to the same extent as interest on the 2017 Series H-A Bonds. Further, such original issue discount accrues actuarially on a constant yield method over the term of each such 2017 Series H A Bond and the basis of each 2017 Series H-A Bond acquired at such initial offering price by an initial purchaser thereof will be increased by the amount of such accrued original issue discount. The accrual of original issue discount may be taken into account as an increase in the amount of tax-exempt income for purposes of determining various other tax consequences of owning such 2017 Series H-A Bonds. Purchasers who acquire 2017 Series H-A Bonds with original issue discount are advised that they should consult with their own independent tax advisors with respect to the state and local tax contequences of owning such 2017 Series H-A Bonds. If the issue price of a 2017 Series H-A Bond is greater than the stated redemption price at maturity of such 2017 Series H-A Bond, the difference constitutes original issue premium, the amortization of which is not deductible from gross income for federal income tax purposes. Original issue premium is amortized over the period to maturity of such 2017 Series H-A Bond based on the yield to maturity of that Bond (or, in the case of� a 40 2017 Series H-A Bond callable prior to its stated maturity, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on that 2017 Series H-A Bond), compounded semiannually. For purposes of determining gain or loss on the sale or other disposition of such 2017 Series H-A Bond, the purchaser is required to decrease such purchaser's adjusted basis in such 2017 Series H-A Bond by the amount of premium that has amortized to the date of such sale or other disposition. As a result, a purchaser may realize taxable gain for federal income tax purposes from the sale or other disposition of such 2017 Series H-A Bond for an amount equal to or less than the amount paid by the purchaser for that 2017 Series H-A Bond. A purchaser of that 2017 Series H-A Bond in the initial public offering at the issue price for that 2017 Series H-A Bond who holds it to maturity (or, in the case of a callable 2017 Series H-A Bond, to its earlier call date that results in the lowest yield on that 2017 Series H-A Bond) will realize no gain or loss upon its retirement. Payments of interest on tax-exempt obligations, including the 2017 Series H-A Bonds, are generally subject to IRS Form ]099-INT information reporting requirements. If an owner of a 2017 Series H-A Bond is subject to backup withholding under those requirements, then payments of interest will also be subject to backup withholding. Those requirements do not affect the exclusion of such interest from gross income for federal income tax purposes. Prospective purchasers of the 2017 Series H-A Bonds should consult their own independent tax advisers regarding pending or proposed federal and state tax legislation and court proceedings, and prospective purchasers of the 2017 Series H-A Bonds at other than their original issuance at the respective prices indicated on the inside front cover of this Official Statement should also consult their own tax advisers regarding other tax considerations such as the consequences of market discount, as to all of which Bond Counsel expresses no opinion. Bond Counsel's engagement with respect to the 2017 Series H-A Bonds ends with the issuance of the 2017 Series H-A Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Successor Agency or the owners of the 2017 Series H-A Bonds regarding the tax status of interest thereon in the event of an audit examination by the IRS. The IRS has a program to audit tax-exempt obligations to determine whether the interest thereon is includible in gross income for federal income tax purposes. If the IRS does audit the 2017 Series H-A Bonds, under current IRS procedures, the IRS will treat the Successor Agency as the taxpayer and the beneficial owners of the 2017 Series H-A Bonds will have only limited rights, if any, to obtain and participate in judicial review of such audit. Any action of the IRS, including but not limited to selection of the 2017 Series H-A Bonds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the market value of the 2017 Series H-A Bonds. 2017 Series H-B Bonds In the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, under existing law, interest on the 2017 Series H-B Bonds is exempt from State of California personal income taxes. Bond Counsel expresses no opinion as to any other tax consequences regarding the 2017 Series H-B Bonds. Interest on the 2017 Series H-B Bonds is not excluded from gross income for federal income tax purposes. The legal defeasance of the 2017 Series H-B Bonds may result in a deemed sale or exchange of the 2017 Series H-B Bonds under certain circumstances; owners of the 2017 Series H-B Bonds should consult their own tax advisors as to the federal income tax consequences of such an event. Prospective purchasers of the 2017 Series H-B Bonds should also consult with their own tax advisors as to the federal, state and local, and foreign tax consequences of their acquisition, ownership and disposition of the 2017 Series H-B Bonds. If a beneficial owner of a 2017 Series H-B Bond fails to provide its taxpayer identification number or fails to report all interest on its federal income tax returns, payments of principal and interest made on the 2017 Series H-B Bond will be subject to backup withholding. Beneficial owners of the 2017 Series H-B Bonds should consult their tax advisors with respect to this and other tax consequences of ownership of the 2017 Series H-B Bonds. The following discussion is generally limited to "U.S. owners," meaning beneficial owners of 2017 Series H-B Bonds that for United States federal income tax purposes are individual citizens or residents of the !� United States, corporations or other entities taxable as corporations created or organized in or under the laws of the United States or any state thercof (including the District of Columbia), and certain estates or trusts with speciiic connections to the United States. Partnerships holding 2017 Series H-B Bonds, and partners in such partnerships, should consult their own tax advisors regarding the tax consequences of an investment in the 2017 Series H-B Bonds (including their status as U.S. owners). Certain of the 2017 Series H-B Bonds (Discount Bonds) may be offered and sold to the public at an original issue discount (OID). OID is the excess of the stated redemption price at maturity (the principal amount) over the "issue price" of such bonds, provided that excess equals or exceeds a statutory de minimis amount (one-quarter of one percent of the bond's stated redemption price at maturity multiplied by the number of complete years to its maturity, or if required by applicable Treasury Regulations, to an earlier call date). The issue price of a Discount Bond is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of the Discount Bonds of the same maturity are sold pursuant to that offering. For federal income tax purposes, OID accrues to the owner of a Discount Bond over the period to maturity based on the constant yield method, compounded semiannually (or over a shorter permitted compounding interval selected by the owner). The portion of OID that accrues durinD the time a U.S. owner owns a Discount Bond (i) constitutes interest includable in the U.S. owner's gross income for federal income tax purposes and (ii) is added to the U.S. owner's tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale, or other disposition of the Discount Bond. The effect of OID is to accelerate the recognition of taxable income during the term of the Discount Bond. Certain of the 2017 Series H-B Bonds (Premium Bonds) may be offered and sold to the public at a price in excess of their stated redemption price (the principal amount) at maturity. If a U.S. owner purchases a Premium Bond, that owner will be considered to have purchased such a Premium Bond with "amortizable bond premium" equal in amount to such excess. The U.S. owner may elect (and that election will apply to all securities purchased at a premium by such U.S. Owner), in accordance with the applicable provisions of Section 171 of the Code, to amortize that premium as an offset to the interest payments on the Premium Bond using a constant yield to maturity method over the remaining term of the Premium Bond (or, if required by applicable Treasury Regulations, ro an earlier call date). Pursuant to Section 67(b)(1 1) of the Code, the amortization of that premium is not considered a miscellaneous itemized deduction. Any amortization of bond premium will reduce the basis of the Premium Bond pursuant to Section 1016(a)(5) of the Code. Owners of Discount or Premium Bonds (or book entry interests in them) should consult their own tax advisers as to the determination for federal tax purposes of the amount of OID or amortizable bond premium properly accruable in any period with respect to the Discount or Premium Bonds and as to other federal tax consequences and the treatment of O1D and amortizable bond premium for purposet of state or local taxes on (or based on) incomc. General information reporting requirements will apply to payments of principal and interest made on 2017 Series H-B Bonds and the proceeds of the sale of 2017 Series H-B Bonds to non-corporate owners, and "backup withholding" at a rate of 287c will apply to such payments if the owner fails to provide an accurate taxpayer identification number in the manner required or fails to report all interest required to be shown on its federal income tax returns. A beneficial owner of 2017 Series H-B Bonds that is a U.S. owner generally can obtain complete exemption from backup withholding by providing a properly completed 1RS Form W-9 (Request for Taxpayer ldentification Number and Certification). For taxable years beginning after December 31, 2012, a U.S. owner that is an individual or estate, or a trust not included in a special class of trust that is exempt from such tax, is subject to a 3.8 percent Medicare tax on the lesser of (i) the U.S. owner's "net investment income" for the taxable year, and (ii) the excess of the U.S. owner's modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals is between $125,000 and $250,000, depending on the individual's circumstances). A U.S. owner's net investment income generally includes interest income on, and net gains from the disposition of, 2017 Series H-B Bonds, unless such interest income or net gains are derived in the ordinary course of a trader business 42 (other than a trader business that consists of certain passive or trading activities). A U.S. owner that is an individual, estate, or trust, should consult its tax advisor regarding the applicability of the Medicare tax. 2017 Series H-B Bonds — Non-U.S. Owners Under the Code, interest and OID on any 2017 Series H-B Bond whose bene�cial owner is not a U.S. owner are generally not subject to United States income tax or withholding tax (including backup withholding) if the non-U.S. owner provides the payor of interest on the 2017 Series H-B Bonds with an appropriate statement as to its status as a non-U.S. owner. This statement can be made on IRS Form W-8BEN or a successor form. If, however, the non-U.S. owner conducts a trade or business in the United States and the interest or OID on the 2017 Series H-B Bonds held by the non-U.S. owner is effectively connected with such trade or business, that interest or OID will be subject to United States income tax but will generally not be subject to United States withholding tax (including backup withholding). The foregoing is a brief summary of certain federal income tax consequences to a non-U.S. owner. Non-U.S. owners should consult their own tax advisors regarding the tax consequences of an investment in the 2017 Series H-B Bonds. 2017 Series H-B Bonds — Foreign Account Tax Compliance Act The Foreign Account Tax Compliance Act ("FATCA") generally imposes a 30 percent withholding tax on interest payments and proceeds from the sale of interest-bearing obligations for payments made after the relevant effective date to (i) certain foreign financial institutions that fail to certify their FATCA status, and (ii) investment funds and non-�nancial foreign entities if certain disclosure requirements related to direct and indirect United States shareholders and/or United States account holders are not satisfied) Under applicable Treasury Regulations, the FATCA withholding tax of 30 percent will generally be imposed, subject to certain exceptions, on payments of (i) interest on 2017 Series H-B Bonds on or after July 1, 2014, and (ii) gross proceeds from the sale or other disposition of other 2017 Series H-B Bonds on or after January 1, 2017, where such payments are made to persons described in the preceding paragraph.) In the case of payments made to a"foreign financial institution" (generally including an investment fund), as a beneficial owner or as its intermediary, the FATCA withholding tax generally will be imposed, subject to certain exceptions, unless such institution (i) enters into (or is otherwise subject to) and complies with an agreement with the United States government (a "FATCA Agreement"), or (ii) is required by and complies with applicable foreign law enacted in connection with an intergovernmental agreement between the United States and a foreign jurisdiction (an "IGA"), in either case to, among other things, collect and provide to the United States or other relevant tax authorities certain information regarding United States account holders of such institution. In the case of payments made to a foreign entity that is not a financial institution (as a beneficial owner), the FATCA withholding tax generally will be imposed, subject to certain exceptions, unless such entity either provides the withholding agent with a certification that it does not have any "substantial" United States owner (generally, in a specified United States person that directly or indirectly owns more than a specified percentage of such entity) or identifies its "substantial" United States owners. If 2017 Series H-B Bonds are held through a foreign financial institution that enters into (or is otherwise subject to) a FATCA Agreement, such foreign financial institution (or, in certain cases, a person paying amounts to such foreign financial institutions) generally will be required, subject to certain exceptions, to withhold the 30 percent FATCA tax on payments of dividends or the items described above made to (i) a person (including an individual) that fails to comply with certain information requests, or to relies (ii) a foreign financial institution that has not entered into (and is not otherwise subject to) a FATCA Agreement and that is not required to comply with FATCA pursuant to applicable foreign law enacted in connection with an IGA. Coordinating rules may limit duplicative withholding in cases where the withholding described above in "Non-U.S. Owners" or back-up withholding described above also applies. If any amount of, or in respect of, United States withholding tax were to be deducted or withheld from payments on 2017 Series H-B Bonds as a result of a failure by an investor (or by an institution through which an investor holds the 2017 Series H-B Bonds) to comply with FATCA, none of the Successor Agency, the Trustee, 43 any paying agent or bond registrar nor any other person would, pursuant to the terms of the 2017 Serics H-B Bonds, be required to pay additional amounts with respect to any 2017 Series H-B Bond as a result of the deduction or withholding of such tax. Non-U.S. Owners should consult their tax advisors regarding the application of FATCA to the ownership and disposition of 2017 Series H-B Bonds. Form of Bond Counsel Opinions A copy of each of the proposed forms of Bond Counsel's final approving opinions with respect to the 2017 Series H-A Bonds and the 2017 Series H-B Bonds are attached hereto as Appendix F. No Litigation There is no action, suit or proceeding known to the Successor Agency to be pending and notice of which has been served upon and received by the Successor Agency, or threatened, restraining or enjoining the execution or delivery of the Bonds or the Indenture or in any way contesting or affecting the validity of the foregoing or any proceedings of the Successor Agency taken with respect to any of the foregoing. CONCLUDING INFORMATION Ratings on the Bonds S&P Global Ratings has assigned an uninsured rating of "_" to the Bonds. Such rating reflect only the views of S&P Global Ratings, and any desired explanation of the significance of such ratings may be obtained from such rating agency at the following address: S&P Global Ratings, 55 Water Street, New York, New York 10041, (212) 438-2000. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assump[ions of its own. There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds. Except as otherwise required in the Continuing Disclosure Certificate, the Successor Agency undertakes no responsibility either to bring to the attention of the owners of any Bonds any downward revision or withdrawal of any rating obtained or to oppose any such revision or withdrawal. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. The Municipal Advisor The Successor Agency has retained Del Rio Advisors, LLC of Modesto, California, as municipal advisor (the "Municipal Advisor") in connection with the offering of the Bonds. All financial and other information presented in this Official Statement has been provided by the Successor Agency and others from their records. Unless otherwise footnoted, the Municipal Advisor takes no responsibility for the accuracy or completeness of the data provided by the Successor Agency or others and has not undertaken to make an independent verification or does not assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. The Municipal Advisor has assisted the Successor Agency with the structure, timing and terms for the sale of the Bonds. The Municipal Advisor provides municipal advisory services only and does not engage in the underwriting, marketing, or trading of municipal securities or other negotiable instruments. The fee of the Municipal Advisor is not contingent upon the successful closing of the Bonds. Continuing Disclosure The Successor Agency will provide annually certain financial information and data rclating to the Bonds by not later than April 1 in each year commencing April l, 2018 (the "Annual Report"), and to provide notices of the occurrence of certain other listed events. Willdan Group, Inc. will act as Dissemination Agent. The .. specific nature of the information to be contained in the Annual Report or the notices of listed events and certain other terms of the continuing disclosure obligation are found in the form of the Successor Agency's Disclosure Certificate attached in APPENDIX E—"FORM OF CONTINUING DISCLOSURE CERTIFICATE." The Successor Agency entered into previous continuing disclosure undertakings with respect to its bond obligations. [A review of compliance with continuing disclosure undertakings for filings required by the Successor Agency and its related entities within the past iive years indicates that the Successor Agency and its related entities failed to timely disclose one rating change in 2013. The Successor Agency is currently in compliance with its continuing disclosure obligations. The Successor Agency has adopted continuing disclosure compliance policies.] Underwriting The Bonds were sold to Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), who is offering the Bonds at the prices set forth on the inside cover pages hereof. The initial offering prices may be changed from time to time and concessions from the offering prices may be allowed to dealers, banks and others. The Underwriter has purchased the 2017 Series H-A Bonds at a price equal to $ , which amount represents the principal amount of the 2017 Series H-A Bonds plus a net original issue premium of $ , less an Underwriter's discount of $ . The Underwriter has purchased the 2017 Series H-B Bonds at a price equal to $ , which amount represents the principal amount of the 2017 Series H-B Bonds less an original issue discount of $ , less an Underwriter's discount of $ . The Underwriter will pay certain of its expenses relating to the offering from the Underwriter's discount. Additional Information The summaries and references con[ained in the Official Statement with respect to [he Indenture, the Bonds, statutes and other documents, do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute and references to the Bonds are qualified in their entirety by reference to the form hereof included in the Indenture. Copies of this document may be obtained after delivery of the Bonds from the Successor Agency at 73510 Fred Waring Drive, Palm Desert, California 92260. References All statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Of�cial S[atement is not to be construed as a contract or agreement between the Successor Agency and the purchasers or Owners of any of the Bonds. 45 Execution The execution and delivery of this Official Statement by the Executive Director of the Successor Agency has been duly authorized by the Successor Agency. SUCCESSOR AGENCY TO THE PALM UE:SERT REDEVELOPMENT AGENCY : Lauri Aylaian, Executive Director Cf� APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE A-1 APPEiYDIX B CITY OF PALM DESERT INFORMATION GENERAL ECONOMIC DATA CONCERNING THE CI'I'Y OF I'ALM DESERT AND THE COUNTY OF RIVERSIDE The fnllnwin�� infonnation concerning !he City of Pulm Desert, the Coz�nty of Riversrde and surrnurrding a��eas is included only,for the purpose c�fsupplyinggeneral information regarding the community. Overview "I'he City of Palm Desert (the "City"), incorporated in November 26, 1973 as a general law city, becamc a chartcr city through the adoption of Ordinancc 858 by thc City Council on January 8, 1998. Thc City is located in the Coachella Valley and is approximately mid-way between the cities of Indio and E'alm Springs, 1 17 miles east of I,os Angeles, 1 18 miles northeast of San Diego and 515 miles southeast of San Francisco. "i'he City occupies an area of approximately 26 square miles. F.levation of the City is 243 feet and the mean temperature is 73.1 degrees. F.xcept in summer, the weather is mild and annual average rainfall is 3.38 inches. According to the State Department of Finance, the City population as of January l, 2016 was approximately 49,35�. Government "I'he City Council is comprised of five members, elected at large for four-year staggered terms every two years. �I�he general municipal election is conducted in November of even-numbered years, consolidated with the Statewide General F,Iection and councilmembers are sworn in and take office at the first meeting in December f��llowing cach elcction. The Ciiy Council selects one of its �nembers to serve as Mayor for a one-year term and appoints a City Manager to conduct the day to day business of the City and the City Clerk. "The City nttorney is appointed by City Council. The City operates as "Contract City" utilizing, primarily, agreements with other governmental entities, private companies and individuals to provide services. Contracted services include police and fire protection provided through the County, animal control, health services, legal services and landscape maintenancc. Tablc B-1 CITY OF PALM DESF.RT CITY COUNCIL MEMBERS Namc OfCce Jan Harnik Mayor' Sabby Jonatl�an Mayor Pro "i'cm� Kathlecn Kelly Council Member-elect Gina Nestande Council Member-elect Susan Marie Webcr Council Member Yopulation Betwecn 2010 and 2016, the city's population increascd by a total of 890 or approximately 1.83%. In addition to permanent residents, the city has approximatcly 32,000 seasonal residential residents who live thrcc ' Subject to City Council reorganization after election certification on December 8, 2016. B-1 to six months in the City, primarily during the winter months. Table B-2 illustrates the population of the City, the County and the State for 1990, 2000, and 2010 through 2016. Table B-2 CITY OF PALM DESERT POPULATION ESTIMATES The State of California, County of Riverside and the City of Palm Desert (As of January 1 of Each Year) Year (January 1) 1990�" 2000� �' 2010��' 2011 2012 2013 2014 2015 2016 City of Palm Desert 23,252 41,155 48,445 48,957 48,924 48,282 48,494 48,835 49,335 Riverside Countv 1,170,413 1,545,387 2,189,641 2,212,874 2,239,715 2,266,549 2,291,093 2,317,924 2,347,828 State of California 29,758,213 33,873,086 37>253,956 37,536,835 37,881,357 38,239,207 38,567,459 38,907,642 39,255,883 �� As of April 1. Sources: United States Department of Commerce, Bureau of the Census for 2010 and State of California Department of Finance for remaining years. Labor Force and Employment The main sources of revenue in the City are derived from tourism and sales tax. Historically, the unemployment rate in the City has been lower than that for the County and the State. I: Table B-3 table represents the labor patterns in the City, the County, the State, and the United States from 2012 through 2016. Table B-3 CITY OF PALM DESERT, RIVERSIDE COUNTY, STATE OF CALIFORNIA AND UNITED STATES CIVILIAN LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Year and Area 2012 City County State United States 2013 City County State United States 2014 City County State United States 2015 City County Statc United States 2016 � City�-' , County�-� , Statc�-' United States`�' Labor Force 21,800 988,600 18,551,400 154,975,000 22,200 998,800 I 8,670,100 155,389,000 22,600 1,017,000 18,827,900 155,922,000 23,200 1,035,200 18,981,800 157,130,000 23,500 1,051, I 00 19,357,900 159,907,000 Emaloyment 20,000 873,600 16,627,800 142,469,000 20,600 899,900 17,001,000 143,929,000 21,300 933,800 17,418,000 146,300,000 22,000 965,000 17,798,600 148,834,000 22,400 978,900 18,281,600 151,968,000 Unemplovment 1,800 115,100 1,183,200 12,506,000 .11 ':'ll •.' 111 � .1 111 1,300 83,200 1,409,900 9,617,000 1,100 69,600 I ,183,200 8,296,000 1,100 72,200 1,076,300 7,939,000 Unemployment Rate 8.4 I �Ic 11.6 ] 0.4 8.1 7.1 9.9 8.9 7.4 5.8 82 7.5 62 4.8 6.7 6.2 5.3 4.9 6.9 5.6 5.0 �� As of September. izi As of August. Sources: State of California Employment Devclopment Dcpartment and U.S. Depariment of Labor, Burcau of Labur Statistics. : Table B-4 CITY OF PALM DESERT MAJOR EMPLOYERS (As of October 2015) l. 2. 3. 4. 5. 6. 7. 8. 9. 1Q Companv JW Marriott — Dcscrt Sprinas Resort & DS Villas Universal Protection Services Securitas — Security Service USA Avida Caregivers — P. Desert Sunshinc Landscape Walmart Macys CVWD Biahorn Golf Club Costco ProducdService Commercial Hotel, Timeshare & Retail Security Scrvices Security Services Home Healthcarc Gardening/Landscaping Scrvicc Rctail/Store RetaiUStore Municipal Watcr District Golf Coursc/Country Club Retail Warehouse Number of Emaloyees 2,304 1,500 700 550 500 350 350 325 250 250 Sources: City of Palm Desert Comprehensive Annual Financial Report for Fiscal Ycar ended June �i0. 2015. Commercial Activity A sales tax is imposed on retail sale or consumption of personal property. Sales tax revenues are determined by the total taxable transactions within a jurisdiction and distributed by the State Board of Equalization to the jurisdiction where the sale took place. Sales taxes collected from merchants with no permanen[ 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 collection from all sales taxpayers. The value and volume of these taxable transactions are dependent on economic conditions and other factors. Such factors included the level of inflation affecting the price of goods and services subject to the sales tax, the rate of population growth in the general area, the characteristics of retail developments, such as the relative size of market service area5, the sensitivity of the types of businesses within the City to changes in the economy, and competing retail establishments outside the City. A deterioration of economic conditions and other factors influencing taxable sales generated in the City, may reduce the City's sales tax revenues. The table below summarizes taxable transactions in the City for calendar years 201U through 2014. ; .i Table B-5 CITY OF PALM DESERT TAXABLE RETAIL SALES DATA Calendar Years 2010 to 2014 ($ in 000's) Retail and Food Services Motor Vchicic and Parts Dcalers Home Furnishings and Appliance Stores Bidg. Matrl. and Gardcn Equip. and Supplies Food and Bevcrage Stores Gasolinc Stations Clothing and Clothing Accessorics Stores General Merchandise Stores Food Scrviccs and Drinking Places Other Retail Group Total Retail and Food Scrvices All Other Outicts Total All Outlets "' Last year available. Sources: State Board of Equ�lization. Utilities Water, sewage treatment and Southern California Gas Company Southern California Edison Compan is provided by Spectrum. Transportation 2010 $ 17,472 95,561 63,999 47,242 70,512 172,869 340,762 150,093 132,548 $1,091,059 $ 175,775 $1,266,834 2011 $ 19,115 91,246 68>214 48,002 90,4�i l 193,087 :�66,913 162,864 142,704 � 1,182,576 $ 201,633 $1,384,208 2012 6 2Q:i09 95,997 76.241 48,776 92,684 202,706 379,856 174,101 152,229 $1,242,899 $ 228.083 $ I ,470>982 2013 � 22,955 95,108 77,714 56,448 9:i,064 2l 1,465 382,224 188,056 156,276 $1, 283.310 $ 247.203 $ l ,530,512 2014�" $ 22,780 104,568 80,577 6R,378 87>049 25 i, I 87 356, 366 I 97,:�74 168,455 $1.:i �8,734 � 256,020 9� 1,594,75:i wastewater disposal are provided by the Coachella Valley Water District. supplies natural gas to the City and electric power is provided by the y. Telephone service is available through Frontier. Cable television service Inter-City transporta[ion is provided by Sunline Bus System which provides service throughout the entire Coachella Valley. The City's central highways are California Highway 11 1 and 74 which connect to US Interstate 10 and to California Highway 62 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 Paciiic Railroad located in Indio, 10 miles east of the City, and by Amtrak, which has two stations located in Coachell� Valley. A full service airport is loc�ted in Palm Springs, 12 miles northwest of the City, with approximately seven carriers providing service. The airport has an 8,500 foot runway and general aviation facilities. There is also a private airport in Bermuda Dunes, eight miles northeast of the City. Community Services The City of Palm Desert provides both police and fire protection through contracts with the County of Riverside. The Riverside County Public Library System provides library services to the City. The City/County also operates a 43,000 square foot public library on the College of the Desert campus which is jointly used by the public and the College of the Desert. : Income The following table shows per capita income for the City, County, and State for calendar years 2006 through 2015. Table B-6 CITY OF PALM DESERT PER CAPITA PERSONAL INCOME�'� County of Riverside and Statc of California Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 City of Palm Desert $42,339 42,867 47,919 48,069 48,286 51,940 52,336 52,61:i 52,906 53,031 County of Riverside $3 l ,203 31,586 31,497 29,869 29,753 31,07:i 31,879 32,503 33,590 n/a California $41,693 43,182 43,786 41,588 42,411 44,852 47,614 48,125 49,985 n/a Saurce: City of Palm Desert Comprehensive Annual Financial Report for Fiscal Year ended June 30, 2015; L'.S. Uepartment of Commerce Bureau of Economic Analysis. Education, Culture and Recreation Public school education is provided by the Desert Sands Unified School District (the "School District"). The School District provides preschool through grade 12 education to students living in the City and the communities of Indian Wells, Indio, La Quinta, Rancho Mirage and Bermuda Dunes. The School District and operates seven elementary schools, six middle schools, three comprehensive high schools, one independent study alternative school and a continuation high school. The College of the Desert, the Coachella Valley Community College is located in the City. A satellite campus of California State University, San Bernardino ("CSUSB") is located approximately five miles northeast of City Hall. In 2002, the first building on the campus, the Mary Stuart Rogers Gateway Building, was constructed and occupied. In 2005 two additional buildings were constructed and occupied which included a three story classroom building and the Indian Wells Theater, a 300-seat performing arts center. The University of California, Riverside has also established a campus in the City. The UCR Palm Desert Graduate Center opened as a permanent satellite campus in 2005, when construction was completed on the approximately 21,200 square foot Richard J. Heckmann International Center for Entrepreneurial Management and an approximately 23,600 square foot educational facility. Cultural facilities in the City include the 1,127 seat McCallum Theater for the Performing Arts located in Bob Hope Cultural Center, the 1,200 acre Living Desert Zoo and Gardens, the Palm Springs AR Museum which includes a 8,400 syuare foot exhibit building and a 250,000 square foot sculpture garden and the Art in Public Places (a museum without walls featuring more than 130 works of art throughout the City). Recreation programs for residents of the City and other neighboring communities are offered through the Coachella Valley Recreation and Park District (the "Park District"). The Park District provides recreational activities and programs ranging from tiny tots programs, kids clubs and summer day camp, to dance, health and fitness and music instruction, to the senior games. I: . The Desert Willow Golf ResoR, 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. : APPENDIX C FISCAL CONSULTANT'S REPORT C-1 APPENDIX D CITY OF PALM DESERT AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 � APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE This CONTINUING DISCLOSURE CERTIFICATE (the "Disclosure Certificate") is executed and delivered by the Successor Agency to the Palm Desert Redevelopment Agency (the "Issuer") in connection with the issuance of its Tax Allocation Refunding Bonds, 2017 Series H-A and Taxable Tax Allocation Refunding Bonds, 2017 Series H-B (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of 1, 2017, by and between U.S. Bank National Association, as trustee (the "Trustee") and the Issuer (the "Indenture"). The Issuer covenants and agrees as follows: Section 1. Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Beneficial Owners and bondholders in order to assist the Participating Underwriter in complying with Securities and Exchange Commission Rule 15c2�12. Section 2. Definitions. in addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Anni�ul Report" shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "BeneJicial 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. "Disseminution Agent" shall mean Willdan Group, Inc., or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation. In the absence of such a designation, the Issuer shall act as the Dissemination Agent. "EMMA" or "Electronic Municipal Market Access" means the centralized on-line repository system located at www.emma.msrb.org for documents filed with the MSRB pursuant to the Rule, such as official statements and disclosure information relating to municipal bonds, notes and other securities as issued by state and local governments. "Listed Events" shall mean any of the events listed in Section 5(a) and (b) of this Disclosure Certiiicate. "MSRB" means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information which may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. "Participating Under►vriter" shall mean Stifel, Nicolaus & Company, Incorporated, or any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Rule" shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "Stute" 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. As of the date of this Certificate, there is no State Repository. E-1 Section 3. Provision of Annual Reports. (a) Delivery of Annuul Report to MSRB. The Issuer shall, or shall cause the Dissemination Agent to, not later than April 1 in each year, commencing April 1, 2018 and to file with EMMA, in a readable PDF or other electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate; provided however, that the first Annual Report due on April 1, 2018 shall consist solely of a copy of the Official Statement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross- reference other information as provided in Section 4 of this Disclosure Certificate; provided, that the audited financial statements of the Issuer may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. (b) Chunge of Fiscul Year. If the Issuer's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(d). (c) Delivery of�Annual Repnrt to Disseminution Agent. Not later than iive days prior to the date specified in subsection (a) for providing the Annual Report to EMMA, the Issuer shall provide the Annual Report to the Dissemination Agent (if other than the Issuer). If by such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall notify the Issuer. (d) Report of'Non-Compliance. If the Issuer is unable to provide an Annual Report by the date required in subsection (a), the Dissemination Agent shall send a notice to EMMA in a timely manner in an electronic format prescribed by the MSRB. (e) Annuul Compliunce Certification. The Dissemination Agent shall, if the Dissemination Agent is other than the Issuer, file a report with the Issuer certifying that the Annual Report has becn provided pursuant to this Disclosure Certificate, stating the date it was provided. Section 4. Content of Annual Reports. The Issuer's Annual Report shaU contain or incorporate by reference the following: (a) Audited financial statements of the Issuer for the preceding fiscal year, prepared in accordance with the laws of the State and including all statements and information prescribed for inclusion therein by the Controller of the State. If the Issuer's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official State►nent, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. The audited Financial Statements of the Issuer may be included in the City of Palm Desert's Comprehensive Annual Financial Report if no separatc Financial Statement is prepared for the Issuer. (b) To the extent not includcd in the audited final statement of the Issuer, the Annual Report shall also include the following information for the prior fiscal year, insofar as available from public rccords: (i) Table No. 3- Historical Assessed Valuations; (ii) Table No. 4- Ten Largest Taxpayers; (iii) Table No. 6— Projected Tax Revenues with regard to current fiscal year revenue; and (iv) Table No. 8- Debt Service Coverage with regard to current fiscal year revenue. E-2 (c) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which are available to the public on the MSRB's Internet web site or filed with the Securities and Exchange Commission. The Issuer shall clearly identify each such other document so included by reference. lf the document included by reference is a final official statement, it must be available from EMMA. (d) In addition to any of the information expressly required to be provided under paragraph (b) of this Section 4, the Issuer shall provide such further information, if any, as may be necessary to make [he speciiically required statements or information (as set forth herein), in the light of the circumstances under which they are made, not misleading. Section 5. Reportin�gnificant Events. (a) Reportahle Events. The Issuer shall, or shall cause the Dissemination (if not the Agency) to, give notice of the occurrence of any of the following events with respect to the Bonds (in accordance with (e) below): (1) Principal and interest payment delinquencies. (2) Unscheduled draws on debt service reserves reflecting financial difficulties. (3) Unscheduled draws on credit enhancements reflecting financial difficulties. (4) Substitution of credit or liquidity providers, or their failure to perform. (5) Defeasances. (6) Rating changes. (7) Tender offers. (8) Bankruptcy, insolvency, receivership or similar event of the obligated person. (9) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax s[atus of the security. (b) Materiul Reportuble Events. The Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (1) Non-payment related defaults. (2) Modifications to rights of security holders. (3) Bond calls. (4) Thc releasc, substitution, or sale of property securing repayment of the securities. (5) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person> other than in the ordinary course of business, the entry into a definitive agreement to undertake such E-3 an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms. (6) Appointment of a successor or additional trustee, or the change of name of a trustec. (c) Determination of Muteriality of Listed Events. Whenever the Issuer obtains knowledge of the occurrence of a Listed Event listed under Section S(b), the Issuer shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) Notice to Disseminution Agent. If the Issuer has determined that knowledge of the occurrence of a Listed Event listed under Section 5(b) would be material under applicable federal securities laws, the Issuer shall promptly notify the Dissemination Agent (if other than the Issuer) in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (d). (e) Notice of Listecl Event,ti�. The Issuer shall file, or cause the Dissemination Agent to file, a notice of the occurrence of a Listed Event listed in Section 5(a), and, listed in Section 5(b), if material, with EMMA, in a readable PDF or other electronic format as prescribed by the MSRB, in a timely manner not in excess of ten (] 0) business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(5) and (b)(3) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds. Section 6. Identifyin� Information for Filings with EMMA. All documents provided to �MMA under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reportin� Obli ag t�. The Issuer's obligations under this Disclosure Certificate shall terminate upon the defeasance, prior redemption or payment in full of all of the Bonds. Section 8. Dissemination A ent. (a) Appointmeiit of�Dissemination Agent. The initial Dissemination Agent shall be Willdan Group, Inc. The Issuer may, from time to time, appoint or engage a different Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor Dissemination Agent. If the Dissemination Agent is not the Issuer, the Dissemination Agent shall not be responsible in any manner for the content of any notice or rcport prepared by the Issuer pursuant to this Uisclosure Certificate. (b) Compen,cutinn of Disseminution Agent. The Dissemination Agent, if not the Issuer, shall be paid compensation by the Issuer for its services provided hereunder in accordance with its schedule of fees as agreed to between the Dissemination Agent and the Issuer from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the Issuer, Owners or Beneficial Owners, or any other party. The Dissemination Agent may rely 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 may at any time resign by giving written notice of such resignation to the Issuer. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certi�cate, the Issuer may amend this Disclosure Certificate (and the Uissemination Agent shall agree to any amendment so reyuested by the Issucr that does not impose any greater duties or risk of liability on the Dissemination Agent), and any provision of this Disclosure Certiticate may be waived, provided that thc following conditions are satisfied: E-4 (a) Chunge in Circumstances. If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) Cnmpliance as of Issue Dute. The undertaking, as amended or taking into account such waiver, would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) Consent of Owners; Non-impairment Opinion. The amendment or waiver either (i) is approved by the Owners in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners. If this Disclosure Certificate is amended or any provision of this Disclosure Certificate is waived, the Issuer shall describe such amendment or waiver in the next following Annual Report and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(d), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate 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 Certificate. If the Issuer 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 Certificate, the Issuer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 11. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certifcate, any Bondholder or Benefcial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under this Disclosure Certificate. The sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Duties, Immunities and Liabilitiet of Dissemination A�. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Issuer agrees to indemnify and save the Dissemination Agent, and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of the disclosure of information pursuant to the Disclosure Certificate or arising out of or in the exercise of 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 negligence or willful misconduct. The Dissemination Agent shall have no duty of obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the Issuer, the owner of a Bond, or any other party. The Trustee shall have no liability to any party for any monetary damages or other financial liability of any kind whatsoever related to or arising from any breach of this Disclosure Certificate. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel speci�c performance of this Disclosure Certificate. The Dissemination Agent may rely and shall be protected in acting E-5 or refraining from acting upon any written direction from the Issuer or an opinion of Special Counsel. The obligations of the Issuer under this Sec[ion shall survive resignation or removal of the Dissemination Agent or the Trustee and payment of the Bonds. Section 13. Benefciaries. This Disclosure Cer[ificate shall inure solely to the beneft of the Issuer, the Uissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. Dated: , 2017 SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY : ACCEPTED BY DISSEM1NATiON AGENT By: _ Title: Lauri Aylaian, Executive Director E-6 APPENDIX F PROPOSED FORMS OF BOND COUNSEL OPINIONS F-1 APPENDIX G THF, BOUK-ENTRY SYSTEM The following description of the Depository Trust Company ("DTC"), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneiicial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor [he Beneficial Owners should rely on thc foregoing information with respect to such matters, but should instead coniirm the same with DTC or the DTC Participants, as the case may be. Neither the issuer of the Bonds (the "Issuer") nor the trustee, fiscal agent or paying agent appointed with respect to the Bonds (the "Agent") take any responsibility for the information contained in this Appendix. No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownerthip interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The cunent "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully-registered securiii�s registered in [he name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certi�cate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. 2. DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a"banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a"clearing corporation" within the meaning of the New York Uniform Commercial Code, and a"clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non- U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and cicaring corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on tile with the Securities and Exchange Commission. More information about DTC G-1 can be found at www.dtcc.com. The information contained on such Internet site is not incorporated herein by reference. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and lndirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneiicial Owner entered into the transaction. Transfers of ownership interests in the Securities 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 Securities, except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect P�-ticipants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of signi�cant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identiiied in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Bene�cial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend G-2 payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such paymentti 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 Indirec[ Participants. 9. DTC may discontinue providing its services as depository with respec[ to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required ro be printed and delivered. ] 0. Issuer may decide to discontinue use of the system of book-entry transfers through UTC (or a succestior securities depository). In that event, Security certificates will be printed and delivered to DTC. 1 1. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof. G-3 RESOLUTION NO. sa-xDA o62 A RESOLUTION OF THE BOARD OF DIRECTORS TO THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND PURCHASE CONTRACT, AN OFFICIAL STATEMENT, AN ESCROW AGREEMENT AND OTHER DOCUMENTS IN CONNECTION WITH THE SUCCESSOR AGENCY'S ISSUANCE OF TAX ALLOCATION REFUNDING (NON-HOUSING) BONDS AND TAKING RELATED ACTIONS RECITALS: A. The former Palm Desert Redevelopment Agency (the "Former Agency") was a duly constituted redevelopment agency pursuant to provisions of the Community Redevelopment Law (the "Redevelopment Law") set forth in Section 33000 et seq. of the Health and Safety Code ("HSC") of the State of California (the "State"). B. The Former Agency undertook to redevelop four project areas (collectively, the "Project Areas"). C. The Former Agency and the City of Palm Desert (the "City") executed and delivered a Joint Exercise of Powers Agreement, dated as of January 26, 1989 (the "Joint Powers Agreement"), which Joint Powers Agreement created and established the Palm Desert Financing Authority (the "Authority"). D. To finance and refinance redevelopment projects benefiting the Project Areas, the Former Agency entered into the loan agreements listed in Attachment I (collectively, the "Loan Agreements," each being a"Loan AgreemenY') with the Authority and incurred loans thereunder (collectively, the "Agency Loans," with each being an "Agency Loan"). E. To provide funding for the Agency Loans, the Authority issued the bonds listed in Attachment I(collectively, the "Authority Bonds"). F. As of the date of this resolution, a portion of the principal amount of each Agency Loan (and, correspondingly, an equivalent portion of the principal amount of each series of the Authority Bonds) remains outstanding. G. Pursuant to AB X1 26 (enacted in June 2011), and the State Supreme Court's decision in California Redevelopment Association, et al. v. Ana Matosantos, et al., 53 Cal. 4th 231 (2011), the Former Agency was dissolved as of February 1, 2012, the Successor Agency of the Palm Desert Redevelopment Agency (the "Successor Agency") was constituted, and the Oversight Board to the Successor Agency (the "Oversight Board") was established. 1 G.rda��'eronica l'apia�N�brd Piles.Stafl'ReponsSuccesso� Agrncy�Ucbt Refundin63'alm Uesen - 2017 refunding - SA reso approving non-housing POS BPA Re.� 12-IJ�+docs RESOLUTION NO. sa-RnA o62 H. Pursuant to HSC Section 34177.5(a), the Successor Agency is authorized to issue bonds (the "Refunding Bonds"} to refund the Agency Loans, to provide savings to the Successor Agency, provided that: (i) the total interest cost to maturity on the Refunding Bonds plus the principal amount of the Refunding Bonds shall not exceed the total remaining interest cost to maturity on the refunded Agency Loans, plus the remaining principal of the refunded Agency Loans; and (ii) the principal amount of the Refunding Bonds shall not exceed the amount required to defease the refunded Agency Loans, to establish customary debt service reserves and pay related costs of issuance. I. The Successor Agency desires to issue Refunding Bonds to refund the outstanding Agency Loans to achieve debt service savings. J. The Refunding Bonds will be issued under the authority of HSC Section 34177.5 and Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the "Refunding Bond Law"). K. The Board of Directors previously adopted Resolution No. SA-RDA-060, on October 13, 2016 (the "SA Bond Approval Resolution"), approving the issuance of the Refunding Bonds an Indenture (the "Indenture"), by and between the Successor Agency and U.S. Bank National Association, as trustee, in substantially the form attached to the SA Bond Approval Resolution. L. Pursuant to HSC Sections 34177.5(� and 34180, the issuance of the Refunding Bonds is subject to the Oversight Board's prior approval. M. The Oversight Board adopted Resolution No. OB-154 on October 17, 2016 (the "Oversight Board Resolution"), approving the issuance of the Refunding Bonds. N. The State Department of Finance ("DOF") issued its letter, dated December 1, 2016, providing the DOF's approval of the Oversight Board Resolution. O. The Refunding Bonds will be issued in one or more series, and will consist of a combination of tax-exempt bonds (the "Tax-Exempt Bonds") and taxable bonds (the "Taxable Bonds"). NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: 2 G rda ��tronica 7'apia.l�brd f'iles'.Staff keports'Suceessor A�ency'�Ueht Reliindin�tPalm Uesen - 2017 refimAing - tiA reso appro��ing non-housinb POti RpA Rer 12- I- In ducc RESOLUTION NO. sA-xna 062 Section 1. Recitals. The above recitals, and each of them, are true and correct. Section 2. RefundinQ Bonds. This Board of Directors hereby confirms its approval of the issuance of the Refunding Bonds in an aggregate principal amount not to exceed $240,000,000 pursuant to the SA Bond Approval Resolution. Section 3. Bond Purchase Contract. The sale of the Refunding Bonds pursuant to a Bond Purchase Contract (the "Bond Purchase ContracY'), by and between the Successor Agency and Stifel, Nicolaus & Company, Incorporated ( the "Underwriter") is hereby approved; provided, that such sale shall be subject to the following parameters: (i) the terms of the Refunding Bonds shall be in compliance with the savings parameters set forth in clauses (A) and (B) of the Recital H of this Resolution, (ii) the true interest cost of the Tax-Exempt Bonds shall not exceed 3.75 percent, (iii) the true interest cost of the Taxable Bonds not exceed 5.00 percent; (iv) the Underwriter's compensation (i.e., underwriter's discount), exclusive of any original issue discount, for the Refunding Bonds shall not exceed 0.5 percent of the aggregate principal amount of the Refunding Bonds. The Bond Purchase Contract, in the form on file with the Secretary of the Successor Agency, is hereby approved. Subject to the parameters set forth above, each of the Chair of this Board, the Vice Chair of this Board, the Executive Director and the Finance Officer of Successor Agency (the "Authorized Officers," each an "Authorized Officer"), acting individually, is authorized, for and in the name and on behalf of the Successor Agency, to execute and deliver the Bond Purchase Contract, with changes therein as the Authorized Officer executing the same may require or approve (such approval to be conclusively evidenced by the execution and delivery thereofl. Section 4. Escrow Aqreement. The Non-Housing Bonds Escrow Agreement (the "Escrow AgreemenY') relating to the refunding and defeasance of the Agency Loans and the Authority Bonds, substantially in the form on file in the office of the Secretary of the Successor Agency, is hereby approved. Each Authorized Officer, acting individually, is hereby authorized and directed, for and in the name and on behalf of the Successor Agency, to execute and deliver the Escrow Agreement, in substantially such form, with changes therein as the Authorized Officer executing the same may require or approve (such approval to be conclusively evidenced by the execution and delivery thereofl. Section 5. Preliminary Official Statement. The Preliminary Official Statement (the "Preliminary Official StatemenY') relating to the Refunding Bonds, substantially in the form on file in the office of the Secretary of the Successor Agency, is hereby approved. Each Authorized Officer, acting individually, is hereby authorized and directed, for and in the name and on behalf of the Successor Agency, to cause the Preliminary Official Statement in substantially said form, with such additions or 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 3 G�rda.Vewnica Tapia'.\1brJ FJes�StaFi'kepons'.Successor Agency'lleb� Re(unding.Palm Uesert - 2017 refundmg - SA reso approvmg nomhousing PUS RPA Rer I'_-I-IG Aoc� RESOLUTION NO. sA-xnA o62 1934, as amended (the "Rule"). The Underwriter is hereby authorized to distribute copies of the Preliminary Official Statement to persons who may be interested in the purchase of the Refunding Bonds. Section 6. Official Statement. Each Authorized Officer, acting individually, is hereby authorized and directed, for and in the name and on behalf of the Successor Agency, to cause the Preliminary Official Statement to be brought into the form of a final Official Statement and to execute the final Official Statement and such additional documents prior to or concurrently with the signing of the final Official Statement as such Authorized Officer may deem necessary or appropriate to verify the accuracy thereof. The distribution and use of the Official Statement by the Underwriter in connection with the sale of the Refunding Bonds are hereby approved. Section 7. Continuinq Disclosure Certificate. The Continuing Disclosure Certificate (the "Continuing Disclosure Certificate") with respect to the Refunding Bonds, substantially in the form attached as an appendix to the draft Preliminary Official Statement on file in the office of the Successor Agency Secretary, is hereby approved. Each Authorized Officer, acting individually, is hereby authorized and directed, for and in the name and on behalf of the Successor Agency, to execute and deliver the Continuing Disclosure Certificate in substantially such form, with changes therein as the Authorized Officer executing the same may require or approve (such approval to be conclusively evidenced by the execution and delivery thereofl. The appointment of Willdan Financial Services as the initial Dissemination Agent under the Continuing Disclosure Certificate is hereby approved. Section 8. Authorization to Proceed with Refundinc,�in Part. In the event that the Executive Director and the Financial Officer, in consultation with the Successor Agency's municipal advisor, determine that a portion of the Agency Loans (the "Uneconomic Portion") cannot be refunded concurrently with the other portion, because refunding the Uneconomic Portion would not be in compliance with requirements of Health and Safety Code Section 34177.5(a) and the parameters set forth herein, the Executive Director is hereby authorized to direct the continuation of the refunding transaction without the Uneconomic Portion. The Authorized Officers are authorized to execute, on behalf and in the name of the Successor Agency, the Indenture and each of the documents authorized hereby, with the applicable modifications to exclude the Uneconomic Portion. Section 9. Continuinq Disclosure Compliance Procedures. Reference is hereby made to Resolution No. (the "City Resolution") adopted by the City Council of the City on December 8, 2016, pursuant to which the Continuing Disclosure Compliance Procedures (the "Continuing Disclosure Compliance Procedures") were adopted. It is hereby affirmed that the Successor Agency adopts such Continuing Disclosure Compliance Procedures. With respect to the Successor Agency's continuing disclosure undertakings, each reference in the Continuing Disclosure Compliance Procedures to the City, the City Manager and the Finance Director shall be 4 G�rda\\'eronica �1'apia`\lbrd PilesStafTRepontiSuccessur Agene��'DeM Refunding�Pnlm Desert - 2017 rc(unding - SA rexo approvmg nomhousing POS 13PA Rev 12-IJb docx RESOLUTION NO. sa-RDA o62 read as, respectively, the Successor Agency, the Successor Agency's Executive Director and the Successor Agency's Finance Officer. The Executive Director, consultation with bond counsel, is authorized to amend the Compliance Procedures from time to time Section 10. Tax-Advantaged Bonds Post-Issuance Compliance Procedures. Reference is hereby made to the Tax-Advantaged Bonds Post-Issuance Compliance Procedures (the "Post-Issuance Tax Compliance Procedures") also adopted pursuant to the City Resolution. It is hereby affirmed that such Post-Issuance Tax Compliance Procedures will be applicable to the Tax-Exempt Bonds. The Executive Director, consultation with bond counsel, is authorized to amend the Post-Issuance Tax Compliance Procedures from time to time. Section 11. Other Acts. The members of this Board, the Chair, the Vice Chair, the Executive Director, the Finance Officer and all other officers of the Successor Agency, are hereby authorized, jointly and severally, to execute and deliver any and all necessary documents and instruments and to do all things (including, but not limited to, obtaining bond insurance or other types of credit enhancement, engagement of a verification agent for the defeasance escrows) which they may deem necessary or proper to effectuate the purposes of this Resolution. Any such previous action taken by such officers are hereby ratified and confirmed. APPROVED and ADOPTED this 8th day of December, 2016. AYES: NOES: ABESENT: ABSTAIN: JAN HARNIK, CHAIR ATTEST: RACHELLE D. KLASSEN, SECRETARY SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY 5 G�rda'�\'eionica �I�apia\N'oid Piles��titalTReports`•Successor AgencyJ)ebt Refunding•d'alm Desen - 2017 refunding - SA reso approving nun-housing POS UP,\ Rev 131-16 docr RESOLUTION NO. SA-RDA 062 ATTACHMENT I List of Loans to be Refunded Loan Project Incurred Related Authority Bonds Series Area Year Loan A reement Desi nation (1) 1 2002 Project Area No. 1, As Tax Allocation Refunding Amended, Loan Revenue Bonds (Project Area No. Agreement, dated as of 1, As Amended) 2002 Series A March 1, 2002 (2) 1 2003 Project Area No. 1, As Tax Allocation Revenue Bonds Amended, Loan (Project Area No. 1, As Amended) Agreement, dated as of Series 2003 Jul 1, 2003 (3) 1 2004 Project Area No. 1, As Tax Allocation Refunding Amended, Loan Revenue Bonds (Project Area No. Agreement, dated as of 1, As Amended) 2004 Series A June 1, 2004 (4) 1 2006 Project Area No. 1, As Tax Allocation Revenue Bonds Amended, Loan (Project Area No. 1, As Agreement, dated as of Amended), 2006 Series A Jul 1, 2006 (5) 2 2002 Project Area No. 2 Loan Tax Allocation Refunding Agreement, dated as of Revenue Bonds (Project Area No. June 1, 2002 2, 2002 Series A (6) 2 2003 Project Area No. 2 Loan Tax Allocation Revenue Bonds Agreement, dated as of (Project Area No. 2), Series 2003 March 1, 2003 (7) 2 2006 Project Area No. 2 Loan Tax Allocation Refunding (Series Agreement (2006 Senior Revenue Bonds (Project Area No. 2006A Loans), dated as of July 1, 2), 2006 Series A Loan 2006 (8) 2 2006 Project Area No. 2 Loan Subordinate Tax Allocation Agreement (2006 Revenue Capital Appreciation Subordinate Loan), dated Bonds (Project Area No. 2) 2006 as of July 1, 2006 Series D (9) 3 2003 Project Area No. 3 Loan Tax Allocation Revenue Bonds Agreement, dated as of (Project Area No. 3), Series 2003 Jul 1, 2003 (10) 3 2006 Project Area No. 3 Loan Tax Allocation Revenue Bonds (Series Agreement (2006 Senior (Project Area No. 3) 2006 Series 2006A Loans), dated as of July 1, A; Loan 2006 G'JJa`\'eiomca'Papia`�N'ord Piles•.StaO' Repuns��Sueeessor Agenc}`Debt Refundingd'alm Desen - 20 V rofunding - SA reso approving non-housing POS BPA Rev 12- I-16 docx RESOLUTION NO. SA-RDA 062 (11) 3 2006 Project Area No. 3 Loan Tax Allocation Revenue Capital (Series Agreement (2006 Senior Appreciation Bonds (Project Area 20066 Loans), dated as of July 1, No. 3) 2006 Series B Loan 2006 (12) 3 2006 Project Area No. 3 Loan Subordinate Tax Allocation Agreement (2006 Revenue Capital Appreciation Subordinate Loan), dated Bonds (Project Area No. 3) 2006 as of Jul 1, 2006 Series C (13) 4 1998 Project Area No. 4 Loan Tax Allocation Revenue Bonds Agreement, dated as of (Project Area No. 4), Series 1998 March 1, 1998 (14) 4 2001 Project Area No. 4 Loan Tax Allocation Revenue Bonds Agreement, dated as of (Project Area No. 4), Series 2001 November 1, 2001 (15) 4 2006 Project Area No. 4 Loan Tax Allocation Refunding (Series Agreement, dated as of Revenue Bonds (Project Area No. 2006A July 1, 2006 4) 2006 Series A Loan (16) 4 2006 Project Area No. 4 Loan Tax Allocation Revenue Capital (Series Agreement, dated as of Appreciation Bonds (Project Area 20066 July 1, 2006 No. 4) 2006 Series B Loan G�ida`•\'cronica 1'apia��N�ord Eiles`S�afiRepons`•Succcuor ,\geney�Debt Re(unding�Palm Desen - 2017 refundin� - SA reso approving nomhousing POS RPA Rev 12-I-16 docs Draft for Discussion Purposes Only S�rudling Yoccu Curlson & Rauth $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS 2017 SERIES A $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAXABLE TAX ALLOCATION REFUNDING BONDS 2017 SERIES B BOND PURCHASE CONTRACT , 201 Successor Agcncy to the Palm Desert Redevclopment Agency 73510 Fred Waring Urive Palm Desert, California 92260 Attention: Cxecutive Uirector Ladies and Gentlemen: Stifel, Nicolaus & Company, Incorporated (the "Underwriter") offers to enter into this Bond Yurchase Contract (this '`Purehase Contraet") with the Successor Agency to the Palm Desert Redevelopment Agency (the '`Agency"). `I'his offer is made subject to the Agency's acceptance by execution of this Purchase Contract 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, will be subject to withdrawal by the Underwriter upon notice delivered to the Agency at any time prior to such acceptance. Upon the Agency's acceptance hereof, the Purchase Contract will be binding upon the Agency and the Underwriter. Capitalized terms that are used in this Purchase Contract and not otherwise defined have the respective meanings given to such terms in the Indenture (as such term is defined herein). Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations set forth in this Purchase Contract, the Underwriter agrees to purchase from the Agency, and the Agency agrees to sell and deliver to the Underwriter, all (but not Iess than all) of: (i) the $ Successor Agency to the Palm Desert Redevelopment Agency Tax Allocation Refunding Bonds 2017 Series f1 (the '`Series A Bonds") at a purchase price of $ (being an amount cqual to thc principal amount of the Series A Bonds plus/less a nct original issue premium/discount of $ and less an Underwritcr's discount of $�; and (ii) the $ Successor Agency to the Palm Desert Redevelopment Agency 'I'axable 'I�ax Allocation Refunding I3onds 2017 Series B(lhe "Series B Bonds" and, together with the Scrics /1 E3onds, the `Bonds") at a purchase price of $ (bcing an amount equal to the principal amount of the Series 13 Bonds plus/less a net original issue premium/discount of $ and less an Underwriter's discount of $_____�. [The Agency acknowledges that the Underwriter will at Closing (as such term is defined herein), on behalf of the Agency, wire a portion of the purchase price in the amounts of: (a) $ as the premium for the Policy (as such term is defined herein); and (b) $ , as the premium for the Reserve Policy (as such term is defined herein), directly to thc Insurcr (as such term is def7ned herein).] The obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds Shall be conditioned on the sale and delivery of all of the Bonds by the Agency to the Underwriter at Closing. Section 2. Bond Terms; Authorizing Instruments. (a) The Bonds shall be dated their date of delivery and shall mature and bear interest as set forth on Exhibit A. The Bonds shall be as described in, and shall be issued and secured under, an Indenture (the "Indenture"), dated as of January 1, 2017, by and between the Agency and U.S. Bank National Association, as trustee (the "Trustee"). The Bonds are payable and subject to redemption as provided in the Indenture and as described in the Official Statement (as such term is detined hcrein). (b) The Bonds will be issued pursuant to Part l.8 (commencing with Section 34161) and Part 1.85 of Division 24 (commencing with Section 34170) of the California Health and Safety Codc and Article 1 1(commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (collectively, the "Law"). The Bonds are payable from and secured by the Agency's pledge of Tax Revenues undcr and as defined in the Indenture. (c) The net proceeds of the sale of the Series A Bonds will be used: (i) to refund the 2017A Prior Loans (as such term is defined in the Indenture); (ii) [to obtain a debt service reservc insurance policy (the "Reserve Policy") issued by (the "Insurer") for deposit in the 2017A Reserve Subaccount established under the Indenture; (iii) to obtain a municipal bond insurance policy (the "Policy") issued by the Insurer insuring the payment of principal of and interest on the 5eries A Bondti]; and (iv) to pay costs incurred in connection with the issuance of the Series A Bonds. (d) The net proceeds of the tiale of the Series B Bonds will be used: (i� to refund thc 2017B Prior Loans (ati such term is defined in the Indenture); (ii) [to obtain a debt service reserve insurance policy (the "Reserve Policy") issued by (the "Insurer") for deposit in the 2017B Reserve Subaccount established under the Indenture; (iii) to obtain a municipal bond insurance policy (the "Policy") issued by the Insurer insuring the payment of principal of and interest on the Series B Bonds]; and (iv) to pay costs incurred in connection with the issuance of the Series B Bonds. Section 3. Public Offering. The Underwriter agrees to make an initial bona fide public offering of all of the Bonds, at not in excess of the initial public offering yields or prices set forth on Exhibit A. Following thc initial public offering of the Bonds, the offering prices may be changed from time to time by the Underwriter. The Agency acknowledges and agrees that: (a) the purchase and sale of the Bonds pursuant to this Purchase Contract i� an arm's-length commercial transaction between the Agency and the Underwriter, and the only obligations that the Underwriter has to the Agency with respect to the transaction contemplated hereby expressly are set forth in this Purchase Contract; (b) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as a principal and is not acting ati a Municipal Advisor (as �uch term is defined in Section ISB of The Securities Exchange Act oi 1934, as amended) to the Agency; (c) the Underwriter ha� not assumed an advisory or fiduciary responsibility in favor of the Agency with re�pect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the 2 Agency on other matters); (d) the Underwriter has financial and other interests that may differ from and be adverse to those of the Agency; and (e) the Agency has consulted its own legal, financial, accounting, tax and other advisors to the extent that it has deemed appropriate. Section 4. Official Statement; Continuing Disclosure. (a) The Agency has delivered to the Underwriter the Preliminary Official Statement dated _, 201_ (the "Preliminary Of�cial StatemenY') and will deliver to the Underwriter the final Official Statement dated the date of this Purchase Contract (as amended and supplemented from time to time pursuant to Section 5(i) of this Purchase Contract, the "Official Statement") within seven business days. (b) The Agency authorizes the use of the Official Statement and the information contained therein by the Underwriter in connection with the public offering and the sale of the Bonds. The Agency consents to the use by the Underwriter prior to the date hereof of the Preliminary Official Statement in connection with the public offering of the Bonds. The Underwriter agrees that it will not send any confirmation requesting payment for the purchase of any Bonds unless the confirmation is accompanied by or preceded by the delivery of a copy of the Official Statement. The Underwriter agrees: (i) to provide the Agency with �tnal pricing information on the Bonds on a timely basis prior to the Closing; and (ii) to take any and all other actions necessary to comply with applicable rules of the Securities and Exchange Commission (the "SEC") and the Municipal Securities Rulemaking Board (the "M5RB") governing the offering, sale and deliver}� of the Bonds to ultimate purchasers. (c) In connection with the issuance of the Bonds, and in order to a�sist the Underwriter in complying with the provisions of SEC Rule 15c2-12 ("Rule 15c2-12"), the Agency will enter into a Continuing Disclosure Agreement (the "Continuing Disclosure Undertaking") dated the date of the Closing, under which the Agency will undertake to provide certain financial and operating data as reyuired by Rule 15c2-12. The form of the Continuing Disclosure Undertaking is attached as an appendix to the Preliminary Official Statement. Section 5. Representations, Warranties and Covenants of the Agency. The Agency hereby represents, warrantti and agree� with the Underwriter that: (a) The Board of Directors (the "Board") of the Agency has taken official action by onc or more resolutions (collectively, the "Agency Resolution") adopted by a majority of the members of the Board at regular meetings that were duly called, noticed and conducted, at which a quorum was present and acting throughout, authorizing the execution, delivery and due performance of: (i) the Indenture; (ii) the Continuing Disclosure Undertaking; (iii) the Non-Housing Bonds Escrow Agremeent, dated as of January I, 2017 (the "Escrow Agreement"), by and among the Agency, the Palm Desert Financing Authority (the "Authority") and U.S. Bank National Association, as escrow agent (the "Escrow AgenY'), related to the obligations that arc listed in Appendices A and B of thc Indenture; and (iv) this Purchase Contract (collectively, the "Ageney Agreements") and the Official Statement, and the taking of any and all such action as may be required on the part of the Agency to carry out, give effect to and consummate the transactions that are contemplated hereby. (b) The Agency is a redevelopment successor agency that is duly organized and existing under the laws of the State of California (the "State") and has all necessary power and authority to adopt the Agency Resolution and to enter into and perform its duties under the Agency Agreements. 3 (c) By all necessary official action, the Agency has: (i) duly authorized the preparation and delivery of the Preliminary Official Statement and the preparation, execution and delivery of the Official Statement; (ii) duly authorized and approved the execution and dclivery of, and the performance of its obligations under, the Bonds and the Agency Agrecments; and (iii) duly authorired the contiummation by the Agency of all other transactions contemplated by the Agency Re�olution, the Agency Agreements, the Preliminary Official Statement and the Official Statement. When executed and delivered, the Agency Agreements (assuming due authorization, execution and delivery by and enforceability against the other parties thereto) will be in full force and effect and each will constitute legal, valid and binding agreements or obligations of the Agency, enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally, the application of equitable principles, the exercise of judicial discretion and the limitation� on legal remedies against public entities in the State. (d) At the time of the Agency'� acceptance hereof and at all times subsequent thereto up to and including the time of the Closing, the information and statements in the Official Statement do not and will not contain any untrue statement of a material fact or omit to state a material fact that is required to be stated thcrein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that no representation is made with respect to information relating to DTC (as such term is defined herein), DTC's book-entry system)[, the Policy, the Reserve Policy or the Insurer]). (e) As of the date hereof, except as described in the Preliminary Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body that is pending against, and notice of which has been served on and received by, the Agency, or, to the best knowledge of the Agency, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the crcation, organization, existence or powers of the Agency, or the titles of its members or officers; (ii) in any way question or affect the validity or enforceability of the Agency Agreements, the Bonds or the exclusion of the interest on the Series A Bonds from federal taxation or of the interest on the Bonds from State taxation; or (iii) in any way question or affect the Purchase Contract or the transactions contemplated by the Purchase Contract, the Official Statement, or any other agreement or instrument to which the Agency is a party relating to the Bonds. (� There is no consent, approval, authorization or other order of, filing or registration with, or certitication by, any regulatory authority that has jurisdiction over the Agency thal is required for the execution and delivery of this Purchase Contract and the other Agency Agreements or the consummation by the Agency of the other transactions that are contemplated by the Official Statement or the Agency Agrcements. (g) Any certiticate that is signed by any official of the Agency who is authorized to do so shall be deemed a representation and warranty by the Agency to the Underwriter as to the statements made therein. (h) The Agency is not in default, and at no time has the Agency defaulted in any material respect, on any bond, note or other obligation for borrowed money or any agreement under which any such obligation is or was outstanding. (i) If any event occurs of which the Agency has knowledge between the date of this Purchase Contract and the date of the Closing that might or would cause the Ofticial Statement, as � then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact that is required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Agency will notify the Underwriter and if, in the opinion of the Underwriter, such event require� the preparation and publication of a supplement or amendment to the Official Statement, the Agency will cooperate with the Underwriter in causing the Official Statement to be amendcd or supplemented in a form and in a manner that is approved by the Underwriter. All expen�eti that are thereby incurred will be paid by the Agency, and the Underwriter will file, or cause to be filed, the amended or supplemented Official Statement with the MSRB's Electronic Municipal Market Access database ("EMMA"). (j) The Agency wili furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Undcrwriter may reasonably request in order: (i) to qualify the Bondti 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 (ii) to dctermine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions. The Agency will not be required to execute a general or special con�ent to service of process or to qualify to do business in connection with any such yualification or determination in any jurisdiction. (k) The Agency is not in any material respect in breach of or default under: (i) any applicable constitutional provision, law or administrative regulation of any state or of the United 5tates, or any agency or instrumentality of either; (ii) any applicable judgment or decree; or (iii) any loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument to which the Agency is a party, which breach or default has or may have an adverse effect on the ability of the Agency to perform its obligations under the Agency Agreements, and no event has occurred and is continuing which with the pa�sage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the adoption, execution and delivery of the Agency Agreements, if applicable, and compliance with the provisions on the Agency's part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument to which the Agency is a party, 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 property or assets of the Agency or under thc terms of any such law, regulation or instrument, except as may be provided by the Agency Agreements. (I) Except as set forth in the Official Statement under the caption ["CONTINUING DISCLOSURE,J" the Agency has complied in all material respects with its continuing disclosure undertakings in the past five years. (m) The financial statements relating to the receipts, expenditures and cash balances of the Agency as of June 30, 201 [5] attached as an appendix to the Official Statement fairly represent the receipts, expenditures and cash balances of the Agency as of such date. Except as disclosed in the Official Statement or otherwise disclosed in writing to the Underwriter, there has not been any materially adverse change in the financial condition of the Agency or in its operations since June 30, 201 [5] and there has been no occurrence, circumstance or combination thereof that is reasonably expected to result in any such materially adverse change. 5 (n) The Agency will refrain from taking any action, or permitting any action to be taken, with regard to which the Agency may exercise control, that results in the loss of the tax-exempt status of the interest on the Series A Bonds under federal law or of the interest on the Bonds under State law. Section 6. The Closing. (a) At 8:00 A.M., California time, on _, 2017, or on such earlier or later time or date as may be agreed upon by the Underwriter and the Agency (the "Closing"), the Agency shall deliver, or cause to be delivered, to the Trustee the Bonds in definitive form, registered in the name of Cede & Co., as the nominee of The Depository Trust Company, New York, New York ("DTC") (so that the Bonds may be authenticated by the Trustee and credited to the account that is specified by the Underwriter under DTC's FAST procedures). Prior to the Closing, the Agency shall deliver, at the offices of Richards, Watson & Gershon, A Profe�sional Corporation ("Bond Counsel") in Los Angeles, California, or at such other place as is mutually agreed upon by thc Underwriter and the Agency, the other documents that are described in this Purchase Contract. On the date of the Closing, the Underwriter shall pay the purchase price of the Bond� as set forth in Section 1 of this Purchase Contract in immediately available funds to the order of the Trustee. (b) The Bonds shall be issucd in fully registered form and shall be prepared and delivered as one Bond for each maturity registered in the name of a nominee of DTC. It is anticipated that CUSIP identitication numbers will be inserted on the 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 Underwriter to accept delivery of the Bonds in accordance with the terms of this Purchase Contract. Section 7. Conditions to Underwriter's Obligations. The Underwriter has entered into this Purchase Contract in reliance upon the representations and warranties of the Agency contained herein and to be contained in the documents and instruments to be delivered on the datc of the Closing, and upon the performance by the Agency of its obligations to be performed hereunder and under such documents and instruments to be delivered at or prior to the date of the Clo�ing. Thc Underwriter's obligations under this Purchase Contract are and shall also be subject to the following conditions: (a) The representations and warranties of the Agency that are contained in this Purchase Contract shall be true and correct in all material respects on the date of this Purchase Contract and on and as of the date of the Closing as if made on the date of the Closing. (b) As of the date of the Closing, the Official Statement shall not have been amended, modified or supplemented, except in any case as may have been agreed to by the Underwriter. (c) (i) As of� the date of the Closing, the Agency Resolution and the Agency Agreements shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to by the Agency and the Underwriter; and (ii) the Agency tihall perform or shall have performed all of it� obligations that are required under or specified in the Agency Re�olution and the Agency Agreements to be performed at or prior to the date of the Closing. (d) As of the date of the Closing, all nece�sary official action of the Agency relating to the Agency Agreements, the Agency Resolution and the Official Statement shall be in full forcc and effect and shall not have been amended, modified or supplemented in any material respect. 0 (e) Subsequent to the date of this Purchase Contract, up to and including the date of the Closing, there shall not have occurred any change in the financial affairs of the Agency, as described in the Official Statement, which in the rcasonable professional judgment of the Underwriter materially impairs the investment quality of the Bonds. (t) A� of or prior to the date of the Closing, the Underwriter shall havc received each of the following documents: (A) Certified copies of the Agency Resolution. (B) Duly executed copies of the Agency Agreements. (C) The Preliminary Official Statement and the Official Statement, with the Oft7cial Statement duly executed on behalf of the Agency. (D) An approving opinion of� Bond Counsel, dated the date of the Closing, as to the validity of the Bonds and the exclusion of interest on the Series A Bonds from federal taxation and of interest on the Bonds from State income taxation, addressed to the Agency, substantially in the form attached as an appendix to the Official Statement, and a reliance letter with respect therero addre�sed to the Underwriter. (E) A supplemental opinion or opinions of Bond Counsel, dated the date of the Closing, addressed to the Underwriter, to the effect that: ( I) The Purchase Contract has bcen duly executed and delivered by the Agency and (assuming due authorization, execution and delivery by and enforceability against the Underwriter) is valid and binding upon the Agency, subject to laws relating to bankruptcy, insolvency, reorganization or creditors' rights generally and to the application of equitable principles; (2) The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (3) The statements contained in the Ofticial Statement on the cover and under the captions ["INTRODUCTIOIV," "REFUNDING PLAN," "THE BONDS" (excluding therefrom the statements pertaining to DTC), "SECURITY FOR THE BONDS" and "TAX MATTERS," and in Appendices A and B], excluding any material that may be treated as included under such captions by cross-reference, insofar as such statements expressly summarizc certain provisions of the Bonds, the Agency Agreements and the form and content of Bond Counsel's iinal approving opinion, are accurate in all material respects; and (4) The obligations that are listed in Appendices A and B of the Indenture have been defeased in accordance with the provisions of the instruments pursuant to which they wcre issued. (F) An opinion of the Agency's General Counsel, dated the date of the Closing> addressed to the Agency and the Underwriter, substantially in the form attached hereto as Exhibit D. (G) An executed Rule 15c2-12 certificate of the Agency, dated the date of the Prcliminary Official Statement, substantially in the form attached hereto as Exhibit B. 7 (H) An executed closing certiticate of the Agency, dated the date of the Closing, substantially in the form attached hereto as Exhibit C. (I) The opinion of counsel to the Trustee, addressed to the Agency and thc Underwriter, substantially to the effect that: (1) The Trustee i� a national banking association that is duly organized, validly existing and in good standing under the laws of the United States of America, having full powers and authority and being qualified to enter into, accept and administer the trust created under the Indenture and to enter into the Indenture; and (2) The Indenture has been duly authorized, executed and delivered by the Trustee, and, astiuming due authorization, execution and delivery by the Agency, the Indenwre constitutes the legal, valid and binding agreements of the Trustee, enforceable in accordance with its terms, subject to laws relating in bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and the application of equitable principles if equitable remedies are tiought. (J) The opinion or opinions of counsel to the Escrow Agent, addressed to the Agency and the Underwriter, substantially to the effect that: (1) The Escrow Agent is a national banking association that is duly organized, validly existing and in good standing under the laws of the United States of America, having full powers and authority and being qualified to enter into, accept and administer the trutit created under the Escrow Agreement and to enter into the Escrow Agreement; and (2) The Escrow Agreement has been duly authorized, executed and delivered by the Escrow Agent and, assuming due authorization, execution and delivery by lhe Agency, the Escrow Agreement constitutes the legal, valid and binding agreements of the Escrow Agenl, enforceable in accordance with its terms, subject to laws relating in bankruptcy, insolvency or other laws affccting the enforcement of creditors' rights generally and the application of equitable principles if equitable remedies are sought. (K) A certificate, dated the date of the Closing, in form and substancc acceptablc to the Underwriter and Bond Countiel, of an authorized officer of officers of the Tru�tee to the effect that the Trustee is duly authorized to enter into the Indenture, has accepted the duties imposed by the Indenwre and is authorized to carry out such duties, and that the Trustee has duly authenticated the Bonds. (L) A certificate or certificates, dated the date of the Closing, in form and substance acceptable to the Underwriter and Bond Counsel, of an authorized officer of officers of the Escrow Agent to the effect that the Escrow Agent is duly authorized to enter into the Escrow Agreement, has accepted the duties imposed by the Escrow Agreement and is authorized to carry out such duties. (M) A certificate, dated the date of the Closing, in form and substance acceptable to the Underwriter and Bond Counsel, of an authorized officer of officers of the Authority to the effect that: (1) the Authority is duly authorized to enter into the Escrow Agreement; (2) the Escrow Agreement (assuming due execution and delivery by the other parties thereto) constitutes the valid and binding obligation of the Authority; and (3) the execution and delivery of the Escrow Agreement : and compliance with the provisions thereof will not coni7ict with or constitute a breach of or default under any applicable law, decision, administrative rule or regulation of the State of California, the United States, any department, division, agency or instrumentality of either thereof or any applicable court, or under any instrument to which the Authority is a party or is otherwise subject or bound in a manner that would materially adversely affect the Authority's performance thereunder. (N) Evidence of required filings with the California Debt and Invest►nent Advisory Commission. (0) A copy of the executed Blanket Issuer Letter of Representations by and between the Agency and DTC relating to the book-entry system. (P) An executed verification report relating to the obligations that are listed in Appendices A and B of the Indenture, among other matters. (Q) Evidence that the ratings that have been assigned to the Bonds as of the date of the Clo�ing are as tiet forth in the Official Statement. (R) A certified copy of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officen of the Trustee, which resolution authorizes the execution and delivery of the Indenture and the authentication and delivery of the Bonds by the Trustee. (S) A certified copy of the general resolution of the Escrow Agent authorizing thc execution and delivery of certain documents by certain officers of the Escrow Agent, which resolution authorizes the execution and delivery of the Escrow Agreement. (T) An opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, counsel to the Underwriter, addressed to the Underwriter and in form and substance satisfactory to the Underwriter. (U) A report of Lumesis as to compliance by the Agency and related entities with their respective continuing disclosure undertakings. (V) A Tax Certificate with respect to maintaining the tax-exempt status of thc 5eries A Bonds, duly executed by the Agency, together with Form 80�i8-G, duly executed by the Agency. (W) An letter of Best Best & Krieger LLP, as Disclosure Counsel, to the effect that, based upon an examination that they have made, and without having undertaken to determine independently or assuming any responsibility for the accuracy or completeness or fairness of the statements contained in the Official Statement, as a matter of fact and not opinion, such counscl advises that, in its capacity as Disclosure Counsel, no facts came to the attention of the attorneyti in such firm rendering legal services in connection with such representation that caused such counsel to believe that the Official Statement as of its date and as of the Closing (except for: (1) the expressions of opinion, the assumptions, the projection�, the financial statements, or other financial, numerical, economic, demographic or statistical data contained in the Official Statement; (2) any CUSIP numbers or information relating thereto; (3) any information with respect to DTC and DTC's book- entry system; [and (4) any information with respect to the Policy, the Reserve Policy and the 0 Insurer]) contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Bonds. (X) A letter from the State Department of Finance approving the issuance of the (Y) A certitied copy of the resolution of the Agency'1 Oversight Board approving the issuance of the Bonds. (Z) A certificate of Keyser, Marston & Associateti, the Agency's fiscal consultant, relating lo the information provided by such party in the Official Statement, in form and substance satisfactory to the Underwriter and Bond Counsel. (AA) [ADD CERTIFICATION BY OTHER PARTY TO CDA, AS IVEEDED] (BB) (Evidence satisfactory to the Underwriter of the issuance of the Policy and the Reserve Policy by the Insurer. (CC) Evidence satisfactory to the Underwriter that the Trustee shall have received the Reserve Policy from the Insurer, which Reserve Policy constitutes a Qualified Reserve Account Credit Instrument under and as detined in the Indenture. (DD) An opinion of counsel to the Insurer, in form and substance satisfactory to the Underwriter and Bond Counsel, with respect to, among other matters, the Policy and the Reserve Policy, and disclosures relating thereto and to the Insurer in the Official Statement. (EE) A certificate of the Insurer, in form and substance satisfactory to the Underwriter and Bond Counsel, with respect to, among othcr matters, the Policy and the Reserve Policy. ] (FF) Such additional legal opinions, certificates, proceedingti, instrument5 and other documents as the Underwriter or Bond Counsel may reasonably request to evidence compliance by the Agency with legal requirements, the truth and accuracy, as of� the date of the Closing, of the representations of the Agency contained herein and of the Of�cial Statement and the due performance or satisfaction by the Agency at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Agency. All of the opinions, letters, certificates, instruments and other documents that are mentioned in this Purchase Contract shall be deemed to be in compliance with the provisions of this Purchase Contract if, but only if, they are in form and substance sati�factory to the Underwriter. If the Agency is unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds as set forth in this Purchase Contract, or if the obligations of thc Underwriter to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter nor the Agency shall be under any further obligations hereunder, except that the respective obligations of the Agency and the Underwriter that are set forth in Section 11 of this Purchase Contract shall continue in full force and effect. fLl7 Section 8. Conditions to Agency's Obligations. The performance by the Agency of its obligations under this Purchase Contract is conditioned upon: (i) the performance by the Underwritcr of its obligations hereunder; and (ii) receipt by the Agency of opinions addressed to the Agency, receipt by the Underwriter of opinions addressed to the Underwriter and the delivery of certificates on the date of the Closing by persons and entities other than the Agency. Section 9. Termination Events. The Underwriter shall have the right to terminate the Underwriter's obligations under this Purchase Contract to purchase, accept delivery of and pay for the Bonds by notifying the Agency of its election to do �o if, after the execution hereof and prior to the Closing, any of the following events occurs: (a) the marketability of the Bonds or the market price thereof, in the reasonable opinion of the Underwriter, has been materially and adversely affected by any decision that is issued by a court of the Uni[ed States (including the United States Tax Court) or of the State, by any ruling or regulation (final, temporary or proposed) that is i�sued by or on behalf of the Department of the Treasury of the United States, the Internal Revenue Service, or other governmental agency of the United States, or any governmental agency of the State, or by a tentative decision or announcement by any member of the House Ways and Means Committee, the Senate Finance Committee, or the Conference Committee with respect to contemplated legislation or by legislation enacted by, pending in> or favorably reported to either the House of Representatives or either House of the Legislature of the State, or formally proposed to the Congress of the United States by the President of the United States or to the Legislature of the State by the Governor of the State in an executive communication, affecting the tax status of the Agency or the City of Palm Desert, their property or income, their debt or contractual obligations (including the Bonds) or the interest thereon or any tax exemption granted or authorized by the Internal Revenue Code of 1986, ati amended; (b) the United States becomes engaged in hostilities that result in a declaration of war or a national emergency, or any other outbreak of hostilities occurs, or a local, national or international calamity or crisis occurs, financial or otherwise, the effect of such outbreak, calamity or crisis being �uch as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds; (c) there occurs a general suspension of trading on the New York Stock Exchange or the declaration of a general banking moratorium by the United States, New York or State authoritics; (d) a stop order, ruling, regulation or official statement by, or on behalf of, the SEC is issued or made to the effect that the issuance, offering or sale of the Bonds or obligations similar to the Bonds is or would be in violation of any provision of the Securities Act of 1933, as then in effect, the Securities Exchange Act of 1934, as then in effect, or the Trust Indenture Act of 1939, as then in effect; (e) legislation is enacted by the House of Representatives or the Senate of the Congress of the United States of America, a decision by a court of the United States of America is rendered or a ruling or regulation by or on behalf of the SEC or other governmental agency having jurisdiction of the subject matter is made or proposed to the effect that the Bonds are not exempt from registration, qualification or other similar requirement� of the Securities Act of 1933, as then in effect, or of the Trust Indenture Act of 1939, as then in effect; � (fl in the reasonable judgment of the Underwriter, the market price of the Bonds, or the market price of obligations of the general character of the Bonds, might be materially and adversely affected because additional material restrictions that are not in force as of the date hereof are imposed upon trading in securities generally by any governmental authority or by any national �ecuritie� exchange; (g) the Office of the Comptroller of the Currency, The New York Stock Exchange, or other national securities exchange, or any governmental authority, imposes, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increases materially those now in force, with respect to the extension of credit by, or the chargc to the net capital requirements of, or financial responsibility requirements of the Underwriter; (h) a general banking moratorium is established by federal, New York or Statc authoritics; (i) any legislation, ordinance, rule or regulation is introduced in or enacted by any governmental body, department or agency in the State or a decision of a court of competent jurisdiction within the State is rendered, which, in the reasonable opinion of the Underwriter, after consultation with the Agency, materially adversely affects the market price of the Bonds; (j) any federal or State court, authority or regulatory body takes action that materially and adversely affect� the collection of revenues that are pledged under the Indenture; (k) any rating of the Bonds or the In�urer is downgradcd, suspended, withdrawn or placed on credit watch or similar status by a national rating service, which, in the reasonable opinion of the Underwriter, materially adversely affects the marketability or market price of the Bonds; (1) an event occurs which in the reasonable opinion of the Underwriter requires a supplement or amendment to the Official Statement and: (i) the Agency refuses to prepare and furnish such supplement or amendment; or (ii) in the reasonable judgment of the Underwriter, the occurrence of such event materially and adversely affects the marketability of the Bonds or renders the enforcement of the sale contracts of the Bonds impracticable; (m) an order, decree or injunction that is istiued by any court of competent jurisdiction, or order, ruling, regulation (tinal, temporary or proposed), ofiicial statement or other form of notice or communication that is issued or made by or on behalf of the SEC, or any other governmental authority having jurisdiction of the subject matter, to thc effect that: (i) obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualitication under the Trust Indenture Act of 1939, as amended; or (ii) the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including any or all underlying obligations, as contemplated hereby or by the Ofticial Statement, is or would be in violation of the federal securities laws as amended and then in effect; (n) additional material restrictions that are not in force as of the date hereof shall have been impo�ed upon trading in securities generally by any domestic governmental authority or 12 by any domestic national securities exchange, which are material to the marketability of the Bonds; or 5(e). (o) the commencement of any action, suit or proceeding described in Section Section 10. Changes in Official Statement. After the Closing, the Agency will not adopt any amendment of or supplement to the Official Statement to which the Underwriter shall reasonably object in writing. Within 90 days after the Closing or within 25 days following the "end of the underwriting period" (as such term is defined below), whichever occurs tirst, if any event relating to or affecting the Bonds, the Trustee or the Agency occur� as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in any material respect in the light of thc circumstances existing at the time tha[ it is delivered to a purchaser, the Agency will forthwith prepare and furnish to the Underwriter an amendment or supplement that 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 that the Official Statement is delivered to a purchaser, not misleading. The Agency will cooperate with the Underwriter in the filing by the Underwriter of such amendment or supplement to the Ofticial Statement with the MSRB. As used herein, the term "end of the underwriting period" means the later of such time as: (i) the Agency dclivers the Bonds to thc Underwriter; or (ii) the Underwritcr does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Notwithstanding the foregoing, unless the Underwriter gives notice to the contrary> the "end of the underwriting period" will be the date of the Closing. Any notice that is delivered pursuant to this provision will be written notice delivered to the Agency at or prior to the date of the Closing and will specify a date (other than the date of the Closing) to be deemed the "end of the underwriting period." Section 11. Payment of Expenses. (a) The Underwriter �hall be under no obligation to pay, and the Agency shall pay the following expenties incident to the performance of the Agency's obligations hercunder: (i) the fees and disbursements of Bond Counsel; (ii) the cost of� printing and delivering the Bonds, the Preliminary Official Statement and the Ot�ficial Statement (and any amendment or supplement that is prepared pursuant to Section 10 of this Purchase Contract); (iii) the feeti and disbursements of accountants, advisors and any other experts or consultants retained by the Agency, including the Agency's general counsel; and (iv) any other expenses and costs of the Agency that are incident to the performance of its obligations in connection with the authorization, issuance and sale of the Bonds, including out-of-pocket expenses and regulatory expenses, reimbursement to the Underwriter for any meals and travel for Agency employees or ofiicers that were paid for by the Underwriter, costs relating to the issuance of thc Policy and the Reserve Policy and any other expenses agreed to by the parties. 13 (b) The Underwriter shall pay all expenses incurred by il in connection with the public offering and distribution of the Bonds including, but not limited to: (i) all advertising expenses in connection with the offering of thc Bonds; and (ii) all out-of-pocket disbursements and expenses incurred by the Underwriter in connection with the offering and distribution of the Bonds (including, without limitation, the fees and expenses of its counsel and MSRB, CUSIP Bureau, California Debt and Investment Advisory Commission and California Public Securities Association fee�, if any), except as provided in clause (a) above or as otherwise agreed to by the Underwriter and the Agency. Section 12. Notices. Any notice or other communication to be given to the Agency under this Purchase Contract may be given by delivering the same in writing to the Agcncy at the address that is tiet forth on the first page of this Purchase Contract, and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to: Stifel, Nicolaus & Company, Incorporated One Montgomery Street, 35th Floor San Francisco, California 94104 Attention: Jim Cervantes Section 13. Survival of Representations, Warranties, Agreements. All of the Agency's representations, warranties and agreements that are contained in this Purchase Contract shall remain operative and in full force and effect regardless of: (a) any investigations made by or on behalf of the Underwriter; or (b) delivery of and payment for the Bonds pursuant to this Purchase Contract. The agreements contained in this Section and in Section 1 1 shall survive the termination of this Purchasc Contract. Section 14. Benefit; No Assignment. This Purchase Contract is made solely for the benefit of the Agency and the Underwriter (including thcir successors and assigns), and no other person shall acquire or have any right hereunder or by virtue hercof. The rights and obligations created by thiti Purcha�e Contract are not subject to assignment by the Underwriter or the Agency without the prior written consent of the other parties hereto. Section 15. Severability. In the event that any provision of this Purchase Contract is held to be invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provi�ion of this Purchase Contract. Section 16. Counterparts. This Purchase Contract 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 Contract by signing any such counterpart. Section 17. Governing Law. This Purchase Contract shall be governed by the laws of the State. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANKj f� Section 18. Effectiveness. This Purchase Contract shall become effective upon the execution of the acceptance hereof by an authorized officer of the Agency, and tihall be valid and enforceable as of the time of such acceptance. Very truly yours, STIFEL, NICOLAUS & COMPANY, INCORPORATED By: Title: Authorized Officer Accepted: SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY By: Title: Executive Director Time of Execution: California Timc 15 EXHIBIT A MATURITY SCHEDULE Principal Payment Date (October 1) $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REF'UNDING BONDS 2017 SERIES A Principal Coupon c�� Yield * Term Bond. �`� Priccd to tirst optional redemption datr of l, 20_ at par. A-1 C/c Price $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAXABLE TAX ALLOCATION REFUNDING BONDS 2017 SERIES B Principal Payment Date (October 1) Principal Coupa: �Ic Yield * Tcrm Bond. "' Priced to fint optional rcdcmptiun datc of 1, 20_ at par. A-2 9� Price EXHIBIT B RULE 15c2-12 CERTIFICATE $ * $ * SUCCESSOR AGENCY TO THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDIN(� BONDS TAXABLE TAX ALLOCATION 2017 SERIES A REFUNDING BONDS 2017 SERIES B The undersigned hereby certifics and represents that the undersigned is the duly appointed and acting repre�entative of the Successor Agency to the Palm Desert Redevelopment Agency (the "Agency"), and as such is duly authorized to execute and deliver this Certificate on behalf of the Agency, and further hereby certifies and reconfirms on behalf of the Agency as follows: (1) This Certiticate is delivered in connection with the offering and sale of the above captioned bonds (the "Bonds") in order to enable the underwriter of the Bonds to comply with Securities and Exchange Commission Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the "Rule"). (2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement, setting forth information concerning the Bonds and the Agency (the "Preliminary Official StatemenY'). (3) As used herein, "Permitted Omissions" means the offering price(s), interest rate(s), tielling compensation, aggregate principal amount, principal amount per maturity, delivery dates, rating� and other terms of the Bondti depending on such matters, all with respect to the Bonds. (4) The Preliminary Official Statement is, except for the Permitted Omis�ions, deemed tinal within the meaning of the Rule, and the information therein is accurate and complete except for the Permitted Omissions. Datcd: _, 201 _ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY By: Title: Executive Director * Preli�ninarr; s«bject tu cha�tge. C EXHIBIT C CLOSING CERTIFICATE OF THE AGENCY $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS 2017 SERIES A $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAXABLE TAX ALLOCATION REFUNDING BONDS 2017 SERIES B The undersigned hereby certifies and represents that the undersigned is the duly appointed and acting representative of the Successor Agency to the Palm Desert Redevelopment Agency (the "Agency"), and is duly authorized ro execute and deliver this Certificate and further hereby certities and reconfirms on behalf of the Agency as followti: (i) The repre�entations, warranties and covenants of the Agency that are contained in the Bond Purchase Contract, dated _, 201_ (the "Purchase Contract"), by and between the Agency and Stifel, Nicolaus & Company, Incorporated, a� underwriter, are true and correct and in all material respects on and as of the date of the Closing, with the same effect as if made on the date of the Closing. (ii) The Agency Resolution is in full force and effect at the date of the Closing and has not been amended, moditied or supplemented, except as agreed to by the Agency and the Underwriter. (iii) The Agency has complied with all of the agreements and satisfied all of the conditionti on its part to be performed or satisfied on or prior to the date of the Closing. (iv) The statements and descriptions in the Ofticial Statement that pertain to the Agency do not contain any untrue or misleading statement of a material fact and do not omit to statc any material fact necessary to make the statement� therein, in the light of the circumstances under which they are made, not misleading. Capitalized terms used but not def7ned hercin have the meanings given to such terms in thc Purchase Contract. Dated: _, 201 SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY By: Title: Executive Director C-1 EXHIBIT D OPINION OF GENERAL COUNSEL _, 201 _ Succetisor Agency to the Stifel, Nicolaus & Company, Incorporated Palm Desert Redevelopment Agency One Montgomery Street, 35th Floor 73510 Fred Waring Drive San Francisco, California 94104 Palm De�crt, California 92260 $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS 2017 SERIES A $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAXABLE TAX ALI,OCATION REFUNDING BONDS 2017 SERIES B Ladies and Gentlemen: In my capacity as the General Counsel to the Successor Agency to the Palm Desert Redevelopment Agency (the "Agency"), in connection with the issuance by the Agency of the above-referenced bonds (the "Bonds"), I have examined such documents, certificates and records as I have deemed relevant and necessary as the basis for the opinion set forth herein. Capitalized terms that are used and not otherwise defined herein have the same meanings as assigned to them in the Bond Purchase Contract, dated _, 201_ (the "Purchase Contract"), by and between Stifel, Nicolaus & Company> Incorporated, as underwriter, and the Agency. Relying on my examination described above and pertinent law and subject to the limitations and qualifications set forth hereinafter, I am of the following opinion: l. The Agency is a rcdevelopment successor agency that is duly organized and existing under the laws of the State of California, and has all necessary power and authority to adopt the Agency Resolution and to enter into and perform its duties under the Agency Agreements. 2. Resolution Nos. and of the Agency (collectively, the "Agency Resolution") have been duiy adopted at meetings of the Board of Directors of the Agency that were duly called and held on October 13, 2016 and _, 201_ pursuant to law, with all reyuired public notice and at which a quorum was present and acting throughout. The Agency Resolution is in full force and effect and has not been amended or repealed. 3. The Agency has duly authorized, executed and delivered the Agency Agreements. Assuming due authorization, execution and delivery by the other parties thereto, as necessary, the Agency Agreements constitute legal, valid and binding agreements of the Agency enforceable � against the Agency in accordance with their terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, debt adjustment, fraudulent conveyance or transfer, moratorium> reorganization or other laws affecting the enforcement of creditors' rights generally and equitable remedies if equitable remedies are sought, to the exercitie of judicial discretion in appropriate cases and limitations on remedies against public agencies. 4. Except as disclosed in the Official Statement, there is no action, suit or proceeding before or by any court, public board or body pending (with service of process having been accomplished on the Agency) or, to the best of my knowledgc, threatened wherein an unfavorable decision, ruling or iinding would: (a) affect the creation, organization, existence or powers of the Agency or the titles of its ofticers to their respective offices; (b) in any way question or affect the validity or enforceability of the Agency Agreements or the Bonds; (c) render illegal, invalid or unenforceable the Agency Agrcements or the transactions contemplated thereby, or any other agreement or in�trument related to the issuance of the Bonds to which the Agency is a party; or (d) have a material adverse effect on the ability of the Agency to make payments of principal of and interest on the Bonds when due. 5. The execution and delivery of the Agency Agreements and compliance with the provisions of each thereof will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States or any department, division, agency or instrumentality of either thereof, any applicable court or administrative decree or order or any loan agreement, note, resolution, indenture, trust agreemcnt, contract, agreement or other instrument to which the Agency is a party or is otherwise subject or bound in a manner that would materially adversely affect the Agency'� performance under the Agency Agreements. The opinion is ba�ed on such examination of the laws of the State of California as I have deemed relevant for the purposes of this opinion. I have not considered the effect, if any, of the laws of any other jurisdiction upon matters covered by this opinion. I have assumed the genuineness of all documents and signatures, presented to me. I have not undertaken to verify independently, and havc assumed, the accuracy of the factual matters represented, warranted or certified in �uch documents. I express no opinion as to the status of the Bondti, the interest thereon or the Agency Agreements under any federal securities laws or any state securities or "Blue Sky" law or any federal, state or local tax law. Without limiting any of the foregoing, I express no opinion as to any matter other than as expressly set forth above. I am furnishing this opinion as General Counsel to the Agency. Except for the Agency, no attorney-client relationship has existed or exists betwecn me and the addressees hereof in connection with the Bonds or by virtue of this opinion. This opinion is rendered solely in connection with the tinancing described herein, and may not be relied upon by you for any other purpose. I disclaim any obligation to update this opinion. This opinion shall not extend to, and may not bc used, quoted, referr�d to, or relied upon by any other person, firm, corporation or other entity without my prior written consent. Respectfully submitted, � NON-HOUSING BONDS ESCROW AGREEMENT by and among PALM DESERT FINANCING AUTHORITY, SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY and U.S. BANK NATIONAL ASSOCIATION, as Trustee and Escrow Agent Dated as of January 1, 2017 Relating to Defeasance of: Various Series of Palm Desert Financing Authority Tax Allocation Revenue Bonds and Tax Allocation Refunding Revenue Bonds as described herein (and corresponding prepayment of loans under Loan Agreements, by and among the Authority, the former Palm Desert Redevelopment Agency and the trustee thereunder) I?812-OW3\1991535v4.doc RWG DRAFT: 11/28/2016 TABI,E OF CONTENTS Section 1. Section 2. Section 3. Section 4. Section 5. Section 6. Section 7. Section 8. Section 9. Section 10. Section 11. Section 12. Section 13. Section 14. Section 15. Section 16. Section 17. Section 18. Section 19. Section 20. Section 21. Section 22. Section 23. Section 24. Definitions.................................................................................................. Escrow Agent's Acceptance of Duties ....................................................... Incorporation of Prior Indentures ............................................................... Escrow Funds Deposits ............................................................................... Maintenance of Escrow Funds .................................................................... Payment of Refunding Requirements ......................................................... Verification. ................................................................................................ Compliance with Prior Indentures and this Agreement .............................. TaxCovenant .............................................................................................. Defeasance and Redemption Notices . ........................................................ Defeasance of Refunded Bonds .................................................................. Discharge of Prior Loans . ........................................................................... Natureof Lien ............................................................................................. Amendments............................................................................................... Compensation of Escrow Agent . ................................................................ Resignation or Removal of Escrow Agent; Appointment of Successor..... Limitation of Powers and Duties Pa�e . . .................................................................... Indemnification. ............................................................................................... Limitation of Liability ..................................................................................... Closing of Escrow Funds; Termination of Agreement .................................... GoverningLaw . ............................................................................................... Severability. ..................................................................................................... Successor Deemed Included in References to Predecessors ........................... Counterparts. .................................................................................................... .2 .4 .4 .4 .5 .6 .6 .6 .6 .7 .7 .7 .7 .7 .8 .8 .9 10 10 I1 11 11 11 11 Appendix A- List of 2017A Prior Bonds Appendix B- List of 2017B Prior Bonds Appendix C - Refunding Requirements Appendix D - Escrow Securities Appendix E- Form of Defeasance Notice I 28 I 2-OW3\ 1991535v4.doc NON-HOUSING BONDS ESCROW AGREEMENT This Non-Housing Bonds Escrow Agreement (this "Agreement"), dated as of January 1, 2017, is by and among the Palm Desert Financing Authority, a joint exercise of powers agency duly organized and existing pur�uant to the laws of the State of California (the "Authority"), the Successor Agency to the Palm Desert Redevelopment Agency, a public entity existing under the laws of the State of California (the "City"), and U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, as successor trustee under the Prior Indentures and Prior Loan Agreements described below and escrow agent hereunder (the "Escrow Agent"). RECITALS: A. The former Palm Desert Redevelopment Agency (the "Former Agency") was a duly constituted redevelopment agency pursuant to provisions of the Community Redevelopment Law set forth in Section 33000 et seq. of the Health and Safety Code ("HSC") of the State of California (thc "State"). B. The Former Agency undertook a program to redevelop four project areas (the "Projcct Areas"). C. The Former Agency and the City of Palm Desert (the "City") executed and delivered a Joint Exercise of Powers Agreement, dated as of January 26, 1989 (the "Joint Power� Agreement"), which Joint Powers Agreement created and estabiished the Authority. D. To finance and refinance redevelopment projects benefiting the Project Areas, the Former Agency entered into multiple loan agreements including, among others: (i) those identified in A�pendix A(the "2017A Prior Loan Agreements") with the Authority and incurred loans thereunder (the "2017A Prior Loans"), and (ii) those identified in Appendix B(the "2017B Prior Agrcements" and, together with the 2017A Prior Loan Agreements, the "Prior Loan Agreements") with the Authority and incurred loans thereunder (the "2017B Prior Loans" and, together with the 2017A Prior Loans, the "Prior Loans"). E. To provide funding for the 2017A Prior Loans and the 2017B Prior Loans, the Aulhority issued: (i) the bonds (the "2017A Prior Bonds") pursuant to the Indentures of Trust (the "2017A Prior Indentures") identified in AQpendix A and (ii) the bonds (the "2017B Prior Bonds" and, together with the 2017A Prior Bonds, the "Prior Bonds") pursuant to the Indentures of Trust (the "2017B Prior Indentures" and, together with the 2017A Prior indentures, the "Prior Indentures") identificd in Appendix B. F. Pursuant to the Prior Indentures, the Prior Bonds are secured by "Revenues," consisting of amounts repaid by the Former Agency (as succeeded by the Successor Agency") for the Prior Loans. G. Pursuant to AB XI 26 (enacted in June 2011), and the State Supreme Court's decision in Califnrnia Redevelopment Association, et ul. v. Ann Mutosantos, et al., 53 Cal. 4th 231 (2011), the Former Agency was dissolved as of February 1, 2012, the Successor Agency was constituted. i 2x i z-000�u yy t s�s�a.do� H. Thc Successor Agency has determined to issue its Tax Allocation Refunding Bonds, 2017 Series A, in the aggregate principal amount of $ (the "2017A Bonds"), pursuant to an Indenture, dated as of January l, 2017 (the "2017 Indenture"), by and between the Successor Agency and U.S. Bank National Association, as trustee. I. The 2017A Bonds are being issued to effect a refunding of all of the outstanding 2017A Prior Bonds and the concurrent discharge of the 2017A Prior Loans. J. The Successor Agency has determined to issue its Taxabie Tax Allocation Refunding Bonds, 2017 Series B, in the aggregate principal amount of $ (the "2017B Bonds" and, together with the 2017A Bonds, the "2017 Bonds"), pursuant to the 2017 lndenture. K. The 2017B Bonds are being issued to effect a refunding of all of the outstanding 2017B Prior Bonds and the concurrent discharge of the 2017B Prior Loans. I.. Pursuant to the 2017 Indenture and this Agreement, the Successor Agency will also cause to be transferred to the Escrow Agent, a portion of the sale proceeds of 2017 Bonds, together with other moneys, for the deposit into the escrow funds (the "Escrow Funds") to be established under this Agreement, to effect the defeasance of the outstanding Prior Bonds (and the concurrent discharge of the Prior Loans). M. Pursuant, and subject, to the terms of the Prior Indentures, if there has been deposited with the Escrow Agent, to be held in escrow, cash or qualified securities (or a combination thereo� which shall provide sufficient moneys to pay and redeem any portion of the outstanding Prior Bonds through maturity or a designated redemption date, then the Authority's obligations with respect to such Prior Bonds shall be discharged and the lien with respect to such Prior Bonds under the Prior Indentures shall cease (except for the payment thereof from the moneys held in escrow by the Escrow Agent) and such Prior Bonds shall be defeased. N. The Authority and the Successor Agency are entering into this Agreement in order to provide for the proper and timely application of the proceeds from the 2017 Bonds and other moneys toward the defeasance and the payment and redemption of the Prior Bonds. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows: Section 1. Definitions. (a) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa. 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: "2002 PA 1 Escrow Account," "2003 PA 1 Escrow Account," "2004 PA 1 Escrow Account," "2002 PA2 Escrow Account," "2003 PA2 Escrow Account" and "1998 PA4 Escrow Account" mean, respectively, the account by such names established within the 2017A Escrow Fund pursuant to Section 4. I 2A l Z-0(�3\1991535v4.doc : "2Q06A PA 1 Escrow Account," "2003 PA2 Escrow Account," "2006A PA2 Escrow Account," "2006D PA2 Escrow Account," "2003 PA3 Escrow Account," "2006A PA3 Escrow Account," "2006B PA3 Escrow Account," "2006C PA3 Escrow Account," "2001 PA4 Escrow Account," "2006A PA4 Escrow Account" and "2006B PA4 Escrow Account" mean, respectivcly, the account by such names cstablished within the 2017B Escrow Fund pursuant to Section 4. "2017A Escrow Fund" mcans the fund by that name e�tablished by the Escrow Agent pursuant to Section 4. "2017B Escrow Fund" means the fund by that name established by the Escrow Agent pursuant to Section 4. "Bond Counsel" means Richards, Watson & Gershon, A Professional Corporation, or such other attorney or firm of attorneys of nationally recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Code selected by the Authority and the Successor Agency. "Closing Date" means January _, 2017, the date on which the 2017 Bonds are being issued. "Code" means the Internal Revenuc Code of 1986, as amended. "Escrow Accounts" means, collectively, the account� within the Escrow Funds. "Escrow Fund�" means, together, the 2017A Escrow Fund and the 2017B Escrow Fund. "Escrow Securities" means the Investment Securities to be deposited in the each Escrow Account established within the Escrow Funds, as described in A�pendix D. "Investment Securities" means noncallable direct obligations of the United States of America, or bonds or other obligations which are noncallable and the payment of principal and interest of which are unconditionally and fully guaranteed by the United States of America, to mature or bc withdrawable, as the case may be, not latcr than the time when needed for the payment and redemption of lhe Refunded Bonds in order to discharge the pledge and lien securing the Refunded Bonds. "Redemption Date" mcans: (i) with respect to the Refunded PA2 Bonds, February 1, 2017, and (ii) with respect to all other Refunded Bonds, April 1, 2017. "Refunded Bonds" means the remaining unpaid Prior Bonds to be defeased, paid and redeemed, pursuant to this Agreement, as further described in Appendix C. "Refunded PA2 Bonds" means the portion of the Prior Bonds related to "Project Area 2" (as identified in Appendices A and B) to be defeased, paid and redeemed, pursuant to this Aareement. B-3 12Ri2-0003\1991S3Svd.doc "Refunding Requirement" means, with respect to Refunded Bonds of each series designation, an amount sufficient to pay the principal, interest and the redemption premium (if any) with respect to such Refunded Bonds on the applicable Redemption Date as set forth in A�pendix C. Section 2. Escrow Agent's Acceptance of Duties. The Escrow Agent hereby accepts the duties and obligations expressly provided in this Agreement and agrees that the irrevocable instructions to the Escrow Agent contained herein are in a form satisfactory to it. Section 3. Incorporation of Prior Indentures. The applicable and necessary provisions of the Prior Indentures, including redemption provisions and defeasance provisions set forth therein, are incorporated herein by reference. Section 4. Escrow Funds Deposits. (a) There is hereby created and established with the Escrow Agent, a special and irrevocable trust fund designated the "2017A Escrow Fund," to be held by the Escrow Agent separate and apart from all other funds of the Authority, the Successor Agency or the Escrow Agent and used oniy for the puiposes and in the manner provided in this Agreement. Within the 2017A Escrow Fund, the Escrow Agent shall establish the separate accounts and make the deposits set forth below on the Closing Date: (A) (B) (C) (D) (E) (F) Release from Release from Reserve Total Revenue Fund held Deposit into Related Prior Deposit from Fund held under Account on Bonds Proceeds of under related Prior Closing Date (as defined in 2017 A related Prior Loan (Columns C Account designation Appendix A) Bonds Indenture Agreement + D+ E) 2W2 PA1 Escrow Account 2002 PAl Bonds 2003 PA 1 Escrow Account 2003 PA 1 Bonds 2004 PA l Escrow Account 2W4 PA I Bonds 2002 PA2 Escrow Account 2002 PA2 Bonds 2W3 PA2 Escrow Account 2003 PA2 Bonds* 1998 PA4 Escrow Account 1998 PA4 Bonds * Consisting of a portion of each mawrity of the 2(H)2 PA2 Bonds: (i) $169,400 of the principal maturing on August l, 2023, (ii) $176,176 of thc principal maturing on August l, 2024, (iii) $481,096 of the principal maturing on Au�ust 1, 2026, and (iv) $2,221,560 of the principal maturing on August 1, 20:i3. B-4 I 28 l 2-(M103\ I 991535 v4.doc (b) There is hereby created and established with the Escrow Agent, a special and irrevocable trust fund designated the "2017B Escrow Fund," to be held by thc Escrow Agent separate and apart from all other funds of the Authority, the Successor Agency or the Escrow Agent and used only for the purposes and in the manner provided in this Agreement. Within the 2017B Escrow Fund, the Escrow Agent shall establish the separate accounts and make the deposits set forth below on the Closing Date: (A) (13) (C) (D) (E) (F) Release from Release from Reserve Total Revenue Fund held Deposit into Related Prior Deposit from Fund held under Account on Bonds Proceeds of under related Prior Closing Date (as defined in 2017B related Prior Loan (Columns C Account designation Appendix B) Bonds Indenture Agreement + D+ E) 2006 PA1 Escrow Account 2006 PAl Bonds 200� PA2 Escrow Account 2003 PA2 Bonds* 2006A PA2 Escrow Account 2(x)6A PA2 Bonds 2006D PA2 Escrow Accc�unt 2006D PA2 Bonds 2003 PA3 Escrow Account 2003 PA3 Bonds 2006A PA3 Escrow Accc�unt 2006A PA3 Bonds 2(H)6B PA3 Esaow Account 2006B PA3 Bonds 2006C PA3 Escrow Account 2(?06C PA3 Bonds 2(x)I PA4 Escrow Account 2U01 PA4 Bonds 2006A PA4 Escrow Account 2006A PA4 Bonds 2006V PA4 Escruw Account 2006B PA4 Bonds * Cc�nsisting of a portion of each maturity of thc 2002 PA2 Bonds: (i) $705,600 of thc principal maturing on August l, 2023, (ii) 5733.824 of thc principal maturing on August l, 2024, (iii) $2,(H)3,904 of the principal maturing on August l, 2026, and (iv) $9,253,440 of thc principal maturing on August I, 203�. (c) Each Escrow Account constitutes a special and irrevocable trusl fund for purposes of effecting the concurrent defeasance of the related Refunded Bonds and the discharge of the related Prior Loan. Section 5. Maintenance of Escrow Funds. (a) The Escrow Agent, upon receipt of the moneys described in Section 4 shall immediately invest the moneys in each Escrow Account as described in Appendix D. All proceeds received upon the maturity of the Escrow Securities, including interest earnin�s thereon, shall be retained in the related Escrow Account. The Escrow Agent is hereby authorized and empowered to deposit uninvested monies held hereunder from time to time in a demand deposit account, without payment of interest thereon as provided hereunder, established at commercial banks that are corporate affiliates of the Escrow Agent. (b) Notwithstanding the foregoing or any other provision of this Agreement to the contrary, at the written request of the Successor Agency and upon compliance with the B-5 I 28 I?-(Hx) 3\ I 99 I 53S v4.do� 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 each Escrow Account and to substitute Investment Securities. The foregoing may be effected only if: (i) the substitution of Investment Securities for the substituted Escrow Securities occurs simultaneously; (ii) the amount1 of and dates on which the anticipated moneys from such Escrow Account to be available for the payment or redemption of the related Refunded Bonds on each payment or redemption date identified in A�pendix C will not be diminished or postponed thereby, as shown in the certification (described below) of an independent certified public accountant; (iii) the Escrow Agent shall receive the unqualified opinion of counsel to the effect that the Successor Agency has the right and power to effect such disposition and substitution; and (iv) the Escrow Agent shall receive from an independent certified public accountant a certiiication that, immediately after such transaction, the principal of and interest on the Investment Securities in such Escrow Account will, together with other moneys available for such purpose, be sufficient to pay the related Refunding Requirement. Any cash received from the disposition and substitution of Escrow Securities pursuant to thi� Section to the extent that, as shown in such certitication, such cash will not be required, in accordance with the 2017 Indenture and this Agreement, at any time for the payment when due as provided in Section 6, shall be transferred to the Successor Agency. Section 6. Pavment of Refunding Requirements. On each payment or redemption date identi�ed in Appendix C, the Escrow Agent shall disburse the amount indicated on Appendix C for application toward the payment or redemption of the related Refunded Bonds, for the equal and ratable benefit of the owners of the related Refunded Bonds; provided, that if such payment or redemption date falls on a Saturday or Sunday, then the actual disbursement may be made on the following business day.. Section 7. Verification. The Successor Agency has caused schedules to be prepared relating to the sufficiency of the funds deposited in the Escrow Funds to pay the Refunding Requirements. The Successor 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 Prior Indentures and this A�eement. The Escrow Agent 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, interest and redemption premium (if any) with respect to the Refunded 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 under the Prior Indentures, shall be limited to the application, in accordance with this Agreement, of moneys in the Escrow Funds (including the Escrow Securities and interest earnings thereon, if any) available for the purposes of and in accordance with this Agreement. Section 9. Tax Covenant. Notwithstanding any other provision of this Agreement, the Authority and the Successor Agency hereby covenant that no part of the proceeds of 2017A Bonds or of the moneys or funds held by the Escrow Agent hereunder shall be used, and that the Authority and the Successor Agency 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 2017A Bonds to be an "arbitrage bond" under Section 148 of the Code and the regulations of the B-6 1281'_'-OW3\1991535v4.doc Treasury Department thereunder proposed or in effect at the time of such use and applicable to obligations issued on the date of execution and dclivery of the 2017A Bonds. None of the Authority, the Successor Agency nor the Escrow Agenl shall transfer or otherwise dispose of moneys and securities held in the 2017A Escrow Fund except as set forth in this Agreement; provided that the Escrow Agent may effectuate the transfer of such moneys to a successor Escrow Agent in accordance with the provisions of Section 16 relating to the transfer of rights and property to successor Escrow Agents. Section 10. Defeasance and Redemption Notices. As soon as practicable upon the Escrow Agent's receipt of moneys for deposit in the Escrow Funds pursuant to Section 4, the Escrow Agent shall send notices of defeasance to the registered owners of the Refunded Bonds and each bond insurer of the Refunded Bonds (as indentified in the Prior Indentures), substantially in the form set forth in A�pendix E. No later than the 30 days (but not more than 60 days) before each Redemption Date, the Escrow Agent shall also send notices of redemption for the applicable Refunded Bonds in accordance with the Indentures, with copies to the applicable bond insurers; provided, that it is recognized that for the Refunded PA2 Bonds (which have a Redemption Date of February l, 2017), a notice of redemption was sent before the execution and delivery of this Agreement. Section 11. Defeasance of Refunded Bonds. Concurrently with the deposit of the moneys in the Escrow Funds pursuant to Section 4 of this Agreement, the Refunded Bonds shall no longer be deemed to be "Outstanding" and unpaid within the meaning and with the effect expressed in the Prior lndentures. Section 12. Discharge of Prior Loans. Concurrently with the deposit of the moneys in the Escrow Funds pursuant to Section 4 of this Agreement, the Prior Loans shall be deemed discharged pursuant to the lerns of the Prior Loan Agreements. Section 13. Nature of Lien. The trusts hereby created shall be irrevocable. The owners of the Refunded Bonds shall have an express lien on all of the moneys (including any securities) in the Escrow Account relating to the Refunded Bonds owned by such owners, including the earnings thereon, until paid out, used and applied in accordance with this Agreement. Section 14. Amendments. This Agreement shall not be repealed, revoked, altered, amended without the written consent of all of the registered owners of the unpaid Refunded Bonds and the written consent of the Escrow Agent, the Successor Agency and the Authority; provided, however, that the Authority, the Successor Agency and the Escrow Agent may, without the consent of or notice to, such registered owners, enter into such amendment to this Agreement, if such amendment shall not materially adversely affect the rights of such registered owners and 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-7 I 2R I 2-0(x)3\ I 99l 5� i v�l.dcx (b) To grant to, or confer upon, the Escrow Agent for the benefit of the owners of the Refunded Bonds, any additional rights, remedies, powers or authority that may lawfully be granted to, or conferred upon, such owners or the Escrow Agent; (c) To transfer to the Escrow Agent and make subject to this Agreement, additional funds securities or properties; (d) To conform the Agreement to the provisions of any law or regulations governing the tax-exempt status of the Prior Bonds, as applicable, and the 2017A Bonds in order to maintain their tax-exempt status; and (e) To make any other change determined by the Successor Agency to be not materially adverse to the owners of the Refunded Bonds. The Escrow Agent shall be entitled to rely exclusively upon an opinion of Bond 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 owners of the Refunded Bonds, or that any instrument executed hereunder complies with the conditions and provisions of this Section. Section 15. ComQensation of Escrow A e�nt. In consideration of the services rendered by the Escrow Agent under this Agreement, the Successor 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 Successor Agency, including all reasonable expenses, charges, counsel fees and other disbursements incurred by it or by its attorneys, agents and employees in and about the performance of their powers and duties hereunder, from any moneys of the Successor Agency and the Authority lawfully available therefor and the Escrow Agent shall have no lien whatsoever upon any of the moneys in the Escrow Funds (including any securities therein) for the payment of such proper fees and expenses. Section 16. Resignation or Removal of Escrow Agent; Appointment of Successor. The Escrow Agent at the time acting hereunder may at any time resign and be discharged from the trusts hereby created by giving written notice to the Authority and the Successor Agency 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 owners of the Refunded Bonds or by the Successor 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 Authority and the Successor Agency and signed by the registered owners of a majority in principal amount of the Refunded Bonds. The Escrow Agent may also be removed at any time by the Authority and the Successor Agency with not less than 30 days' written notice to the Escrow Agent and the registered owners of the Refunded 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 a receiver appointed by a court, a successor Escrow Agent may be appointed by the I 2812-OW3U 991535 v4.doc . .� . owners of a majority in principal amount of the Refunded Bonds, by an instrument or concurrent instruments in writing, signed by such owners, or by their attorneys in fact duly authorized in writing; provided, nevertheless, that in any such event, the Successor Agency shall appoint a temporary Escrow Agent to fll such vacancy until a successor Escrow Agent shall be appointed by the owners of a majority in principal amount of the Refunded Bonds, and any such temporary Escrow Agent so appointed by the Successor Agency shall immediately, and without further act, be superseded by the Escrow Agent so appointed by such owners. In the event that no appointment of a successor Escrow Agent, or a temporary successor Escrow Agent, shall have been made by such owners or the Authority, pursuant to the foregoing provisions of this Section, within 30 days after written notice of the removal or resignation of the Escrow Agent has been given to the Authority and the Successor Agency, the owner of any of the Refunded 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 national banking association or 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. Every successor Escrow Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor and to the Authority and the Successor 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 A�ent, the Authority or the Successor 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 moneys held by it to its succes5or. Should any transfer, assignment or instrument in writing from the Authority or the Successor 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 Authority or the Succes5or Agency. Any entity into which the Escrow Agent, or any successor to il 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 resul[ing 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 Authority and the Successor 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 17. Limitation of Powers and Duties. The Escrow Agent shall have no power or duty to invest any funds held under thiti Agreement except as provided in Section 5. The I?812-0(H)3\ I 991 S35 v4.doc :• 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 18. Indemnification. To the extent permitted by law, the Authority and the Successor Agency hereby assume liability for, and hereby agree (whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and keep harmless the Escrow Agent and its 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 Authority, the Successor 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 Funds, the acceptance of the moneys and any securities deposited therein, transfer or other application of moneys by the Escrow Agent in accordance with the provisions of this Agreement; provided, however, that the Authority and the Successor 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 agents, employees or servants. In no event shall the Successor Agency, the Authority or the Escrow Agent be liable to any person by reason of the transactions contemplated hereby other than as set forth in this Section. The indemnities contained in this Section shall survive the termination of this Agreement and removal or resignation of the Escrow Agent. Section 19. Limitation of Liabilitv. The Escrow Agent and its 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 Funds, the acceptance of the moneys or securities deposited therein, the sufficiency of the moneys or any securities held hereunder to accomplish the payment and redemption of the Refunded Bonds, or any payment, transfer or other application of moneys or any 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 Escrow Agent shall incur no liability for losses arising from any investment made in accordance with this Agreement. The recitals of fact contained in the Recitals of this Agreement, shall be taken as the statements of the Authority and the Successor Agency, and the Escrow Agent assumes no responsibility for the correctness thereof. The Escrow Agent makes no representation as to the sufficiency of any securities purchased pursuant hereto, and any moneys to accomplish the payment and redemption of the Refunded Bonds, pursuant to the Prior Indentures or to the validity of this Agreement as to the Authority or the Successor Agency 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 or willful misconduct, and the duties and obligations of the Escrow Agent shall be determined by the express provisions of this Agreement. Anything in this Agreement notwithstanding, the Escrow Agent shall not be liable for any consequential (i.e., special or indirect) losses or damages in performing its duties or in exercising its rights or power pursuant to this Agreement. The Escrow Agent may consult with counsel, who may or may not be counsel to the Successor Agency or the Authority. Whenever the Escrow Agent shall deem it necessary or desirable that a B-10 I 28 I 2-0W3\ 1991535 v4.doc 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 specifcally requiring a certificate of a nationally recognized firm of independent certiiied public accountants or an opinion of nationally recognized bond counsel) may be deemed to be conclusively established by a written certification of the Authority or the Successor Agency. Whenever the Escrow Agent deems it necessary or desirable, that a matter specifically requiring a certifcate 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 20. Closing of Escrow Funds; Termination of Agreement. (a) Upon completion of disbursements from each Escrow Account within the 2017A Escrow Fund to redeem and pay the related Refunded Bonds pursuant to Section 6 of this Agreement, all moneys (if any) remaining in such Escrow Account shall be transferred to the Debt Service Fund established under the 2017 Indenture, to be applied to the next payment of debt service of the 2017A Bonds. Thereafter, such Escrow Account will be closed. (b) Upon completion of disbursements from each Escrow Account within the 2017B Escrow Fund to redeem and pay the related Refunded Bonds pursuant to Section 6 of this Agreement, all moneys (if any) remaining in such Escrow Account shall be transferred to the Debt Service Fund established under the 2017 Indenture, to be applied to the next payment of debt service of the 2017B Bonds. Thereafter, such Escrow Account will be closed. (c) An Escrow Fund shall be closed upon the closing of all of the Escrow Account therein. This Agreement shall terminate upon the closing of both Escrow Funds. Section 21. Governing Law. This Agreement shall bc governed by the law of the State of California. Section 22. Severability. If any one or more of the covenants or agreements provided in this Agreement on the part of the Authority, the Successor Agency, 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 contained herein and shall in no way affect the validity of the remaining provisions of this Agreemcnt. Section 23. Successor Deemed Included in References to Predecessors. All the covenants, promises and agreements contained in this Agreement by, or on behalf of, the Authority, the Successor Agency or the Escrow Agent shall bind and inure to the beneft of their respective successors and assigns, whether so expressed or not. Section 24. 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. B-11 1281 �-0(x)3\I y91 i3iv4.doc (Non-Housing Bonds Escror�� Agreement) IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be executed by their duly authorized officers as of the date first written above. PALM DESERT FINANCING AUTHORITY : Chief Administrative Officer SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY : Executive Director U.S. BANK NATIONAL ASSOCIATION, as Escrow Agent I: Authorized Officer 1 28 1 2-0003\ 1991 i i5 v4.doc APPENDIX A LIST OF 2017A PRIOR BONDS Project Prior Bonds Series Related Prior l.oan Area Designation Related Prior Indenture Agreement (1) 1 Tax Allocation ReCunding Indcnturc of Trust, dated as of Project Arca No. I, As Revenuc Bonds (Projcct Arca March 1. 2002 Amended. Loan Agreemcnt, No. 1, As Amcndcd) 2002 datcd as of March 1, 2002 Serics A ("2002 PA1 Bonds") (2) I Tax Allocation Revcnue B�mds Indenturc of Trust, dated as of Project Arca No. l, As (Project Arca No. l, As July l, 2003 Amendcd. Loan Agrecment, Amended) Series 2(�3 dated as of July l, 200; ("2003 PAl Bonds") (3) 1 Tax Allocation Rel�unding Indcnture oCTrust, dated as of Project Arca Nc�. l. As Revenuc Bonds (Projcct Area June l, 2004 Amended, Loan Agreemcnt, No, l, As Amended) 2004 dated as of Junc l, 2004 Scrics A ("200d PAl Bonds") (4) 2 Tax Allocation RefundinR Indenture of Trust, dated as of Project Area No. 2 Loan Revenuc Bonds (Project Area June I. 2002 Agrecment, datcd as of�Junr I, No. 2). 2002 Scries A 2002 ("2002 PA2 Bonds") (5) 2 Tax Allocation Rcvenue Bonds Indenture of Trust, dated as of Project Arca No. 2 Loan (Projcct Area No. 2), Series March 1, 2003 A�reemcnt, dated as of March 2003 ("2003 PA2 Bonds"), but l, 2003 solely: (i) 5169,400 of thc principal maturin� on August 1, 202�, (ii) 5176,176 of the principal maturing on August I, 2024, (iii) �481,096 of thc principal maturing on August 1, 2026, and (iv) �2.221,560 of the principal maturin�.* on Au�ust 1, 2033 (6) 4 Tax Allucation Revenuc Bonds Indenture of Trust, datcd as of Project Arca No. 4 Loan (Project Arca No. 4), Scrics March I. 1998 Agreement, datcd as of March 19y8 l, 1998 ("1998 PA4 Bonds") A-1 I 2R I 2-0(�3\ 19915 iSv4.dci� APPENDIX B LIST OF 2017B PRIOR BONDS Project Prior Bonds Series Related Prior Loan Area Designation Related Prior Indenture Agreement (1) 1 Tax Allocation Revenuc Bonds Indenture of Trust, dated as of Projcct Arca No. 1, As (Project Arca No. 1, As July 1, 2006 Amended, Loan Agrecment, Amended), 2006 Series A dated as of July l. 2006 ("2006 PA 1 Bonds ') (2) 2 Tax Allocation Revenue Bonds Indenturc of Trust, dated as of Project Arca No. 2 Loan (Project Area No. 2), Series March 1, 2003 Agreement, dated as of March 2(�3 ("2003 PA2 Bonds"), but l, 2003 solely: (i) �705,600 of thc principal maturing on August l, 2023, (ii) $7:i3,824 of thc principal maturing on August l, 2024, (iii) $2,003,904 oCthe principal maturing on August l, 2026, and (iv) $9,253,440 of the principal maturing on August l, 2033 (3) 2 Tax Allocation Refunding Indcnture of Trust, dated as of Projcct Area No. 2 Loan Revenuc Bonds (Projcct Arca July l, 2006 Agreement (2006 Senior No. 2), 2W6 Series A Loans), dated as of July l, 20(X� ("2006A PA2 Bonds") (4) 2 Subordinatc Tax Allocation Indenture of Trust, dated as of Project Area No. 2 Loan Rcvenue Capital Apprcciation July 1, 2006 Agrcement (2006 Subordinate Bonds (Project Area No. 2) Loan), datcd as of July l, 2006 2006 Serics D ("2006D PA2 Bonds") (5) 3 Tax Allocation Revenue Bonds Indenture of Trust, dated as of Project Area No. 3 Loan (Project Arca No. 3), Serics July l, 2003 Agrcement, dated as of July l, 200i 2003 ("2(�3 PA3 Bonds") (b) 3 Tax Allocation Rcvenue Bonds Indenture of Trust, datcd as of Project Area No. 3 Loan (Project Area No. 3) 2W6 July 1. 2006 Agreement (2006 Senior Series A Loans), dated as of July l, 2006 ("2006A PA3 Bonds") (7) 3 Tax Allocation Revenue Capital Indenwre of Trust, dated as of Project Area No. 3 Loan Appmciation Bonds (Project July l, 2006 Agreement (2(�6 Senior Arca No. 3) 2(�b Serics B Loans), dated as of July 1, 2W6 ("2(�6B PA:i Bonds") B-1 1 ZR 12-0003U991S3Sv4.doc Project Prior Bonds Series Related Prior I,oan Arca Designation Related Prior Indenture Agreement (8) 3 Subordinatc Tax Allocation Indenture of Trust, dated as of Projcct Area No. 3 Loan Revenuc Capital Apprcciation July l, 2006 Agrecment (2006 Subordinatc Bonds (Projcct Area No. 3) Loan), dated as of July 1, 2Q06 2006 Series C ("2006C PA3 Bonds") (9) 4 Tax Allocation Revenue Bonds Indenwre of Trust, Novemhcr Project Arca No. 4 Loan (Projcct Area No. 4), Scries l, 2001 Agrecmcnt, dated as of 2001 November 1, 2001 ("2001 PA4 Bonds") (10) 4 Tax Allocation Refunding Indenwre of Trust, dated as of Projcct Arca No. 4 Loan Revenuc Bonds (Prc�ject Area July 1, 2006 Agrecment, dated as of July 1, No. 4) 2006 Serics A 20Q6 ("2006A PA4 Bonds") (1 1) 4 Tax Allocation Rcvcnuc Capital Indcnture of Trust, dated as of Projcct Area No. 4 Loan Appreciation Bonds (Projcct July l, 2006 A�rcement. datcd as of July l, Arca 1Vo. 4) 2006 Scrics B 2006 ("2006 PA4 Bonds") B-2 I 28 I 2-0(x)3\ I 99l S iSvd.doc APPENDIX C REFUNDING REQUIREMENTS I. 2017A Prior Bonds A. 2002 PA1 Bonds: Payment/ Redemption Redemption Date Principal Interest Premium April 1, 2017 $22,070,000* $557,332.50 -- * Consists of the following 2002 PAl Bonds to be paid or redeemed on thc Redemption Uatc: Maturity Date Remaining Interest Redcmption (April l) Principal Ratc Price 2025 $10,905,000 5.000�% 100� 2030 1 1,165,000 5.100 ] 00 B. 2003 PA1 Bonds: PaymenU Redemption Redemption Date Principal Interest Premium April 1, 2017 $12,660,000* $316,500.00 -- * Consists of the following 2003 PA I Bonds to be paid or redecmed on the Rcdemption Date: Maturity Datc Rcmaining Intcrest Rcdemption (April 1) Principal Rate Price 2026 $3,440,000 5.0(H)7� IOO�I 2027 3,610.000 5.000 ] 00 2030 5,610,0(� 5.000 100 Disbursement $22,627,332.50 Disbursement � 12,976,500.00 I 2R I 2-0003\ 1991535 v4.doc C. 2004 PA1 Bonds: Payment/ Redemption Redemption Date Principal Interest Premium Disbursement April 1, 2017 $12,770,000'r 5309,250.00.QO -- x Cunsists of the following 20(� PAl Bonds to be paid or rcdcemed on the Redemption llate: Maturity Date Remaining Interest Redemption (April I ) Principal Ratc Price 2017 SI,:i35,000 4.500%� 100�%: 2018 I ,460,(Hl0 4.625 100 2019 1.42Q000 5.000 100 2020 1,520,000 4.750 ] 00 2021 1.620,000 4.750 100 2022 1,695,000 5.000 100 2023 205,000 5.000 lO0 2024 2,255.000 5.000 ] 00 2025 1,26Q0(H) 5.000 100 D. 2002 PA2 Bonds: $13,079,250.00 (mawrity) Payment/ Redemption Redemption Date Principal Interest Premium February 1, 2017 56,815,000* $166,718.75 -- x Consists of thc following 2002 PA2 Bonds to bc paid or redeemed on the Redemption Date: Maturity Date Remaining Interest Redemption (Auwst 1) Principal Rat� Pricc 2017 $995,000 4J50"/ 100"l� 2U 1� 1,OS0,0(x) 4.750 100 2019 1, I 00,0(H) 4.800 I 00 2020 I ,160,000 5.000 ] 00 2021 1.230,000 S.OQO 100 2022 1,280,000 5.000 l00 Disbursement $6,981,718.75 C-2 128IZ-0003\1991535v4.doc E. 2003 PA2 Bonds: PaymenU Redemption Redemption Date Principal Interest Premium Disbursement February 1, 2017 $3,048,232* $ -- $ " Consists of the following 2(?06A PA2 Bonds to be paid or redecmed on the Rcdemption Date: Remaining M�turity Principal ro bc Date paid from 2017A Interest Redcmption (August 1) Escrow Fund** Ratc Pricc 2023 $169.400 4.SOO�I 1 W7� 2024 176,176 4.5(� 100 2026 481,096 4.625 ] 00 2033 2,221,560 5.000 l(x) "* Such principal, together with the principal to paid from the 2003 PA2 Escrow Arcount of the 2017B Escrow Fund, eyual the full amount of the principal outstanding F. 1998 PA4 Bonds: PaymenU Redemption Redemption Date Principal Interest Premium April 1, 2017 $6,670,000* $173,245.00 -- * Consists of thc following 1998 PA4 Bonds to bc paid or redcemcd on thc Rcdemption Uate: Maturity Datc (Octohcr 1) 2017 2028 2()28 Rcmaining Principal $175,000 2,020,000 4,475,000 Intcrest Rate 5.000 5 200 S.2(x) Rcdcmption Pricc l 00�1� ]00 1�0 Disbursement �6,843,245.00 C-3 12812-0003\199153Sv4.Joc II. 2017B Prior Bonds G. 2006A PA1 Bonds: PaymenU Redemption Redemption Date Principal Interest Premium April l, 2017 $37,780,000* $957,222.50 -- x Ccrosists of the following 2006A YA I Bonds to he paid or redeemcd on the Redemption Date: Maturity Datc Rcmaining Intcrest Redcmption (April 1) Principal Ratc Price Disbursement $38,737,222.50 2017 �1,000.(H)0 5.0007� 1007 (maturity) 201R l,(H)5.000 5.250 100 2019 5.065,0(H) 5.250 100 2020 5>285,0(� 5.250 l(H) 2022 11,365,(H)0 5.000 l00 2023 7,69Q0(x) 5.000 ] 00 2024 960,000 5.000 100 2025 1.000,000 5.000 l00 2026 �,:i�5,000 5.(Hx) 100 2027 250.000 4.700 100 2028 260.000 4.700 100 2029 275,U00 4.750 l00 2030 290.000 4.750 ]00 H. 2003 PA2 Bonds: PaymenU Redemption Redemption Date Principal Interest Premium Disbursement February 1, 2017 $12,696,768 R $ -- $ * Consists o( thc ti�llowing 2006A F'A2 l�unds tu b� paid or redccm�J on the Redemptian Date: Remaining Maturity Princip�l to bc Date paid Crom 2017B Interest Redcmption (/�u�ust 1) Escrow Fund** Rate Price 2023 5705,6(x) 4.500�1: ] 00'7: 2024 7��,824 4.500 l00 2026 2.(H)3.904 4.625 100 203:� 9.253.440 5.000 ] 00 " Such principal, together with the principal to paid from thc 2003 PA2 Escrow Account of the 2017A Escrow Fund, equal the full amount ot the principal outstanding C-4 I 2813-(R103\1991 S3Sv4.doc I. 2006A PA2 Bonds: Paymend Redemption Redemption Date Principal Interest Premium February 1, 2017 �36,510,000* � -- * Consists of the following 2006A PA2 Bonds to be paid or redecmed on the Redemption Dutc: Maturity Date Remaining Interest Redemption (August 1) Principal Ratc Price 2017 $810,000 4250% l (H)�Ic 2018 840,000 4.500 100 2019 880,000 4.500 100 2020 915,000 4.500 100 2021 950,(HH) 4.500 100 2022 1,005,000 4.625 100 2U23 1,520,000 4.625 100 2024 1,600,0(H) 4.750 1(H) 2025 1,485,(Hx) 4.750 l(x) 2026 1,415,000 4.750 l00 2031 8,225,000 4.9(H) 100 20�6 16,865,000 5.125 100 Disbursement $ C-5 I 28 l 2-W03\ I 9915 35 v4. doc J. 2006D PA2 Bonds: Payment/ Accreted Redemption Redemption Date Value Premium Disbursement February 1, 2017 $ * -- � ' Consists of thc followin� 2006U PA2 Bonds to be paid or redecmed on the Redcmption Uatc: Maturity Datc (August 1) 2017 zo�x 2019 2020 2021 2022 2023 2024 2025 202� 2027 2028 2029 zo3o zo�t 2032 20:� 3 2034 2035 Initial Principal Amount $489,413.85 522, I78.80 556,998.15 583,801.50 601,155.50 622,659.75 64Q,715.40 656,Od6.80 ��x,x��.�o 679,171.80 400.036.00 380,1 I I .45 345,925.00 339,�24.70 333,:i 10.25 326.726.40 320,498.75 :� 16.652.60 362.896.75 Mawrity Amount $885>000 l >020,0(� 1, l 65.000 1,310,000 1,450,000 I ,605,0(H) l ,755,000 I ,9 l0,()O() z.o�o,000 2,235.000 l ,400.000 I ,415,0(x) � ,��o,cxx� 1,430.0(x) I ,495,000 1 >560.000 l .625.000 1,705,(H� 2,075,000 Accrctcd Value Yicld to as of Maturity Redcmption Date Datc 5.4509� 5.650 5.750 5.850 5.950 6.000 6.010 6.020 �.o�o 6.040 6.050 6.060 �.o�c� �.oxc� 6.090 6.100 6.100 6. l OQ 6. l 00 Redcmption Price (as �/ of Accrctcd Valuc I 00'% 100 100 l00 100 100 100 100 ioo 100 100 l00 ►oo ioo 100 100 100 100 100 G6 12812-0003\19915i5�4.Jo� K 2003 PA3 Bonds: PaymenU Redemption Redemption Date Principal Interest Premium Disbursement April 1, 2017 $3,325,000* �81,673.75 -- * Consists of thc following 2003 PA3 Bonds to be paid or redcemed on thc Redemption Uate: Maturity Datc Rcmaining Intcrest Rcdcmption (April I ) Principal Rate Pricc 20l 7 $130,000 4.200� ] 00�%r 2018 140,(x� 43(� 100 2019 145,000 4.350 100 2020 150,(x)0 4.450 ] 00 2021 155,000 4.550 100 2022 165.000 4.600 100 202 i 170,(x)0 4.650 100 20�3 2,270,OOU 5.125 1(H) L. 2006A PA3 Bonds: $3,406,673.75 ( mawrity) PaymenU Redemption Redemption Date Principal Interest Premium April 1, 2017 $10,695,000'•` $258,140.63 -- ' Consists of the following 2006A PA3 Bonds to be paid or redeemed on thc Redemption Date: Maturity Date Remainin� Interest Redemption (April 1) Principal Ratc Price Disbursement $10,953,140.63 2017 $220,000 4.250�7� 1(x)�I (maturity) 2018 225,000 4.500 100 2019 240,000 4.500 100 2022 250,000 4.625 l00 2023 265,000 4.625 l00 2024 275,000 4.750 100 2025 285,000 4.750 100 2036 4,465,0(� 4.750 100 2041 4,470,000 5.(H)0 l00 C-7 I 2812-000�\ 1991535 v4.doc M. 2006B PA3 Bonds: PaymenU Accreted Redemption Redemption Uate Value Premium Disbursement April 1, 2017 S * -- $ ' Consists of the following 20068 YA3 Bonds to be paid or redeemed on thc Redrmption Date: Maturity Datc (April 1) 2020 2021 2027 2028 Initial Principal Amount Maturity Amount $ l 22.040.00 $250,000 I I 5,147.50 250,(x)0 102, I 35.60 315,000 44,:i36.65 145,(�0 Accreted Valuc Yield to as of Mawrity Rcdemption Date Date S.�i I O�Io 5.350 5.520 5.540 Redcmption Pricc (as �I of Accret�d Value i cx� 100 ]00 100 C-8 I 28 I 2-0(x)3\ I 99 I 535 v4. doc N. 2006C PA3 Bonds: PaymenU Accreted Redemption Redemption Date Value Premium Disbursement April 1, 2017 $ * -- � '� Consists of the following 2006C PA3 Bunds to be paid or redeemed on the Redcmption Datr. Accreted Redemption Value Price (as Maturity Yield [o as of 9c of Date Initial Maturity Maturity Redemption Accreted (April 1) Principal Amoun[ Amount Date Date Value 2017 $109,786.95 $195,000 5.4507c 100 (maturity) 2018 119,954.20 230,000 5.650 100 2019 129,115.95 265,000 5.750 100 2020 138,561.50 305,000 5.850 100 2021 143,741.80 340,000 5.950 100 2022 150,354.60 380,000 6.000 ]00 2023 147,078.25 395,000 6.010 100 2024 143,639.40 410,000 6.020 100 2025 141,715.10 430,000 6.030 100 2026 137,936.65 445,000 6.040 100 2027 135,533.SS 465,000 6.OS0 100 2028 131,534.40 480,000 6.060 100 2029 128,790.00 500,000 6.070 100 2030 125,876.40 520,000 6.080 100 2031 122,823.00 540,000 6.090 100 2032 119,660.80 560,000 6.100 100 2033 116,707.60 580,000 6.100 100 2034 111,793.20 _590,000 6.100 ]00 C-9 I 28 I 2-0(Al3\ 1991535 v4.doc O. 2001 PA4 Bonds: PaymenU Redemption Redemption Date Principal Interest Premium April 1, 2017 $11,375,000* �270,452.50 -- " Cunsists of the following 2(Hl I PAd Bonds to be paid or redeemed on the Redemption Date: Mxturity Datc (Octoher 1) 2017 2018 2019 2020 2021 2022 2022 2031 20�1 Remxining Principal $260,000 275,000 285,(�0 295,000 305,000 i, iss,ocx� � i s,cx�o 2.440,000 6,045,0(x) Interest Ratc 4.400 4.500 4.550 4.6Q0 4.650 4.700 4J00 4.800 4.800 Redemption Price 100'% 100 l00 100 100 100 100 ]00 ]00 P. 2006A PA4 Bonds: Payment/ Redemption Redemption Date Principal Interest Premium Apri 1 1, 2017 $10,620,000* $255,285.00 -- " Cunsists ot'the following 2006A PA4 BonJs to bc paid or redeemed on the Redemption l)ate: Maturity Date (Octobcr 1) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2029 2034 Rcmaining Principal 5270,000 300.(�0 125,(H)0 300.000 575,000 �oo,cx�o 635,WU 665.000 695.(x)0 2,200,000 4,255,000 Interest Rate 4.400"/ 4.400 4.450 4.500 4.500 4.500 4.500 4.550 4.600 5.000 5.000 Rrdemption Pricc 100''I� 100 100 100 100 100 100 100 100 l00 100 Disbursement $11,645,452.50 Disbursement � 10,875,285.00 C-10 I 2812-0003U 991535 v4.dcx Q. 20068 PA4 Bonds: Payment/ Accreted Redemption Redemption Date Value Premium Disbursement April 1, 2017 � * -- $ * Consists of the following 20068 PA4 Bonds to be paid or redcemed on the Redemp[ion Date: Accreted Value Redemption Maturity Yicld to as of Pricc (as Date Initial Maturity Redemption �I� of Accreted (Octobcr 1) Principal Amount Maturity Amount Datc Date Valuc 2017 $106,489J0 $185,000 5.(�"I� 100 2019 �iR,167.50 75,(xx) 5.19 l00 2020 168,052.50 350,(l�0 5.24 ]00 2021 124,fi46.50 275.000 5.28 ] 00 2022 49,244.15 1 15,(x)0 5.3 l ] 00 2023 86,926.65 215,000 5.34 ] 00 2024 I14,4S6.00 300,(x� 5.37 100 2025 140.587.20 390,000 5.39 ] 00 2026 163,425.60 480,000 5.41 100 2027 182,844.60 570,(xH) 5.44 100 2028 204.32925 675,000 5.46 ] 00 2029 244,136J0 855,000 5.48 100 2030 :i85,013.20 1,430.0(x) 5.50 100 2031 385,745.60 1,520,0(H) 5.52 100 2032 598,97O.SS 2,505,000 5.54 100 2033 578,022.40 2,560.000 5.55 I(H) 2034 560.66�.40 2,630.0(x) 5.56 100 12812-0003\1991535v4.doc C-1 1 APPENDIX D ESCROW SECURITIES I. 2017A Escrow Fund a. 2002 PAI F.scrow Account — On the Closing Date, the Escrow Agent shall use � of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of $ F,xpected Receipt at Maturity (including Principal principal and Securities Type Maturity Amount Coupon interest) b. 2003 PA1 F.scrow Account — On the Closing Date, the Escrow Agent shall use � of the moneys deposited to purchase the Escrow Securities identified below and hold the remainin� $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of $ Securities Type Principal Maturity Amount Coupon Expected Receipt at Maturity (including principal and interest) 1281?-0(H13\199153Sv4.doc c. 2004 PA1 Escrow Account — On the Closing Date, the Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of $ Principal Securities Type Maturity Amount Coupon Expected Receipt at Maturity (including principal and interest) d. 2002 PA2 Escrow Account — On the Closing Date, the Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of $ Principal Securities Type Maturity Amount Coupon Expected Receipt at Maturity (including principal and interest) e. 2003 PA2 Escrow Account — On the Closing Date, the Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining � as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of � Securities Type Maturity Principal Amount Coupon Expected Receipt at Maturity (including principal and interest) 12812-0003\1991S35v4.do� f. .1998 PA4 Escrow Account — On the Closing Date, the Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the rclated Refunding Requirement of $ Securities Type Maturity Principal Amount Coupon Expected Receipt at Maturity (including principal and interest) 1281 �-(H�3\199153Sv4.duc II. 2017B Escrow Fund a. 2006 PAl Escrow Account — On the Closing Date, the Escrow Agent shall use $ of the money5 deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of $ Principal Securities Type Maturity Amount Coupon Expected Receipt at Maturity (including principal and interest) b. 2003 PA2 Escrow Account — On the Closing Date, the Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of � Expected Receipt at Maturity (including Principal principal and Securities Type Maturity Amount Coupon interest) c. 2006A PA2 Escrow Account — On the Closing Date, the Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of � Expected Receipt at Maturity (including Principal principal and Securities Type Maturity Amount Coupon interest) I 28 I 2-0(H)3\ I 99 I 53S v4.duc d. 2006D PA2 Escrow Account — On the Closing Date, the Escrow Agent shall usc $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of $ Expected Receipt at Maturity (including Principal principal and Securities Type Maturity Amount Coupon interest) e. 2003 PA3 Escrow Accouitt — On the Closing Date, the Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of $ Expected Receipt at Maturity (including Principal principal and Securities Type Maturity Amount Coupon interest) f. 2006A PA3 Escrow Account — On the Closing Date, the Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identiCied below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plu� the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of � Expected Receipt at Maturity (including Principal principal and Securitics Type Maturity Amount Coupon interest) I?812-(H�3U991535v4.doc g. 2006B PA3 Escrow Account — On the Closing Date, the Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of $ Principal Securities Type Maturity Amount Coupon Expected Receipt at Maturity (including principal and interest) h. 2006C PA3 Escrow Account — On the Closing Date, the Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of $ Principal Securities Type Maturity Amount Coupon Expected Receipt at Maturity (including principal and interest) 2001 PA4 Escrow Account — On the Closing Date, the Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of � Securities Type Maturity Principal Amount Coupon Expected Receipt at Maturity (including principal and interest) I 28 I 2-0003\ 1991.5 3 S v 4. doc j. 2006A PA4 Escrow Account — On the Closing Date, the Escrow Agent shall use � of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of $ Expected Receipt at Maturity (including Principal principal and Securities Type Maturity Amount Coupon interest) k. 2006B PA4 Escrow Account — On the Closing Date, the Escrow Agent shall use $ of the moneys deposited to purchase the Escrow Securities identified below and hold the remaining $ as cash. The expected receipt at maturity of such Escrow Securities, plus the uninvested cash, will be sufficient to satisfy the related Refunding Requirement of � Expected Receipt at Maturity (including Principal principal and Securities Type Maturity Amount Coupon interest) 1'_'8 I 3-0(M1 �\ 1991515 v4.dor APPENDIX E Form of NOTICE OF DEFEASANCE with reference to PALM DESERT FINANCING AUTHORITY Tax Allocation Revenue Bonds & Tax Allocation Revenue Bonds described herein This Notice is being given on behalf of the Palm Desert Financing Authority (the "Authority") to the owners of the bonds identiiied in Exhibit I(the "Bonds"), issued pursuant to the Indentures of Trust (collectively, the "Indentures"), each by and between the Authority and U.S. Bank National Association, as successor trustee (the "Trustee"�. Pursuant to the Indentures, the lien with respect to the Bonds under the Indentures has been discharged through the irrevocable depo�it of cash and certain securities (consisting of non- callable United States Treasury Obligations) in escrow funds (the "Escrow Funds"), pursuant to a Non-Housing Bonds Escrow Agreement, dated as of January 1, 2017 (the "Escrow Agreement"), by and among the Authority, the Successor Agency to the Palm Desert Redevelopment Agency and the Trustee. Such deposit into the Escrow Funds has been calculated to provide sufficient moneys to pay the outstanding principal and unpaid accrued interest due on the Bonds to (and including) their respective final payment or redemption dates, as identified in Exhibit I. As a result of the deposit into the Escrow Funds, the Bonds are deemed to have been paid and defeased in accordance with the respective Indentures. Obligations of the Authority to the owners of the defeased Bonds are hereafter limited to the application of moneys in the Escrow Funds for the principal and interest payment (including redemption price, as applicable) on the Bonds as the same become due and payable as described above. Dated: , 2017 U.S. BANK NATIONAL AS50CIATION, as Trustee I 2812-0(x)3\ I 991 S35 v4.doc EXHIBIT I (to Notice of Defeasance) 1. Tax Allocation Refunding Revenue Bonds (Project Area No. l, As Amended), 2002 Series A, issued under Indenture of Trust, dated as of March 1, 2002 CUSIP* Date on which Remaining (Base: Principal will bc Maturity Date Principal Interest Rate 696617) Redeemed 4/ 1/2025 $] 0,905,000 S.00O�I� J L4 4/ I/2017 4/ 1/2030 11,165,000 5.100 JM 2 4/ 1/2017 2. Tax Allocation Revenue Bonds (Project Area No. 1, As Amended), Series 2003, issued under Indenture of Trust, dated as of July 1, 2003 CUS1P* Date on which Remaining (Base: Principal will be Maturity Date Principal Interest Rate 696617) Redeemed 4/ 1/2026 $3,440,000 S.00O�k MG 1 4/ 1/2017 4/ 1/2027 3,610,000 5.000 MH9 4/ 1/2017 4/ 1/2030 5,610,000 5.000 MJ 5 4/ 1/2017 3. Tax Allocation Refunding Revenue Bonds (Project Area No. 1, As Amended), 2004 Series A, issued under Indenture of Trust, dated as of June 1, 2004 CUSIP* Date on which Remaining (Base: Principal will be Paid Maturity Date Principal Interest Rate 696617) or Redeemed 4/I/2017 $1,335,000 4.SOO�Ic MX4 4/1/2017 4/ 1/20 I 8 1,460,000 4.625 M Y2 4/ 1/2017 4/ 1/2019 1,420,000 5.000 M'L9 4/ 1/2017 4/ 1/2020 1,520,000 4.750 NA3 4/ 1/2017 4/ 1/2021 1,620,000 4.750 NB 1 4/ 1/2017 4/ I/2022 1,695,000 5.000 NC9 4/ 1/2017 4/ 1/2023 205,000 5.000 N07 4/ 1/2017 4/ 1/2024 2,255,000 5.000 NES 4/ 1/2017 4/ 1/2025 1,260,000 5.000 NF2 4/ I/2017 � Neit{ier the Authoritv nor the Tru,stee shall be helcl responsible for the selection or use of the CUSIP n�unher, nor is uny representcition mude u.c tn it.c correctness. !t i.r incluclecl solely for ennvenienre of the o�cfiers of'the Bonds. Exhibit I-1 I?8 l Z-0(xl3\ I 991535 v4.doc 4. Tax Allocation Revenue Bonds (Project Area No. 1, As Amended), 2006 Series A, issued under Indenture of Trust, dated as of July 1, 2006 CUSIP* Date on which Remaining (Base: Principal will be Paid Maturity Date Principal Interest Rate 696617) or Redeemed 4/ 1/2017 $1,000,000 S.00O�I� NGO 4/ 1/2017 4/ 1/2018 1,005,000 5.250 NH8 4/ 1/2017 4/ 1/2019 5,065,000 5 250 NJ4 4/ 1/2017 4/1/2020 5,285,000 5.250 NK1 4/1/2017 4/ 1/2022 11,365,000 5.000 NM7 4/ 1/2017 4/1/2023 7,690,000 5.000 NNS 4/1/2017 4/ 1/2024 960,000 5.000 NPO 4/ 1/2017 4/ 1/2025 1,000,000 5.000 NQ8 4/ 1/2017 4/1/2026 3,335,000 5.000 NR6 4/1/2017 4/ 1/2027 250,000 4.700 NS4 4/ 1/2017 4/ 1/2028 260,000 4.700 NT2 4/ 1/2017 4/ 1/2029 275,000 4.750 NU9 4/ 1/2017 4/ 1/2030 290,000 4.750 NV 7 4/ 1/2017 5. Tax Allocation Refunding Revenue Bonds (Project Area No. 2), 2002 Series A, issued under Indenture of Trust, dated as of June l, 2002 CUSIP* Date on which Remaining (Base: Principal will be Maturity Date Principal Interest Rate 696617) Redeemed 8/1/2017 $995,000 4JSO�Ic KC2 2/1/2017 8/ 1/2018 1,050,000 4.750 KDO 2/ 1/2017 8/ 1/2019 1,100,000 4.800 KE8 2/ 1/2017 8/ 1/2020 1,160,000 5.000 K FS 2/ 1/2017 8/ 1/2021 1,230,000 5.000 KG3 2/ 1/2017 8/ 1/2022 1,280,000 5.000 KH 1 2/ 1/2017 * Neither the Authoriry nnr the Trustee sha[l be held responsible for the selection nr use of the CUS/P number, nor is any repre.ti�entution made as to its correctness. It is included solely jor convenience of the owners of'the Bonds. Exhibit I-2 1 28 1 2-0003\1991 Si5v4.doc 6. Tax Allocation Revenue Bonds (Project Area No. 2), Series 2003, issued under Indenture of Trust, dated as of March 1, 2003 CUSIP* Date on which Remaining (Base: Principal will bc Maturity Date Principal Interest Rate 696617) Redecmed 8/1/2023 $875,000 4.5009� LF4 2/I/2017 8/ 1/2024 91 O,d00 4.500 LG2 2/ 1/2017 8/ 1/2026 2,485,000 4.625 LHO 2/ I/2017 8/ 1/2033 11,475,000 5.000 LJ6 2/ 1/2017 7. Tax Allocation Refunding Revenue Bonds (Project Area No. 2), 2006 Series A, issued under Indenture of Trust, dated as of July 1, 2006 CUSIP* Date on which Remaining (Base: Principal will be Maturity Date Principal Interest Rate 696617) Redeemed 8/1/2017 $810,000 4.250�I� PS2 2/1/2017 8/ 1/2018 840,000 4.500 PTO 2/ 1/2017 8/ 1/2019 880,000 4.500 PU7 2/ 1/2017 8/ 1/2020 915,000 4.500 PV 5 2/ 1/2017 8/1/2021 950,000 4.500 PW3 2/1/2017 8/ 1/2022 1,005,000 4.625 PX 1 2/ 1/2017 8/ 1/2023 1,520,000 4.625 PY9 2/ 1/2017 8/ 1/2024 1,600,000 4.750 PZ6 2/ I/2017 8/ 1/2025 1,485,000 4.750 QAO 2/ 1/2017 8/1/2026 1,415,000 4.750 QB8 2/1/2017 8/ 1/203 I 8,225,000 4.900 QC6 2/ 1/2017 8/1/2036 16,865,000 5.125 QD4 2/I/2017 * Neither the Authority nnr the Trustee shul/ he held responsihle for the selection vr u.se nf' the CUS/P number, nor is uny representution mude us to its correctnes.s. It is includect solely for convenience of'the a�ti•ners of the Bo�uls. Exhibit i-3 I?812-0(x)3\ 1991 S i 5�.i.doc 8. Subordinate Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 2), 2006 Series D, issued under Indenture of Trust, dated as of July 1, 2006 Accreted Value Yield to CUSIP* Date on which as of Maturity Initial Maturity (Base: Bonds will be Redemption Date Principal Date 696617) Redeemed Date 8/ 1/2017 $489,413.85 5.450% RP6 2/ 1/2017 8/ 1/2018 522,178.80 5.650 RQ4 2/ 1/2017 8/1/2019 556,998.15 5.750 RR2 2/1/2017 8/1/2020 583,801.50 5.850 RSO 2/1/2017 8/1/2021 601,1SS.50 S.9S0 RT8 2/1/2017 8/1/2022 622,659.75 6.000 RUS 2/1/2017 8/1/2023 640,715.40 6.010 RV3 2/1/2017 8/1/2024 656,046.80 6.020 RW1 2/l/2017 8/1/2025 668,837.70 6.030 RX9 2/1/2017 8/ 1/2026 679,171.80 6.040 RY7 2/ 1/2017 8/ 1/2027 400,036.00 6.050 RZ4 2/ 1/2017 8/ 1/2028 3 80,111.45 6.060 S A 8 2/ 1/2017 8/ 1/2029 345,925.00 6.070 SB6 2/ 1/2017 8/1/2030 339,324.70 6.080 SC4 2/1/2017 8/1/2031 333,310.25 6.090 SD2 2/1/2017 8/1/2032 326,726.40 6.100 SEO 2/1/2017 8/1/2033 320,498.75 6.100 SF7 2/1/2017 8/ 1/2034 3 I 6,652.60 6.100 SGS 2/ 1/2017 8/1/2035 362,896.75 6.100 SH3 2/1/2017 9. Tax Allocation Revenue Bonds (Project Area No. 3), Series 2003, issued under Indenture of Trust, dated as of July 1, 2003 CUSIP* Date on which Remaining (Base: Principal will be Paid Maturity Date Principal Interest Rate 696617) or Redeemed 4/ 1/2017 $130,000 4.2009� LY3 4/ 1/2017 4/ 1/2018 140,000 4.300 L"LO 4/ 1/2017 4/ I/2019 145,000 4.350 MA4 4/ 1/2017 4/ 1/2020 150,000 4.450 M B 2 4/ 1/2017 4/ 1/202 l 155,000 4.550 MCO 4/ 1/2017 4/ 1/2022 165,000 4.600 MD8 4/ 1/2017 4/ 1/2023 170,000 4.650 ME6 4/ 1/2017 4/1/2033 2,270,000 S.125 MF3 4/1/2017 * Neither the Authority nor the Trustee shall be held responsible for the selection or use of the CUSIP numher, nor is uny representution mude us to its cnrrectness. /t is included solely f'or convenience of the ori•ners of the Bonds. Exhibit I-4 I 2R I 2-0003\ 1991535 v4.doc 10. Tax Allocation Revenue Bonds (Project Area No. 3), 2006 Series A, issued under Indenture of Trust, dated as of July 1, 2006 CUSIP* Date on which Remaining (Base: Principal will be Paid Maturity Date Principal Interest Rate 696617) or Redeemed 4/1/2017 $220,000 4.250�I� SS9 4/1/2017 4/ 1/2018 225,000 4.500 ST7 4/ 1/2017 4/ 1/2019 240,000 4.500 SU4 4/ 1/2017 4/ 1/2022 250,000 4.625 S V 2 4/ 1/2017 4/ 1/2023 265,000 4.625 S WO 4/ I/2017 4/ 1/2024 275,000 4.750 S X8 4/ 1/2017 4/ 1/2025 285,000 4.750 S Y6 4/ 1/2017 4/ 1/2036 4,465,000 4.750 SZ3 4/ 1/2017 4/ 1/2041 4,470,000 5.000 TA7 4/ 1/2017 11. Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 3), 2006 Series B, issued under Indenture of Trust, dated as of July 1, 2006 Accreted Value Yield to CUSIP* Date on which as of Maturity Initial Maturity (Base: Bonds will be Redemption Date Principal Date 696617) Redeemed Datc 4/ 1/2020 $122,040.00 5.310�I� TBS 4/ 1/2017 4/ I/2021 115,147.50 5.350 TC3 4/ 1/2017 4/ 1/2027 102,135.60 5.520 TD 1 4/ 1/2017 4/ 1/2028 44,336.65 5.540 TE9 4/ 1/2017 * Neither the Aut{tority nor the Tru.stee shall be held responsihle for the selection or erse of the CUSIP number, nor i.s uny representatinn made us tn its correctne.s.s. It i.c inclucled sole/y for convenience r�f the o�cners of the Boncls. Exhibit I-5 I 2813-0W3\ 1991 S3S c4.doc 12. Subordinate Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 3), 2406 Series C, issued under Indenture of Trust, dated as of July 1, 2006 Accreted Value Yield to CUSIP* Date on which as of Maturity Initial Maturity (Base: Bonds will be Redemption Date Principal Date 696617) Redeemed Date 2017 $109,786.95 5.450�I� TP4 4/1/2017 2018 119,954.20 5.650 TQ2 4/1/2017 2019 129,115.95 5.750 TRO 4/ 1/2017 2020 138,561.50 5.850 TS8 4/1/2017 2021 143,741.80 5.950 TT6 4/ 1/2017 2022 150,354.60 6.000 TU3 4/1/2017 2023 147,078.25 6.010 TV 1 4/1/2017 2024 143,639.40 6.020 TW9 4/1/2017 2025 141,715.10 6.030 TX7 4/1/2017 2026 137,936.65 6.040 TYS 4/1/2017 2027 135,533.55 6.050 TZ2 4/1/2017 2028 131,534.40 6.060 UAS 4/1/2017 2029 128,790.00 6.070 UB3 4/1/2017 2030 125,876.40 6.080 UC 1 4/ 1/2017 2031 122,823.00 6.090 UD9 4/1/2017 2032 1 19,660.80 6.100 UE7 4/ 1/2017 2033 116,707.60 6.100 UF4 4/1/2017 2034 1 1 1,793.20 6.100 UG2 4/ 1/2017 13. Tax Allocation Revenue Bonds (Project Area No. 4), Series 1998, issued under Indenture of Trust, dated as of March 1, 1998 CUSIP* Datc on which Remaining (Base: Principal will be Maturity Date Principal Interest Rate 696617) Redeemed 10/1/2017 $175,000 S.00O�I� HF9 4/1/2017 ]0/1/2028 2,020,000 5.200 HG7 4/1/2017 10/I/2028 4,475,000 5.200 HJl 4/1/2017 * Neither the Authority nor the Trustee shall be helct responsible for the selection or use of the CUS/P numher, nnr is any representation mude us tn it.r correctness. /t is included solely for convenience of the owners of the Bonds. Exhibit I-6 128I 2-OW 3\ 1991535v4.doc 14. Tax Allocation Revenue Bonds (Project Area No. 4), Series 2001, issued under Indenture of Trust, dated as of November l, 2001 CUSIP* Date on which Remaining (Base: Principal will be Maturity Date Principal Interest Rate 696617) Redeemed 10/1/2017 $260,000 4.400"/� JA8 4/1/2017 10/1/2018 275,000 4.500 JB6 4/1/2017 10/ 1/2019 285,000 4.550 JC4 4/ 1/2017 10/1/2020 295,000 4.600 JD2 4/1/2017 10/ I/2021 305,000 4.650 JEO 4/ 1/2017 10/ 1/2022 1,155,000 4.700 JF7 4/ 1/2017 10/ 1/2022 315,000 4.700 J H 3 4/ 1/2017 10/ I/2031 2,440,000 4.800 JJ9 4/ 1/2017 10/ 1/2031 6,045,000 4.800 J K6 4/ 1/2017 15. Tax Allocation Refunding Revenue Bonds (Project Area No. 4), 2006 Series A, issued under Indenture of Trust, dated as of July 1, 2006 CUSIP* Date on which Remaining (Base: Principal will be Maturity Date Principal Interest Rate 696617) Redeemed ] 0/ 1/2018 $270,000 4.4007� UU 1 4/ 1/2017 10/ 1/2019 300,000 4.400 U V 9 4/ 1/2017 10/ I/2020 125,000 4.450 U W 7 4/ 1/2017 10/ 1/2021 300,000 4.500 UXS 4/ 1/2017 10/ 1/2022 575,000 4.500 UY3 4/ 1/2017 10/ 1/2023 600,000 4.500 UZO 4/ 1/20 I 7 10/ 1/2024 635,000 4.500 V A4 4/ 1/2017 10/1/2025 665,000 4.550 VB2 4/1/2017 10/ 1/2026 695,000 4.600 VCO 4/ 1/2017 10/ 1/2029 2,200,000 5.000 C D8 4/ 1/2017 10! 1 f 2034 4,255,000 5.000 V E6 4/ 1/2017 * Neither the Authoritv nnr the Trustee shull be he[d respon.sihle for the selection or use of� the CUS/P number, nnr is uny representutioft made u.r to its correctness. It is inclucled snlely for convenience of the o�ti�ners nf the Bon�ls. Exhibit I-7 I 28 I 2-0(Hl3\ 1991535 v4.doc 16. Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 4), 2006 Series B, issued under Indenture of Trust, dated as of July 1, 2006 Accreted Value Yield to CUSIP* Date on which as of Maturity Initial Maturity (Base: Bonds wiil be Redemption Date Principal Date 696617) Redeemed Date 10/ 1/2017 $106,489.70 S.00�I� WGO 4/ 1/2017 10/1/2019 38,167.50 5.19 WH8 4/1/2017 10/1/2020 168,052.50 5.24 VQ9 4/1/2017 10/ 1/2021 124,646.50 5.28 V R7 4/ 1/2017 10/1/2022 49,244.15 5.31 VSS 4/1/2017 10/ 1/2023 86,926.65 5.34 VT3 4/ 1/2017 10/ 1/2024 114,456.00 5.37 V UO 4/ 1/2017 10/1/2025 140,587.20 5.39 VV8 4/1/2017 10/1/2026 163,425.60 5.41 VW6 4/1/2017 10/ 1/2027 182, 844.60 5.44 V X4 4/ 1/2017 10/1/2028 204,32925 5.46 VY2 4/1/2017 10/ 1/2029 244,136.70 5.48 V Z9 4/ 1/2017 10/V2030 385,013.20 5.50 WA3 4/1/2017 10/1/2031 385,745.60 5.52 WB1 4/1/2017 10/1/2032 598,970.55 5.54 WC9 4/1/2017 10/1/2033 578,022.40 5.55 WD7 4/1/2017 10/1/2034 560,663.40 5.56 WES 4/1/2017 * Neither the Authority nor the Trustee shall he held responsible for the selection or use of the CUSIP number, nor is any representution made as to its correctness. /t is included solely for cnnvenience of the ow•ners of the Bonds. Exhibit I-8 12812-0003\1991535v4.dcx Maturity Date (October 1) $ SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS $ * Tax Allocation Refunding Bonds 2017 Series A MATURITY SCHEDUI�E Principal Amount Interest Rate Yield Price �I: Term Bond Maturing . 20_ Yield Taxable Tax Allocation Refunding Bonds 2017 Series B Maturity Date Principal (October 1) Amount Interest Rate Yield �I� Term Bond Maturing , 20_ Yicld CUSIPa'� %, Pricc: , CUSIPt+: Price CUSIP`' �I�, Price: , CUSIP?t: Prcliminary, subjcct to change. " Copyright 2017, American Bankers Association. CUSIPOO is a registered trademark of thc Amcrican Bankers Association. CUSIP data contained in the Oflicial Statement is provided by CUSIP Glohal Services Bureau, operated by Standard & Poor's. This data is not intended to crcate a d�tabasc and docs not serve in any way as a substitute for CUSIP Global Serviccs. CUSIP numbers have been assigned by an independent company not affiliated with the Successor Agency and are included solely for the convenience of the holdcrs of the Bonds. Nonc of the Successor Agency, the Fin�ncial Advisor or the Underwriter takes any retiponsibility for the selection or uses of these CUSIP numbers, and no representation is madc as to their correc[ness on the Bonds or as included in the Of�cial Statement. The CUSIP number for a specitic maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other simil�r cnhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS CITY COUNCIL AND SUCCESSOR AGENCY GOVERNING BOARD Jan Harnik, Mayor` Sabby Jonathan, Mayor Pro Tem* Kathleen Kelly, Council Member-elect Gina Nestande, Council Member-elect Susan Marie Weber, Council Member SUCCESSOR AGENCY/CITY STAFF Lauri Aylaian, Executive Director/City Manager Janet Moore, Finance Officer/Finance Director Veronica Tapia, Senior Management Analyst Rachelle D. Klassen, Secretary/City Clerk PROFESSIONAL SERVICES Bond Counsel Richards Watson & Gershon, A Professional Corporation Los Angeles, California Disclosure Counsel Best Best & Krieger LLP Riverside, California Municipal Advisor Del Rio Advisors, LLC Modesto, California Fiscal Consultant Keyser Marston Associates, lnc. Loti Angeles, California Trustee and Escrow Agent U.S. Bank National Association Los Angeles, California Veri6cation Agent Grant Thornton LLP Minneapolis, Minnesota " Suhject to City Council reorganization after election ccrtitication on December 8, 2016. GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT No Offering May Be Made Except by this Official Statement. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized. No Unlawful Offers or Solicitations. This Official Statement docs not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualiticd to do so or to any person to whom it is unlawful to make such offcr or solicitation. Effective Date. This Official Statement speaks only as of' its date and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Of'ticial Statement nor any sale of the Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the Successor Agency or the Redevelopment Project since the date of this Ofticial Statemcnt. Use of this Official Statement. This Official Statement is submitted in connection with the sale of the Bonds refened to in this Official Statement and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract with the purchasers of the Bonds. Preparation of this OJficiat Statement. The information contained in this Ofiicial Statement has becn obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. The information and expressions of opinions in the Official Statement are subject to change without notice and neither the delivery of this Official Statement nor any sale of Bonds shall, under any circumstances, create any implication that there has been no change in the affairs of the Successor Agency since its date. This Official Statement is submitted in connection with the sale of the Bonds and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the Successor Agency. All summaries of the Bonds, the Indenture and other documents, are made subject to the provisions of such documents and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the Successor Agency for further information. See "INTRODUCTION - Summary Not Definitive." The Underwriter has provided the following sentence for inclusion in this Official Statcment: The Undenvriter has reviewed thc information in this Official Statement in accordance with, and as part of, its res�nsibilitics to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwnter does not guarantee the accuracy or completeness of such information. Stabilization of and Changes to Offering Prices. The Underwriter may overallot or take other steps that stabilize or maintain thc market price of the Bonds at levels above that which might otherwise prevail in the open market. If commenced, the Underwriter m�y discontinue such market stabilization at any time. The Underwriter may offer and sell the Bonds to certain dealcrs, dealer banks and banks acting as agent at prices lower than the public offering priccs stated on the inside cover pages of this Official Statement, and those public offerine prices may be changed from time to time by the Underwriter. Bonds are Exempt from Securities Laws Registration. Thc Bonds have not been registcrcd undcr the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for thc issuance and sale of municipal securities provided under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(12) of the Securitics Exchange Act of 1934. Estimates and Projections. Certain statements included or incorporated by reference in this Official Statement constitutc "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21 E of the United Statcs Securities Exchange Act of 1)34, as amended, and Section 27A of the United S�ates Securities Act of 1933, as amended. Such st�tements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "budget" or other similar words. THE ACHIEVEMENT OF CERTAIN RF,SUI,TS OR OTHER EXPECTATI0�1S CO:VTAINED IN SUCH FORWARD- LOOKING STATEMENTS INVOI,VE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESUI,TS, PERFOR'�IANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFF,RENT FROM ANY FUTURF. RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. WHILE THE SUCCESSOR AGENCY HAS AGREED TO PROVIDE CERTAIN ON-GOING FINANCIAL AND OTHER DATA PURSUANT TO A CONTINUING DISCLOSURE CERTIFICATE (SEE "CONCI.UDING INFORMATION — Continuing Disclosure"). THE SUCCESSOR AGENCY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD- LOOKING STATEMENTS IF OR WHF,N ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS AR� BASED OCCUR. Website. The City of Palm Dcsert maintains an Internct website, but the information on the website is not incorporated in this Ofiicial Statement. TABI.E OF CONTENTS INTRODUCTIOIV ........................................... The Successor Agency and the Former Agency.................................................. TheCity ...................................................... Authority and Purpose ................................ Tax Allocation Financing Under the Dissolution Act ..................................... The Redevelopment Project Areas ............. Security for the Bonds ................................ Municipal Bond Insurance ......................... Legal Matters ............................................. Professional Services ................................. Offering of the Bonds ................................. Summary Not Definitive ............................ THE FINANCING PLAN ............................... The Refunding Plan .................................... Estimated Sources and Uses of Funds ....... THE: BONDS ................................................... General Provisions ..................................... Redemption................................................ Scheduled Debt Service on the Bonds ....... SECURITY FOR THE BONDS ..................... Tax Allocation Financing ........................... Tax Revenues ............................................. Pledged Tax Revenues ............................... Redevelopment Property Tax Trust Fund...................................................... Recognized Obligation Payment Schedules.............................................. Reserve Account ........................................ No Additional Dcbt Other Than Refunding Bonds .................................. PROPERTY TAXATION IN CALIFORNIA .................................... THE SUCCESSOR AGEIVCY ........................ Government Organization .......................... Successor Agency Powers .......................... Uissolution Act Milcstones ........................ Successor Agency Accounting Records and Financial Statements ...................... Stipulation Agreement ............................... Plan Limitations ......................................... THE PROJECT AREAS ................................. Description of the Project Areas ................ LandUse .................................................... Assessed Valuations and Tax Revenues .... Major Taxpayers ........................................ Assessment Appeals ................................... Yass-Through Agrecmcnts ......................... Statutory Tax Sharing Payments ................ ...... 1 .... 1 .... 2 .... 2 ...... 4 ...... 4 ...... 5 ...... 6 ...... 6 ...... 6 ...... 6 ...... 7 ...... 8 ...... 8 .... ] 0 .... 11 .... 1 1 .... 12 .... 1 S .... 16 .... 16 .... 16 .... 17 17 �r 21 .. 22 .. 24 .. 24 .. 25 .. 25 ... 25 ... 26 ... 27 ... 28 ... 28 ... 29 ... 30 ... 31 ... 32 ... 32 ... 33 Outstanding Indebtedness ...................... TAX REVENUES AND DEBT SERVICE COVERAGE .................................. RISK FACTORS ........................................ Factors Which May Affect Tax Revenues .......................................... LEGAL MATTERS .................................... Enforceability of Remedies ................... Approval of Legal Proceedings ............. Tax Matters ............................................ No Litigation ......................................... CONCLUDING INFORMATION ............. Ratings on the Bonds ............................. The Municipal Advisor .......................... Continuing Disclosure ........................... Underwriting .......................................... Additional Information .......................... References ............................................. Execution............................................... .......... 38 ..........42 ..........42 .......... 4:i .......... 43 ..........48 .......... 48 .......... 48 .......... 48 .......... 48 .......... 49 .......... 49 ..........49 ..........49 APPEIVDIX A- SUMMARY OF CERTAIN PROViSIONS OF THE INDENTURE ................................... APPENDIX B- CITY OF PALM DESERT INFORMATION .............................. APPENUiX C - FISCAL CONSULTANT'S REPORT .......................................... APPENDIX D- CITY OF PALM DESERT AUDITED FINANC[AL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 ....... APPENDiX E- FORM OF CONTINUING DISCLOSURE CERTIFICATE....... APPENll1X F- PROPOSED FORMS OF BOND COUNSEL OPINIONS........ APPENDIX G - THE BOOK-ENTRY SYSTEM ......................................... 33 ..... 34 ..... 38 A-1 B-1 C-1 r�- � E-1 .F-1 G-1 � REGIONAL MAP [TO COME] MAP OF PROJECT AREAS [TO COME] OFFICIAL STATEMENT SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS $ � $ � Successor Agency to the Palm Desert Successor Agency to the Palm Desert Redevelopment Agency Redevelopment Agency Tax Allocation Refunding Bonds Taxable Tax Allocation Refunding Bonds 2017 Series A 2017 Series B This Official Statement, which includes the cover page, inside cover pages and appendices (the "Ofiicial Statement"), is provided to furnish certain information concerning the sale of the Successor Agency to the Palm Desert Redevelopment Agency Tax Allocation Refunding Bonds, Series 2017 A(Tax-Exempt) ("2017 Series A Bonds") and Taxable Tax Allocation Refunding Bonds, 2017 Series B Bonds (Federally Taxable) ("2017 Series B Bonds," and together with the 2017 Series A Bonds, the "Bonds"). INTRODUCTION This Introduction contains only a brief description of this issue and does not purport to be complete. The Introductinn is subject in ull respects to more complete information in the entire O�cial Statement and the offering of the Bonds to potential investors is made only by meuns of the entire O�ciul Statement und the documents summarized in the Official Statement. Potential investors must reud the entire Official Statement to obtuin information essential to the making of an informed investment decision (see "R/SK Ff1CTORS"). For definitions of certain capitali;.ed terms used in the Off-rcial Statement and not otherwise defined, and the terms reluting to the Bonds, see the summary included in APPEND/X A-"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE. " The Successor Agency and the Former Agency The Palm Desert Redevelopment Agency (the "Former Agency") was established in 1974 by the City Council (the "City Council") of the City of Palm Desert (the "City") pursuant to the Community Redevelopment Law (the "Redevelopment Law"), constituting Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State of California (the "State"). In June 2011, Assembly Bill No. 26 ("AB Xl 26") was enacted as Chapter 5, Statutes of 201 1, together with a companion bill, Assembly Bill No. 27 ("AB X1 27"). A lawsuit was brought in the California Supreme Court, California Redevelopmen[ Association, et al. v. Matosantos, et al., 53 Cal. 4th 231 (Cal. 2011), challenging the constitutionality of AB X 1 26 and AB X 1 27. In its December 29, 2011 decision, the California Supreme Court largely upheld AB X 1 26, invalidated AB X 1 27, and held that AB X 1 26 may be severed from AB X 1 27 and enforced independently. As a result of AB X 1 26 and the decision of the California Supreme Court in the California Redevelopment Association case, as of February 1, 2012, all redevelopment agencies in the State were dissolved, including the Former Agency, and successor agencies were designated as successor entities to the former redevelopment agencies to expeditiously wind down the affairs of the former redevelopment agencies. The primary provisions enacted by AB X l 26 relating to thc dissolution and wind down of former redevelopment agency affairs are Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code of the State. There have been multiple amendments to Parts 1.85 since its original enactment, including those pursuant to Assembly Bill No. 1484 ("AB 1484"), enacted in June 2012 as Chapter 26, Statutes of 2012, and Senate Bill No. 107 ("SB 107") enacted in September 2015, as Chapter 325, Statutes of 2015. The provisions of Parts 1.8 and 1.85 as amended, is « Preliminary, subject to change. referred to in this Official Statement as the "Uissolution Act." The Redevelopment Law, as amended by the Dissolution Act, is sometimes referred to in the Official Statement as the "Law." Pursuant to Section 34173 of the Dissolution Act, the City Council adopted Resolution No. 201 1-76 on August 2S, 2011, electing for the City to serve as the Successor Agency to the Palm Uesen Redevelopment Agency (the "Successor Agency"). Since the February 1, 2012 dissolution of the Former Agency, the Successor Agency was established. The Successor Agency is governed by a five-member Board of Directors consisting of the Mayor and the members of the City Council. The Mayor acts as the chair of the Successor Agency. See "THE SUCCESSOR AGENCY." Section 34173(g) of the Dissolution Act expressly affirms that the Succetsor Agency is a separate public entity from the City, that the two entities shall not merge, and that the liabilities of the Former Agency will not be transferred to the City nor will the assets of the Former Agency become assets of the City. See "THE SUCCESSOR AGENCY." The City The City of Palm Desert (the "City") is located in the County of Riverside (the "County") within the area known as the Coachella Valley. The City is situated approximately midway between the cities of Indio and Palm Springs, 1 17 miles east of Los Angeles, 1 18 miles northeast of San Diego and S 15 miles southeast of San Francisco. According to the State Department of Finance, the City population as of January 1, 2016 was approximately 49,355. The Bonds are not an obligation of the City. For certain information with respect to the City, see APPENDIX B—"CITY OF PALM DESERT INFORMATION." Authority and Purposc The Bonds are being issued pursuant to the Constitution and laws of the State, including Article i 1 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Ti[le S of the Government Code of the State (the "Refunding Law"), the Law and an Indenture dated as of January 1, 2017 (the "Indenture") by and between the Successor Agency and U.S. Bank National Association, as trustee (the "Trustee"). The Agency entered into certain loan agreements (the "Prior Loans") with the Palm Desert Financing Authority (the "Authority") to finance and refinance redevelopment projects of the Former Agency. The Authority issued bonds to fund such loans. The 2017 Series A Bonds are being issued to prepay certain of the Prior Loans incurred by the Former Agency and cause a corresponding defeasance of the following bonds issued by the Authority (collectively, the "2017 Series A Refunding Bonds"): • $22,070,000 Tax Allocation Refunding Revenue Bonds (Yroject Area No. l, As Amended) 2002 Series A(the "PA 1 2002 Serics A Bonds"), which are outstanding in the principal amount of �22,070,000; • $19,000,000 Tax Allocation Revenue Bonds (Project Area No. 1, As Amended) Series 2003 (the "PA 1 Series 2003 Bonds"), which are outstanding in the principal amount of $12,660,000; • $24,945,000 Tax Allocation Refunding Revenue Bonds (Project Area No. 1, As Amended) 2004 Series A(the "PA 1 2004 Series A Bonds"), which are outstanding in the principal amount of $12,770,000; • $17,310,000 Tax Allocation Refunding Revenue Bonds (Project Area No. 2) 2002 Series A(the "PA 2 2002 Series A Bonds"), which are outstanding in the principal amount of $6,815,000; • $15,745,000 Tax Allocation Revenue Bonds (Project Area No. 2), Series 2003 but solely: (i) $169,400 of the principal maturing on August 1, 2023, (ii) $176,176 of the principal maturing on August l, 2024, (iii) $481,096 of the principal maturing on August I, 2026, and (iv) $2,221,560 of the principal mawring on August 1, 2033 (the "PA 2 Series 2003(A) Bonds"); and 2 • $11,020,000 Tax Allocation Revenue Bonds (Project Area No. 4) Series 1998 (the "PA 4 Series 1998 Bonds"), which are outstanding in the principal amount of $6,670,000. The 2017 Series B Bonds are being issued to prepay certain of the Prior Loans incurred by the Former Agency relating to the Authority's and cause a corresponding defeasance of the following bonds issued by the Authority (collectively, the "2017 Series B Refunded Bonds"): � $37,780,000 Tax Allocation Revenue Bonds (Project Area No. 1, As Amended) 2006 Series A(the "PA 1 2006 Series A Bonds"), which are outstanding in the principal amount of $37,380,000; •$15,745,000 Tax Allocation Revenue Bonds (Project Area No. 2), Series 2003 but solely: (i) $705,600 of the principal maturing on Augus[ 1, 2023, (ii) $733,824 of the principal ma[uring on August 1, 2024, (iii) $2,003,904 of the principal maturing on August 1, 2026, and (iv) $9,253,440 of the principal maturing on August 1, 2033 ([he "PA 2 Series 2003(B) Bonds"); • $41,340,000 Tax Allocation Refunding Revenue Bonds (Project Area No. 2), 2006 Series A(the "PA 2 2006 Series A Bonds"), which are outstanding in the principal amount of $36,510,000; • $16,936,094.60 Subordinate Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 2) 2006 Series D(the "PA 2 2006 Series D Bonds"), which are outstanding in the principal amount of $16,922,514� �'; • $4,745,000 Tax Allocation Revenue Bonds (Project Area No. 3), Series 2003 (the "PA 3 Series 2003 Bonds"), which are outstanding in the principal amount of $3,325,000; •$11,915,000 Tax Allocation Revenue Bonds (Project Area No. 3), 2006 Series A(the "PA 3 2006 Series A Bonds"), which are outstanding in the principal amount of $10,695,000; • $383,659.75 Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 3) 2006 Series B (the "PA 3 2006 Series B Bonds"), which are outstanding in the principal amount of $670,857�"; • $2,760,866.35 Subordinate Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 3) 2006 Series C(the "PA 3 2006 Series C Bonds"), which are outstanding in the principal amount of $4,362,076�� ; • $15,695,000 Tax Allocation Revenue Bonds (Project Area No. 4), Series 2001 (the "PA 4 Series 2001 Bonds"), which are outstanding in the principal amount of $11,375,000; • $14,610,000 Tax Allocation Refunding Revenue Bonds (Project Area No. 4) 2006 Series A(the "PA 4 2006 Series A"), which are outstanding in the principal amount of $10,620,000; and • $4,633,089.30 Tax Allocation Revenue Capital Appreciation Bonds (Project Are No. 4) 2006 Series B (the "PA 4 2006 Series B Bonds"), which are outstanding in the principal amount of $7,271,343�"; and See "THE FINANCING PLAN." Following the issuance of the Bonds, the following tax allocation bonds of the Former Agency will remain outstanding and payable from Tax Revenues on a senior basis to the Bonds: • $32,600,000 Tax Allocation Refunding Revenue Bonds (Project Area No. 1, As Amended) 2007 Series A(the "PA 1 2007 Series A Bonds" or the "Senior Bonds"), which are outstanding in the principal amount of $7,250,000 with a final maturity date of April 1, 2018. � Based on a January 17, 2017 redemption datc. The loan agreement which relates to the Senior Bonds is referred to as the "Senior Loan Agreement." The loan described in the Senior Loan Agreement is referred to as the "Senior Loan." See "SECURITY FOR THE BONDS" and "THE PROJECT AREAS - Outstanding Indebtedness." Additionally, certain pass-through payments pursuant to negotiated tax sharing agreements and tax sharing statutes are payable on a senior basis to the PA 1 2007 Series A Bonds and the Bonds. See "THE PROJECT AREAS — Pass-Through Agrcements" and "- Statutory Tax Sharing Payments." Tax Allocation Financing Under the Dissolution Act Prior to the enactment of AB X 1 26, the Redevelopment Law authorized the financing of redevelopment projects through the use of tax increment revenues. This method provided that the taxable valuation of the property within a redevelopment project area on the property tax roll last equalized prior to the effective date of the ordinance which adopted the redevelopment plan (or with respect to a later added component area of a project area, the effective date of the ordinance adopting the amendmen[ to the redevelopment plan) became the base year valuation. Assuming the taxable valuation never drops below the base year level, the Taxing Agencies, as defined in the Official Statement, thereafter received that portion of the taxes produced by applying then current tax rates to the base year valuation, and the redevelopment agency was allocated the remaining portion produced by applying then current tax rates to the increase in valuation over the base year. Such incremental tax revenues allocated to a redevelopment agency were authorized to be pledged to the payment of agency obligations. Under the Dissolution Act, moneys will be deposited from time to time in a Redevelopment Property Tax Trust Fund (the "Redevelopment Property Tax Trust Fund" or "RPTTF") held by a county auditor- controller with respect to a successor agency, which are equivalent to the tax increment revenues that were formerly allocated under [he Redevelopment Law to the redevelopment agency and formerly authorized under the Redevelopment Law to be used for the financing of redevelopment projects using current assessed values on the last equalized roll on August 20 each year. See "SECURITY FOR THE BONDS - Tax Allocation (=inancing" for additional information. The Uissolution Act provides that any bonds to be issued by the Successor Agency will be considered indebtedness incurred by the Former Agency, with the same legal effect as if the bonds had been issued prior to the effective date of AB X1 26, in full conformity with the applicable provision of the Redevelopment Law that existed prior to that date, and will be included in the Successor Agency's Recognized Obligation Payment Schedules (each a"Recognized Obligation Payment Schedule" or "ROPS") in accordance with the requirements of the Dissolution Act. See "SECURITY FOR THE BONDS Recognized Obligation Payment Schedules." The Redevelopment Project Areas There are four redevelopment project areas within the City which are identified below: • Project Area No. 1, as amended ("PA 1" or "Project Area No. 1") • Project Area No. 2("PA 2" or "Project Area No. 2") • Project Area No. 3("PA 3" or "Project Area No. 3") • Project Area No. 4("PA 4" or "Project Area No. 4") PA 1, PA 2, PA 3 and PA 4 are collectively hereinafter referred to as the "Project Areas," or e�ch individually a"Project Area." The Project Areas contain approximately 11,771 acres, which comprises approximately 68�Io of the total acres in the City. See "THE PROJECT AREAS" and "THE SUCCESSOR AGENCY" for additional information. 4 Security for the Bonds For the security of the Bonds, the Successor Agency grants a pledge of and lien on all of the Tax Revenues. "Tax Revenues" are defined under the Indenture as: (a) All property taxes deposited from time to time into the RPTTF (consisting of all property tax revenues that would have been allocated to the Former Agency pursuant [o subdivision (b) of Section 16 of Article XVI of the Constitution of the State and that are deposited and administered in accordance with the provisions of the Dissolution Act), but excluding the following amounts: (i) administrative costs of the County Auditor-Controller deducted as required by California Health and Safety Code Section 34183(a); (ii) amounts payable to affected taxing entities pursuant to the Law (including payments under California Health and Safety Code Sections 33676, 33607.5 or 33607.7 and the Pass-Through Agreements, as described in "THE PROJECT AREAS — Pass-Through Agreements"), except to the extent such payment to a taxing entity has been subordinated to the Bonds, (iii) the Housing Portion (as hereinafter defined), and (iv) amounts repayable by the Successor Agency with respect to the Senior Loan (including any reimbursement to the bond insurer for draws on the related bond insurance policy and the debt service reserve surety bond) pursuant to the terms of the Senior Loan Agreement. (b) In the event that the provisions of the Dissolution Act are invalidated because of a final judicial decision or a change in law, such that property tax revenues described above are no longer deposited into the RPTTF, then Tax Revenues shall mean all revenues derived from taxes levied on properties that would have been allocated to the Former Agency pursuant to Section 16(b) of Article XVI of the California Constitution, subject to the exclusions stated in paragraph (a) above, as such exclusions are then in effect pursuant to the law of such time. "Housing Portion" is defined in the Indenture as the portion of the property tax revenues required to be deposited by the County Auditor-Controller into the RPTTF that is equal to the dollar amount (the "Housing Set-Aside") that the Former Agency would have been required to deposit into the Low and Moderate Income Housing Fund (the "Housing Fund") pursuant to Sections 33334.2 and 33334.3 of the Redevelopment Law, if the Former Agency had not been dissolved and such provisions were applicable in each fiscal year that the Bonds remain outstanding. The Dissolution Act authorizes refunding bonds, including the Bonds, to be secured by a pledge of moneys deposited from time to time in the RPTTF. The Dissolution Act has eliminated the Housing Fund and the requirement to deposit the Housing Set-Aside into such fund. The moneys deposited into the RPTTF now include all property tax revenues, including amounts which would have been attributable to the Housing Set- Aside. With respect to the moneys deposited into the RPTTF, any amounts due under the Pass-Through Agreements and pursuant to tax sharing statutes will be paid prior to the payment of debt service on the Bonds; provided, however, see discussion under "SECURITY FOR THE BONDS — Redcvclopment Property Tax Trust Fund — Di.shursement from Recleve[npment Property Tax Trust Fund " regarding the treatment of subordinated pass-through payments in the event that there are insufficient Tax Revenues to make a debt service payment on the Bonds. On or about the same time that the Bonds will be issued, the Successor Agency plans to issue two other series of bonds (the "2017 Housing Refunding Bonds") to refund certain other outstanding debt incurred by the Former Agency. The 2017 Non-Housing Refunding Bonds, upon issuance, will be secured by a lien and pledge on moneys deposited into the RPTTF in an amount equal to the Housing Portion. DISCUSSIONS HEREIN REGARDING TAX REVENUES NOW REFER TO THOSE MONEYS DEPOSITED BY THE COUNTY AUDITOR-CONTROLLER INTO THE REDEVELOPMENT PROPERTY TAX TRUST FUND EQUAL TO SUCH TAX REVENUES. See "PROPERTY TAXATION IN CALIFORNIA" and "THE PROJECT AREAS - Pass-Through Agreements" and "- Statutory Tax Sharing Payments." The Successor Agency may not itisue additional bonds payable on a basis senior to the Bonds. The Successor Agency may issue additional bonds payable from Tax Revenues on parity with the Bonds ("Parity Obligations"), but solely to refinance the Bonds if certain condi[ions are satisiied. See "SECURITY FOR THE BONDS - No Additional Debt Other Than Refunding Bonds." The Successor Agency has covenanted to include in each ROPS the amounts required for debt service payments for the Bonds in the manner prescribed in the Indenture, and to transfer Tax Revenues to the Trustee for deposit into the Debt Service Fund at the times required by the Indenture. See "SECURiTY FOR THE BONDS." The Bonds do not constitute a debt or liability of the City, the County of Riverside (the "County"), the State or of any of its political subdivision, other than the Successor Agency. The Successor Agency shall only be obligated to pay the principal of the Bonds, or related interest, from the funds described in the Official Statement, and neither the faith and credit nor the taxing power of the City, the County or the State pledged to the payment of the principal of or the interest on the Bonds. The Successor Agency has no taxing power. Municipal Bond Insurance The Successor Agency has applied for a municipal bond insurance policy and will decide whether to purchase such policy in connection with the offering of the Bonds. Such information will be included in the Official Statement. Legal Matters The Bonds are being offered when, as and if issued, subject to the approval as to their legality by Richards Watson & Gershon, A Professional Corporation, Los Angeles, California, as Bond Counsel. Bond Counsel's proposed approving opinions, and certain tax consequences incident to the ownership of the Bonds, including certain exceptions to the tax treatment of interest, are described more fully under the heading "LEGAL MATTERS." Certain legal matters will be passed on for the Successor Agency by Best Best & Krieger LLP, as Disclosure Counsel, by Richards Watson & Gershon, A Professional Corporation, Los Angeles, California, as General Counsel to the Successor Agency, and for the Underwriter by their Counsel, Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California. Professional Services U.S. B�nk National Association will act as Trustee with respect to the Bonds. Del Rio Advisors, LLC, Modesto, California (the "Municipal Advisor") advised the Successor Agency as to the financial structure and certain other financial matters relating to the Bonds. Straddling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, will serve as Underwriter's Counsel. Offering of the Bonds Authority for Issuance. The Bonds are to be issued and secured pursuant to the Indenture, as authorized by Resolution Nos. SA-RDA-60 of the Successor Agency adopted on October 13, 2016, respectively, the Refunding Law and the Law. The Successor Agency's Oversight Board (the "Oversight Soard") approved the action taken by the Successor Agency to refinance the Refunded Bonds on October 17, 2016. The State Department of Finance approved the Oversight Board action by letter dated December 1, 2016. � Summary Not Definitive The summaries and references contained in the Official Statement with respect to the Indenture, the Bonds and other statutes or documents do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute, and references to the Bonds are qualified in their entirety by reference to the form thereof included in the Indenture. Copies of these documents may be obtained after delivery of the Bonds from the Successor Agency at 73510 Fred Waring Drive, Palm Desert, California 92260. THE FINANCINC PLAN The Refunding Plan Redemption of Refunded Bonds. On the Closing Date, a portion of the proceeds of each series of the Bonds will be transferred to the Trustee, as prior trustee, for the Refunded Bonds (the "Prior Trustee") for deposit into separate escrow accounts (together, the "Escrow Accounts") as provided for each series of Refunded Bonds, under a certain Non-Housing Bonds Escrow Agreement, dated as of January 1, 2017 (thc "Escrow Agreement") delivered by and among the Successor Agency, the Authority and the Prior Trustee. Most or all of the amount deposited in the Escrow Account for the 2017 Series A Refunded Bonds, together with other available moneys, will be invested in Escrow Securities as set forth in the Escrow Agreement. The moneys (including those derived from the Escrow Securities) in such Escrow Account are irrevocably pledged for the payment of the related 2017 Series A Refunded Bonds on their respective date of redemption as follows: • the $22,070,000 outstanding PA 1 2002 Series A Bonds will be redeemed in full on April 1, 2017 at a redemption price equal to 100°l0 of the principal amount of the PA 1 2002 Series A Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium; and • the $12,660,000 outstanding PA 1 2003 Series Bonds will be redeemed in full on April l, 2017 at a redemption price equal to 100% of the principal amount of the PA 1 Series 2003 Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium; and • the $12,770,000 outstanding PA 1 2004 Series A Bonds will be redeemed in full on April l, 2017 at a redemption price equal to 100�1c of the principal amount of the PA 1 2004 Series A Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium; and • the $6,815,000 outstanding PA 2 2002 Series A Bonds will be redeemed in full on February 1, 2017 at a redemption price equal to 100�7c of the principal amount of the PA 2 2002 Series A Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium; and • the $3,048,232 outstanding PA 2 2003(A) Series Bonds will be redeemed in full on February l, 2017 at a redemption price equal to 100�Ic of the principal amount of the PA 2 2003(A) Series Bond� to be redeemed toge[her with accrued interes[ thereon to the date fixed for redemption, without premium; and • the $6,670,000 outstanding PA 4 1998 Series A Bonds will be redeemed in full on April ], 2017 at a redemption price equal to 100% of the principal amount of the PA 4 1998 Series A Bonds to be redeemed together with accrucd interest thereon to the date fixed for redemption, without premium. The amount deposited in the Escrow Accounts for the 2017 Series B Refunded Bonds, together with other available moneys, will be invested in Escrow Securities as set forth in the Escrow Agreement and irrevocably pledged for the payment of the related 2017 Series B Refunded Bonds on thcir respective date of redemption as follows: the $37,780,000 outstanding PA 1 2006 Series A Bonds will be redeemed in full on April 1, 2017 at a redemption price equal to 100�Io of the principal amount of the PA 1 2006 Series A Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium; and • the $12,696,768 outstanding PA 2 Series 2003(B) Bonds will be redeemed in full on February 1, 2017 at a redemption price equal to 100�Ic of the principal amount of the PA 2 Series 2003 Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium; and • the $36,510,000 outstanding PA 2 2006 Series A Bonds will be redeemed in full on February 1, 2017 at a redemption price equal to ]00% of the principal amount of the PA 2 2006 Series A Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium; and • the $16,922,514�'� outstanding PA 2 2006 Series D Bonds will be redeemed in full on February 1, 2017 at a redemption price equal to the accreted value of such bonds on the date fixed for such redemption, without premium; and • the $3,325,000 outstanding PA 3 2003 Series Bonds will be redeemed in full on April 1, 2017 at a redemption price equal to 100�Ic of the principal amount of the PA 3 2003 Series Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium. • the $10,695,000 outstanding PA 3 2006 Series A Bonds will be redeemed in full on April 1, 2017 at a redemption price equal to ] 00% of the principal amount of the PA 3 2006 Series A Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium. • the $670,857"' outstanding PA 3 2006 Series B Bonds will be redeemed in full on April 1, 2017 at a redemption price equal to the accreted value of such bonds on the date fixed for such redemption, without premium. • the $4,362,076"� outstanding PA 3 2006 Series C Bonds will be redeemed in full on April 1, 2017 at a redemption price equal to the accreted value of such bonds on the date fixed for redemption, without premium. • the $11,375,000 outstanding PA 4 2001 Series A Bonds will be redeemed in full on April 1, 2017 at a redemption price equal to 100% of the principal amount of the PA 4 2001 Series A Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium. • the $]0,620,000 outstanding PA 4 2006 Series A Bonds will be redeemed in full on April I, 2017 at a redemption price equal to 100�Ic of the principal amount of the PA 4 2006 Series A Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, withou[ premium. • the $7,271,343�'� outstanding PA 4 2006 Series B Bonds will be redeemed in full on April 1, 2017 at a redemption price equal to 100% of the principal amount of the PA 4 2006 Series B Bonds to be redeemed together with accrued interest thereon to the date fixed for redemption, without premium. The 2017 Series A Refunded Bonds and the 2017 Series B Refunded Bonds are collectively referred to in this Ofiicial Statement as the "Refunded Bonds"). The sufficiency of [he amounts deposited in the Escrow Accounts for such purpose will be verified by the Verification Agent as described below. The lien of the Refunded Bonds will be discharged, terminated and of no further force and effect upon the deposit with the Prior Trustee of the amounts required pursuant to the Escrow Agreement. The amounts held by the Prior Trustee for the respective Refunded Bonds in the Escrow Accounts are pledged solely to the payment of amounts due and payable by the Successor Agency with respect to the Refunded Bonds. The funds deposited in the Escrow Accounts for the Refunded Bonds will not be available for the payment of debt service on the Bonds. Verifications of Mathematica! Computations. Grant Thornton LLP will verify from the information provided to them the mathematical accuracy as of the date of the closing on the Bonds of (1) the computations contained in the provided schedules to determine that the cash listed in the schedules prepared by the � Based on accreted value as of an assumcd January 17, 2017 redemption datc. 9 Underwriter, to be held in the Escrow Accounts, will be sufficient to pay, when due, the principal, redemption premium and interest requirements of the Refunded Bonds, and (2) the computation of yield on the 2017 Series A Bonds contained in the provided schedules used by Bond Counsel in its determination that the interest with respect to the 2017 Series A Bonds is exempt from federal taxation. Estimated Sources and Uses of Funds The following is a summary of the anticipated sources and uses of funds relating to the Bonds: Series A Series Q Total Sourccs of Funds: Par Amount of Bonds $ $ $ Net Original Issuc Premium/(Original Issue Discount) Undcrwriter's Discount Funds Held for the Refunded Bonds T()TAL 50URCES OF FUNDS: $ $ $ Uscs of Funds: Transfcr to Escrow Accounts $ $ $ Costs of Issuance�� TOTAL USES OF FUNDS: $__ $ _ $ �� Costs ot issuance include fees and expenscs of Bond Counsel, the Municipal Advisor, Disclosure Counscl, Verification Agent, Trustec and Escrow Agent, premium for bond insurance (if any), premium for debt servire reserve insurance policy (if any), costs of printin� the Official Statement, rating fee and other costs of issuance of the Bonds. L�1 THE BONDS General Provisions Repayment of the Bonds. The Bonds of each series shall be delivered in fully registered form, numbered from one upwards in consecutive numerical order, and shall be executed and delivered in integral multiples of $5,000 and will be dated as of the date of delivery (the "Closing Date"). Interest on the Bonds is payable at the rates per annum set forth on the inside cover page of the Official Statement. Interest on the Bonds will be computed on the basis of a year consisting of 360 days and twelve 30-day months. Interest on the Bonds will be payable on each April 1 and October 1, commencing April 1, 2017 (each an "Interest Payment Date"). The Bonds shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after the 15th calendar day of the month preceding an Interest Payment Date (a "Record Date") and on or bcfore the following Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (b) it is authenticated on or prior to the Record Date for the first Interest Payment Date, in which event it shall bear interest from the Closing Date; provided, however, that if, at the time of authentication of any Bond, interest with respect to such Bond is in default, such Bond shall bear interest from the Interest Payment Date to which interest has been paid or made available for payment with respect to such Bond. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Indenture, by the person in whose name it is registered, in person or by that person's duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer. Whenever any Bond or Bonds is surrendered for transfer, thc Successor Agency shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds of the same series and like tenor, maturity and total maturity 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 Successor Agency, 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 register the transfer or exchange of any Bond during the 15 days preceding any date established by the Trustee for selection of Bonds for redemption or any Bonds which have matured or been selected for redemption. Bonds may be exchanged at the Trust Ofiice for the same aggregate principal amount of the Bond of the same maturity 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 Successor Agency, 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. No such exchange shall be required to be made during the 15 days preceding any date established by the Trustee for selection of Bonds for redemption or any Bonds which have matured or been selected for redemption. The foregoing provisions regarding the transfer and exchange of the Bonds apply only if the book-entry system is discontinued. So long as the Bonds are in the book-entry system of The Depository Trust Company ("DTC") as described below, the rules of DTC will apply for the transfer and exchange of Bonds. Book-Entry System. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. Interest on and principal of the Bonds will be payable when due by wire of the Trustee to DTC which will in turn remit such interest and principal to DTC Participants, which will in turn remit such interest and principal to Beneficial Owners of the Bonds (see APPENDIX G-"THE BOOK-ENTRY SYSTEM."). As long as DTC is the registered owner of the Bonds and DTC's book-entry method is used for the Bonds, the Trustee will send any notices to Bond Owners only [o DTC. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Successor Agency or the Trustee. Under such circumstances, if a � successor securities depository is not obtained, Bonds are required to be printed and delivered as described in the Indenture. The Successor Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, the Bonds will be printed and delivered as described in the Indenture. Redemption Optional Redemption of the Bonds. The 2017 Series A Bonds maturing on or before October 1, 20_ shall not be subject to optional redemption prior to their maturity. The 2017 Series A Bonds maturing on or aRer October 1, 20_ shall be subject to redemption as a whole or in part from such maturities as the Successor Agency shall designate, prior [o their maturity at the option of the Successor Agency on any date on or after October 1, 20_, from funds derived by the Successor Agency from any source, at a redemption price equal to [ 100] percent of the principal amount of the 2017 Series A Bonds to be redeemed, together with interest accrued thereon to the date fixed for redemption, without premium. The 2017 Series B Bonds maturing on or before October 1, 20_ shall not be subject to optional redemption prior to their maturity. The 2017 Series B Bonds maturing on or after October 1, 20_ shall be subject to redemption as a whole or in part from such maturities as the Successor Agency shall designate, prior to their maturity at the option of the Successor Agency on any date on or after October 1, 20_, from funds derived by the Successor Agency from any source, at a redemption price equal to [ I OOj percent of the principal amount of the 2017 Series B Bonds to be redeemed, together with interest accrued thereon to the date fixed for redemption, without premium. Mandatory Sinking Account Redemption. The 2017 Series A Bonds maturing on October 1, 20_ and October 1, 20_ are also subject to redemption prior to their stated maturity, in part by lot, from Sinking Account Installments deposited in the Sinking Account on October 1 of each year commencing October 1, 20_ and October 1, 20_, respectively, at the principal amount thereof and interest accrued thereon to the date fixed for redemption, without premium, according to the following schedules: 2017 Series A Bonds maturing October 1, 20 Redemption Date Sinking Account (October 1) Installment 20_ (Maturity) 2017 Series A Bonds maturing October 1, 20 Redemption Date Sinking Account (October 1) Installment 20_ (Maturity) The 2017 Series B Bonds maturing on October 1, 20_ and October 1, 20_ are also subject to redemption prior to their stated maturity, in part by lot, from Sinking Account Installments deposited in the Sinking Account on October 1 of each year commencing October 1, 20_ and October 1, 20_, respectively, at the principal amount thereof and interest accrued thereon to the date iixed for redemption, without premium, according to the following schedules: 12 2017 Series B Bonds maturin� October l, 20 Redemption Date Sinking Account (October 1) Installment 20_ (Maturity) 2017 Series B Bonds maturing October 1, 20 Redemption Date Sinking Account (October 1) Installment 20_ (Maturity) In lieu of redemption of any Term Bond, upon the Successor Agency's written request, the Trustee may apply amounts on deposit in the Debt Service Fund or the Sinking Account at any time, for the purchase of such Term Bonds at public or private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as the Successor Agency may determine in its discretion, but not in excess of the principal amount thereof. No Bonds shall be so purchased by the Trustee with a settlement date more than 60 days prior to the redemption date. The principal amount of any Term Bonds so purchased by the Trustee in any 12 month period ending 30 days prior to any Principal Payment Date in any year will be credited towards and will reduce the principal amount of such Term Bonds required to be redeemed on such Principal Payment Date in such year. Selection of Boncts for Redemptinn. With respect to the redemption of Outstanding Bonds of a series, whenever less than all of the Outstanding Bonds of a maturity are called for redemption at any one time, the Trustee will select the Bonds to be redeemed, from the Outstanding Bonds of such maturity not previously selected for redemption, by lot; provided, that if less than all of the Outstanding Term Bonds of any maturity are called for optional redemption, each future Sinking Account Installment with respect to such Term Bonds will be reduced on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, so that the total amount of Sinking Account Ins[allment payments (with respect to such Term Bonds) to be made after the optional redemption will be reduced by an amount equal to the principal amount of the Term Bonds so redeemed, as will be designated by the Successor Agency to the Trustee in writing. Notice of Redemption; Cuncellation of Redemption. The Trustee, on behalf of the Successor Agency, will send notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the bond registra[ion books of the Trustee, to the Securities Depository and the Municipal Securities Rulemaking Board (via the Electronic Municipal Market Access System), not more than 60 days and not less than 30 days prior to the date fixed for redemption; provided that neither the failure of any Owner to receive any redemption notice sent to such Owner nor any defect in the notice so sent will not affect the sufficiency of the proceedings for redemption. The Successor Agency will have the right to rescind any optional redemption by written notice of rescission. Any notice of optional redemption will be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption. Neither such cancellation nor lack of available funds will constitute an event of default under the Indenture. The Trustee will send notice of rescission of such redemption in the same manner as the original notice of redemption was sent. 13 So long as DTC is the sole registered owner of the Bonds, notices of redemption (and notices of cancellation of redemption) will be sent to DTC and not to any beneficial owners. See "Book-Entry Only System." Effect of Reclemption. From and after the date iixed for redemption, if notice of such redemption will have been duly given and funds available for the payment of such redemption price of the Bonds so called for redemption will have been duly provided, no interest will accrue on such Bonds from and after the redemption date specified in such notice. Such Bonds, or parts thereof redeemed, will cease to be entitled to any lien, benefit or sccurity under the Indenture. 14 r�� V�y i�l /�� IW ei s � C � 6� v .; L 6) � .r � � A b � � ^C 6� s u � a V .� d f � � Li � O F � u .; �. u � r v ', v: � Cp Oa � � ce .0 `I U � r � 0 N � 'u e .` 0. d � .� �. d � L u A � c 0 C � � . � i. s+ � y � r O N W �V C .` � o �p 'C C 0 r� � u � -- W� �� },�j 6. C } °C 7 � � C Q � 3 L � � _ t F- J '� 7 U, V'; SECURITY FOR THE BONDS Tax Allocation Financing Priar to the enactment of the Dissolution Act, the Redevelopment Law authorized the financing of redevelopment projects through the use of tax increment revenues. First, the assessed valuation of the taxable property in a project area (or, if applicable, a later added component area), as last equalized prior to adoption of the redevelopment plan (or, as applicable, the adoption of the amendment to the redevelopment plan adding such component area), was established and became the base roll. Thereafter, except for any period during which the assessed valuation drops below the base year level, the Taxing Agencies (defined below), on behalf of which taxes are levied on property within the project area, receive the taxes produced by the levy of the then current tax rate upon the base roll. Taxes collected upon any increase in the assessed valuation of the taxable property in a project area over the levy upon the base roll could be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing the redevelopment project. Redevelopment agencies themselves had no authority to levy taxes on property. The Dissolution Act now requires the County Auditor-Controller to determine the amount of property taxes that would have been allocated to the Former Agency had the Former Agency not been dissolved using current assessed values on the last equalized roll on August 20, and to deposit that amount in the RPTTF for the Successor Agency established and held by the County Auditor-Controller pursuant to the Dissolution Act. Such funds, or portions thereof distributed to the Successor Agency, are deposited by the Successor Agency in its Recognized Obligation Retirement Fund (the "Recognized Obligation Retirement Fund"). The Dissolution Act provides that any bonds authorized its terms to be issued by the Successor Agency will be considered indebtedness incurred by the dissolved Former Agency, with the same legal effect as if the bonds had been issued prior to effective date of AB XI 26, in full conformity with the applicable provision of the Redevelopment Law that existed prior to that date, and will be included in the Successor Agency'ti ROPS. Successor agencies have no power to levy property taxes but must receive an allocation of taxes as described above. See "RISK FACTORS." Tax Revenues As provided in the redevelopment plans for the Project Areas (each a"Redevelopment Plan") and pursuant to Article 6 of Chapter 6 of the Redevelopment Law, and Section 16 of Article XV1 of the Constitution of the State, taxes levied upon taxable property in the Project Areas each year by or for the beneiit of the State, for cities, counties, districts or other public corporations (collectively, the "Taxing Agencies" and each individually a"Taxing Agency") for fiscal years beginning after the effective date of the ordinance approving the Redevelopment Plan, will be divided as follows: (a) To Taxin� encies: That portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of the Taxing Agencies upon the total sum of the assessed value of the taxable property in a 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 the ordinance adopting a Project Area's Redevelopment Plan, or the respective effective dates of ordinances approving amendments to such Redevelopment Plan that added territory, as applicable (each, a"base year valuation"), will be allocated to, and when collected will be paid into, the funds of the respective Taxing Agencies as taxes by or for the Taxing Agencies on all other property are paid; and (b) To the Former A�ency/Successor A e�nCX: Except for that poriion of the taxes in excess of the amount identified in (a) above which are attributable to a tax rate levied by a Taxing Agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of and the interes[ on, any bonded indebtedness approved by the voters of the Taxing Agency on or after January l, 1989 for the acqui�ition or improvement of real property, which portion shall be allocated to, and when collected shall be paid into, the fund of that Taxing Agency, that portion of the levied taxes � each year in excess of such amount, annually allocated within the redevelopment plan limit, when collected will be paid into a special fund of the Former Agency/Successor Agency. Section 34183 of the Dissolution Act effectively eliminates the January 1, 1989 date from this paragraph. Additionally, the language clarified that effective September 22, 2015, debt service override revenues approved by the voters for the purpose of supporting pension programs, capital projects, or programs related to the State Water Project, which are not pledged to or needed for debt service on successor agency obligations are allocated and paid to the entity that levies the override and will not be deposited into the RPTTF. Tax revenues generated as set forth under (b) above and allocated to the Successor Agency constitute a portion of the Tax Revenues, as that term is used in the Official Statement. The Tax Revenues do not include any override revenues. Pledged Tax Revenues For the security of the Bonds, the Successor Agency grants a pledge of and lien on all of the Tax Revenues. With respect to moneys deposited into the RPTTF, any amounts due under the Pass-Through Agreements or tax sharing statutes will be paid prior to the payment of debt service on the Bonds; provided, however, see Redevelopment Property Tax Trust Fund — Disbursement from Redevelopment Property Tax Tru.st Fund' regarding the treatment of subordinated pass-through payments in the event that there are insufficient Tax Revenues to make a debt service payment on the Bonds. DISCUSSIONS HEREIN REGARDING PLEDGED TAX REVENUES NOW REFER TO THOSE MONEYS DEPOSITED BY THE COUNTY AUDITOR- CONTROLLER INTO THE REDEVELOPMENT PROPERTY TAX TRUST FUND EQUAL TO SUCH TAX REVENUES. See "Pledge of Tax Revenues" below and "THE PROJECT AREAS - Pass-Through Agreements" and "- Statutory Tax Sharing Payments." The Bonds are special obligations of the Successor Agency. The Bonds do not constitute a debt or liability of the City, the County, the State or of its political subdivision, other than the Successor Agency. The Successor Agency shall only be obligated to pay the principal of the Bonds, or the interest thereon, from the funds described in the Official Statement, and neither the faith and credit nor the taxing power of the City, the County, the State or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Successor Agency has no taxing power. The State Legislature has amended the Dissolution Act several times. The Successor Agency expects, but cannot guarantee, that the processes for funding of enforceable obligations prescribed by any new legislative change in the Dissolution Act will not interfere with its administering of the Tax Revenues in accordance with the Indenture and will effectively result in adequate Tax Revenues for the timely payment of principal of and interest on the Bonds when due. Redevelopment Property Tax Trust Fund Deposits to the Redeve[opment Property Tax Trust Fund. Section 34172 of the Dissolution Act provides that, for purposes of Section 16 of Article XVI of the State Constitution, the RPTTF shall be deemed to be a special fund of the Successor Agency to pay the debt service on indebtedness incurred by the Former Agency or the Successor Agency to finance or refinance the redevelopment projects of the Former Agency. Disbursements from the Redevelopment Property Tax Trust Fund. The Redevelopmen[ Law authorized redevelopment agencies to make payments to Taxing Agencies to alleviate any financial burden or detriments to such Taxing Agencies caused by a redevelopment project. The Former Agency entered into agreements with the Taxing Agencies for this purpose ("Pass-Through Agreements"). Additionally, because of amendments to the redevelopment plans, there are Statutory Tax Sharing payments with respect to each Project Area. See "THE PROJECT AREAS - Pass-Through Agreements" and "- Statutory Tax Sharing Payments"). Typically, under the RPTTF distribution provisions of the Dissolution Act, a county auditor-controller is to distribute funds for each six-month period in the following order specified in Section 34183 of the Dissolution Act: 17 (i) first, subject to certain adjustments (as described below) for subordinations to the extent permitted under the Dissolution Act (if any, as described below under "THE PROJECT AREAS - Pass- Through Agreements" and "- Statutory Tax Sharing Payments") and no later than each January 2 and June 1, to each local taxing agency and school entity, to the extent applicable, amounts required for pass-through payments such entity would have received under provisions of the Redevelopment Law, as those provisions read on January 1, 2011, including negotiated pass-through agreements and statutory pass-through obligations; (ii) second, on each January 2 and June 1, to the successor agency for paymen[s listed in its ROPS, with debt service payments (and amounts required to replcnish the related reserve funds, if any) scheduled to be made for tax allocation bonds having the highest priority over payments scheduled for other debts and obligations listed on the Recognized Obligation Payment Schedule; (iii) third, on each January 2 and June l, to the successor agency for the administrative cost allowance, as defined in the Dissolution Act; and (iv) fourth, on each January 2 and June 1, to taxing entities any moneys remaining in the RPTTF after the payments and transfers authorized by clauses (i) through (iii), in an amount proportionate to such taxing entity's share of property tax revenues in the tax rate area in that fiscal year (without giving effect to any pass-through obligations that were established under the Redevelopment Law). The Dissolution Act requires county auditor-controllers to distribute from the RPTTF amounts reyuired to be distributed under the Pass-Through Agreements and Statutory Pass-Through to the taxing entities on each January 2 and June 1 before amounts are distributed by the County Auditor-Controller from the RPTTF to the Successor Agency's Redevelopment Obligation Retirement Fund, unless: (i) pass-through payment obligations have been made subordinate to debt service payments for the bonded indebtedness of the Former Agency, as succeeded to by the Successor Agency; (ii) the Successor Agency has reported, no later than the September 1 and June 1 preceding the applicable January 2 or June 1 distribution date, that the total amount available to the Successor Agency from the RPTTF allocation to the Successor Agency's Redevelopment Obligation Retirement Fund, from other funds transferred from the Former Agency and from funds that have or will become available through asset sales and all redevelopment operations is insufficient to fund the Successor Agency's enforceable obligations, pass-through payments and the Agency's administrative cost allowance for the applicable ROPS period; and (iii) the State Controller has concurred with the Successor Agency that there are insufficient funds for such purposes. If the requirements tiet forth in clauses (i) through (iii) of the foregoing paragraph have been met, the Dissolution Act provides for certain modifications in the distributions otherwise calculated to be distributed on the applicable January 2 or June 1 property tax distribution date (as adjusted for weekends and holidays). To provide for calculated shortages to be paid to the Successor Agency for enforceable obligations, the amount of the deiiciency will first be deducted from the residual amount otherwise calculated to be distributed to the taxing entities under the Dissolution Act after payment of the Successor Agency's enforceable obligations, pass- through payments and the Successor Agency's administrative cost allowance. lf such residual amount is exhausted, the amount of the remaining deficiency will be deducted from amounts available for distribution to the Successor Agency for administrative costs for the applicable ROPS period in order to fund the enforceable obligations. Finally, funds required for servicing bond debt may be deducted from the amounts to be distributed under subordinated Pass-Through Agreements, in order to be paid to the Successor Agency for enforceable obligations, but only after the amounts described in the previous two sentences have been exhausted. The Dissolution Act provides for a procedure by which the Successor Agency may make statutory pass-through payments subordinate to the Bonds. The Successor Agency has not undertaken any procedures to obtain such subordination of the statutory pass-through payments and, therefore, statutory pass-through payments are senior to the Bonds as described below. The Successor Agency's Pass-Through Agreement with certain Ta�ng Agencies are subordinate to the Bonds by their terms. However, the Successor Agency cannot guarantee that this process prescribed by the Dissolution Act of administering the Tax Revenues and the subordinations provided in the Pass-Through Agreements will effectively result in adequate Tax Revenues for 18 the payment of principal and interest on the Bonds when due. See the captions "THE PROJECT AREAS - Pass- Through Agreements" and "- Statutory Tax Sharing Payments" and "RISK FACTORS - Recognized Obligation Payment Schedule." Recognized Obligation Payment Schedules Enforceable Obligations. The Dissolution Act requires successor agencies to prepare and approve, and submit to the successor agency's oversight board and the State Department of Finance for approval, a ROPS pursuant to which enforceable obligations (as defined in the Dissolution Act) of the successor agency are listed, together with the source of funds to be used to pay for each enforceable obligation. As defined in the Dissolution Act, "enforceable obligation" includes bonds, including the required debt service, reserve set-asides, and any other payments required under the indenture or similar documents governing the issuance of the outstanding bonds of the former redevelopment agency, as well as other obligations such as loans, judgments or settlements against the former redevelopment agency, any legally binding and enforceable agreement that is not otherwise void as violating the debt limit or public policy, contracts necessary for the administration or operation of the successor agency, and amounts borrowed from the Low and Moderate Income Housing Fund and from the city. A reserve may be included on the ROPS and held by the successor agency when required by the bond indenture or when the next property tax allocation will be insufficient to pay all obligations due under the provisions of the bond for the next payment due in the following half of the calendar year (see APPENDLX A—"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE"). The Successor Agency has covenanted to request such reserves as described below. Under the Dissolution Act, the categories of sources of payments for enforceable obligations listed on a ROPS are the following: (i) the Low and Moderate Income Housing Fund (however, as discussed under "INTRODUCTION — Security for the Bonds," the Low and Moderate Income Housing Fund was eliminated under the Dissolution Act), (ii) bond proceeds, (iii) reserve balances, (iv) administrative cost allowance, (v) the RPTTF (but oniy to the extent no other funding source is available or when payment from property tax revenues is required by an enforceable obligation or otherwise required under the Dissolution Act), or (vi) other revenue sources (including rents, concessions, asset sale proceeds, interest earnings, and any other revenues derived from the former redevelopment agency, as approved by the oversigh[ board). Other than amounts deposited in the RPTTF allocable to the Project Areas and amounts held in funds and accounts under the lndenture, the Successor Agency does not expect to have any other funds available to pay the Bonds. The Dissolution Act provides that only those payments listed in the ROPS may be made by the Successor Agency from the funds specified in the ROPS. Required Approvals. As provided in SB 107, the ROPS with respect to each Fiscal Year (which is segregated into six-month periods beginning July 1 and January 1(each, a"ROPS Payment Period")), must be submitted by the Successor Agency, after approval by the Oversight Board, to the County Auditor-Controller, the State Department of Finance, and the State Controller by each February 1(unless a Last and Final ROPS has been approved as described below). For information regarding procedures under the Dissolution Act relating to late ROPS and implications thereof on the Bonds, see "RISK FACTORS Recognized Obligation Payment Schedule." Pursuant to SB 107, commencing on January 1, 2016, successor agencies that have received a Finding of Completion and the concurrence of the Department of Finance as to the items that qualify for payment, among other conditions, may at their option, file a"Last and Final" ROPS schedule (the "Last and Final ROPS"). If approved by the State Department of Finance, the Last and Final ROPS will be binding on all parties, and the successor agency will no longer submit any additional ROPS to the Department of Finance or the Oversight Board. The county auditor-controller will remit the authorized funds to the successor agency in accordance with the approved Last and Final ROPS until each remaining enforceable obligation has been fully paid. A successor agency may submit no more than two requests to amend an approved Last and Final ROPS. The Successor Agency plans to evaluate its outstanding obligations from time to time, to determine whether (and if so, when) it would file a Last and Final ROPS. � Debt Service. The Successor Agency has made a covenant in the Indenture [o include in each ROPS to be submitted after the effective date of the Indenture a request for the County Auditor-Controller to disburse from the RPTTF to the Successor Agency on each RPTTF Disbursement Date, the following amounts: (i) the interest payment coming due with respect to the Outstanding Bonds and Parity Obligations (if any) during such ROPS Payment Period, (ii) for any ROPS Payment Period which covers payments from January through June of a calendar year, at least one-half (but, at the discretion of the Successor Agency, may be up to all) of the principal amount (including maturing principal and any Sinking Account Installment) coming due with respect to the Bonds and Parity Obligations (if any) on October 1 of such calendar year (the "Principal Reserve"), (iii) for any ROPS Payment Period which covers payments from July through December of a calendar year, an amount equal to the principal amount (including maturing principal and any Sinking Account Installment) coming due with respect to the Bonds and Parity Obligations (if any) on October 1 of such calendar year, less the Principal Reserve already received in connection with the immediately prior ROPS Payment Period and deposited with the Trustee, and (iv) amounts, if any, required to replenish the Reserve Account (including payments to the provider of any Qualiiied Reserve Credit lnstrument for draws on such Qualified Reserve Credit Instrument), as required pursuant to the lndenture, and to replenish the reserve accounts of any Parity Obligations (if any). The Successor Agency shall also include on the periodic ROPS for approval by the Oversight Board and State Department of Finance, to the extent necessary and permitted under the Dissolution Act, the amounts to be held as a reserve until the next ROPS Payment Period, as contemplated by California Health and Safety Code Section 34171(d)(1)(A), if the next property tax allocation is projected to be insufficient to pay all obligations due under this Indenture during that next ROPS Payment Period. To that end, whenever the Successor Agency is preparing a ROPS, the Successor Agency shall, based on information obtained from the County Auditor- Controller, review the amount of dollars deposited in the RPTTF on the two immediately prior RPTTF Disbursement Dates. For the purposes of complying with this paragraph (i.e., projecting whether the next property tax allocation will be sufficient to pay all obligations due under this Indenture during the next ROPS Period), the Successor Agency shall assume that the property tax revenue collection (and thus, the dollar amount to be deposited in the RPTTF) will be consistent with the pattern shown during the last two ROPS Payment Periods, but without any assumed increase to the assessed value of the taxable properties in the Project Areas. Upon the Successor Agency's receipt of Tax Revenues on each RPTTf� Disbursement Date, the Successor Agency shall apply the Tax Revenues pursuant to the ROPS (as approved by the State Department of Finance) and deposit the Tax Revenues received for the payment of debt service of the Bonds and any Parity Obligations and any replenishment of the Reserve Account and Parity Reserve Accounts into a fund designated the "Special Fund." During each Bond Year, the Successor Agency sh�ll deposit such moneys in the Special Fund until such time as the amount so deposited in the Special Fund is at least equal to the sum of (i) the aggregate amount required to be transferred to the Trustee pursuant to the Indenture for such Bond Year, and (ii) the aggregate amount required by the governing documents of the Parity Obligations to be transferred for the debt service payment and replenishment of the Parity Reserves. In addition to the foregoing, from the moneys received by the Successor Agency as part of January 2017 RPTTF disbursement, the Successor Agency shall promptly deposit � into the Special Fund for application toward debt service on the Bonds. Such amount represents moneys received by the Successor Agency pursuant to a listing on the ROPS for the "ROPS 16-17B" period (i.e., the ROPS Payment Period covering January 2017 through June 2017) that would have bcen used for debt service for the Prior Loans if the Prior Loans were not refunded. The Successor Agency has no power to levy and collect taxes, and various factors beyond its control could affect the amount of Tax Revenues available in any six-month period (or otherwise) to pay the principal of and interest on the Bonds. See "RISK FACTORS." The Bonds are special obligations of the Successor Agency. The Bonds do not constitute a debt or liability of the City, the County, the State or of its political subdivision, other than the Successor Agency. The Successor Agency shall only be obligated to pay the principal of the Bonds, or the interest thereon, from the funds described in the Ofticial Statement, and neither the faith and credit nor the taxing power 20 of the City, the County, the State or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Successor Agency has no taxing power. The State Legislature has amended the Dissolution Act several times. The Successor Agency expects, but cannot guarantee, that the processes for funding of enforceable obligations prescribed by any new legislative change in the Dissolution Act will not interfere with its administering of the Tax Revenues in accordance with the Indenture and will effectively result in adequate Tax Revenues for the timely payment of principal of and interest on the Bonds when due. Reserve Account A Reserve Account has been established under the Indenture to be held by the Trustee to further secure the timely payment of principal of and interest on the Bonds. Within the Reserve Account, a separate subaccount (each a"Reserve Subaccount") has been established for each series of Bonds. The Reserve Requirement for each Reserve Subaccount is equal to the least of (i) ten percent of the sum of the original stated principal amounts of the Bonds of such series at issuance, (ii) 125 percent of Average Annual Debt Service of the Outstanding Bonds of such series or (iii) Maximum Annual Debt Service of the Outstanding Bonds of such series. Moneys in (or available to) each Reserve Subaccount will be used and withdrawn by the Trustee solely for the purpose of (i) replenishing the Interest Account, the Principal Account or the Sinking Account in such order, in the event of any deficiency at any time in any of such accounts or for the purpose of paying the interest on or principal of the related series of Bonds in the event that no other money in the Special Fund or the Debt Service fund is lawfully available therefor, or (ii) making the final payments of principal of and interest on the related series of Bonds. Each Reserve Subaccount secures only the Bonds of the related series, and will not secure the Senior Bonds or any other series of Parity Obligations that may be issued pursuant to the terms of the Indenture (see "No Additional Debt Other Than Refunding Bonds" below). The Indenture provides that in lieu of a cash deposit, the Successor Agency may satisfy all or a portion of the Reserve Requirement for a series of Bonds by means of a Qualiiied Reserve Account Credit Instrument (see APPENDLX A-"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE"). The Successor Agency has applied for a debt service reserve insurance policy to satisfy such requirement. The Successor Agency will decide whether to purchase such policy in connection with the offering of the Bonds. The Senior Bonds reserve account is currently secured by a debt service reserve. Such amounts are not available to pay debt service on the Bonds. No Additional Debt Other Than Refunding Bonds The Successor Agency covenants that it will not incur any additional obligations payable, either as to principal or interest, from the Tax Revenues, that will have any lien upon the Tax Revenues on a parity with or superior to the lien under the Indenture for the Bonds; except that the Successor Agency may: (a) incur Parity Obligations to refund then outstanding Bonds or the Senior Bonds (or Parity Obligations issued after the Closing Date pursuant to the Indenture), if (i) aggregate debt service on such proposed Parity Obligations will be lower than the aggregate debt service on the Bonds (or Parity Obligations) being refunded; (ii) the scheduled final maturity date of such proposed Parity Obligations will not be later than the scheduled final maturity date of the Bonds or other Parity Obligations being refunded; and (iii) the issuance of such Parity Obligations shall be in compliance with California Health and Safety Code Section 34177.5 (but only to the extent that such provision of the Dissolution Act is applicable and then in effect); or (b) incur Obliga[ions which will have a lien on Tax Revenues junior to the Bonds; or (c) incur Obligations that will be payable in whole or in part from sources other than the Tax Revenues pledged under the Indenture. 21 PROPERTY TAXATION IN CALIFORNIA Manner in Which Property Valuations and Assessments are Determined (Artic[e XII). On June 6, 1978, California voters approved an amendment (commonly known as both Proposition 13 and the Jarvis-Gann Initiative) to the State Constitution which imposes certain limitations on taxes that may be levied against real property. This amendment, which added Article XIiIA to the State Constitution, among other things, defines full cash value of property to mean "the county assessor's valuation of real 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." This full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2�Io per year, or any reduction in the consumer price index or comparable local data, or any reduction in the event of declining properiy value caused by substantial damage, destruction or other factors. The amendment further limits the amount of any ad valorem tax on real property to 1�Ic of the full cash value of that property, except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July l, 1978 and on any bonded indebtedness for the acquisition or improvement of real property which is approved after July 1, 1978 by two-thirds of the votes cast by voters voting on such indebtedness. See "SECURITY FOR THE BONDS - Tax Revenues," "Property Tax Rate" below and "RISK FACTORS - Factors Which May Affect Tax Revenues - Reduction in Inflationary Ratc." Tn the general election held IVovember 4, 1986, voters in the State approved two measures, Propositions S8 and 60, which further amend the terms "purchase" and "change of ownership," for purposes of determining full cash value of property under Article XIIIA, to not include the purchase or transfer of (1) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children. Proposition 60 amends Article XIIIA to permit the Legislature to allow persons over age 55 who sell their residence and buy or build another of equal or lesser value within two years in the same county (or in ceRain cases, another county), to transfer the old residence's assessed value to the new residence. Proposition 8 Adjustments. Proposition 8, approved in 1978, provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be rcassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide, and such methodology has been upheld by the California courts. During the recent recession, the County made significant blanket assessed value reductions throughout the County pursuant to Proposition 8 from the maximum amount that could be assessed on property. Unsecured and Secured Property. In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." The secured clatsification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property, arising pursuant to State law, has priority over all other liens on the secured property, regardless of the time of [he creation of the other liens. Property in the Project Areas are assessed by the Riverside County Assessor except for public utility property which is assessed by the State Board of Equalization. The valuation of secured property is determined as of January 1 each year for taxes owed with respect to the succeeding Fiscal Year. The tax rate is equalized during the following September of each year, at which time the tax rate is determined. Secured and unsecured property is entered on separate parts of the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. feT►J Property taxes on the secured roll are due in two installments, on November 1 and February 1 of the fiscal year. If unpaid, such taxes become delinquent on September ]0 and April 10, respectively, and a lO�Ic penalty attaches to any delinquent payment in addition to a$38.63 cost on the second installment, which is the cost for fiscal year 2016/17. On July 1 of each fiscal year any property which is delinquent will become defaulted. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus a redemption penalty of 1.S�Io per month to the time of redemption, together with any other charges permitted by law. If taxes are unpaid for a period of five years or more, the property is subject to sale by the County Tax Collector. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes for the amount of taxes which are delinquent. The County utilizes a mechanism for the distribution of tax increment revenue to the former redevelopment agencies that has a similar effect on the Agency's tax increment revenues as the device known as the Teeter Plan (Section 4701 et seq. of the Califomia Revenue and Taxation Code). The Teeter Plan allows counties to distribute secured property tax revenue to participating jurisdictions without regard to delinquencies by maintaining a reserve fund to cover delinquencies and allocating revenue based on the original secured roll, retaining all delinquent tax payments and penalties. Under the mechanism used by the County to distribute tax increment revenue to the former redevelopment agencies, the County pays one-half of the taxes from the net taxable assessed valuation appearing on the equalized roll to each agency's RPTTF on January 2 and the other one-half on June 1; delinquencies are not deducted from the RPTTF revenue, and delinquent tax payments and defaulted tax redemptions, penalties and interest are not added to RPTTF revenue. Consequently, the Successor Agency is not affected by delinquent tax payments. Property taxes on the unsecured roll become delinquent, if unpaid on August 31. A lO�Io penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of 1.S�Io per month begins to accrue on November 1 of the fiscal year. The County has four ways of collecting delinquent unsecured personal property taxes: (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) iiling a certificate of delinquency for record in the County Recorder's Office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. Supp[emental Assessments. Legislation adopted in 1984 (Section 75, et seq. of the Revenue and Taxation Code of the State of California) provides for the supplemental assessment and taxation of property at its full cash value as of the date of a change of ownership or the date of completion of new construction (the "Supplemental Assessments"). To determine the amount of the Supplemental Assessment the County Auditor- Controller applies the current year's tax rate to the supplemental assessment roll and computes the amount of taxes that would be due for the full year. The taxes due are then adjusted by a proration factor to reflect the portion of the tax year remaining as determined by the date on which the change in ownership occurred or the new construction was completed. Supplemental Assessments become a lien against the rea) property on the date of the change of ownership or completion of new construction. Unitary Property. Commencing in the 1988/89 Fiscal Year, the Revenue and Taxation Code of the State of California changed the method of allocating property tax revenues derived from state assessed utility properties. It provides for the distribution of statc assessed values to tax rate areas by a county-wide mathematical formula rather than assignment of state assessed value according to the location of those values in individual tax rate areas. Commencing with the 1988/89 Fiscal Year, each county has established one county-wide tax rate area. The assessed value of all unitary property in the county has been assigned to this tax rate area and one tax rate is levied against all such property ("Unitary Revenues"). The property tax revenue derived from the assessed value assigned to the county-wide tax rate area shall be allocated as follows: (1) each jurisdiction will be allocated up to 2% of the increase in Unitary Revenues on a pro rata basis county-wide; and (2) any decrease in Unitary Revenues or increases less than 2�Io, or any increase 23 in Unitary Revenues above 2% will be allocated among jurisdictions in the same proportion of each jurisdiction's Unitary Revenues received in the prior year to the total Unitary Revenues county-wide. Legislation adopted in 2006 (SB 1317, Chapter 872) provides that, commencing with Fiscal Year 2007/08, certain property related to new electrical facilities shall be allocated entirely to the county in which such property is located and property tax revenues derived from such property shall be allocated to such county and certain Taxing Agencies with such county. Property Tax Rate. The difference between the $1.00 general tax levy provided under Article X1IlA tax rate and those actually levied (referred to as the "tax override rate") represents the tax levied by overlapping entities to pay debt service on bonded indebtedness approved by the voters. Section 34183 of the Dissolution Act effectively eliminated the tax override rate from the calculation of Tax Revenues with respect to tax override rates authorized by voters for the purpose of repaying bonded indebtedness for the acquisition or improvement of real property. Future Tax Revenues have been projected by applying a tax rate of $1.00 per $100 of taxable value general levy to incremental taxable values. Administrative Costs. In 1990, the Legislature enacted SB 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. SB 1559 (Chapter 697, Statutes of 1992) explicitly includes redevelopment agencies among the jurisdictions which are subject to such charges. ln addition, Sections 34182(e) and 34183(a) of the Dissolution Act allow administrative costs of the County Auditor-Controller for the cost of administering the provisions of the Dissolution Act, as well as the foregoing SB 1559 amounts, to be deducted from property tax revenues before moneys are deposited into the RPTTF. For Fiscal Year 2016/17, the County administrative fees charged to the Project Areas including administration of [he RPTTF were $1,013,000. In total, the fees represent approximately 1.10�I� of gross Tax Revenues. THE SUCCESSOR AGENCY Government Organization The Former Agency was established by the City Council in 1974 pursuant to the Redevelopment Law. On June 29, 2011, AB X 1 26 was enacted, together with a companion bill, AB X 1 27. A lawsuit was brought in [he California Supreme Court, California Redevelopment Association, et al. v. Matosantos, et al., 53 Cal. 4th 231 (Cal. Dec. 29, 2011), challenging the constitutionality of AB X 1 26 and AB X 1 27. In its December 29, 2011 decision, the California Supreme Court largely upheld AB X 1 26, invalidated AB X 1 27, and held that AB X 1 26 may be severed from AB X 1 27 and enforced independently. As a result of AB X 1 26 and the decision of the California Supreme Court in the California Redevelopment Association case, as of Nebruary 1, 2012, all redevelopment agencies in the State were dissolved, including the Former Agency, and successor agencies were designated as successor entities to the former redevelopment agencies to expeditiously wind down the affairs of the former redevelopment agencies. Section 34173(g) of the Dissolution Act expressly affirms that the Successor Agency is a separate public entity from [he City, that the two entities shall not merge, and that the liabilities of [he Former Agency will not be transferred to the City nor will the assets of the Former Agency become assets of the City. Successor Agencv Board Members Jan Harnik, Chair' Sabby Jonathan, Vice-Chuir Kathleen Kelly, Director-elect Gina Nestande, Director-elect Susan Marie Weber, Director Term Expires November 2018* November 2018* November [2020] Novembcr [2020] November [2020] � Subject to City Council reorganization aftcr clection certification on December 8, 2016. 24 The City Manager serves as the Successor Agency's Executive Director, the City's Finance Director serves as the Successor Agency's Finance Officer and the City Clerk serves as the Successor Agency Secretary. The costs of such functions, as well as additional services performed by City staff are allocated annually to the Successor Agency, within certain limitations established by the Dissolution Act. Such reimbursement is subordinate to payment on any outstanding bonds of the Successor Agency. Successor Agency Powers Pursuant to the Dissolution Act, the Successor Agency is a separate public body from the City and succeeds to the organizational status of the Former Agency but without any legal authority to participate in redevelopment activities, except to complete any work related to an approved enforceable obligation. The Successor Agency is tasked with expeditiously winding down the affairs of the Former Agency, pursuant to the procedures and provisions of the Dissolution Act. Under the Dissolution Act, many Successor Agency actions are subject to approval by the Oversight Board, as well as review by the State Department of Finance. California has strict laws regarding public meetings (known as the Ralph M. Brown Act) which generally make all Successor Agency and Oversight Board meetings open to the public in similar manner as City Council meetings. Dissolution Act Milestones Section 34179.5 of the Dissolution Act established a due diligence review process for determining the unobligated balances that redevelopment agencies had available as of June 30, 2012 to remit to their respective county auditor-controllers for distribution to affected Taxing Agencies within project areas of the former redevelopment agencies. The Successor Agency has remitted to the County Auditor-Controller all of the unobligated balances as determined by the State DepaRment Finance. On May I5, 2013, the Successor Agency received its Finding of Completion from the State Department of Finance. Receipt of the Finding of Completion allows the Successor Agency to do several things, among them, developing a Long Range Property Management Plan (described below) and spending proceeds of bonds issued prior to December 31, 2010, all requiring approval of the Oversight Board. After receiving the finding of completion, each successor agency is required to submit a Long Range Property Management Plan (a "Long Range Property Management Plan") detailing what it intends to do with its inventory of real property interests. Permissible uses include: sale of the property, use of the property to fulfill an enforceable obligation, retention of the property for future redevelopment, and retention of the property for governmental use. The State Department of Finance approved the Successor Agency's Long Range Property Management Plan on June 2, 2014 and an amendment to the Long Range Property Management Plan on December 9, 2015. Successor Agency Accounting Records and Financial Statements The activities of the Successor Agency are reported as a fiduciary trust fund, which is in accordance with guidance issued by the State Department of Finance on September 19, 2012 and available on its website relating to redevelopment dissolution (www.dof.ca.Qov/redevelopment) under the category of "Common RDA Dissolution Questions and Answers," interpreting Section 34177(n) of the Law concerning certain successor agency postaudit obligations. The State Department of Finance's website is not in any way incorporated into this Of�cial Statement, and the Successor Agency cannot take any responsibility for, nor make any representation whatsoever as to, the continued accuracy of the Internet address or the accuracy, completeness, or timeliness of information posted there. In addition, from time to time, the State Department of Finance changes its guidance without notice. The City's financial statements for the Fiscal Year ended June 30, 2015, which include information regarding the Successor Agency, are attached as "APPENDIX D" to this Official Statement and have been audited by White Nelson Diehl Evans LLP, Irvine, California. The Successor Agency's audited financial statements are public documents and are included within this Official Statement without the prior approval of the auditor. White Nelson Diehl Evans LLP has not been engaged to perform, and has not performed, since the date of its report included in the Official Statement, any procedures on the ftnancial statements addressed 25 in that report. White Nelson Diehl Evans LLP also has not performed any procedures relating to this Official Statement. Stipulation Agreement On May 15, 1991, the Riverside County Superior Court entered a final judgment incorporating the terms of a Stipulation for Entry of Judgment ("Original Stipulation") in Case No. S 1124 and a Stipulation for Entry of Judgment pursuant to Settlement Agreement and Mutual Release ("Settlement Agreement") in Case No. S 1124, among the Former Agency, the City, the Western Center on Law and Poverty, Inc., California Rural Legal Assistance, and others. On June 18, 1997 and on September 20, 2002, the Riverside County Superior Court amended the judgment, incorporating Stipulations Amending Stipulation for Entry of Judgment. The judgment, as amended (the "Judgment"), generally required the Former Agency to use 20�I� of its tax increment revenues, and additional tax increment revenues if necessary, to develop, rehabilitate, or otherwise financially assist affordable housing units and to meet certain housing needs of the City. Before dissolution, the Former Agency used its Housing Set-Aside (see "INTRODUCTION — Security for the Bonds") to fulfill its obligations under the Judgment. The Housing Refunded Bonds were used to finance and refinance affordable housing projects that satisfied the requirements of both the Judgment and the Redevelopment Law provisions relating to the Housing Set-Aside. Accordingly, the Former Agency pledged, and used, the Housing Set-Aside for the repayment of certain prior loans relating to the Housing Refunded Bonds. Under the terms of the Judgment, the Former Agency was permitted to incur indebtedness and pledge 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 amoun[ of debt service payable in connection with such refinancing reflects a present value savings when compared with the total amount of debt service remaining to be paid on the refunded obligations. While the Dissolution Act has eliminated the Housing Fund and the requirement to deposit the Housing Set-Aside into such fund, the Successor Agency continues to recognize the Judgment as its enforceable obligation. On its ROPS, the Successor Agency has included line items designated as "Stipulation Judgment Case No. S 1 I 24," listing the amounts necessary to fulfill itti obligations under the Judgment (after taking into account the amounts already listed for the repayment of the Housing Refunded Bonds). While the DOF originally approved such line items, the DOF changed its position beginning with ROPS 14-15A (i.e., covering the period commencing July 1, 2014). On August 14, 2014, the Successor Agency filed an action, Succe,ssor Agency� to the Palm Desert Re�levelopment A�enc�� v. Michnel Cohen, Sacrumento Superior Cnurt Cuse No. 34-2014-00167698 (the "Successor Agency Lawsuit"), seeking to compel the DOF to permit payment of the affordable housing obligations mandated by the Judgment. Subsequently, in view of the fact that there were similar cases pending in the California Third District Court of Appeal, the Successor Agency took action to have the Successor Agency Lawsuit dismissed without prejudice, pending resolution of those similar cases. Under the Indenwre, the term "Housing Portion" is defined as the portion of property tax revenucs required to be deposited into the RPTTF that is equal to amount that [he Former Agency would have bcen required to deposit into the Housing Fund, if the �ormer Agency had not been dissolved. The calculation of the Housing Portion is not dependent on the DOF's recognition of the Judgment. "Tax Revenues" pledged to thc Bonds is defined as the moneys deposited into the RPTTF, less the Housing Portion, and administrative costs payable to the County pursuant to the HSC Section 34183(a), unsubordinated pass-through payments and repayments for the Senior Loan. Thc amount of Tax Rcvcnucs available to pay debt service on the Bonds should be unaffected by the outcome of the dispute between the Successor Agency and the UOF regarding the Judgment. 26 Plan Limitations In accordance with the Redevelopment Law, redevelopment plans were required to include certain limits on the financing of redevelopment projects. These limits could include a time limit on the life of the redevelopment plan, a time limit to incur debt, a time limit on the receipt of Tax Revenues and the repayment of debt, and a limit on the amount of bonded indebtedness outstanding at any time. SB 107 clarifies that the former tax increment limits in redevelopment plans no longer apply for purposes of paying approved enforceable obligations such as the Bonds and the Senior Bonds. 27 THE PROJECT AREAS Description of the Project Areas There are four Project Areas totaling 11,771 acres and encompasses 68�Ic of the total acres in the City. The following table provides information on assessed and incremental value of each Project Area. TABLE 1 Proiect Areas Projcct No. 1 Original Area Project No. I 19R2 Addcd Arca Project Nu. 2 Project \o. 3 Project tio. 4 Total All Projcct Areas BY PROJECT AREA LAND USE BY ASSESSED VALUE (2016/17) 2016-17 Less I3ase Acrea�e Asse.s.sed Value Value S80 S 1,058,238,219 $ 27,4RS,R36 5,240 5,278,508,068 656,OG5,059 2.927 I .686.803.512 102,157.447 764 564,855,842 149,523,2SS 2.260 1,99Q188.034 S87192.21R ] 1.771 510,578,593,675 $I,S22,423,R1S 2016-17 Increment and Assessed Value $ I .030.752,383 4,622,443,009 I ,584,646.065 415,332,587 I ,402,995,8 I 6 59,056, I 69,860 9c or Incremental Value 1 1.�8�/, S 1.04 17.50 3.59 I 5.49 100.00�/ Sourcc: Fiscal Consultant's Rcport. Specific information about each Project Area and its redevelopment plan is set forth below. Project Area No. 1. The Project Area No. 1 was formally established with the adoption by the City Council of a redevelopment pl�n (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 Territory") were added to the Original Area pursuant to amendments to the Original Plan approved and adopted by the City Council by Ordinance IVo. 275, adopted on November 25, 1981 and Ordinance No. 324, adopted on October 13, 1983 (collectively, the "Amendments"). The Original Plan, as amended by the Amendments, is referred to as the "PA 1 Redevelopment Plan." The Project Area IVo. 1 includes approximately 5,820 acres, comprising approximately 14,221 parcels, zoned for residential, office, commercial, industrial, public and open space uses. The Project Area incorporates an approximately 70-acre Civic Center campus; a Sheriffs dispatch center; County Library facilities; multifamily rcntal, townhouse and single-family developments; the Canyons at Bighorn, a 275-unit luxury custom home development; and over two million square feet of retail space, including three major retail malls. The Westfield Shoppingtown (located in the Original Area) was expanded in January 2003 to add two parking garages totaling 1,000 parking spaces, the expansion of Macy's, and an additional 40,000 square feet of retail space, including Barnes & Noble. The Project Area also includes the Gardens on EI Paseo, El Paseo Village and the Shops on EI Paseo which include over 200,000 square feet of luxury retail space. Luxury retail brands within the EI Paseo include, Apple, Saks Fifth Avenue, TUMI, Kate Spade, Eileen Fisher and Louis Vuitton. Project Area No. 2. On July 1 S, 1987, the Redevelopment Plan for Project Area No. 2 was adopted by the City of Palm Desert pursuant to the adoption of Ordinance No. 509. Project Area No. 2 encompasses approximately 2,927 acres (68,230 parcels including timeshare parcels) of residential, hotel/resort, office and undeveloped uses. Project Area No. 2 is generally bounded by the Palm Desert City limits and Interstate 10 to the north, Gcrald Ford Drive to the east, Country Club Drive and Hovley Lane to the south and Portola and Monterey Avenues to the west. Project Area No. 3. The Redevelopment Plan for Project Area No. 3 was adopted by the City on July 17, 1991 pursuant to the adoption of Ordinance No. 652. Project Area No. 3 is located in the City and includes approximately 1,531 acres, comprising 1,016 parcels, zoned for residential, office, commercial, industrial, public and open space uses. Project Area No. 3 is generally bounded by Portola Avenue and Cook Street to the F�:3 west, and Carlotta Drive to the east, Hovley Lane and Running Springs Drive to the north and the Whitewater River Channel to the south. The Portola Country Club is not within Project Area No. 3. Project Area No. 4. The Redevelopment Plan for Project Area No. 4 was adopted by the City on July 19, 1993 pursuant to the adoption of Ordinance No. 724. Project Area No. 3 includes approximately 2,260 acres, comprising 10,556 parcels, zoned for residential, ofiice, commercial, industrial, public and open space uses. Project Area No. 4 is generally bounded by Eldorado Drive to the west, running southward to the boundary of the City of Indian Wells, then eastward to the corner boundary between the county line and the City of Indian Wells. The western boundary follows this line southward to Fred Waring Drive, which is also the southern boundary of the City limits. The eastern boundary of Project Area No. 4 is Washington Street and the northern boundary is County Club Drive. Land Use Land use within the Project Areas is predominantly residential, encompassing 73.62�Ic of all uses by assessed value. The following table shows land use among all Project Areas by assessed value. Land Use ResidentiaL• Single Family Condominium Multi Family Other Commercial: Retail Office Hotel/Motcl Other Timeshares Industrial Miscellaneous Public Unsecured Totals TABLE 2 ALL PROJECT AREAS LAND USE BY ASSESSED VALUE (2016/17) Number of Assessed % of Parcels Value Total 9,674 $ 4,949,379,078 46.79�/� 9,543 2,333,511,057 22.06 387 296,411,443 2.80 1,893 208,772,900 1.97 306 $ 989,963,416 9.36% �i65 345,�58,835 3.26 22 226,270,805 2.14 533 246,939,701 2.33 69,397 $ 408,890,790 3.87 185 177,114,542 1.67 255 I46,i50,978 1.38 502 - 0.00 I,476 249.630. I 30 2.36 94,538 $10,578,59�i,675 100.00�% Source: Fiscal Consultant's Report. �. Assessed Valuations and Tax Revenues Total assessed value of the Project Areas, together with assessed values of the constituent arcas comprising the Project Areas between fiscal years 2007/08 and 2016/17 are shown in the tables below. TABLE 3 ALL PROJECT AREAS CURRENT AND HISTORICAL VALUATIONS 2005/06 through 2016/17 Secured Unsecured FY Value Value 2007-08 $ 9.652.979,21 i $ i0S.989.337 2008-09 10,117,866.565 343.044,906 2009-10 9,709,045.177 327,469,966 2010-11 9,214,357,136 319,604.911 2011-12 8,853,491,4Q5 303,821,693 2012-13 8,R39,633.215 248,989.726 2013-14 9,090,410,899 291,714,52i 2014-IS 9,597,498.735 257,817,882 2015-16 10.07Q986.681 261,573,49R 2016-17 10.326.335,572 252.258.103 Sourcc: Fiscal Consultant's Report. Total Value 9,958,9G8,SS0 I Q460.91 I ,471 I 0,036,5 I 5, l43 9,533,962,047 9.157,313,068 9,088,622,941 9.382, I 25.422 9,855,:i 16.617 10,332,560,170 10,578,593,675 Less Base Value $1,522,42�,815 I .522.423,815 I .522,423,815 I ,522,423,815 1,522,423,A 15 I .i22.423,815 I ,522,423,815 I ,522,423,8I5 I ,522,423,815 1.522.423.815 Increment $8.436,544.735 8,938,487,656 8,514,091.328 8,011,538.232 7.634.889.283 7,566.199,126 7,859,701,607 8,332,892.802 8,810,136,355 9,056. I 69,860 Percentage ChanQe 5.9!�� -4.7 -S.9 -4.7 -0.9 3.9 6.0 i.7 2.8 For a detailed description of current and historical assessed value in each Project Area see APPENDIX C — "FISCAL CONSULTANT'S REPORT." Actual Tax Revenues paid to the Former Agency or available to the Successor Agency from the Project Arcas for fisc�l years 2011/12 through 2015/16 are shown below. TABLE 4 ALL PROJECT AREAS HISTORIC TAX REVENUES RECEIPT 1. Rcportcd Assesscd Valuc'�': Secured Unsecured IL Total Project Value Less Basc Ycar Valuc Total Incremental Value Tax Kate to Compute Tax Increment 111. Computed Gross Tax Increment Unitary Tax Total Compwed LevY IV. 1'ax Allocation: Allocated Tax Inrrcmrnt'�' Unitary Tax Tota1 Tax Bascd on Collections Variancc From Computed Lcvy 7r Collections per County 2U11-12 5R.8S3,491,405 303.821.693 9. l 57,3 I 3,098 1,522,4?3,815 7.634.8239.283 L000�/r 76.350,940 1,OS5,430 77.4(M.370 76,395366 _ 1 O55 430 77.450,796 44,425 I 00. I `7r 2U12-13 $8,839.633,215 248,989,726 9,08R.622.941 1.522,423.ki 1 S 7.566.199.126 1.000'%r 75,666,465 1.017.I �8 76.683,603 75,666,465 1.017.138 7G,G83.603 0 I OO.O�Ic 2013-14 $9.(�0.410,899 291.714,523 9.382,125,422 1.522.423.8 I 5 7.RS9.701.607 I .0009r 78,597,016 ---- l. 067 y49 79,664,965 78,597,0 l fi l.Ofi7.949 79.664.965 0 100.0�/c 2014-15 59.597,498,73i �57.817.88? 9,8Si.316.617 I .523,423,8 I 5 R. ��?.}Sy2.H02 i .ocx» g3,334.078 1,091.101 R4,42S.179 83.��4,07R 1.091.101 84.425,179 0 100.0�1� 2015-16 S 10,070,986,681 261,573 489 10.332.560,17O 1.S22,d23,R I S �3.810,1 ��.:� 5 5 I .0009� ss, iox,�5�� 1. I 5?.094 89,'_60.8SZ 88. I 08.759 I . I 52s09�3 89.�60.85? 0 I OU.07 '�' Amounls shown are as reported by the Counly Auditor-Controller in August of each fisral ycar. ''' Amounts represent the :uinual lax increment revenues apportioned to the Agency and do not exclude County administrati�e chargcs, interest eamings, supplemental taxes, set asides or tax sharing allocations. "' l�he Counry allocates tax increment revenues on a Tecter Ylan based on adjusted computed levy. Sourcc: Fiscal Consultant's Report. �0 � � � LC G k � F. O .� � v. � � Q U � O a` Q) � � 3 � � A :c a i� � � � � «, � 3 � i � � J C� � .r. Q �3 u o .?� .° a a� y s � F� � O a� � c� > C/� a �Q� rl 0. Q X N � � F a i� O � �r QI i..� FaaQ U a ..a r�.i � � �I F r � c N y�� j � �O �D � V > N �O � C ry � � s" n �o '� v o v?� o " � x Q � N f�', Q� r � o r ��7Ix C N N � 'C r ^ �+ W � � u �la Y R c+, N 2 > � r / (n 'D V o � v v-. 6l yl �T v= ? v-; ^ ; v'. x � v-i � s �, N '9 �. � �v 0 z �a- � �. y � C �, u o0 ° u 4 v': Z�C,v�� t � � � \ � � i i � �, �- o a�o� - — .... V^: V', V 7 �O — —... 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' C N N N C C � 7 CA '�0 �li = t � ti c c c� v; � c � � �: � ^ � n ' � a> a� a � U C C C (]� ;� c = :J O C �, C � � J 'J :J Y � � ^ � Z V; ..'�. ...`�: ...v: 'C �„ �--� �. t. �. ? ��'` _ � o ¢ c c c 3 '� Cj � ='� u � 3 �� U F, c c 3 c a � � _ � W� �'y�J 3"� � '^ O v� � C C Z T T T V t't '� v 1 � �� E E F- c E W u� y ia c"� � w c U� � h E �[i � c c' o' � � m � m o. 3�3 � c � ;u c¢v � v� O a`.ia`,� � c c ro O � ;` c`o .v .v a' ti ca � u `=.c G- c �' �. •,-yU �`a ca Q..^. t \ � . � �. ` v � y >, T � " ..U..l h � cs � � p L c c � � � = - _ _ ci ��>3U 3 1�. �»�2u N M, Assessment Appeals As of October 1 2016, there were a total 189 pending appeals filed in the last 6 years by property owners in the Project Areas as shown below. The total value of property under appeal for all years is �1,363,543,560. Some appeals have been filed for multiple years for the same property. A summary of all pending appeals is shown below. Total No. of Appeals 2009-10 to 2015-16 2>506 TABLE 6 ALL PROJECT AREAS ASSESSMENT APPEALS FISCAL YEAR 2009/10 through 2015/16�� No. of Resolved Appeals 2009-10 to 2015-16 2.317 Fiscal Year EndinQ June 30 2016 2015 2014 2013 2012 2011 2010 Total Number of Appeals 121 40 23 3 0 2 0 l89 Average No. of Successful Assessed Appeals Valuation 2009-10 to 2015-16 Reduction 359 15.77'% Combined Value Under Pendins Appeals $ 623,732,885 402,209,739 330,065,062 7,253.306 0 2,282,568 0 $1,365,543,560 Est. No. of No. of Pending Pending Appeals Appeals Allowed 189 30 Estimated Reduction on Pending Appeals (FY 2017-18 AV) $ I 5,236,000 9,826,000 8.063.000 0 55,000 0 $33,357,000 ��' Includes secured assessed valuations only. Sc�urce: Fiscal Consultant's Rcport. There are appeals pending for three of the largest property owners included in TABLE 4-"TEN LARGEST TAXPAYERS." The Successor Agency cannot predict the outcome of any pending appeals. For Fiscal Years 2009/]0 to 2015/16, 14.3�Ic of all appeal iilings were reduced or stipulated, 78.1 �Ic of the appeals were withdrawn or denied and 7.S�I� of the appeals remain open. For the period reviewed by the Fiscal Consultant, propertieti that were the subject of assessment appeal iilings resulted in an overall average reduction in assessed value of 15.77�Ic This averagc reduction is incorporated by the Fiscal Consultant in the projections of Tax Revenues. See APPENDiX C—"Fiscal Consultant's Report." Pass-Through Agreements Pursuant to prior Section 33401(b) of the Redevelopment Law, a redevelopment agency was authorized to enter into an agreement to pay Tax Revenues to any Taxing Agency that has territory located within a Project Area to alleviate any �nancial burden or detriment caused by the Project Areas. These agreements are commonly referred to as "tax sharing agreements" or "pass-through agreements." Any payments made by thc Successor Agency to a Taxing Agency pursuant to a pass-through agreement shall be paid prior to the payment of debt service on the Bonds; provided, however, payments on subordinated pass-through agreements shall no[ be made prior to the payment of debt service on the Bonds if there are insufficient Tax Revenues to pay debt service on the Bonds. [n addition, pursuant to former Section 33676 of the Redevelopment Law, any affected taxing agency that had not entered into a tax sharing agreement with the redevelopment agency prior to the adoption of a 32 redevelopment plan could elect, by resolution adopted prior to the adoption of a redevelopment plan, to receive the portion of Tax Revenues attributed to one or both of the following: (a) Increases in the rate of tax imposed for the benefit of the taxing agency which levy occurs after the tax year in which the ordinance adopting the redevelopment plan becomes effective; and (b) Increases in the assessed value of the taxable property in the redevelopment project area, as the assessed value is established by the assessment roll last equalized prior to the effective date of the ordinance adopting the redevelopment plan pursuant to subdivision (a) of Section 33670, which are, or otherwise would be, calculated annually pursuant to subdivision (� of Section 110.1 of the Revenue and Taxation Code. For a description of the Former Agency's Pass-Through Agreements, See APPENDIX C"Fiscal Consultant's Report." Since dissolution, the County-Auditor-Controller caiculates and pays directly to the Taxing Agency any amounts due under a Pass-Through Agreement. Statutory Tax Sharing Payments Certain provisions were added to the Redevelopment Law by the adoption of AB 1290 in 1994. If a new redevelopment project was formed by a redevelopment plan adopted on or after January 1, 1994 or if new territory was added to a redevelopment project on or after January 1, 1994, under Section 33607.5 of the Redevelopment Law, any affected taxing entity, including the City, would share in the Tax Revenues generated by such added area pursuant to a statutory formula ("Statutory Tax Sharing"). In addition, a redevelopment agency, on or after January l, 1994 amended a redevelopment plan to delete the time limit to incur indebtedness in a redevelopment project (pursuant to Section 33333.6(e) of the Redevelopment Law, as amended pursuant to SB 211) or increased the total amount of Tax Revenues to be allocated to the project area or increased the duration of the Redevelopment Plan and the period for receipt of tax increment, Statutory Tax Sharing is required under Section 33607.7 of the Redevelopment Law with all affected Taxing Agencies not already a party to a tax sharing agreement, once the original limitations were reached. The Successor Agency has not taken any proceedings to subordinate the payment of Statutory Tax Sharing Amounts to the Bonds. With respect to moneys deposited in the RPTTF, the payment of Statutory Tax Sharing amounts shall be made prior to the payment of debt service on the Bonds. Since dissolution, the County Auditor-Controller calculates and pays directly to the taxing enti[ies the Statutory Tax Sharing amounts. Outstanding Indebtedness After refinancing the Refunded Bonds, the following obligations will be outstanding on a senior basis to the Bonds: • Palm Desert Financing Authority Tax Allocation Refunding Revenue Bonds (Project Area No. 1, As Amended) 2007 Series A(the "2007 Series A PA 1 Bonds"), currently outstanding in the principal amount of $ and maturing April 1, 2018. Concurrently with the issuance of the Bonds, the Successor Agency will be issuing its Tax Allocation Refunding Bonds 2017 Series H-A, in the principal amount of $ (the "2017 Series A Bonds") and Taxable Tax Allocation Refunding Bonds 2017 Series H-B, in the principal amount of $ (the "2017 Series B Bonds," and together with the 2017 Series A Bonds, the "2017 Housing Bonds")) to refund certain outstanding housing obliga[ions of the Successor Agency ([he "Housing Refunded Bonds"). Under the 33 indenture for the 2017 Housing Bonds, the pledge securing the 2017 Housing Bonds includes money deposited in the RPTTF in an amount equal to the dollar amount that the Former Agency would have been required to deposit into the Low and Moderate Income Housing Fund pursuant to Sections 33334.2 and 33334.3 of the Law, if the Former Agency had not been dissolved, referred to in [his Official Statement as the "Housing Poriion." See APPENDIX C—"REPORT OF FISCAL CONSULTANT." TAX REVENUES AND DEBT SERVICE COVERAGE As shown in Table 7 and 8, the actual amounts received by the Successor Agency depends on the realization of certain assumptions relating to the Tax Revenues. The Fiscal Consultant has projected taxable valuation and Tax Revenues in the Project Areas. Table 7 retlects taxable value and Tax Revenues assuming no growth on the tax base. Table 8 includes certain tax base growth assumptions as presented below. The Successor Agency believes the assumptions upon which the projections are based are reasonable; however, some assumptions may not materialize and unanticipated events and circumstances may occur (see "RISK FACTORS"). Therefore, the actual Tax Revenues received during the forecast period may vary from the projections and the variations may be material and could affect the Successor Agency's ability to timely pay principal of and interest on the Bonds. Following is a discussion of assump[ions used in the projection of Tax Revenues: Base[ine Assumption (b) The values of unsecured personal property and state assessed utility property and the amount of unitary revenues have been maintained throughout the projections at their 2016/17 levels. (b) A tax rate of $1.00 per $100 of assessed value applied to the taxable property in the Project Areas has been used to determine Tax Revenues. (c) Projected Tax Revenues include a deduction for property tax collection administrative costs charged by County. (d) Projected Tax Revenues do not reflect delinquencies. (e) Projected Tax Revenues do not reflect any potential future Proposition 8 adjustments. (f) Projected Tax Revenues do not reflect any potential decreases resulting from pending assessment appeals. See "THE PROJECT AREAS - Assessment Appeals." (g) Projected Tax Revenues do not include supplemental property taxes. (h) Projected Tax Revenues include a deduction for payments due to Taxing Agencies under the Pass-Through Agreements and Tax Sharing Statutes, including subordinate payments. (g) Projected Tax Revenues include a deduction for the Housing Portion. Growth Assumption for Table 8 (a) The secured roll is assumed to increase 2% annually for inflation. See "Property Taxation in California - Manner in Which Property Valuations and Assessments are Determined (Article XIIIA)." 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' � C � � ;U T � C � � � � y '� Q G C � L .'� � i C V y L Q+ L :J 'U C c � �; � � � x v �� ct'-1iFx � . x .. '7 • � :7 � L Gl �,�p � n � L � > n, � V a I r � oA y y� I�G y i� �' 7 u i.r-. .. - 4 N v 'L 7 +� �n y ' G . � �+ . � `y O :L I.i �a n. ci: U U J I, _ _ _ _ �/i � M G� G7 0. w > O W U � a> G� � .a w � � Q � F rm_l W Q A w F■ U � ti � :i� s a .+ � ; c a : �a� � s N y � 00 3 � •° o � 4 � �a o z ..I 0 F � N � � C N CO Q y � � �. O N .'r. �� 6� 3 _ x � L F F >:7 as N �� y � 3 exa y cc. F � �; � c z L 6� � i. � Cd � 6! � � � 4r 0 Q w�+ G � U 0 F ti � c � >, U C � � Q 0 r N U U � � � � H v� �. O H U Q [r, � � .� � a� a� � 3 0 a� � -� � � .� U 'D � � .` :� > L � .� � � N s � o s U v '� �-' � �- ;; � 3 C3 J a� y � 7 C o " � ' � � a C 3 � o � t � � � ., a� � � • -� c > o. � y � s x � :� :� H � -v � � U U C N `��, Q � {-. J d � � Q .5:: � � � � � .j O L a � M RISK FACTORS The purchase qf the Boncls invnlve,s investment risk. If a ri.rk factor muteriali�es to a s��ffir.iefit degree, it could deluy or prevent payment of principu! of and/nr interest on the Bnncls. Such risk factors include, hert ure not [imited t�, the fc�l[owing mutters uncl should he ennsiderecl, ulonK tivith other informution in this Offrciaf Stutement, by potentiul i�rvestors. Factors Which May Affect Tax Revenues The ability of the Successor Agency to pay principal of and interest on the Bonds depends on the timely receipt of Tax Revenues as projected in the Official Statement (see "TAX REVENUES AND DEBT SERVICE COVERAGE"). Projections of Tax Revenues are based on the underlying assumptions relating to Tax Revenues of the Project Areas. Tax Revenues allocated to the Successor Agency (which constitute the ultimate source of payment of principal of and interest on the Bonds, as discussed in the Ofiicial Statement) are determined by the amount of incremental valuation of taxable property in the Project Areas, taxed at a rate of $1.00 per $] 00 of assessed value (17c) and the percentage of taxes collected in the Project Areas, adjusted to ref7ect prior claims on the Tax Revenues. A number of factors which may affect Tax Revenues, and consequently result in a reduction of Tax Revenues, are outlined below. Reductions in Assessed Value. Tax Revenues allocated to the RPTTF are determined by the amount of incremental taxable value in the Project Areas taxed at a rate of $1.00 per $100 of assessed value (1 �I ). The reduction of taxable values of property in the Project Areas caused by economic factors beyond the Successor Agency's control, such as relocation out of the Project Areas by one or more major property owners, sale of property to a non-profit corporation exempt from property taxation, or the complete or partial destruction of such property caused by, among other eventualities, earthquake or other natural disaster, could cause a reduction in the Tax Revenues that provide for the repayment of and secure the Bonds. Such reduction of Tax Revenues could have an adverse effect on the Successor Agency's ability to make timely payments of principal of and interest on the Bonds. Article XIIIA. Pursuant to the California voter initiative process, on June 6, 1978, California voters approved Proposition 13 which added Article XIIIA to the California Constitution. This amendment imposed certain limitations on taxes that may be levied against real property to l�Ic of the full cash value of the property, adjusted annually for infla[ion at a rate not exceeding 2�Ic annually. Full cash value is determined as of the 1975/76 assessmenl year, upon change in ownership (acquisition) or when newly constructed (see "- Property Taxation in California" for a more complete discussion of Article X111A). Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by substantial damage, destruction or other factors, and to provide that there would be no increase in the "full cash vafue" base in the event of reconstruction of property damaged or destroyed in a disaster and in other special circumstances. Reduction in lnflationary Rate. The annual inflationary adjustment, while limitcd to 2�Ic, is determined annually and may not exceed the percentage change in the California Consumer Price Index (CCPI). 38 Because the Revenue and Taxation Code does not distinguish between positive and negative changes in the CCPI used for purposes of the inflation factor, there was a decrease of 0237% in 2009/10 — applied to the 2010/11 tax roll — reflecting the actual change in the CCPI, as reported by the State Department of Finance. For each fiscal year since Article XIIIA has become effective (the 1978/79 fiscal year), the annual increase for inflation has been at least 2�Ic except in nine iiscal years as shown below: Tax Roll Percentage 1981 /82 1.000°Ic 1995/96 1.190 1996/97 1.110 1998/99 1.853 2004/OS 1.867 2010/11 (0.237) 2011/12 0.753 2014/ 15 0.454 2015/16 1.998 2016/17 1.525 Proposition 8 Adjustments. Proposition 8, approved in 1978, provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide. This methodology has been approved by the Fourth District Court of Appeals in a case in which the California Supreme Court declined further review. See "PROPERTY TAXATION IN CALIFORNIA." If Proposition 8 adjustments are made by the County Assessor in future years because of declines in the fair market value of properties caused by the lack of real estate development in the area generally, Tax Revenues may be adversely affected and as a possible consequence may have an adverse effect on the Successor Agency's ability to pay debt service on the Bonds. Assessment Appeals. Assessment appeals may be filed by property owners seeking a reduction in the assessed value of their property. After the property owner iiles an appeal, the County's Appeals Board will hear the appeal and make a determination as to whether or not there should be a reduction in assessed value for a particular property and the amount of the reduction, if any. To the extent that any reductions are made to the assessed valuation of such properties with appeals currently pending, or appeals subsequently filed, Tax Revenues, and correspondingly, Tax Revenues will be reduced. Such reductions may have an adverse effect on the Successor Agency's ability [o pay debt service on the Bonds. As of October 2016, there were 189 pending appeals fled within the last five years by propeRy owners within the Project Areas relating to $1,365,543,560 of current year or prior years' assessed value (see "THE PROJECT AREAS - Assessment Appeals"). To the extent these appeals are resolved in favor of the property owner, Tax Revenues will be reduced. Earthquake, Flood and Other Risks. Any natural disaster or other physical calamity, including earthquake, may have the effect of reducing Tax Revenues through reduction in the aggregate assessed valuation within the boundaries of the Project Areas. Wildfires. The City is located in area where wildfires are a common occurrence. While there have not been any wildfires in the City, the occurrence of any natural disaster or physical calamity, including wildfires, floods, landslides and earthquakes, could result in damage within the Project Areas. The occurrence of such events could adversely impact the value of real property in the Project Areas, Tax Revenues, the economy of the City, and, accordingly, the ability of the Redevelopment Agency to make timely payments of principal of and interest on the Bonds. 39 Floodin�. Flood zones are identiiied by the Federal Emergency Management Agcncy ("FEMA"). FEMA designates land located 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 IVSFHA as an area [hat is in a low- to moderate-risk f7ood zone (i.e. not in a floodplain) and has less than a 1�Ic 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 development in flood prone areas by preventing construction in such areas. Development is permitted in these areas once floodflow hazards are eliminated. Areas in the City that have received flood control improvements are those subject to potentially destructive floods. Significant capital investments have been made in the community where these threats occur. The City can make no representation that future maps will not be revised to include the City within an area deemed subject to flooding. The occurrence of flooding in the Project Areas could result in a reduction in Tax Revenues. Such a reduction of Tax Revenues could have an adverse effect on the ability of the Successor Agency ability to make timely payments of principal and interest on the Bonds. Seismic Factors. Generally, seismic activity occurs on a regular basis in the State. Periodically, the magnitude of a single seismic event can cause significant ground shaking and potential damage to property located at or near the center of such seismic activity. The occurrence of severe seismic activity in the City could result in damage to roads, infrastructure and other property within the Project Areas. The occurrence of such a severe seismic could have a negative impact on assessed values of taxable values of property in the Project Areas and could result in a reduction in Tax Revenues. Such a reduction of Tax Revenues could have an adverse effect on the ability of the Successor Agency ability to make timely payments of principal and interest on the Bonds. Hazardous Substances. An additional environmental condition that may result in the reduction in the assessed value of parcels would be the discovery of a hazardous substance that would limit the beneficial use of a property within the Project Areas. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner (or operator) may be required to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the Project Areas be affected by a hazardous substance would be to reduce the marketability and value of the property, perhaps by an amount in excess of the costs of remedying the condition. The Successor Agency can give no assurance that future development will not be limited by these conditions. Certain Bankruptcy Risks. The enforceability of the rights and remedies of the Owners of the Bonds and the obligations of the Successor Agency may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the Owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights. Limited Obligations. The Successor Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provision of additional sources of income to Taxing Agencies having the effect of reducing the property tax rate must necessarily reduce the amount of Tax Revenues, and consequently, Tax Revcnucs that would otherwise be available to pay the principal of, and interest on the Bonds. Interpretation of and Future Changes in the Law; Voter Initiatives. The Redevelopment Law and the Dissolution Act are complex bodies of law and their application to the Successor Agency, the Redevelopment 40 Plan and the Project Areas may be subject to different interpretations by the Successor Agency, the Department of Finance, the County Auditor-Controller, Taxing Agencies and other interested parties, including with respect to Pass-Through Agreements and Statutory Tax Sharing obligations and enforceable obligations. Since the effectiveness of the Dissolution Act, the State Department of Finance and various successor agencies have from time to time disagreed about the interpretation of different language contained in the Dissolution Act, as well as whether or not the State Department of Finance has exceeded its authority in rejecting items from ROPS submitted by successor agencies, as evidenced by numerous lawsuits. While the Successor Agency has covenanted in the lndenture to preserve and protect the security of the Bonds and the rights of the Bondholders (see APPENDIX A—"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE"), any such action taken by the Successor Agency could incur substantial time and cost that may have a detrimental effect on the Successor Agency's ability to timely pay debt service on the Bonds. Moreover, the Successor Agency cannot guarantee the outcome of any such action taken by the Successor Agency to preserve and protect the security of the Bonds and the rights of the Bondholders. In addition to the existing limitations on Tax Revenues described in this Official Statement under "PROPERTY TAXATION W CALIFORNIA," the California electorate or Legislature could adopt future limitations with the effect of reducing Tax Revenues payable to the Successor Agency. Real Estate and Genera[ Economic Risks. Tax Revenues available for payment of any indebtedness of the Successor Agency are based upon the latest actual assessed values for the 2016/ 17 Fiscal Year. Redevelopment of real property within the Project Areas by the City, as well as private development in the Project Areas, may be adversely affected by changes in general economic conditions, fluctuations in the real estate markets and interest rates, unexpected increases in development costs, changes in or new governmental policies including governmental policies to restrict or control certain kinds of development and by other similar factors. If development and redevelopment activities in the Project Areas encounters significant obstacles of the kind described in the Official Statement or other impediments, the economy of the area in and around the Project Areas could be adversely affected, causing reduced taxable valuation of propeRy in the Project Areas a reduction of the Tax Revenues and a consequent reduction in Tax Revenues available to repay the Bonds. Due to the decline in the general economy of the region, owners of property within the Project Areas may be less able or less willing to make timely payments of property taxes, causing a delay or reduction of Tax Revenues and consequently a reduction in Tax Revenues available to repay the Bonds. Recognized Obligation Payment Schedule. The Dissolution Act provides that only those payments listed in the ROPS may be made by the Successor Agency from the funds specified in the ROPS. The Dissolution Act requires successor agencies to prepare and approve, and submit to the successor agency's oversight board and the State Department of Finance for approval, a ROPS pursuant to which enforceable obligations (as defined in the Dissolution Act) of the successor agency are listed, together with the source of funds to be used to pay for each enforceable obligation. Tax Revenues will not be distributed from the RPTTF by the County Auditor-Controller to the Successor Agency's Redevelopment Obligation Retirement Fund without a duly approved and effective ROPS obtained in sufficient time prior to the January 2 or June 1 distribution dates, as applicable. See "SECURITY FOR THE BONDS - Recognized Obligation Payment Schedules." In the event the Successor Agency were to fail to file a ROPS with respect to any six-month period, the availability of Tax Revenues to the Successor Agency could be adversely affected for such period. The Successor Agency has covenanted to take all actions required under the Dissolution Act to include scheduled debt service on the Bonds as well as any amount required under the Indenture to replenish the Reserve Account of the Debt Service Fund, in ROPS for each six-month period of a Fiscal Year and to enable the County Auditor-Controller to distribute from the RPTTF to the Successor Agency's Redevelopment Obligation Retirement Fund on each January 2 and June 1 amounts required for the Successor Agency to pay principal of, and interest on, the Bonds coming due in the respective six-month period of a Fiscal Year, including listing a reserve on the ROPS to the extent required by the Indenture or when the next property tax allocation is projected to be insufficient to pay all obligations due under the provisions of the Bonds for the next payment due in the following six-month period (see APPENDIX A—"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE"). 41 The Dissolution Act also contains certain penalties in the event the Successor Agency does not timely submit a Recognized Obligation Payment Schedule for a Fiscal Year. Specifically, a ROPS must be submitted by the Successor Agency, after approval by the Oversight Board, the County Auditor-Controller, the State Department of Finance, and the State Controller no later than February 1 of each year. If the Successor Agency does not submit an Oversight Board-approved ROPS by such deadlines, the City wi11 be subject to a civil penalty equal to $10,000 per day for every day the schedule is not submitted to the State Department of Finance. Additionally, the Successor Agency's administrative cost allowance is reduced by 25�Ic if the Successor Agency does not submit an Oversight Board-approved ROPS by the lOth day after the February 1 deadline with respect to a ROPS for the subsequent annual period. The Successor Agency has submitted all ROPS, duly approved by the Oversight Board, in a timely manner. 2017 Series A Bonds Loss of Tax Exemption. As discussed under the caption "LEGAL MATTERS - Tax Matters," interest on the 2017 Series A Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the 2017 Series A Bonds were executed and delivered as a result of future acts or omissions of the Successor Agency in violation of its covenants contained in the Indenture. Should such an event of taxability occur, the 2017 Series A Bonds are not subject to special redemption or any increase in interest rate and will remain outstanding until maturity. In addition, Congress has considered in the past, is currently considering and may consider in the future, legislative proposals, including some that carry retroactive effective dates, that, if enacted, would alter or eliminate the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the 2017 Series A Bonds. Prospective purchasers of the 2017 Series A Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. The Successor Agency can provide no assurance that federal tax law will not change while the 2017 Series A Bonds are outstanding or that any such changes will not adversely affect the exclusion of the interest on the 2017 Series A Bonds from gross income for federal income tax purposes. If the exclusion of the interest on the 2017 Series A Bonds from gross income for federal income tax purposes were amended or eliminated, it is likcly that the market price for the 2017 Series A Bonds would be adversely impacted. IRS Audit of Tax-Exempt Bond Issues. The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the 2017 Series A Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the 2017 Series A Bonds might be affected as a result of such an audit of the 2017 Series A Bonds (or by an audit of similar bonds). Secondary Market. There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. LEGAL MATTERS Enforceability of Remedies The remedies available to the Trustee and the Owners of the Bonds upon an event of default under the Indenture or any other document described in the Official Statement are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified to the extent that the enforceability of certain legal rights related to the Bonds and the Indenture are subject to limitations 42 imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. Approval of Legal Proceedings Richards Watson & Gershon, A Professional Corporation, as Bond Counsel, will render opinions with respect to the Bonds which state that the Indenture is a valid and binding obligation of the Successor Agency and enforceable in accordance with its terms. The legal opinions of Bond Counsel will be subject to the effect of bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights and to the exercise of judicial discretion in accordance with general principles of equity. See "APPENDIX F" for the proposed forms of Bond Counsel's opinions with respect to the Bonds. The Successor Agency has no knowledge of any fact or other information which would indicate that the Indenture is not so enforceable against the Successor Agency, except to the extent such enforcement is limited by principles of equity and by state and federal laws relating to bankruptcy, reorganization, moratorium or creditors' rights generally. Certain legal matters will be passed on for the Successor Agency by Richards Watson & Gershon, A Professional Corporation, Los Angeles, California, as Successor Agency Counsel. Best Best & Krieger LLP, Riverside, California, will also pass on certain legal matters for the Successor Agency as Disclosure Counsel. Certain legal matters will be passed on for the Underwriter by its counsel, Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California. Fees payable to Bond Counsel, Disclosure Counsel and Underwriter's Counsel are contingent upon the sale and delivery of the Bonds. Tax Matters 2017 Series A Bonds The Internal Revenue Code of 1986, as amended (the "Code"), establishes certain requirements which must be met subsequent to the issuance and delivery of the 2017 Series A Bonds for interest thereon to be and remain excluded from gross income for federal income tax purposes. Noncompliance with such requirements could cause interest on the 2017 Series A Bonds to be included in gross income for federal income tax purposes retroactive to their date of issue. These requirements include, but are not limited to, provisions which limit how the proceeds of the 2017 Series A Bonds may be spent and invested, and generally require that certain investment earnings be rebated on a periodic basis to the United States of America. The Successor Agency has made certifications and representations and has covenanted to maintain the exclusion of the interest on the 2017 Series A Bonds from gross income for federal income tax purposes pursuant to Section 103(a) of the Code. In the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, under existing law and assuming the accuracy of such certifications and representations by the Successor Agency and compliance with such covenants, (i) interest on the 2017 Series A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Code, and (ii) the 2017 Series A Bonds are not "specified private activity bonds" within the meaning of Section 57(a)(5) of the Code and, therefore, interest on the 2017 Series A Bonds is not a preference item for purposes of computing the alternative minimum tax imposed by Section 55 of the Code. Bond Counsel is also of the opinion that interest on the 2017 Series A Bonds is exempt from State of California personal income taxes. Bond counsel expresses no opinion as to any other tax consequences regarding the 2017 Series A Bonds. Under the Code, a portion of the interest on the 2017 Series A Bonds earned by certain corporations may be subject to a federal corporate alternative minimum tax. In addition, interest on the 2017 Series A Bonds may be subject to a federal branch profits tax imposed on certain foreign corporations doing business in the United States and to a federal tax imposed on excess net passive income of certain S corporations. The exclusion of interest from gross income for federal income tax purposes may have certain adverse federal income tax consequences on items of income, deduction or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those 43 deemed to incur or continue indebtedness [o acquire or carry tax-exempt obligations, and individuals eligible for the earned income tax credit. Bond Counsel will express no opinion regarding these and other such consequences. Bond Counsel has not undertaken to advise in the future whether any circumstances or events occurring after the date of issuance of the 2017 Series A Bonds may affect the tax status of interest on the 2017 Series A Bonds. Legislation affecting tax-exempt obligations is regularly considered by the United States Congress and may also be considered by the State legislature. Court proceedings may also be �led, the outcome of which could modify the tax treatment of obligations such as the 2017 Series A Bonds. No assurance can be given that legislation enacted or proposed, or actions by a court, after the date of issuance of the 2017 Series A Bonds, will not contain provisions which could eliminate, or directly or indirectly reduce the benefit of the exclusion of interest on the 2017 Series A Bonds from gross income for federal income tax purposes, or have an adverse effect on the market value or marketability of the 2017 Series A Bonds. For example, recent presidential and legislative proposals would eliminate, reduce or otherwise alter the tax benefits currently provided to ceriain owners of state and local government bonds, including proposals that would result in additional federal income tax on taxpayers that own tax-exempt obligations if their incomes exceed certain thresholds. investors in the 2017 Series A Bonds should be aware that any such future legislative actions (including federal income tax reform) may retroactively change the treatment of all or a portion of the interest on the 2017 Series A Bonds for federal income tax purposes for all or certain taxpayers. ln such event, the market value of the 2017 Series A Bonds may be adversely affected and the ability of holders to sell their 2017 Series A Bonds in the secondary market may be reduced. The 2017 Series A Bonds are not subject to special mandatory redemption, and the interest rates on the 2017 Series A Bonds are not subject to adjustment, in the event of any such change. Investors should consult their own financial and tax advisors to analyze the importance of these risks. Certain requirements and procedures contained or referred to in relevant documents may be changed and certain actions may be taken, under the circumstances and subject to the terms and conditions set fonh in such documents, upon the advice or with the approving opinion of nationally recognized bond counsel. Bond Counsel expresses no opinion as to any 2017 Series A Bond, or the interest thereon, if any such change occurs or action is taken upon the advice or approval of bond counsel other than Richards, Watson & Gershon, A Professional Corporation. If the issue price of a 2017 Series A Bond (the first price at which a substantial amount of the bonds of a maturity are to be sold to the public) is less than the stated redemption price at maturity of such 2017 Series A Bond, the difference constitutes original issue discount, the accrual of which is excluded from gross income for federal income tax purposes to the same extent as interest on the 2017 Series A Bonds. Further, such original issue discount accrues actuarially on a constant yield method over the term of each such 2017 Series A Bond and the basis of each 2017 Series A Bond acquired at such initial offering price by an initial purchaser thereof will be increased by the amount of such accrued original issue discount. The accrual of original issue discount may be taken into account as an increase in the amount of tax-exempt income for purposes of deter�nining various other tax consequences of owning such 2017 Series A Bonds. Purchasers who acquire 2017 Series A Bonds with original issue discount are advised that they should consult with their own independent tax advisors with respect to the state and local tax consequences of owning such 2017 Series A Bonds. If the issue price of a 2017 Series A Bond is greater than the stated redemption price at maturity of such 2017 Series A Bond, the difference constitutes original issue premium, the amortization of which is not deductible from gross income for federal income tax purposes. Original issue premium is amortized over the period to maturity of such 2017 Series A Bond based on the yield to maturity of that Bond (or, in the case of a 2017 Series A Bond callable prior to its stated maturity, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on that 2017 Series A Bond), compounded semiannually. For purposes of determining gain or loss on the sale or other disposition of such 2017 Series A Bond, the purchaser is required to decrease such purchaser's adjusted basis in such 2017 Series A Bond by the amount of premium that has amortized to the date of such sale or other disposition. As a result, a 44 purchaser may realize taxable gain for federal income tax purposes from the sale or other disposition of such 2017 Series A Bond for an amount equal to or less than the amount paid by the purchaser for that 2017 Series A Bond. A purchaser of that 2017 Series A Bond in the initial public offering at the issue price for that 2017 Series A Bond who holds it to maturity (or, in the case of a callable 2017 Series A Bond, to its earlier call date that results in the lowest yield on that 2017 Series A Bond) will realize no gain or loss upon its retirement. Payments of interest on tax-exempt obligations, including the 2017 Series A Bonds, are generally subject to IRS Form 1099-INT information reporting requirements. If an owner of a 2017 Series A Bond is subject to backup withholding under those requirements, then payments of interest will also be subject to backup withholding. Those requirements do not affect the exclusion of such interest from gross income for federal income tax purposes. Prospective purchasers of the 2017 Series A Bonds should consult their own independent tax advisers regarding pending or proposed federal and state tax legislation and court proceedings, and prospective purchasers of the 2017 Series A Bonds at other than their original issuance at the respective prices indicated on the inside front cover of this Official Statement should also consult their own tax advisers regarding other tax considerations such as the consequences of market discount, as to all of which Bond Counsel expresses no opinion. Bond Counsel's engagement with respect to the 2017 Series A Bonds ends with the issuance of the 2017 Series A Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Successor Agency or the owners of the 2017 Series A Bonds regarding the tax status of interest thereon in the event of an audit examination by the IRS. The IRS has a program to audit tax-exempt obligations to determine whether the interest thereon is includible in gross income for federal income tax purposes. lf the IRS does audit the 2017 Series A Bonds, under current IRS procedures, the IRS will treat the Successor Agency as the taxpayer and the benefcial owners of the 2017 Series A Bonds will have only limited rights, if any, to obtain and paRicipate in judicial review of such audit. Any action of the IRS, including but not limited to selection of the 2017 Series A Bonds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the market value of the 2017 Series A Bonds. 2017 Series B Bonds ln the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, under existing law, interest on the 2017 Series B Bonds is exempt from State of California personal income taxes. Bond Counsel expresses no opinion as to any other tax consequences regarding the 2017 Series B Bonds. Interest on the 2017 Series B Bonds is not exc[uded from gross income for federal income tax purposes. The legal defeasance of the 2017 Series B Bonds may result in a deemed sale or exchange of the 2017 Series B Bonds under certain circumstances; owners of the 2017 Series B Bonds should consult their own tax advisors as to the federal income tax consequences of such an event. Prospective purchasers of the 2017 Series B Bonds should also consult with their own tax advisors as to the federal, state and local, and foreign tax consequences of their acquisition, ownership and disposition of the 2017 Series B Bonds. If a beneficial owner of a 2017 Series B Bond fails to provide its taxpayer identification number or fails to report all interest on its federal income tax returns, payments of principal and interest made on the 2017 Series B Bond will be subject to backup withholding. Beneficial owners of the 2017 Series B Bonds should consult their tax advisors with respect to this and other tax consequences of ownership of the 2017 Series B Bonds. The following discussion is generally limited to "U.S. owners," meaning beneficial owners of 2017 Series B Bonds that for United States federal income tax purposes are individual citizens or residents of the United States, corporations or other entities taxable as corporations created or organized in or under the laws of the United States or any state thereof (including the District of Columbia), and certain estates or trusts with specific connections to the United States. Partnerships holding 2017 Series B Bonds, and partners in such partnerships, should consult their own tax advisors regarding the tax consequences of an investment in the 2017 Series B Bonds (including their status as U.S. owners). !� Certain of the 2017 Series B Bonds (Discount Bonds) may be offered and sold to the public at an original issue discount (OID). OID is the excess of the stated redemption price at maturity (the principal amount) over the "issue price" of such bonds, provided that excess equals or exceeds a statutory de minimis amount (one-quarter of one percent of the bond's stated redemption price at maturity multiplied by the number of complete years to its maturity, or if required by applicable Treasury Regulations, to an earlier call date). The issue price of a Discount Bond is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of the Discount Bonds of the same maturity are sold pursuant to that offering. For federal income tax purposes, OID accrues to the owner of a Discount Bond over the period to maturity based on the constant yield method, compounded semiannually (or over a shorter permitted compounding interval selected by the owner). The portion of OID that accrues during the time a U.S. owner owns a Discount Bond (i) constiwtes interest includable in the U.S. owner's gross income for federal income tax purposes and (ii) is added to the U.S. owner's tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale, or other disposition of the Discount Bond. The effect of OID is to accelerate the recognition of taxable income during the term of the Discount Bond. Certain of the 2017 Series B Bonds (Premium Bonds) may be offered and sold to the public at a price in excess of their stated redemption price (the principal amount) at maturity. If a U.S. owner purchases a Premium Bond, that owner will be considered to have purchased such a Premium Bond with "amortizable bond premium" equal in amount to such excess. The U.S. owner may elect (and that election will apply to all securities purchased at a premium by such U.S. Owner), in accordance with the applicable provisions of Section 171 of the Code, to amortize that premium as an offset to the interest payments on the Premium Bond using a constant yield to maturity method over the remaining term of the Premium Bond (or, if required by applicablc Treasury Regulations, to an earlier call date). Pursuant to Section 67(b)(11) of the Code, the amortization of that premium is not considered a miscellaneous itemized deduction. Any amortization of bond premium will reduce the basis of the Premium Bond pursuant to Section 1016(a)(5) of the Code. Owners of Discount or Premium Bonds (or book entry interests in them) should consul[ their own tax advisers as to the determination for federal tax purposes of the amount of OID or amortizable bond premium properly accruable in any period with respect to the Discount or Premium Bonds and as to other federal [ax consequences and the treatment of OID and amortizable bond premium for purposes of state or local taxes on (or based on) income. General information repor[ing requirements will apply to payments of principal and interest made on 2017 Series B Bonds and the proceeds of the sale of 2017 Series B Bonds to non-corporate owners, and "backup withholding" at a rate of 28�Io will apply to such payments if the owner fails to provide an accurate taxpayer identification number in the manner required or fails to report all interest required to be shown on its federal income tax returns. A beneficial owner of 2017 Series B Bonds that is a U.S. owner generally can obtain complete exemption from backup withholding by providing a properly completed IRS Form W-9 (Request for Taxpayer ldentification Number and Certification). For taxable years beginning after Uecember 31, 2012, a U.S. owner that is an individual or estate, or a trust not included in a special class of trust that is exempt from such tax, is subject to a 3.8 percent Medicare tax on the lesser of (i) the U.S. owner's "net investment income" for the taxable year, and (ii) the excess of the U.S. owner's modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals is between $125,000 and $250,000, depending on the individual's circumstances). A U.S. owner's net investment income generally includes interest income on, and net gains from the disposition of, 2017 Series B Bonds, unless such interest income or net gains are derived in the ordinary course of a trader business (other than a trader business that consists of certain passive or trading activities). A U.S. owner that is an individual, estate, or trust, should consult its tax advisor regarding the applicability of the Medicare tax. 2017 Series B Bonds — Non-U.S. Owners Under the Code, interest and OIU on any 2017 Series B Bond whose beneticial owner is not a U.S. owner are generally not subject to United States income tax or withholding tax (including backup withholding) 46 if the non-U.S. owner provides the payor of interest on the 2017 Series B Bonds with an appropriate statement as to its status as a non-U.S. owner. This statement can be made on IRS Form W-8BEN or a successor form. If, however, the non-U.S. owner conducts a trade or business in the United States and the interest or OID on the 2017 Series B Bonds held by the non-U.S. owner is effectively connected with such trade or business, that interest or OID will be subject to United States income tax but will generally not be subject to United States withholding tax (including backup withholding). The foregoing is a brief summary of certain federal income tax consequences to a non-U.S. owner. Non-U.S. owners should consult their own tax advisors regarding the tax consequences of an investment in the 2017 Series B Bonds. 2017 Series B Bonds — Foreign Account Tax Compliance Act The Foreign Account Tax Compliance Act ("FATCA") generally imposes a 30 percent withholding tax on interest payments and proceeds from the sale of interest-bearing obligations for payments made after the relevant effective date to (i) certain foreign iinancial institutions that fail to certify their FATCA status, and (ii) investment funds and non-financial foreign entities if certain disclosure requirements related to direct and indirect United States shareholders and/or United States account holders are not satisfied} Under applicable Treasury Regulations, the FATCA withholding tax of 30 percent will generally be imposed, subject to certain exceptions, on payments of (i) interest on 2017 Series B Bonds on or after July 1, 2014, and (ii) gross proceeds from the sale or other disposition of other 2017 Series B Bonds on or after January 1, 2017, where such payments are made to persons described in the preceding paragraph.) In the case of payments made to a"foreign �nancial institution" (generally including an investment fund), as a beneficial owner or as its intermediary, the FATCA withholding tax generally will be imposed, subject to certain exceptions, unless such institution (i) enters into (or is otherwise subject to) and complies with an agreement with the United States government (a "FATCA Agreement"), or (ii) is required by and complies with applicable foreign law enacted in connection with an intergovernmental agreement between the United States and a foreign jurisdiction (an "IGA"), in either case to, among other things, collect and provide to the United States or other relevant tax authorities certain information regarding United States account holders of such institution. In the case of payments made to a foreign entity that is not a�nancial institution (as a beneficial owner), the FATCA withholding tax generally will be imposed, subject to certain exceptions, unless such entity either provides the withholding agent with a certification that it does not have any "substantial" United States owner (generally, in a specified United States person that directly or indirectly owns more than a specified percentage of such entity) or identifies its "substantial" United States owners. If 2017 Series B Bonds are held through a foreign financial institution that enters into (or is otherwise subject to) a FATCA Agreement, such foreign financial institution (or, in certain cases, a person paying amounts to such foreign financial institutions) generally will be required, subject to certain exceptions, to withhold the 30 percent FATCA tax on payments of dividends or the items described above made to (i) a person (including an individual) that fails to comply with certain information requests, or to relies (ii) a foreign financial institution that has not entered into (�nd is not otherwise subject to) a FATCA Agreement and that is not required to comply with FATCA pursuant to applicable foreign law enacted in connection with an IGA. Coordinating rules may limit duplicative withholding in cases where the withholding described above in "Non-U.S. Owners" or back-up withholding described above also applies. If any amount of, or in respect of, United States withholding tax were to be deducted or withheld from payments on 2017 Series B Bonds as a result of a failure by an investor (or by an institution through which an investor holds the 2017 Series B Bonds) to comply with FATCA, none of the Successor Agency, the Trustee, any paying agent or bond registrar nor any other person would, pursuant to the terms of the 2017 Series B Bonds, be required to pay additional amounts with respect to any 2017 Series B Bond as a result of the deduction or withholding of such tax. Non-U.S. Owners should consult their tax advisors regarding [he application of FATCA to the ownership and disposition of 2017 Series B Bonds. 47 Form of Bond Counsel Opinions A copy of each of the proposed forms of Bond Counsel's final approving opinions with respect to the 2017 Series A Bonds and the 2017 Series B Bonds are attached hereto as Appendix F. No Litigation There is no action, suit or proceeding known to the Successor Agency to be pending and notice of which has been served upon and received by the Successor Agency, or threatened, restraining or enjoining the execution or delivery of the Bonds or the Indenwre or in any way contesting or affecting the validity of the foregoing or any proceedings of the Successor Agency taken with respect to any of [he foregoing. CONCLUDING INFORMATION Ratings on the Bonds S&P Global Ratings has assigned an uninsured rating of "_" to the Bonds. Such rating reflect only the views of S&P Global ratings, and any desired explanation of the significance of such ratings may be obtained from such rating agency at the following address: S&P Global Ratings, 55 Water Street, New York, New York 10041, (212) 438-2000. Generally, a rating agency bases its rating on the information and materials furnished to it and on invcstiga[ions, studies and assumptions of its own. There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds. Except as otherwise required in the Continuing Disclosure Certificate, the Successor Agency undertakes no responsihility either to bring [o the attention of the owners of any Bonds any downward revision or withdrawal of any rating obtained or to oppose any such revision or withdrawal. A rating is no[ a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. 1'he Municipal Advisor The Successor Agency has retained Del Rio Advisors, LLC of Modesto, California, as municipal advisor (the "Municipal Advisor") in connection with the offering of the Bonds. All financial and other information presented in this Official Statement has been provided by the Successor Agency and others from their records. Unless otherwise foomoted, the Municipal Advisor takes no responsibility for the accuracy or completeness of the data provided by the Successor Agency or others and has not undertaken to make an independent verification or does not assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. The Municipal Advisor has assisted the Successor Agency with the structure, timing and terms for the sale of the Bonds. The Municipal Advisor provides municipal advisory services only and does not engage in the underwriting, marketing, or trading of municipal securities or other negotiable instruments. The fee of the Municipal Advisor is not contingent upon the successful closing of the Bonds. Continuing Disclosure The Successor Agency will provide annually certain iinancial information and data relating to the Bonds by not later than April 1 in each year commencing April 1, 2018 (the "Annual Report"), and to provide notices of the occurrence of certain other listed events. Willdan Group, Inc. will act as Dissemination Agent. The specific nature of the information to be contained in the Annual Report or the notices of listed events and certain other terms of the continuing disclosure obligation are found in the form of the Successor Agency's Disclosure Certificate attached in APPENDLX E—"FORM OF CONTINUING DISCLOSURE CERTIFICAT�." .• The Former Agency entered into previous continuing disclosure undertakings with respect to its bond obligations. [A review of compliance with continuing disclosure undertakings for iilings required by the Successor Agency and its related entities within the past five years indicates that the Successor Agency and its related entities failed to timely disclose one rating change in 2013. The Successor Agency is currently in compliance with its continuing disclosure obligations. The Successor Agency has adopted continuing disclosure compliance policies.] Underwriting The Bonds were sold to Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), who is offering the Bonds at the prices set forth on the inside cover pages hereof. The initial offering prices may be changed from time to time and concessions from the offering prices may be allowed to dealers, banks and others. The Underwriter has purchased the 2017 Series A Bonds at a price equal to $ , which amount represents the principal amount of the 2017 Series A Bonds plus a net original issue premium of $ , less an Underwriter's discount of $ . The Underwriter has purchased the 2017 Series B Bonds at a price equal to $ , which amount represents the principal amount of the 2017 Series B Bonds less an original issue discount of $ , less an Underwriter's discount of $ . The Underwriter will pay certain of its expenses relating to the offering from the Underwriter's discount. Additional Information The summaries and references contained in the Official Statement with respect to the Indenture, the Bonds, statutes and other documents, do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute and references to the Bonds are qualified in their entirety by reference to the form hereof included in the Indenture. Copies of this document may be obtained after delivery of the Bonds from the Successor Agency at 73510 Fred Waring Drive, Palm Desert, California 92260. References All statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Successor Agency and the purchasers or Owners of any of the Bonds. Execution The execution and delivery of this Of�cial Statement by the Executive Director of the Successor Agency has been duly authorized by the Successor Agency. SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY I� Lauri Aylaian, Executive Director :: APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE A-1 APPENDIX B CITY OF PALM DESERT INFORMATION GENERAL ECONOMIC DATA CONCERNING THE CITY OF PALM DESERT AND THE COUNTY OF RIVERSIDE The following informution concerning the City of Palm Desert, the County of Riverside und surrounding areus is included only for the purpose of supplying genera! informatinn regarding the community. Overview The City of Palm Desert (the "City"), incorporated in November 26, 1973 as a general law city, became a charter city through the adoption of Ordinance 858 by the City Council on January 8, 1998. The City is located in the Coachella Valley and is approximately mid-way between the cities of Indio and Palm Springs, 117 miles east of Los Angeles, 118 miles northeast of San Diego and 515 miles southeast of San Francisco. The City occupies an area of approximately 26 square miles. Elevation of the City is 243 feet and the mean temperature is 73.1 degrees. Except in summer, the weather is mild and annual average rainfall is 3.38 inches. According to the State Department of Finance, the City population as of January 1, 2016 was approximately 49,355. Government The City Council is comprised of five members, elected at large for four-year staggered terms every [wo 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 December following each election. The City Council selects one of its members to serve as Mayor for a one-year term and appoints a City Manager to conduct the day to day business of the City and the City Clerk. The City Attorney is appointed by City Council. The City operates as "Contract City" utilizing, primarily, agreements with other governmental entities, private companies and individuals to provide services. Contracted services include police and �re protection provided through the County, animal control, health services, legal services and landscape maintenance. Table B-1 CITY OF PALM DESERT CITY COUNCIL MEMBERS Name Jan Harnik Sabby Jonathan Kathleen Kelly Gina Nestande Susan Marie Weber Office Mayor� Mayor Pro Tem� Council Member-elect Council Member-elect Council Member Population Between 2010 and 2016, the city's population increased by a total of 890 or approximately 1.83%. In addition to permanent residents, the city has approximately 32,000 seasonal residential residents who live three ' Subject to City Council reorganization after election certification on Dccember 8, 2016 B-1 to six months in [he City, primarily during the winter months. Table B-3 illustrates the population of the City, the County and the State for 1990, 2000, and 2010 through 2016. Table B-2 CITY OF PALM DESERT POPULATION ESTIMATES The State of California, County of Riverside and the City of Palm Desert (As of January 1 of Each Year) Year (January 1) 1990"' 2000�" 2010��' 2011 2012 2013 2014 2015 2016 City of Palm Desert 23,252 41,155 48,445 48,957 48,924 48,282 48,494 48,835 49,335 Riverside County 1,170,413 1,545,387 2,189,641 2,212,874 2,239,715 2,266,549 2,291,093 2,317,924 2,347,828 State of California 29,758,213 33,873,086 37,253,956 37,536,835 37,881,357 38,239>207 38,567>459 38,907,642 39,255,883 ' �' As of April 1. Sources: United States Department of Commerce, Burcau of the Censuti for 2010 and State of California Deparunent of Finance for remaining ycars. Labor Force and Employment The main sources of revenue in the City are derived from tourism and sales tax. Historically, the unemployment rate in the City has been lower than that for the County and the State. : Table B-3 table represents the labor patterns in the City, the County, the State, and the United States from 2012 through 2016. Table B-3 CITY OF PALM DESERT, RIVERSIDE COUNTY, STATE OF CALIFORNIA AND UNITED STATES CIVILIAN LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Year and Area 2012 City County State United States 2013 City County State United States 2014 City County State United States 2015 City County State United States 2016 City�2' County«' , State�-' United States��' Labor Force 21,800 988,600 18,551,400 154,975,000 22,200 998,800 18,670,100 155,389,000 22,600 1,017,000 18,827,900 155,922,000 23,200 1,035,200 18,981,800 157,130,000 23,500 1,051,100 19,357,900 159,907,000 Emplovment 20,000 873,600 16,627,800 142,469,000 20,600 899,900 17,001,000 143,929,000 21,300 933,800 17,418,000 146,300,000 22,000 965,000 17,798,600 148,834,000 22,400 978,900 18,281,600 151,968,000 Unemployment 1,800 115,100 1,183,200 12,506,000 1,600 98,900 1,669,000 11,460,000 1,300 83,200 1,409,900 9,617,000 1,100 69,600 1,183,200 8,296,000 1,100 72,200 1,076,300 7,939,000 Unemployment Rate 8.41 �Ic 11.6 10.4 8.1 7.1 9.9 8.9 7.4 5.8 82 7S 6.2 4.8 6.7 6.2 5.3 4.9 6.9 5.6 S.0 �� As of September. �'' As of August. Sources: State of California Employment Development Department and U.S. Departmen[ of Labor, Bureau of Labor Statistics. : Table B-4 CITY OF PALM DESERT MAJOR EMPLOYERS (As of October 2015) Company l. JW Marriott - Dcsert Springs Resort & DS Villas 2. Universal Protection Services 3. Securitas - Sccurity Scrvicc USA 4. Avida Carcgivcrs - P. Dcscrt S. Sunshine Landscapc 6. Walmart 7. Macys 8. CVWD 9. Bighorn Golf Club l0. Costco ProducbService Commercial Hotel, Timeshare & Retail Sccurity Services Security Scrviccs Homc Hcalthcare Gardcning/Landscaping Scrvicc Rctail/Store Retail/Storc Municipal Watcr District Golf Coune/Country Club Retail Warchousc Number of Employees 2,304 1,500 700 550 500 350 350 :i25 250 250 Sources: City of Palm Desert Comprehensive Annual Financial Report for Fiscal Ycar ended June 30, 2015. Commercial Activity A sales tax is imposed on retail sale or consumption of personal property. Salcs tax revenues are determined by the total taxable transactions within a jurisdiction and distributed by the State Board of Equalization to the jurisdiction where the sale took place. Sales taxes collected from merchants with no permanent place of business (i.e., manufacturers, construction contractors, etc.) are accumulated to a Countywide or Sta[e-wide (out-of-state businesses) pool and distributed to cities and counties in proportion to their collection from all sales taxpayers. The value and volume of these taxable transactions are dependent on economic conditions and other factors. Such factors included the level of inflation affecting the price of goods and services subject to the sales tax, the rate of population growth in the general area, the characteristics of retail developments, such as the relative size of market service areas, the sensitivity of the types of businesses within the City to changes in the economy, and competing retail establishments outside the City. A deterioration of economic conditions and other factors influencing taxable sales generated in the City, may reduce the City's sales tax revenues. The table below summarizes taxable transactions in the City for calendar years 2010 through 2014. � .i Table B-5 CITY OF PALM DESERT TAXABLE RETAIL SALES DATA Calendar Years 2010 to 2014 ($ in 000's) Retail and Food Services Motor Vehicle and Parts Dealers Home Furnishings and Appliance Stores Bldg. Matrl. and Garden Equip. and Supplies Food and Beverage Stores Gasoline Stations Clothing and Clothing Accessories Stores General Merchandise Stores Food Scrvices and Drinking Placcs Other Retail Group Total Retail and Food Services All Other Outicts Total All Outlets ��' Last year available. Sources: Statc Board of Equalization. Utilities 2010 $ 17,472 95,561 63,999 47,242 70,512 172,869 340,762 I50>093 I 32,548 $1,091,059 $ 175,775 $1,266,834 2011 $ 19,115 91,246 68,214 48,002 90,431 193,087 366,91 i 162,864 142,704 $1,182,576 $ 201,633 $1,384,208 2012 i 20,309 95,997 76,241 48,776 92,684 202,706 379,856 174,101 152,229 $1,242,899 � 228,083 $1,470,982 2013 $ 22,955 95,108 77,714 56,448 93,064 21 1,465 382,224 188,056 156,276 $1,283,310 $ 247,203 $1,530,512 2014�" $ 22,780 ] 04,568 80,577 68.378 87,049 25:�,187 356,366 197,�74 168,455 $],338.734 � 256,020 $1,594,753 Water, sewage treatment and wastewater disposal are provided by the Coachella Valley Water District. Southern California Gas Company supplies natural gas to the City and electric power is provided by the Southern California Edison Company. Telephone service is available through Frontier. Cable television service is provided by Spectrum. Transportation Inter-City transportation is provided by Sunline Bus System which provides service throughout the entire Coachella Valley. The City's central highways are California Highway 111 and 74 which connect to US Interstate 10 and to California Highway 63 and 86. Shipping is provided by numerous truck carriers which have overnight service to Los Angeles, San Francisco, San Diego and Phoenix. Rail transportation is provided by the Southern Pacific Railroad located in Indio, 10 miles east of the City, and by Amtrak, which has two stations located in Coachella Valley. A full service airport is located in Palm Springs, 12 miles northwest of the City, with approximately seven carriers providing service. The airport has an 8,500 foot runway and general aviation facilities. There is also a private airport in Bermuda Dunes, eight miles northeast of the City. Community Services The City of Palm Desert provides both police and iire protection through contracts with the County of Riverside. The Riverside County Public Library System provides library services to the City. The Ci[y/County also operates a 43,000 square foot public library on the College of the Desert campus which is jointly used by the public and the College of the Desert. � Income The following table shows per capita income for the City, County, and State for calendar years 2006 through 2015. Table B-6 CITY OF PALM DESERT PER CAPITA PERSONAL INCOME�� County of Riverside and State of California Year 2006 2007 2008 2009 2010 2011 2012 201:i 2014 2015 City of Palm Desert �42339 42,867 47,919 48,069 48,286 51,940 52,336 52,613 52,906 S:i,031 County of Riverside �31,203 31,586 � 1,497 29,869 29,753 31,073 3 I ,879 32,503 33,590 n/a California $41,693 4�, l 82 43,786 41,588 42,411 44,852 47,614 48,125 49,985 n/a Source: City of Palm Desert Comprehensive Annual Financial Report for Fiscal Year ended June 3Q 2015; U.S. Department of Commerce Bureau of Economic Analysis. Education, Culture and Recreation Public school education is provided by the Desert Sands Unified School District (the "School Uistrict"). The School District provides preschool through grade 12 education to students living in the City and the communities of Indian Wells, Indio, La Quinta, Rancho Mirage and Bermuda Dunes. The School District and operates seven elementary schools, six middle schools, three comprehensive high schools, one independent study alternative school and a continuation high school. The College of the Desert, the Coachella Valley Community College is located in the City. A satellite campus of California State University, San Bernardino ("CSUSB") is located approximately five miles northeast of City Hall. In 2002, the first building on the campus, the Mary Stuart Rogers Gateway Building, was constructed and occupied. In 2005 two additional buildingt were constructed and occupied which included a three story classroom building and the Indian Wells Theater, a 300-seat performing arts center. The University of California, Riverside has also established a campus in the City. The UCR Palm Desert Graduate Center opened as a permanent satellite campus in 2005, when construction was completed on the approximately 21,200 square foot Richard J. Heckmann International Center for Entrepreneurial Management and an approximately 23,600 squarc foot cducational facility. Cultural facilities in the City include the 1,127 seat McCallum Theater for the Performing Arts located in Bob Hope Cultural Center, the 1,200 acre Living Desert Zoo and Gardens, the Palm Springs Art Museum, which includes an 8,400 square foot exhibit building and a 250,000 square foot sculp[ure garden, and the Art in Public Places (a museum without walls featuring more than 130 works of art throughout the City). Recreation programs for residents of the City and other neighboring communities are offered through the Coachella Valley Recreation and Park District (the "Park District"). The Park Uis[rict provides recreational activities and programs ranging from tiny tots progra�ns, kids clubs and summer day camp, to dance, health and fitness and music instruction, to the senior games. :. The Desert Willow Golf Resort, two championship 18-hole, public golf course, is located on approximately 540 acres in the northern area of the City. This golf course also features a 33,000 square foot clubhouse with restaurant, dining and banquet facilities. The City also is home to five other public golf courses and resorts and 20 private or semi-private golf clubs and resorts. I: APPENDIX C FISCAL CONSULTANT'S REPORT C-1 APPENDIX D CITY OF PALM DESERT AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 � APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE This CONTINUING DISCLOSURE CERTIFICATE (the "Disclosure Certificate") is executed and delivered by the Successor Agency to the Palm Desert Redevelopment Agency (the "Issuer") in connection with the issuance of its Tax Allocation Refunding Bonds, 2017 Series A and Taxable Tax Allocation Refunding Bonds, 2017 Series B(the "Bonds"). The Bonds are being issued pursuant to an Indenture of Trust, dated as of 1, 2017, by and between U.S. Bank National Association, as trustee (the "Trustee") and the Issuer (the "Indenture"). The Issuer covenants and agrees as follows: Section 1. Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Beneficial Owners and bondholders in order to assist thc Participating Underwriter in complying with Securities and Exchange Commission Rule 15c2-12. Section 2. Definitions. In addition to the definitions set forth in the Indenwre, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annc�ul ReporP' shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "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. "Disse�ninutio�i Agent" shall mean Willdan Group, Inc., or any successor Dissemination Agent designated in writing by the Issuer and which has �led with the Issuer a written acceptance of such designation. In the absence of such a designation, the Issuer shall act as the Dissemination Agent. "EMMA" or "Electronic Municipul Market Access'' means the centralized on-line repository system located at www.emma.msrb.org for documents filed with the MSRB pursuant to the Rule, such as official statements and disclosure information relating to municipal bonds, notes and other securities as issued by state and local governments. "Listed Events" shall mean any of the events listed in Section 5(a) and (b) of this Disclosure Certificate. "MSRB" means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information which may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. "Purticiputing Un�fenti•riter" shall mean Stifel, Nicolaus & Company, Incorporated, or any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Rc�le" shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "Stute" shall mean the State of California. "State Repos�tory�" shall mean any public or private repository or entity designated by the State as a statc repository for the purpose of the Rule. As of the date of this Certificate, there is no State Repository. E-1 Section 3. Provision of Annual Reports. (a) Delivery of Annuul Report to MSRB. The Issuer shall, or shall cause the Dissemination Agent to, not later than [April 1] in each year, commencing [April 1, 2018] and to file with EMMA, in a readable PDF or other electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate; provided however, that the �rst Annual Report due on [April 1, 2018] shall consist solely of a copy of the Official Statement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided, that the audited financial statements of the Issuer may be submitted separately from the balance of the Annual Report and later than the date required above for the �ling of the Annual Report if they are not available by that date. (b) Change of Fiscal Year. If the Issuer's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(d). (c) Delivery of Annual Report to Dissemination Agent. Not later than five days prior to the date specified in subsection (a) for providing the Annual Report to EMMA, the Issuer shall provide the Annual Report to the Dissemination Agent (if other than the Issuer). If by such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall notify the Issuer. (d) Report of Non-Compliance. If the Issuer is unable to provide an Annual Report by the date required in subsection (a), the Dissemination Agent shall send a notice to EMMA in a timely manner in an electronic format prescribed by the MSRB. (e) Anrival Compliunce Certifcation. The Dissemination Agent shall, if the Dissemination Agent is other than the Issuer, file a report with the Issuer certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided. Section 4. Content of Annual Reports. The Issuer's Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements of the Issuer for the preceding fiscal year, prepared in accordance with the laws of the State and including all statements and information prescribed for inclusion therein by the Controller of the State. If the Issuer's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Ofitcial Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. The audited Financial Statemen[s of the Issuer may be included in the City of Palm Desert's Comprehensive Annual Financial Report if no separate Financial Statement is prepared for the Issuer. (b) To the extent not included in the audited final statement of the Issuer, the Annual Report shall also include the following information for the prior fiscal year, insofar as available from public records: (i) Table No. 3- Historical Assessed Valuations; (ii) Table No. 4- Ten Largest Taxpayers; (iii) Table Nos. 6— Projected Tax Revenues with regard to current fiscal year revenue; and (iv) Table IVo. 8- Debt Service Coverage with regard to current fiscal year revenue. E-2 (c) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which are available to the public on the MSRB's Internet web site or filed with the Securities and Exchange Commission. The Issuer shall clearly identify each such other document so included by reference. If the document included by reference is a final of�cial statement, it must be available from EMMA. (d) In addition to any of the information expressly required to be provided under paragraph (b) of this Section 4, the Issuer shall provide such further information, if any, as may be necessary to make the specifically required s[atements or information (as set forth herein), in the light of the circumstances under which they are made, not misleading. Section 5. Reportin� of Si�ni�cant Events. (a) Reportcihle Events. The Issuer shall, or shall cause the Dissemination (if not the Agency) to, give notice of the occurrence of any of the following events with respect to the Bonds (in accordance with (e) below): (1) Principal and interest payment delinquencies. (2) Unscheduled draws on debt service reserves reflecting financial difficulties. (3) Unscheduled draws on credit enhancements reflecting financial difficulties. (4) Substitution of credit or liquidity providcrs, or their failure to perform. (5) Defeasances. (6) Rating changes. (7) Tender offers. (8) Bankruptcy, insolvency, receivership or similar event of the obligated person. (9) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security. (b) Muteria! Reportuble Events. The Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (1) Non-payment related defaults. (2) Modifications to rights of security holders. (3) Bond calls. (4) The release, substitution, or sale of property securing repayment of the securities. (5) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such E-3 an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms. trustee. (6) Appointment of a successor or additional trustee, or the change of name of a (c) Determination of Materiality of Listed Eveiits. Whenever the Issuer obtains knowledge of the occurrence of a Listed Event listed under Section 5(b), the Issuer shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) Notice to Dissemination Agent. If the Issuer has determined that knowledge of the occurrence of a Listed Event listed under Section 5(b) would be material under applicable federal securities laws, the issuer shall promptly notify the Dissemination Agent (if other than the Issuer) in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (d). (e) Notice of Listed Events. The Issuer shall file, or cause the Dissemination Agent to file, a notice of the occurrence of a Listed Event listed in Section 5(a), and, listed in Section 5(b), if material, with EMMA, in a readable PDF or other electronic format as prescribed by the MSRB, in a timely manner not in excess of ten (10) business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(5) and (b)(3) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds. Section 6. Identifyin� Information for Filings with EMMA. All documents provided to EMMA under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure Certificate shall terminate upon the defeasance, prior redemption or payment in full of all of the Bonds. Section 8. Dissemination A�. (a) Appnintment of Dissemination Agent. The initial Dissemination Agent shall be Willdan Group, Inc. The Issuer may, from time to time, appoint or engage a different Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor Dissemination Agent. If the Dissemination Agent is not the Issuer, the Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Certificate. (b) Compen.sation nf Dissemination Agent. The Dissemination Agent, if not the Issuer, shall be paid compensation by the Issuer for its services provided hereunder in accordance with its schedule of fees as agreed to between the Dissemination Agent and the Issuer from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the Issuer, Owner or Beneficial Owners, or any other party. The Dissemination Agent may rely 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 may at any time resign by giving written notice of such resignation to the Issuer. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certiiicate, the lssuer may amend this Disclosure Certificate (and the Dissemination Agent shall agree to any amendment so requested by the Issuer that does not impose any greater duties or risk of liability on the Dissemination Agent), and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: E-4 (a) Chunge in Circumstances. If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstanccs that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) Compliance as uf Issue Dute. The undertaking, as amended or taking into account such waiver, would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) Consent of O�vners; Non-impuirment Opinion. The amendment or waiver either (i) is approved by the Owners in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners. If this Disclosure Certiiicate is amended or any provision of this Disclosure Certificate is waived, the Issuer shall describe such amendment or waiver in the next following Annual Report and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(d), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principlcs. Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate 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 Uisclosure Certiiicate. If the issuer 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 Certificate, the Issuer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 11. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate, any Owner or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under this Disclosure CertiC�cate. The sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certiiicate shall be an action to compel performance. Section 12. Duties, Immunities and Liabilities of Dissemination A�ent. The Dissemination Agent shall have only such duties as are speci�cally set forth in this Disclosure Certificate, and the Issuer agrees to indemnify and save the Dissemination Agent, and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of the disclosure of information pursuant to the Disclosure Certificate or arising out of or in the exercise of 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 negligence or willful misconduct. The Dissemination Agent shall have no duty of obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the [ssuer, the owner of a Bond, or any other party. The Trustee shall have no liability to any party for any monetary damages or other financial liability of any kind whatsoever related to or arising from any breach of this Disclosure Certificate. No person shall have any right to commence any action aaainst the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Certificate. The Dissemination Agent may rely and shall be protected in acting �-5 or refraining from ac[ing upon any written direction from the Issuer or an opinion of Special Counsel. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent or the Trustee and payment of the Bonds. Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. Dated: , 2017 SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY : ACCEPTED BY DISSEMINATION AGENT By: _ Title: Lauri Aylaian Executive Director E-6 APPENDIX F PROPOSED FORMS OF BOND COUNSEL OPINIONS F-1 APPENDIX G THE BOOK-ENTRY SYSTEM The following description of the Depository Trust Company ("DTC"), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of benefcial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC PaRicipants, as the case may be. Neither the issuer of the Bonds (the "Issuer") nor the trustee, fiscal agent or paying agent appointed with respect to the Bonds (the "Agent") take any responsibility for the information contained in this Appendix. No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. 2. DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a"banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a"clearing corporation" within the meaning of the New York Uniform Commercial Code, and a"clearing agency" registered pursuan[ to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non- U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered cicaring agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC G-1 can be found at www.dtcc.com. The information contained on such Internet site is not incorporatcd herein by reference. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Bene�cial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing de[ails of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities 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 Securities, except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in bene�cial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securitics; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Bene�cial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registr�r and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Ca (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend G-2 payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneiicial Owners will be the responsibility of Direct and Indirect Participants. 9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to lssuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 10. Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 11. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Issuer believes to be reliable, but issuer takes no responsibility for the accuracy thereof. G-3 -� .__ �� w� o� v= t y �J _ ;; �� s � �� o N 'C >, n. c� � � � a� u y a � v_ � � T= L �. �_ � '_� �r �� T " E� `o ° . _- C �.0 � � w 0 0'� ��_ �'� V c.'�-�S V�' ._ w. � o c �`�3 � �� ? o,� : C _. a; � N.0 u � ti � u � �w � � o= c � � �� Y� � Y c �'� o � � �� E � � �s = `o aci r c � a o � i? ° o-`n o E �s �«. o'� i e� v o�.� v � � o :c � c �'� G � L � L' 'Ri � '�.N 3 �s,r z c _ � s c N� ';a �o a � o O G G � c" y o E � U N E '- o O U 0 � ❑ .o s�`? .. � _� c� o � c � � � �° c °'—.c � `� u ��v � �L .�. � �.�s �.�� O � � �'�a> c C 'o c � . 'J � C � N N.� n E o � �._ � �° c F- v; c� PRF,LIMINARY OFFICIAL STATEMENT DATED , 2016 NEW ISSUE — BOOK-ENTRY RATINGS Insured Bonds Rating: S&P: " " Uninsured Bonds and Underlying Rating: S&P: "_" (See "CONCLUDING INFORMAI'ION - Ratings on the Bonds") In the apinion af Richards, Watson & Cershon, A Professional Corporntion, Band Counsel, under exis[ing law: (i) assuming continuing compliance with certnin covenants and the accuracy af certain representations, in[erest an the 2017 Series H-A Bonds is excluded from gross income far federa! income tax purposes and is not an item of tnx preference for purposes of the federal alternative minimum tax imposed on individuals and eorporations, and (ee) interest on the Bonds is exempt from State of California personal income taxes. /nterest on the 2017 Series H-A Bonds may be subject to certain federnl taxes imposed on certuin corporations, including the corporate ulternntive ntinimum tax on a portinn of that interest. Bond Counsel expresses no opinion as to am other tux consequences regarding the Bonds. /NTEREST ON THE 20/7 SERIES H-B BONDS /S NOT EXCLUDED FROM GROSS INCOME FOR FEDERAL /NCOME TAX PURPOSES. For u more compfete discuasion of the tax nspects, see "LEGAL MATTERS TaxMatters." SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS Tax Allocation Refunding Bonds 2017 Series H-A Dated: Date of Delivery $ � Taxable Tax Allocation Refunding Bonds 2017 Series H-B Due: October 1 as shown on the inside cover pages Proceeds from the sale of the Successor Agency to the Palm DeseR Redevelopment Agency (the "Successor Agency") Tax Allocation Refunding Bonds, 2017 Series H-A Bonds (the "2017 Series H-A Bonds") and Taxable Tax Allocation Refunding Bonds, 2017 Series H-B Bonds (the "2017 Series H-B Bonds," and together with the 2017 Series H-A Bonds, the "Bonds"), will be used to refinance certain outstanding housing obligations of [he former Palm DeseR Redevelopment Agency (the "Former Agency"). The Bonds will be issued under an Indenture dated as of January 1, 2017 (the "Indenture"), by and between the Successor Agency and U.S. Bank National Association, as trustee (the "Trustee"). The Bonds are special obligations of the Successor Agency and are payable solely from and secured by a pledge of Pledged Tax Revenues, which are defined under the Indenture as the portion of the Tax Revenues required to be deposited by the County Auditor-Controller into the RPTTF that is equal to the dollar amount that the Former Agency would have been required to deposit in the L.ow and Moderate Income Housing Fund pursuant to Sections 33334.2 and 333343 of the Law, and a pledge of amounts in certain funds and accounts established under the Indenture (see "SECURITY FOR THE BONDS" and "RISK FACTORS"). Interest on the Bonds is payable semiannually on each April 1 and October 1, commencing April 1, 2017, until maturity (see "THE BONDS - General Provisions"). The Bonds are subject to optional redemption and mandatory sinking account redemption prior to maturity. See "THE BONDS - Redemption." The Bonds will be issued in book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Purchasers of the Bonds will not receive certiFicates representing their interests in the Bonds. Payments of the principal of, premium, if any, and interest on the Bonds will be made to DTC, which is obligated in turn to remit such principal, premium, if any, and interest to its DTC Participants for subsequent disbursement to the beneficial owners of the Bonds. The Bonds do not constitute a debt or liability of the City of Palm DeseR, the County of Riverside, the State of California or of any of its political subdivisions, other than the Successor Agency. The Successor Agency shall only be obligated to pay the principal of the Bonds, or related interest, from the funds described in the Official Statement, and neither the faith and credit nor the Caxing power of the City of Palm Desert, the County of Riverside, the State of California or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Successor Agency has no taxing power. The Successor Agency has applied for a municipal bond insurance policy and a debt service reserve insurance policy to satisfy the Reserve Requirement for the Bonds and will decide whether to purchase either of such policies in connection with the offering of the Bonds. Such information will be included in the Official Statement. The cover page contains certain information for quick reference only. It is not a summary of the issues. Potential investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. See "R(SK FACTORS" for a discussion of special risk factors that should be considered in evaluating the investmen[ quality of the Bonds. The Bonds are being offered when, as and if issued, subject to the approval as to their legality by Richards, Watson & Gershon, A Professional Corporation, Los Mgeles, California. Certain legal matters will also be passed on for the Successor Agency by Best Best & Krieger LLP, Riverside, Califomia, as Disclosure Counsel, and by Richards, Watson & Gershon, a Professional Corporation, Los Angeles, California, as General Counsel to the Successor Agency. Cedain legal matters will be passed on for the Underwriter by its counsel, Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California. It is anticipated that the Bonds will be available for delivery through the facilities of The Depository Trust Company on or about January _, 2017. STI FEL Dated: , 2017. � Preliminary, subject to change. �.5 U v� w� o �. v= �� .. N E °� aL L '«� '-' O o � i, r o 'r a �' � � �� L � � T= L f �_ �- �� o_ >. � ;-� - o�� .�� w 0 0'� �� °� o .� - c u ,,�'`_', T�� G �3 � U 3 R ^ �o`�, :� _ y o �? • � u � � � � a� v y w a� L � t F C � �� ca�c � � � � = c � N .o a� o r q � 4V—• o a�i � c � Q . o �? � ^ i o n.`n ° 0 E�Y o �� o�•= v U T �— � = o N .., �'E n � c4 ,� .`�3 � ;L � s � cs ° c �L .� -c ❑ � = � = o � 3 o " � .�� ` . .� o '°o� .S c.� s�� ..v�= c. 9� o c E v E �° o � � L ;? c � �w � c� c .c •� �- � 4.�s ',- °-' 3 O� > c ` ^ � -c c �_ �'_ U . •D N yc `r Q. G j � y �- � R C E--' V] c3 PRELIMINARY OFFICIAL STATEMENT DATED , 2016 NEW ISSUE - BOOK-ENTRY RATINGS Insured Bonds Rating: S&P: "_" Uninsured Bonds and Underlying Rating: S&P: "_" (See "CONCLUDING INFORMATION - Ratings on the Bonds") /n the apinion of Richurds, Watsan & Gershon, A Professional Corporation, Bond Counsel, uncler existing luw: (i) assuming continuing con�pliance with certain covennnts and the nccurncy of certnin representutions, interest on the 2017 Series A Bonds is excluded from gross income for federal income tax purposes and is not an item of tnx preference far purposes of the federn! afternntive minimum tax imposed on individunls and corporations, nnd (ii) interest on the Bonds is exemp� from Stnte of Cnlifornia personal income rnxes. /nterest on the 2017 Series A Bonds may be su6ject to certain federal taxes imposed on certain corporations, including the corpornte niternutive minimum tax on n portion of thnt interest. Bond Caunsel expresses na opinion ns ta unV other �ax consequences regarding the Bands. INTEREST ON THE 2017 SER/ES B BONDS /S NOT EXCLUDED FROM GROSS /NCOME FOR FEDERAL /NCOME TAX PURPOSES. For a more complete �liscussion of the tnx nspecte, see "LEGAL MATTERS Tax Mntters. SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY TAX ALLOCATION REFUNDING BONDS $ M Tax Allocation Refunding Bonds 2017 Series A Dated: Date of Delivery $ ' Taxable Tax Allocation Refunding Bonds 2017 Series B Due: October 1 as shown on the inside cover pages Proceeds from the sale of the Successor Agency to the Palm Desert Redevelopment Agency (the "Successor Agency") Tax Allocation Refunding Bonds, 2017 Series A Bonds (the "2017 Series A Bonds") and Taxable Tax Allocation Refunding Bonds, 2017 Series B Bonds (the "2017 Series B Bonds," and together with the 2017 Series A Bonds, the `Bonds"), will be used to refinance certain outstanding obligations of the former Palm Desert Redevelopment Agency (the "Former Agency"). The Bonds will be issued under an Indenture of Tcust dated as of January 1, 2017 (the "Indenture"), by and between the Successor Agency and U.S. Bank National Association, as trustee (the "Trustee"). The Bonds are special obligations of the Successor Agency and aze payable solely from and secured by a pledge of certain Tax Revenues, as described in the Official Statement, and a pledge of amounts in ceRain funds and accounts established under the Indenture (see "SECURITY FOR THE BONDS" and "RISK FACTORS"). Interest on the Bonds is payable semiannually on each April 1 and October l, commencing April 1, 2017, until maturity (see "THE BONDS - General Provisions"). The Bonds aze subject to optional redemption and mandatory sinking account redemption prior to maturity. See "THE BONDS - Redemption." The Bonds will be issued in book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Purchasers of the Bonds will not receive certificates representing their interests in the Bonds. Payments of the principal of, premium, if any, and interest on the Bonds will be made to DTC, which is obligated in turn to remit such principal, premium, if any, and interest to its DTC Participants for subsequent disbursement to the beneficial owners of the Bonds. The Bonds do not constitute a debt or liability of the City of Palm DeseR, the County of Riverside, the State of California or of any of its political subdivisions, other than the Successor Agency. The Successor Agency shall only be obligated to pay the principal of the Bonds, or related interest, from the funds described in the Official Statement, and neither the faith and credit nor the taxing power of the City of Palm Desert, the County of Riverside, the State of Califomia or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Successor Agency has no taxing power. The Successor Agency has applied for a municipal bond insurance policy and a debt service reserve insurance policy to satisfy the Reserve Requirement for the Bonds and will decide whether to purchase either of such policies in connection with the offering of the Bonds. Such information will be included in the Official Statement. The cover page contains certain information for quick reference only. It is not a summary of the issues. Potential investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. See "RISK FACTORS" for a discussion of special risk factors that should be considered in evaluating the investment quality of the Bonds. The Bonds are being offered when, as and if issued, subject to the approval as to their legality by Richazds Watson & Gershon, A Professional Corporation, l.os Angeles, California. Certain legal matters will also be passed on for the Successor Agency by Best Best & Krieger LLP, Riverside, Califomia, as Disclosure Counsel, and by Richazds Watson & Gershon, A Professional Corporation, L.os Angeles, California, as General Counsel to the Successor Agency. CeRain legal matters will be passed on for the Underwriter by its counsel, Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, Califomia. It is anticipated that the Bonds will be available for delivery through the facilities of The Depository Trust Company on or about January _, 2017. STI FEL Dated: , 2017. + Preliminary, subject to change.