HomeMy WebLinkAboutOB Agenda Item 2 - Due Diligence ReviewOVERSIGHT BOARD TO THE
SUCCESSOR AGENCY OF THE REDEVELOPMENT
AGENCY OF THE CITY OF LAKE ELSINORE
TO: CHAIRMAN TISDALE AND MEMBERS OF THE OVERSIGHT BOARD
FROM: BARBARA LEIBOLD, SUCCESSOR AGENCY COUNSEL
DATE: OCTOBER 12, 2012
SUBJECT: DUE DILIGENCE REVIEW OF THE LOW AND MODERATE INCOME
FUND REQUIRED BY HEALTH AND SAFETY CODE SECTION 34179.5
Background
On June 27, 2012, the Legislature passed and the Governor signed Assembly Bill
( "AB ") 1484, a fiscal 2012 -13 budget trailer i bill. AB 1484 makes technical and
substantive amendments to ABx1 26 and took immediate effect upon signature by the
Governor.
Discussion
AB 1484 requires a due diligence review of the low and moderate income housing fund
( "LMIHF) to be completed by October 1, 2012, and a due diligence review of the
remaining funds of the Successor Agency by December 15, 2012. The Successor
Agency of the Redevelopment Agency of the City of Lake Elsinore ( "Successor
Agency ") engaged White, Nelson Diehl .Evans LLP to conduct the due diligence
reviews. The results of the review of the LMIHF is attached (the "LMIHF Report"). The
purpose of the two reviews is to determine the amount of unencumbered funds, if any,
which may be available for distribution to the taxing entities. The attached LMIHF
Report, in Item 10 on page 9, states that $5,598,729 of unencumbered LMIHF monies
are available for distribution to the taxing entities.
The law requires that the Oversight Board hold a "public comment session" to hear any
public comments and any opinions offered by the County Auditor - Controller at least 5
business days before the Board takes any action with respect to the results of the due
diligence review. A public comment session was held on the results of the review of the
LMIHF Report on October 3, 2012. No comments were submitted at the meeting and
none have been received since the meeting.
At least five business days following the public comment session, the Board is required
to take action on the LMIHF Report. The Board must determine the amount of
unencumbered LMIHF available to be transferred by the Successor Agency to the
AGENDA ITEM 2 Page 1
LMIHF Due Diligence Review
October 12, 2012
Page 2
County Auditor - Controller. The Oversight Board's determination is due to the DOF and
the County Auditor - Controller by October 15, 2012. The DOF may reject the
determination of the Oversight Board and adjust the LMIHF Report numbers on or prior
to November 9, 2012. The Successor Agency may contest the DOF findings and
request a meet and confer session within 5 business days of receipt of the DOF's
determination.
At the public comment session, Board Member Lillibridge inquired about the distribution
of the $5,598,729 of unencumbered LMIHF monies to the taxing entities. This
distribution will be made by the County Auditor Controller in accordance with statutory
requirements. Attached for general information purposes only is an estimate provided
by the County Auditor Controller's Office of the distributions based on transfer of
$5,598,729.
Recommendation
That the Oversight Board approve the attached Resolution accepting the Due Diligence
Review of the Low and Moderate Income Housing Fund ( LMIHF) prepared by White
Nelson Diehl Evans LLP on behalf of the Successor Agency of the Redevelopment
Agency of the City of Lake Elsinore pursuant to California Health and Safety Code
Section 34179.5, and determining that $5,598,729 of cash and cash equivalents of
unencumbered LMIHF monies are available for disbursement as provided in Section
34179.5.
Prepared and approved by: Barbara Leibold,
City Attorney /Successor Agency Counsel
Attachment: Resolution No. OB- 2012 -012
LMIHF Report
Estimated Distribution
AGENDA ITEM 2 Page 2
RESOLUTION NO. OB- 2012 -012
A RESOLUTION OF THE OVERSIGHT BOARD TO THE
SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF
THE CITY OF LAKE ELSINORE 'APPROVING THE DUE
DILIGENCE REVIEW FOR THE LOW AND MODERATE INCOME
HOUSING FUND CONDUCTED PURSUANT TO HEALTH AND
SAFETY CODE SECTION 34179.5 AND TAKING CERTAIN
OTHER ACTIONS IN CONNECTION THEREWITH
WHEREAS, the Oversight Board to the Successor Agency of the Redevelopment
Agency of the City of Lake Elsinore ( "Oversight;,, Board ") has been established to direct
the Successor Agency to take certain actions to wind down the affairs of the former
Redevelopment Agency of the City of Lake Elsinore in accordance with the California
Health and Safety Code; I .
WHEREAS, pursuant to Health and Safety Code Section 34179.5, the Successor
Agency employed a licensed accountant, engaged White, Nelson Diehl Evans LLP,
approved by the County- Auditor Controller, to conduct a due diligence review of the low
and moderate income housing fund ( "LMIHF Report ") to determine the unencumbered
LMIHF balances available for disbursement to the taxing entities;
WHEREAS, Health and Safety Code Section 34179.6 requires the Successor
Agency to provide the Oversight Board the results of the LMIHF Report and specifically
the amount of cash and cash equivalents of unencumbered LMIHF monies available for
disbursement as provided in Section 34179.5;
WHEREAS, on October 1, 2012 pursuant to Health and Safety Code Section
34179.6 and 341800), the Successor Agency submitted to the Oversight Board, the
county administrative officer, the county auditor- controller, the State controller and the
Department of Finance ( "DOF ") the LMIHF Report and a copy of the Recognized
Obligation Payment Schedule;
WHEREAS, in accordance with Health and Safety Code Section 34179.6 (b), the
Oversight Board held a public comment session';on October 3, 2012, which such date is
five business days prior to the date of this meeting, at which time the Oversight Board
heard any public comments and any opinions offered by the County Auditor - Controller
regarding the results of the LMIHF Report;
WHEREAS, no comments were submitted at the meeting or since the date of the
meeting; and
WHEREAS, pursuant to Health and Safety Code Section 34179.6(c), the
Oversight Board must review, approve and transmit to DOF and the county- auditor
controller, the determination of the amount of cash and cash equivalents from
unencumbered LMIHF monies' available for " disbursement to the taxing entities,
calculated in accordance with Health and Safety Code Section 34179.5; and
AGENDA ITEM 2 Page 3
OVERSIGHT BOARD RESOLUTION NO. OB 2012 -012
Page 4
WHEREAS, pursuant to Health and Safety Code Section 34179.6(c), the
Oversight Board desires to approve the LMIHF Report and direct the Successor Agency
to transmit $5,598,729 of unencumbered LMIHF monies to the county auditor - controller
for distribution to the taxing entities in accordance with the statutory requirements; and
WHEREAS, all other legal prerequisites to the adoption of this Resolution have
occurred.
NOW, THEREFORE, THE OVERSIGHT BOARD TO THE SUCCESSOR
AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE,
DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
SECTION 1. The Recitals set forth above are true and correct and incorporated
herein by reference.
SECTION 2. This Resolution is adopted pursuant to Health and Safety Code
Section 34179.6(c).
SECTION 3. The Oversight Board hereby approves the LMIHF Report as
presented and on file with the Clerk to the Oversight Board and attached hereto.
SECTION 4. For the purposes of providing for the transfer of housing functions
and assets pursuant to Health and Safety Code Sections 34176 and 34181(c), the
Oversight Board hereby authorizes the Successor Agency to retain the assets and
funds, if any, identified in subparagraphs (B) to (E), inclusive, of paragraph (5) of
subdivision (c) of Section 34179.5, as documented in the LMIHF Report, which provide
for the amount of funds authorized for retention, the source of those funds, and the
purposes for which those funds are being retained.
SECTION 5. The staff of the Successor Agency is hereby directed to transmit to
the county auditor controller, upon demand therefore by DOF, $5,598,729 of
unencumbered LMIHF monies, and to transmit to DOF and the county auditor - controller
written notice of this Resolution and the LMIHF Report, and specifically the
determination of the amount of cash and cash equivalents that are available for
disbursement to the taxing entities, as determined in accordance with Health and Safety
Code Section 34179.5.
SECTION 6. The staff and the Board of the Successor Agency are hereby
authorized and directed, jointly and severally, to execute and record such documents
and instruments and to do any and all other things which they may deem necessary or
advisable to effectuate this Resolution and any such action previously taken are hereby
ratified.
SECTION 7. If any provision of this Resolution or the application thereof to any
person or circumstance is held invalid, such invalidity shall not affect other provisions or
AGENDA ITEM 2 Page 4
OVERSIGHT BOARD RESOLUTION NO. OB 2012 -012
Page 5
applications of this Resolution which can be given effect without the invalid provision or
application, and to this end the provisions of this resolution are severable. The
Oversight Board hereby declares that it would have adopted this Resolution irrespective
of the invalidity of any particular portion thereof.
SECTION 8. This Resolution shall take effect from and after the date of its
passage and adoption.
PASSED, APPROVED AND ADOPTED at a special meeting of the Oversight
Board to the Successor Agency of the Redevelopment Agency of the City of Lake
Elsinore, held this 12th day of October, 2012 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Chairperson, Oversight Board to the
Successor Agency of the Redevelopment
Agency of the City of Lake Elsinore
ATTEST:
Oversight Board Secretary
AGENDA ITEM 2 Page 5
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
Independent Accountants' Report on Applying Agreed -Upon Procedures
On the Lake Elsinore Redevelopment Agency's
And
The Successor Agency to the Lake Elsinore Redevelopment Agency's
Low and Moderate Income Housing Fund
Pursuant to California Health and Safety Code Section 34179.5
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO THE
LOW AND MODERATE INCOME HOUSING FUND
Table of Contents
Page
Independent Accountants' Report on Applying Agreed -Upon Procedures
Related to the Low and Moderate Income Housing Fund
Attachment A - Agreed -Upon Procedures and Findings Related to the
Low and Moderate Income Housing Fund
SUPPORTING SCHEDULES AND EXHIBITS:
Schedule 1 - Listing of Assets Transferred to Successor Agency
as of February 1, 2012
Schedule 2 - Transfers to City of Lake Elsinore
Schedule 3 - Listing of Assets as of June 30, 2012
Schedule 4 - Unspent Bond Proceeds
Schedule 5 - Calculation of Unrestricted Asset Balance for Retention
Schedule 6 - Summary of Balance Available for Allocation to Affected
Taxing Agencies
Exhibit 1 - Housing Loan Agreement dated December 1, 1995
Exhibit 2 - Riverside County Superior Court Judgment Validating
Housing Loans
Exhibit 3 - Schedule of Housing Loan Balances and
Accrued Interest as of January 31, 2012
Exhibit 4 - Bond Documents 2010 Series A Tax Allocation Revenue Bonds
Exhibit 5 - Bond Documents 2010 Series B Tax Allocation Revenue Bonds
Independent Accountants' Report on Applying Agreed -Upon Procedures
Related to the Low and Moderate Income Housing Fund
Oversight Board of the Successor Agency
to the Lake Elsinore Redevelopment Agency
Lake Elsinore, California
We have performed the minimum required agreed -upon procedures (AUP) enumerated in
Attachment A, which were agreed to by the California' Department of Finance, the California State
Controller's Office, the Riverside County Auditor - Controller, and the Successor Agency to the Lake
Elsinore Redevelopment Agency (Successor Agency), (collectively, the Specified Parties), solely to
assist you in meeting the statutory requirements of Health and Safety Code Section 34179.5 related to
the Low and Moderate Income Housing Fund of the former Lake Elsinore Redevelopment Agency and
Successor Agency. Management of the Successor Agency is responsible for meeting the statutory
requirements of Health and Safety Code Section 34179.5 related to the Low and Moderate Income
Housing Fund. This agreed -upon procedures engagement was conducted in accordance with attestation
standards established by the American Institute of Certified Public Accountants. The sufficiency of
these procedures is solely the responsibility of those parties specified in the report. Consequently, we
make no representation regarding the sufficiency of tte procedures described below, either for the
purpose for which this report has been requested or for any other purpose.
The scope of this engagement was limited to performing the agreed -upon procedures as set forth in
Attachment A. Attachment A also identifies the findings noted as a result of the procedures
performed.
We were not engaged to and did not conduct an audit, the objective of which would be the expression
of an opinion on whether the Successor Agency has met the statutory requirements of Health and
Safety Code Section 34179.5 related to the Low and Moderate Income Housing Fund. Accordingly, we
do not express such an opinion. Had we performed additional procedures, other matters might have
come to our attention that would have been reported to you.
This report is intended solely for the information and use of the Oversight Board and management of
the Successor Agency to the Lake Elsinore Redevelopment Agency, the California Department of
Finance, the California State Controller's Office, and the Riverside County Auditor - Controller, and is
not intended to be, and should not be, used by anyone other than these specified parties.
Aa,4,) xJ A;&", �`uloxoJ LAP
Irvine, California
September 27, 2012
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO THE LOW AND MODERATE INCOME HOUSING FUND
1. Procedure:
Obtain from the Successor Agency a listing of all assets that were transferred from the former
redevelopment agency's Low and Moderate Income Housing Fund to the Successor Agency on
February 1, 2012. Agree the amounts on this listing to account balances established in the
accounting records of the Successor Agency. Identify in the Agreed -Upon Procedures (AUP)
report the amount of the assets transferred to the Successor Agency as of that date.
Finding:
We agreed the amounts listed on Schedule 1 to the Successor Agency's accounting records
without exception. The former redevelopment agency transferred $7,311,002 in assets from the
Low and Moderate Income Housing Fund to the Successor Agency as detailed in Schedule 1.
2A. Procedure:
Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from the Low and Moderate Income Housing Fund of the former redevelopment
agency to the city that formed the redevelopment agency for the period from January 1, 2011
through January 31, 2012. For each transfer, the Successor Agency should, describe the purpose
of the transfer and describe in what sense the transfer was required by one of the Agency's
enforceable obligations or other legal requirements. Provide this listing as an attachment to the
AUP report.
Finding:
This procedure is not applicable as the former redevelopment agency did not make any transfers
from the Low and Moderate Income Housing Fund other than payments for goods and services to
the City of Lake Elsinore during the period from January 1, 2011 through January 31, 2012.
2B. Procedure:
Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from the Low and Moderate Income Housing Fund of the Successor Agency to the
city that formed the redevelopment agency for the period from February 1„ 2012 through
June 30, 2012. For each transfer, the Successor Agency should describe the purpose of the
transfer and describe in what sense the transfer was required by one of the Agency's enforceable
obligations or other legal requirements. Provide this listing as an attachment to the AUP report.
2
SUCCESSOR AGENCY TO THE LAKE ELSINORE'REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO THE LOW AND MODERATE INCOME HOUSING FUND
2B. Finding:
The City Council adopted Resolution 2012 -001 on.January 10, 2012 and elected to have the City
serve as the Housing Successor pursuant to Health and Safety Code Section 34176. After the
adoption of Resolution No. 2012 -001, for accounting purpose, the former redevelopment agency
transferred assets as shown in Schedule 2 to the housing successor authorized under Health and
Safety Code Section 34176(a)(2) pursuant to AB 1484. The transfer of these assets was reported
on the Housing Asset List form filed on August 1, 2012 with the California Department of
Finance (the "DOF "). The DOF, in a letter dated September 17, 2012, indicated its approval of
the Housing Asset List.
2C. Procedure:
For each transfer, obtain the legal document that formed the basis for the enforceable obligation
that required the transfer. Note in the AUP report the absence of any such legal document or the
absence of language in the document that required the transfer.
Finding:
Schedule 2 in the report shows the details for the enforceable obligation or other legal
requirement supporting the transfer. Attached toithis AUP report are the Housing Fund Loan
Agreement dated December 1, 1995 (Exhibit 1), Riverside County Superior Court judgment to
validate the Housing Fund loan dated November 14, 1995 (Exhibit 2) and a schedule of housing
loan balances at January 31, 2012 (Exhibit 3).
3A. Procedure:
Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from the Low and Moderate Income Housing Fund of the former redevelopment
agency to any other public agency or to private +parties for the period from January 1, 2011
through January 31, 2012. For each transfer, the Successor Agency should describe the purpose
of the transfer and describe in what sense the transfer was required by one of the Agency's
enforceable obligations or other legal requirements. Provide this listing as an attachment to the
AUP report.
Finding:
This procedure is not applicable as the former redevelopment agency did not make any transfers
from the Low and Moderate Income Housing Fund to other public agencies or private parties
other than payments for goods and services during the period from January 1, 2011 through
January 31, 2012.
3
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO THE LOW AND MODERATE INCOME HOUSING FUND
3B. Procedure:
Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from the Low and Moderate Income Housing Fund of the Successor Agency to any
other public agency or to private parties for the period from February 1, 2012 through
June 30, 2012. For each transfer, the Successor Agency should describe the purpose of the
transfer and described in what sense the transfer was required by one of the Agency's enforceable
obligations or other legal requirements. Provide this listing as an attachment to the AUP report.
Finding:
This procedure is not applicable as the Low and Moderate Income Housing Fund of the
Successor Agency did not make any transfers to other public agencies or private parties other
than payments for goods and services during the period from February 1, 2012 through
June 30, 2012.
3C. Procedure:
For each transfer, obtain the legal document that formed the basis for the enforceable obligation
that required the transfer. Note in the AUP report that formed the absence of any such legal
document or the absence of language in the document that required the transfer.
Finding:
This procedure is not applicable since no transfers were identified as a result of Procedures 3A
and 3B.
4. Procedure:
Obtain from the Successor Agency a summary of the financial transactions of the Redevelopment
Agency and the Successor Agency for the fiscal periods ended June 30, 2010, June 30, 2011,
January 31, 2012 and June 30, 2012. Ascertain that for each period presented, the total of
revenues, expenditures and transfers account fully for the changes in equity from the previous
fiscal period. Compare amounts for the fiscal period ended June 30, 2010 to the state controller's
report filed for the Redevelopment Agency for that period. Compare the amounts for the other
fiscal periods presented to the account balances in the accounting records or other supporting
schedules.
Finding:
This procedure is required by Section 34179.5(c)(4) for the Successor Agency as a whole and
therefore will be addressed in the AUP report associated with all other funds of the Successor
Agency due December 15, 2012.
0
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO THE LOW AND MODERATE INCOME HOUSING FUND
5. Procedure:
Obtain from the Successor Agency a listing of all assets of the Low and Moderate Income
Housing Fund (excluding assets held by the entity that assumed the housing function previously
performed by the former redevelopment agency) as of June 30, 2012. Agree the assets on listing
to the accounting records of the Successor Agency.
Finding:
As of June 30, 2012, the Successor Agency's total assets related to the former redevelopment
agency's Low and Moderate Income Housing Fund amounted to $7,103,282 as shown in
Schedule 3.
6. Procedure:
Obtain from the Successor Agency a listing of asset balances held on June 30, 2012 that were
restricted for the following purposes:
• unspent bond proceeds,
• grant proceeds and program income restricted by third parties, and
• Other assets with legal restrictions.
6A. Procedure Unspent Bond Proceeds:
Obtain the Successor Agency's computation of the restricted balances and trace individual
components of this computation to related account balances in the accounting records; or to other
supporting documentation. Obtain the legal document that sets forth the restriction pertaining to
these balances. We agreed the balances at June 30 2012 to Account Statements at June 30, 2012
from Union Bank, bond trustee. I
Finding - Unspent Bond Proceeds:
As of June 30, 2012, the Successor Agency had $1,453,240 in encumbered (unspent) bond
proceeds as detailed in Schedule 4. Exhibit 4 attached to the report has certain pages from the
Official Statement of the 2010 Series A Tax Allocation Revenue. Bonds. Pages 6 to 8 from that
statement limits the use of a portion of bond proceeds on housing loans. Exhibit 5 attached to the
report has certain pages from the Official Statement of the 2010 Series B Tax Allocation
Revenue Bonds. Page 6 from that statement limits the use of bond proceeds on housing loans.
613. Procedure - Grant Proceeds and Program Income Restricted by Third Parties:
Obtain the Successor Agency's computation of the restricted balances and trace individual
components of this computation to related account balances in the accounting records, or to other
supporting documentation. Obtain a copy of the grant agreement that sets forth the restriction
pertaining to these balances.
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO THE LOW AND MODERATE INCOME HOUSING FUND
6I3. Finding - Grant Proceeds and Program Income Restricted by Third Parties:
This procedure is not applicable as the Successor Agency's assets related to the former
redevelopment agency's Low and Moderate Income Housing Fund did not have grant proceeds
and program income restricted by third parties as of June 30, 2012.
6C. Procedure - Other Assets Considered to be Legally Restricted:
Obtain the Successor Agency's computation of the restricted balances and trace individual
components of this computation to related account balances in the accounting records or other
supporting documentation. We obtained the legal document that sets forth the, restriction
pertaining to these balances.
Finding:
This procedure is not applicable as the Successor Agency's assets related to the former
redevelopment agency's Low and Moderate Income Housing Fund did not have other assets
considered to be legally restricted as of June 30, 2012.
7. Procedure:
Obtain from the Successor Agency a listing of assets of the former redevelopment agency's Low
and Moderate Income Housing Fund as of June 30, 2012 that are not liquid or otherwise available
for distribution and ascertain if the values are listed at either purchase cost or market value as
recently estimated by the Successor Agency. For assets listed at purchased cost, trace the amount
to a previously audited financial statement or other accounting records of the Successor Agency
and note any differences. For any differences noted, inspect evidence of asset disposal
subsequent to January 31, 2012 and ascertain that the proceeds were deposited into the Successor
Agency's trust fund. For assets listed at recently estimated market value, inspect evidence
supporting the value and note the methodology used.
Finding:
This procedure is not applicable as the former redevelopment agency's Low and Moderate
Income Housing Fund held by the Successor Agency did not have any assets that were not liquid
or otherwise available for distribution as of June 30, 2012.
All assets held by the City of Lake Elsinore as the Housing Successor (as listed on Schedule 2)
from the former redevelopment agency's Low and Moderate Income Housing Fund are either not
liquid or restricted and therefore not otherwise available as distributions as of June 30, 2012.
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO THE LOW AND MODERATE INCOME HOUSING FUND
8A. Procedure:
If the Successor Agency identified that existing asset balances were needed to be retained to
satisfy enforceable obligations, obtain an itemized schedule of asset balances (resources) as of
June 30, 2012 that were dedicated or restricted for the funding of enforceable obligations.
Compare the information on the schedule to the legal documents that formed the basis for the
dedication or restriction of the resource balance in question. Compare all current balances which
needed to be retained to satisfy enforceable obligations to the amounts reported in the accounting
records of the Successor Agency or to an alternative computation. Compare the specified
enforceable obligations to those that were included in the final Recognized Obligation Payment
Schedule (ROPS) approved by the California Department of Finance. If applicable, identify any
listed balances for which the Successor Agency was unable to provide appropriate restricting
language in the legal document associated with the enforceable obligation.
Finding:
As of June 30, 2012, the Successor Agency's asset balances to be retained from the former
redevelopment agency's Low and Moderate Income Housing Fund in order to satisfy enforceable
obligations amount to $51,313 as detailed in Schedule 5. These enforceable obligations were
reported on ROPS 1.
8B. Procedure:
If the Successor Agency identified that future revenues together with balances dedicated or
restricted to an enforceable obligation are insufficient to fund future obligation payments and
thus retention of current balances is required, obtain from the Successor Agency a schedule of
approved enforceable obligations that include a projection of the annual spending requirements to
satisfy each obligation and a projection of the annual revenues available to fund those
requirements. Compare the enforceable obligations to those that were approved by the California
Department of Finance for the six month period from January 1, 2012 through June 30, 2012 and
for the six month period July 1, 2012 through December 31, 2012. Compare the forecasted
annual spending requirements to the legal document supporting the enforceable obligation and
obtain the Successor Agency's assumptions relating to the forecasted annual spending
requirements. Obtain the Successor Agency's assumptions for the forecasted annual revenues.
Disclose the major assumptions for the forecasted annual spending requirements and the
forecasted annual revenues in this AUP report.
Finding:
This procedure is not applicable as the Successor' Agency did not identify. any assets from the
former redevelopment agency's Low and Moderate Income Housing Fund to be retained under
this procedure.
7
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO THE LOW AND MODERATE INCOME HOUSING FUND
8C. Procedure:
If the Successor Agency identified that projected property tax revenues and other general purpose
revenues to be received by the Successor Agency are insufficient to pay bond debt service
payments (considering both the timing and amount of the related cash flows), obtain a schedule
demonstrating this insufficiency. Compare the timing and amounts of bond debt service
payments to the related bond debt service schedules in the bond agreement. Obtain the
assumptions for the forecasted property tax revenues and other general purpose revenues and
disclose them in this AUP report.
Finding:
This procedure is not applicable as the Successor Agency did not identify any assets from the
former redevelopment agency's Low and Moderate Income Housing Fund to be retained under
this procedure.
8D. Procedure:
If Procedures 8A, 8B and 8C were performed, calculate the amount of unrestricted balances
necessary for retention in order to meet enforceable obligations. Combine the amount identified
as currently restricted balances and the forecasted annual revenues to arrive at the amount of total
resources available to fund enforceable obligations. Reduce the total resources available by the
amount of forecasted annual spending requirements. Include the calculation in this AUP report.
Finding:
The unrestricted balances necessary for retention to meet enforceable obligations is detailed in
Schedule 5. The Successor Agency does not expect any revenues to pay for these enforceable
obligations.
9. Procedure:
If the Successor Agency identified that cash balances as of June 30, 2012 need to be retained to
satisfy obligations on the Recognized Obligation Payment Schedule (ROPS) for the period of
July 1, 2012 through June 30, 2013, obtain a copy of the final ROPS for the period of
July 1, 2012 through December 31, 2012 and a copy of the final ROPS for the period
January 1, 2013 through June 30, 2013. For each obligation listed on the ROPS, the Successor
Agency should identify (a) any dollar amount of existing cash that was needed to satisfy the
obligation, and (b) the Successor Agency's explanation as to why the Successor Agency believes
that such balances were needed to satisfy the obligation. Include this schedule as an attachment
to this AUP report.
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
ATTACHMENT A - AGREED -UPON PROCEDURES AND FINDINGS
RELATED TO THE LOW AND MODERATE INCOME HOUSING FUND
Finding:
This procedure is not applicable as the Successor Agency did not identify any assets from the
former redevelopment agency's Low and Moderate Income Housing Fund to be retained under
this procedure.
10. Procedure:
Present a schedule detailing the computation of the Balance Available for Allocation to Affected
Taxing Agencies. Amounts included in the calculation should agree to the results of the
procedures performed above. Agree any deductions for amounts already paid to the County
Auditor - Controller on July 12, 2012 as directed by the California Department of Finance to
evidence of payment.
Finding:
The computation of the Balance Available for Allocation to Affected Taxing Agencies from the
former redevelopment agency's Low and Moderate Income Housing Fund shows $5,598,729 to
be remitted to the County for disbursement to taxing entities as shown in Schedule 6.
11. Procedure:
Obtain a representation letter from management of the Successor Agency acknowledging their
responsibility for the data provided and the data presented in the report or in any schedules or
exhibits to the report. Included in the representations is an acknowledgment that management is
not aware of any transfers (as defined by Section 34179.5) from either the former redevelopment
agency or the Successor Agency to other parties for the period from January 1, 2011 through
June 30, 2012 that have not been properly identified in this AUP report and its related schedules
or exhibits. Management's refusal to sign the representation letter should be noted in the AUP
report as required by attestation standards.
Finding:
No exceptions were noted as a result of this Procedure.
SCHEDULEI
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO THE
LOW AND MODERATE INCOME HOUSING FUND
LISTING OF ASSETS TRANSFERRED TO SUCCESSOR AGENCY
As of February 1, 2012
Total
as of
February 1, 2012
ASSETS
Cash and investments $ 5,857,461
Cash and investments with fiscal agent (Bond Trustee) 1,452,936
Interest receivable 605
$ 7,311,002
NOTES:
(A) For accounting purposes, the following assets recorded in the Low and Moderate Income Housing Fund
at January 31, 2012 were transferred to the City of Lake Elsinore (Housing Successor) on February 1, 2012
pursuant to Health and Safety Code Section 34176(a)(2).
Cash and investments
$ 441,253
Loans receivable
10,837,000
Interest receivable on loans receivable
257,176
Advances from Successor Agency funds -SERAF
3,750,000
Advances from Successor Agency funds - Principal
18,040,439
Advances from Successor Agency funds - Interest
16,504,560
Property held for resale
48,369
$ 49,878,797
SCHEDULE2
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO THE
LOW AND MODERATE INCOME HOUSING FUND
TRANSFERS TO THE CITY OF LAKE ELSINORE AS THE HOUSING SUCCESSOR
FOR THE PERIOD FEBRUARY 1, 2012 THROUGH JUNE 30,2012:
Date of Enforceable Obliga4oNOlher
Transfer Descripbonof Transfer Purpose of Transfer Amount Legal Requirement Supporting Transfer
2/12012 Transfer of Real Potwar, tc
City of Lake Sairiore as Housing
Successor
2/12012 Traraferof Cashto
City of Lake Main. as Housing
Successor
2/1/2012 Transfer of Loan Receivable of
S 10,839,000 and accrued interest
of 5259,196 to the City of Lake
Elsinore as Housing Smeassm
2/1/1012 Transfer of a mounts owed to the
Low and Moderate Income Housing
fee arnouna previously borrowed
to fund SERAF payments.
Transfer Housing Assns to the City of
Lake Elsinore as Housing Successor
Transfer of cash fm funds encumbered
no reimburse developer for qualified
affordable housing projects under a
Disposition and Development Agreement
bawcen the former redevelopment agency
McMillin Summedy LLC. The agreement was
originally entered on December 26, 2006 and
was emended and restated on March 8, 2011,
Transfer Housing Assets to the City of
Lake Elsinore as Housing Successor
Transfer Housing Assns to the City of
Lake Boom as Housing Successor
$ 48,369
Health and Safety Code Section 34136(a)(2)
Assn transferred and reported on
Having Assn List filed with the Deparvnent
of Finance.
$ 441,253
Health and Safer Code Section 34196(a)(2) ,
Encumbered cash transferred and reported on
Housing A35a List filed with the Department
of Finance.
This requirement for the use of the Low and
Moderate literate Housing fund is established
in Section 502 ofthe Amended and Restated
Disposition and Development Agreement dated
March 8, 2011 him. the former
redevelopment agency and McMillin
Summerly LLC.
(D.1 11,094,196
Health and Safety Cade Section 34196(a)(2)
Assn transferred and reported on
Housing Asset List fled with the Department
of Finance.
S 3,950,000
Health and Safety Code Section 34196(a)(2)
Asset cansfetred and reported on
Housing Assn List filed with the Department
of Finance.
VI/2012 Tmnsferofelwincestoathv Transfer Housing Assets to the City of S 34,544,999
Successor Agency funds consists Lake Elsinore m Housing Successor
of $18,040,439 in principal and
$16,504,560 in ...it interest to
City of Lake Elsinore as Housing
Successor
(1) On the Housing Assn Transition Forms filed with the Department of Finance, the Low and Moderate Income
Housing Fund reported a transfer ofa$1, 000,000 loan to the City efftake Elsinore as Successor Agency. This
loan was to provide funding for an affordable housing p,,a..
During the review of loan dwument, it was discovered that the original loan dated December 10, 2009, was
entered into between the City of Lake Elsinore and the developer This loin should nn have been recorded
as an assn of the former redevelopment agency.
As of January 31, 2012, this loan was removed from the accounting records ofthe framer redevch pmmr
agenry, and recorded in firebricks ofthe City of Lake Elsinore. Therefore, this loan was not included
in the SH,(94,196 total loans transferred.
Health and Safety Code Section 34126(a)(2)
Asset transferred and reported on
Housing Assn List filed with the Department
of Finance.
See Exhibit I for the Housing Fund Loan
Agreanent dated as of December 1, 1995 between
the former redevelopment agency and Lake
Elsinore Public Financing AutMrit, .
See Exhibit 2 forjudgment by Riverside County
Superior Court to validate the housing fund
loan.
Son Exhibit 3 fora schedule ofadvance balance
and acemed Interest through January 31, 2012.
SCHEDULE3
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO THE
LOW AND MODERATE INCOME HOUSING FUND
LISTING OF ASSETS
As of June 30, 2012
ASSETS
Cash and investments $ 5,650,042
Cash and investments with fiscal agent (Bond Trustee) 1,453,240
TOTAL ASSETS $ 7,103,282
SCHEDULE4
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO THE
LOW AND MODERATE INCOME HOUSING FUND
UNSPENT BOND PROCEEDS
Encumbered (Unspent) Bond Proceeds from Tax Allocation Revenue Bonds 2010 Series A:
Revenue account housing portion only $ 4,252
Reserve account housing portion only - - 457,843
Actual Current Balance (including interest earned) 462,095
Encumbered (Unspent) Bond Proceeds from Tax Allocation Revenue Bonds 2010 Series B:
Revenue account 51,447
Reserve account 939,698
Actual Current Balance (including interest earned) 991,145
TOTAL ENCUMBERED (UNSPENT) BOND PROCEEDS $ 1,453,240
SCHEDULES
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO THE
LOW AND MODERATE INCOME HOUSING FUND
CALCULATION OF UNRESTRICTED ASSET BALANCE FOR RETENTION
June 30, 2012
Enforceable Obligation/Other Legal
Vendor/Payee Purpose of Transactions Amount Requirement Supporting Retention
City of Lake Elsinore Reimbursement for city staff support $ - 51,313 Reported on ROPS 1, page 3, line 1
from February 2012 to June 2012
SCHEDULE6
SUCCESSOR AGENCY TO THE LAKE ELSINORE REDEVELOPMENT AGENCY
AGREED -UPON PROCEDURES RELATED TO THE
LOW AND MODERATE INCOME HOUSING FUND
SUMMARY OF BALANCE AVAILABLE FOR ALLOCATION TO AFFECTED TAXING AGENCIES
As of June 30, 2012
Total amount of assets from the former redevelopment agency's Low and Moderate
Income Housing Fund held by the Successor Agency as of June 30, 2012 - (Procedure 5) $ 7,103,282
Less assets legally restricted for uses specified by debt covenants, grant restrictions,
or restrictions imposed by other governments - (Procedure 6) i (1,453,240)
Less assets that are not cash or cash equivalents (e.g., physical assets) - (Procedure 7) -
Less balances that are legally restricted for the funding of an enforceable obligation
(net of projected annual revenues available to fund those obligations) - (Procedure 8) (51,313)
Less balances needed to satisfy ROPS for the 2012 -13 fiscal year - (Procedure 9)
Less the amount of payments made on July 12, 2012 to the County Auditor - Controller
as directed by the California Department of Finance -
Add the amount of any assets transferred to the City for which an enforceable
obligation with a third party requiring such transfer and obligating the use of
the transferred assets did not exist - (Procedures 2 and 3) -
Amount to be remitted to County for disbursement to taxing agencies $ 5,598,729
EXHIBIT 1
HOUSING LOAN AGREEMENT
DATED DECEMBER 1, 1995
Housing Fund Loan
(FOPS Line 211
Loan Agreements: Housing Fund Loan Agreement dated as of December 1, 1995, by and between the
Lake Elsinore Public Financing Authority and Redevelopment Agency of the City of take Elsinore.
Discussion: In 1995, the Lake Elsinore Public Financing Authority (PFA) issued its 1995 Series A Tax
Allocation Bonds and its 1995 Series B Subordinate Tax Allocation Revenue Bonds to repay a portion of
certain 1993 Prior Loans and 1995 Prior Loans (as defined in the Housing Fund Loan Agreement) and to
finance low and moderate income housing and other redevelopment activities all within or of benefit to
the Rancho Laguna Redevelopment Project Areas Nos. 1, II and III. The PFA loaned the proceeds of the
bonds to the Agency pursuant to that certain Housing ':Fund Loan Agreement dated as of December 1,
1995, by and between the Lake Elsinore Public Financing Authority and Redevelopment Agency of the
City of Lake Elsinore. The funds were deposited into the Agency's low and moderate income housing
fund (LMIHF) and then, in accordance with Section 2.05(a) of the Loan Agreement, transferred from the
LMIHF to each of the three Project Areas as interfund loans.
The PFA sought court validation of the actions taken In connection with the 1995 Bonds under Code of
Civil Procedure section 869, et seq. On November 14, 1995, the Superior Court of the State of California
in and for the County of Riverside validated the 1995 bond issues and the interfund and housing fund
loan agreements relating to payment of the bond debt (copy attached).
Continuine Agency Financial Obligations: As of June 30, 2011, the total amount due the LMIHF by the
Agency was $34,204,248. Payments made in any given year are calculated and disbursed based on
available property tax revenues after deductions for payment of all other debts and obligations of the
Agency. The Successor Agency intends to make a payment in June 2012 after calculation of available
fund balances for payment,
Calculation of Amounts Shown on EOPS: The advances payable include an original loan amount of
$18,040,439 and accrued interest of $16,163,809, for attotal due to the LMIHF of $34,204,248 at June
30, 2011. (See attached Schedule.)
21051 -16 JHHW:ACKTtic FINAL
HOUSING FUND LOAN AGREEMENT
Dated as of December 1,1995
by and between the
REDEVELOPMENT AGENCY OF THE CM OF LAKE ELSiNORE,
and the
LAKEEISINORE
PUBLICMANCINGALTMORI Y
Relating to
Lake Elsinore
Public Financing Authority
$13,345,000
1995 Series A Tax Allocation Revenue Bonds
(Lake Elsinore Redevelopment Projects)
and
$10,071,00260
1995 Series B Subordinate Tax Allocation Revenue Bonds
(Lake Elsinore Redevelopment Projeds)
TABLE OF CONTENTS
ARTICLE I .
DEFINITIONS
Section 1.01. Definitions ................................................................. ............................._. .....3
Section 1.02. Rulesof Constrvction. ........ » .......... :...... _ ............... _ .......................... . ......... . ..... 6
ARTICLE II
THE LOAN; ESTABLISHMENT OF FUNDS; PARITY DEBT
Section2.01. Authorization ................ ....» .................................. ........................................ .. ..... 7
Section 2.02. Terms of Housing Loan..: ........... . ................................................... . . .... . . .......... 7
Section 2.03. Prepayment ........................................................................... ..............................8
Section 2M. Application of Housing Loan Proceeds . .......... _ ..... ........... _ ... . .....
_......» .._..9
Section 2.06. b erfrmd Loans .............................................................. ............................... ...9
Section 2.06. Issuance of Subordinate Debt........................................ .. .......................... _ ...... .70
Section 207. Validtty of Housing Loan. ..» ................. » ................... ........................................ 11
PLEDGE OF TAX REVENUES; APPLICATION OF FUNDS
Section 8.01. Pledge of Housing Set -Aside Revenues, .... ...................................................... ... 12
Section lIAM Housing Lam Payment Account ............................................. ... ....... _ ... » ......... 12
Sertion3.03. Transfer of Housing Set -Aside Revenues to Trustee . ....................................... 12
Section 3.04. Investment of Moneys ............. ... ......... ........ .... ................ ............. ..... __ » ... 13
V:4I(ei ITaTI
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
Section 5.01- Events of Default and Acodeation of Maturities ..................... .............................18
Section 5.02. Application of Funds Upon Default..... ............................... ..18
SectionS.M. No Waiver . ........................................................................ ....... .. ........... .......... 19
Section5.04. Remedies Not Exclusive ....................................................... .........._..._..............19
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OTHER COVENANTS OF THE AGENCY
Section4.01.
Punclnral Payssnrrt ................................_.......... ........... ...._ . .............
..._. .... . ... ..14
Section 4.02.
13mefaHon on Snpenor Debt ...................._......._..... _............ ......... ............. »..74
Section 4.03.
Payment of Qiima ................................. _............ ............................... ..14
.....
Section 4.04.
Hooks end Acernines..........._......_ .........:............................ ....... ..
........... ».. »_ .... 14
Section 4.06.
Protection of Security and Rights .... ......:.............»........... ..... »...
»........._. ... _ .... 14
Section 4.06.
Maintenance of Housing Set- Aside Revenues.. ...................._........._ ........._.14
Section 4.07
Payment of Et< pet► sea...........»_ ...... ............................._. .................15
Seetien4AB.
No Arbit rage».......» ................. ........... ..... ... . .... . ........... . ............ .. ................ 75
Satiimt4A9.
Rebate Requirement ..............».»............................. .............................
Section 4.10.
». ...1s
Private Activity Bond Lmitation .... _. .....................:............... ........................... ».76
Secdon4.1L
Fodetal Guarantee Prohibition ...................».......................... ..........................:..16
Section 4.12.
Maintenance of Tax Exemption ......... .... ......................................................
... 16
Section 4.13
Continuing Disclosure. ..........................................»... .:............................» .....16
Section 4.14.
Report to California Debt Advismy Commission .......... .... ...» ....._.._._._ ...__.16
Secil"4.1S.
Information Provided to Wnd Insurer .._ ...................... ...................
........... 17
Section 4.16.
Further Assurances ......................... ....... ..» ........ .......... _ ................. ............... 17
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
Section 5.01- Events of Default and Acodeation of Maturities ..................... .............................18
Section 5.02. Application of Funds Upon Default..... ............................... ..18
SectionS.M. No Waiver . ........................................................................ ....... .. ........... .......... 19
Section5.04. Remedies Not Exclusive ....................................................... .........._..._..............19
-4-
ARTICLE VI
MISCELLANEOUS
Section6.01. Benefits Limited .................................................................... .............................20
Section 6.02. Successor is leaned Included in All References to Predecessor ........_ ..................20
Section 6.03. Disfiazge of Housing Fund Loan Agreement ..................... ............................... 20
Section6.04. Amendment ................ .. ...... _ ........................................ ................................... 21
Section 6.05.. Waiver of Personal Liability .......... ................ _..................... .............................21
Section6.06. Notices ................................................................................. .......................:.....21
Section6.07. Partial Invalidity ................................................................... .............................22
Section6.08. immunities of Trustee ............................................................ .............................22
Section 6.09. Governing Law ..................................................................... .............................22
Section 6.10. Execution in Counterparts .......... ..................................... ...... .............................22
-ii-
HOUSING FUND
LOAN AGREEMENT
- THIS HOUSING FUND LOAN AGREEMENT (the "Housing Fund Loan Agreement') is
made and entered into as of December 1, 1995, by and between the REDEVELOPMENT
AGENCY OF THE CITY OF LAKE ELSINORE, a public body corporate and politic duly
organized and existing under the laws of the State of California (the "Agencyl, and the LAKE
ELSINORE PUBLIC FINANCING AUTHORITY, a ))joint powers authority organized and
existing under the laws of the State of California (the "Authority');
WITNE'SSETH;
s
WHEREAS, the Agency is a public body, corporate and politic, duly established and
authorized to transact business and exercise powers under and pursuant to the provisions of
Part 1 of Division 24 of the Health and Safety Code of the State of California (the
"Redevelopment Law "), and has the power under Section 33601 of the Redevelopment Law to
borrow money for any of its corporate purposes] and
WHEREAS, the Authority has heretofore issued: its 1993 Series A Senior and
Subordinate Tax Allocation Revenue Notes in the aggregate principal amount of $11,239,275
(the '1993 Notes') and used the proceeds thereof to make three separate loans (together, the
"1993 Prior Loans") with respect to the Agency's Rancho Laguna Redevelopment Project Area
No. 1, Ranelw Laguna Redevelopment Project Area No. 11 and Rancho Laguna Redevelopment
Project Area No. III (together, referred to as the Muee Project Areasw), and ,
WHEREAS, the Authority has h
Allocation Revenue Notes in the aggrega
and used the proceeds thereof to make th
with respect to the Agency's Three Project
issued its 1995 Series A Subordinate Tax
al amount of $8,385,000 (the "1995 Notes")
hte loans (together, the 01995 Prior Loans")
awA
WHEREAS, the Agency has determined; to borrow amounts hereunder for the
purpose
of raising funds to assist in financing tow and moderate income housing redevelopment
activities and to refinance redevelopment activities financed or refinanced with the proceeds of
the 1993 Nom and the 1"5 Notes, all within or of benefit to the Thee Project Arms and all as
provided herein, and the Agency hereby finds; and determines that there will be aignificant
public benefits accruing from such borrowing, consisting of.demonshuMe savings in effxffve
interest rates and financing costs associated with the lssuance of bonds by the Authority as
described below; and
WHEREAS, certain of the amounts required to refinance a portion of the 1993 Notes and
to refnance the 1995 Notes will be borrowed pursuant to a separate loan agreementrelating to
Rancho Laguna Redevelopment Project Area No III (the "Project Area Loan Agreement); and
WHEREAS, concurrent with the execution and delivery of this Housing Fund loan
Agreement and the Project Area Loan Agreement, the Authority has issued its $13,305,000
aggregate rindpal amount of Lake Elsinore Public Financing Authority 1995 Series A Tax
Allocation Revenue Bonds (Lake Elsinore Redevelopment Projects) (the "Series A Bonds') and
$70,071,002.80 aggregate principal amount of Lake Elsinore Public Financing Authority 1995
Series B Subordinate Tax Allocation Revenue Bonds (Lake Elsinore Redevelopment Projects)
(the 'Series B Bonds ") for the purpose of providing funds to make a loan to the Agency
pursuant to this Housing Fund loan Agreement and the Project Area loan Agreement; and
WHEREAS, the Series A Bonds will be payable on a basis senior to the payment of the
Series B Bonds from payments made pursuant to this Housing Pund Loan Agreement and the
Project Area Loan Agreement; and
WHEREAS, the net proceeds of the Housing Loan will be deposited by the Agency into
the Agency's Low and Moderate income Housing Fund (established pursuant to Section
33334.3 of the California Health and Safety Code) (the "Housing Fund ") and the amount of
such deposit will be concurrently transferred by the Agency pursuant to inteifund loans
(collectively, the "btterfund Loans ") to each of the Three Project Areas to be used 6) to repay a
portion of the 1993 Prior Loans and the all of 1995 Prior Loans (and, hence, a portion of the
1993 Notes and all of the 1995 Notes), (11) to finance additional redevelopment activities within
or to benefit to each of the Three Project Areas and (iii) for certain other uses and purposes;
and
WHEREAS, an additional unpaid portion of the 1993 Prior Loans (and, hence, an
additional portion of the 1993 Notes) will be paid with the proceeds of the loan made to the
Agency pursuant to the Project Area Loan Agreement and
WHEREAS, the Housing loan will be repaid by the Agency (and, hence, debt service on
the Series A Bonds and the Series B Bonds will be paid by the Authority) from tax Increment
revenues allocated to the Agency pursuant to 33334.2 of the California Health k Safety Code
for deposit in the Housing Fund ( the "HousingSet -Aside Revenues'); and
WHEREAS, in order to establish and declare the terms and conditions upon which the
Housing Loan is to be made and secured and the Interfund Loans are to be made to the Three
Project Arms, the Agency and the Authority wish to enter into this Housing Fund Loan
Agreemengand
WHEREAS, all acts and proceedings required by law necessary to make this Housing
Fund Loan Agreement, when executed by the Agency and the Authority, H valid; b nddi g and
legal obligation of the Agency and the Authonty, and to constitute thrs acs 4 Loan
Agreement a valid and binding agreement for the uses and purposes herein set forth in
accordance with its terms, have been done and taken, and the execution and delivery of this
Housing Pund loan Agreement have been fn all respects duly authorized;
NOW; THEREFORE, in consideration of the premises and the mutual agreements herein
contained, the parties hereto do hereby agree as follows:
2-
ARTICLE L
DEFINITIONS
Section 1.01. Definitions. Unless the�contezt clearly otherwise requires or unless
otherwise defined herein, the capitalized terms in this Housing Fund loan Agreement shall have
the respective meanings which such terms have in the Indentures. In addition, the following
terms defined in this Section 1.01 shall, for all purposes of this Housing Fund Loan Agreement,
have the respective meanings herein specified.
"Bond Insurer" means, with respect to the Bonds, Capital Guaranty Insurance
Company, a corporation organized and existing under the laws of the State of Maryland, its
successors and assigns. 'Bond Insurer" may mean with respect to any Parity Debt, the
insurance company that issues the applicable insurance policy.
'kaW means the Series A Bonds and the Series B Bonds, together.
"Certificate of the Agency" means a certificate in writing signed by the Executive
Director, Treasurer or Secretary of the Agency or by any other officer of the Agency duly
authorized by the Agency for that purpose.
"qty" means the City of Lake Elsinore, a municipal corporation organized and existing
under the laws of the State
' Closing Date" means the date of original issuance of the Bonds.
*CmmW means the County of Riverside,; California.
" $= Bank" means Union Bank acting as Escrow Bank pursuant to the 1993 Notes
Escrow Agreement and the 1995 Notes Escrow Agreement.
"Event nj DefaW 'means any of the events described in Section 5.01.
"Nscal Yea r means any twelve -month period extending from July 1 in one calendar year
to June 30 of the succeeding calendar year, both dates inclusive, or any other twelvemonth
period selected and designated by the Agency as its official fiscal year period.
"Housing means the loan made 'by the Authority to the Agency pursuant to
Section 201.
"Housing Fund Loan Agreement" means this Housing Fund Loan Agreement by and
between the Agency and the Authority, as I'soriginally entered into or as amended or
supplemented pursuant to the provisions hereof.,
"�-Ipu,,sfn_g Loan Pay ne�Account meanie the account by that name established within
the Low and Moderate Income Housing Fund pursuant to Section 3.02
"Housing Set -Aside Revenue" means all amounts required to be deposited by the
Agency in the Low and Moderate Income Housing Fund of the Agency in any Faecal Year
pursuant to Section 33334.3 of the Redevelopment Law, which amounts are derived from the
taxes annually allocated to the Agency with respect to the Project Areas following the (losing
Date pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the
MB
Redevelopment Law and Section 16 of Article XVl of the Constitution of the State and as
provided in the Redevelopment Plans.
"Indentures" means, together, the Series A Indenture and the Series B Indenture.
"independent Accountant" means any accountant or firm of such accountants duly
licensed or registered or entitled to practice and practicing as such under the laws of the State,
appointed by the Agency, and who, or each of whom:
(a) is in fact independent and not under the domination of the Agency;
(b) does not have any substantial interest, direct or indirect, with the Agency;
and
(c) is not connected with the Agency as an officer or employee of the Agency,
but who may be regularly retained to make reports to the Agency.
"Independent Redevelopment Consultant" means any consultant or firm of such
consultants (and which may be the intttal purchaser of the Bonds) appointed by the Agency,
and who, or each of whom:
(a) is judged by the Agency to have experience in matters relating to the
collection of Housing Set -Aside Revenues or otherwise with respect to the financing of
redevelopment projects;
(b) is in fact Independent and not under the domination of the Agency;
(c) does not have any substantial interest, direct or indirect, with the Agency,
other than as original purchaser of the Bonds, and
(d) is not connected with the Agency as an officer or employee of the Agency,
but who may be regularly retained to make reports to the Agency.
"Investment Earnings" means all interest earned and any gains and losses on the
investment of moneys in any fund of account created by this Housing Fund Loan Agreement
"Interfund Loans' means the loans made to the Agency from moneys In the Low and
Moderate Income Housing Amd pursuant to Section 205.
"Low and' Moderate Income HOu_sWZ d' means the fused of the Agency by that name
established pursuant to Section 33334 3 of the Redevelopment Law.
02993 Notes" means the Lake Elsinore Public Financing Authority 1993 Series A Senior
and Subordinate Tax Allocation Revenue Notes (lake Elsinore Redevelopment Projects) In the
initial aggregate principal amount of $11,239,275, Issued by the Authority pursuant to an
indenture of Trust dated as of September 1, 1993 by and between the Authority and Union
Bank, as Trustee.
"1995 Notes" means the lake Elsinore Public Financing Authority 7995 Series A
Subordinate Tax Allocation Revenue Notes (lake Elsinore Redevelopment Projects) in the initial
aggregate principal amount of $8,385,000, issued by the Authority pursuant to an Indenture of
Trust dated as of January IS, 1995, by and between the Authority and Union Bank, as trustee
-4-
R1993 Notes Escrow Agreement" means the 1993 Series A Notes Escrow Deposit and
Trust Agreement, dated as of December 1, 1995, by and among the Authority, the Agency and
Urdon Bank, as Escrow Bank, relating to the defeasance and refunding of the 1995 Series A
Notes.
"1995 Notes Escrow Agreement " means the 1995 Series A Notes Escrow Deposit and
'Trust Agreement, dated as of December 1, 1995,E by and among the Authority, the Agency and
Union Bank, as Escrow Bank, relating to the defeasance and refunding of the 1995 Series A
Notes.
"plan iL nit' means the limitation contained in the Redevelopment Pbm on the number of
dollars of taxes which may be divided and allocated to the Agency pursuant to the
Redevelopment Plan, as such limitation is prescribed by Section 33333.4 of the Redevelopment
law. 1. "Project g" and "Project Area No. P, "Protect Area No. 11" and 'Protect Area No.
lit" means, respectively and collectively, Rancho Laguna Redevelopment Project Area No. 1,
Rancho Laguna Redevelopment Project Area No. 11 and Random Laguna Project Ara No. III
described in the respective Redevelopment Plans
"Project Area Loan Agreement" means the Loan Agreement relating to Rancho Laguna
Redevelopment Project Area No. 111, dated as of December I, 1995, and each by and between
the Authority and the Agency.
"Redeye meat Fund" means the redevelopment fund established by Section 2.oS of
each of the Project Area Loan Agreement
"Redevelopment Law" means the Community Redevelopment Law of the State,
constituting Part 1 of Division 24 of the Health and Safety Code of the State, and the acts
amendatory thereof and supplemental thereto,
" Redevelopment Plans ".means, collectively 0) the Redevelopment Plan for the project
designated as the "Rancho Laguna Redevelopment Project Area No. I ", approved Ordinance
No. 624, enacted by the City Council of the City' of Lake Elsinore on October 1,1981, together
with any amendments thereof, heretofore or hereafter duly enacted pursuant to the
Redevelopment Law. (U) the Redevelopment Plan for the project designated as the "Rancho
Laguna Redevelopment Project Area No. V, approved by Ordinance No. 671, enacted by the
City Council of the City of Lake Elsinore on July 18, 1983, together with any amendrrtants
thereof, heretofore or hereafter duly enacted ptasuant to the Redevelopment law and (iii) the
Redevelopment Plan for the project designated as,the "Rancho Laguna Redevelopment Project
Area No. ID'; approved by Ordinance No. 815, enacted by the City Council of the City of.l.akc
Elsinore on September 8, 19U, together with any amendments thereof, heretofore or hereafter
duly enacted pursuant to the Redevelopment law.
"Refunding Obli ag jfons" means obligations issued,or incurred by the Agency the net
proceeds of which are used solely to rehmd all or's portion of the Housing Loan.
" rt" means a document in writing signed by an Independent Redevelopment
Co
rheultant and including:
(a) a statement that the person or firm making or giving such Report has read the
pertinent provisions of this Housing Fund Loan Agreement to which such Report relates;
-5-
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the Report is based; and
(c) a statement that, in the opinion of such person or firm, sufficient examination
or investigation was made as is necessary to enable said consultant to express an
Wormed opinion with respect to the subject matter referred to in the Report:.
'R uest of the Agency" means a request in writing signed by the Executive Director,
Treasurer or Secretary of the Agency or by any other officer of the Agency duly authorized by
the Agency for that purpose.
"Series A Bonds" means the $113,345,000 aggregate principal amount of lake Elsinore
Public Financing Authority 1995 Series A Tax Allocation Revenue Bonds (Lake Elsinore
Redevelopment Projects), Issued and at any time outstanding under the Series A Indenture.
"Series A Bonds Trustee" means the trustee for the Series A Bonds appointed and
acting pursuant to the Series A Indenture-
Jedes B Bonds" means the $10,071,00280 aggregate principal amount of lake Hisinore
Public Financing Authority 1995 Series B Subordinate Tax Allocation Revenue Bonds (take
Elsinore Redevelopment Projects), issued and at any time outstanding under the Series B
Irtdenume
"Series B Bonds Trustee" means the trustee for the Series B Bonds approved and acting
pursuant to the Series B Bonds Indenture.
"Series A indenture" means the Indenture of Trust, dated as of December 1,1995, by and
between the Authority and the Trustee, authorizing the issuance of the Series A Bonds.
"Series B Indenture" means the Indenture of Trust, dated as of December 1, 1995, by and
between the Authority and the Trustee, authorizing the issuance of the Series B Bonds.
"Subordinate Debt" means any loans, advances or indebtedness issued or incurred by
the Agency pursuant to Section 206, which are either: (a) payyable from, but not secured by a
pledge of or lien upon, the Housing Set-Aside Revenues; or (b) secured by a pledge of or lien
upon the Housing Set -Aside Revenues which is subordinate to the pledge of and Ben upon the
Housing Set -Aside Revenues hereunder for the seauity of the Housing loan.
"Trustee" means the Series A Bonds Trustee or the Series B Bonds Trustee, as
applicable.
Section 1.02 Rules of Construction. Ali references herein to "Articled, "'SwI orts" and
other subdivisions are to the corresponding Articles, Sections or subdivisions of this Housing
Fled Loan Agreement, and the words "herein," "hereof," hereunder' and outer words of similar
import refer to this Housing Purl Loan Agreement as a whole and not to any particular Articie,
Section or subdivision hereof.
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ARTICLE III
THE LOAN; ESTABLISHMENT OF FUNDS; PARITY DEBT
Section 2.01. Authorization The Authority hereby agrees to lend to the Agency on the
Closing Date, from the proceeds of sale of the Bonds deposited in or otherwise chargeable to
the Loan Fund, the aggregate principal amount of Nineteen Million Nine Hundred Nine
Thousand Two Hundred Seventy -Nine Dollars and Sixty -Three Cents ($19,909,279.63) under
and subject to the terms of this Housing Fund ,Loan Agreement, the Bond Law mind the
Redevelopment law. The Housing Loan shall be made on the Closing Date in.two advances,
namely, the first advance in the principal amount of $13,345,000 to be made from the proceeds
of the Series A'Bonds and the second advance in the principal amount of $6,564,279.63 to be .
made from the proceeds of the Series B Bonds.
Section 2.02 Terms of Housing Loan. The principal of the Housing Loan and interest
thereon shall be payable in installment payments payable not less than six (6).Business Days
prior to each March 1 and September 1, commencing September 3, 1996, in each of the years
and in the amounts, as shown in the following table:
Fiscal ear March I Seplentbei l
19% $1,115,503
1997 86WA11 600,411
1998 608AN 60RAN
1999 70,125 7001125
2000 708,782 7081782
2001 723,148 733,148
20M 738,120 738,120
20M 755,350 735,950
4101 770,910 77D,910
2005 787,406 787,406
20% 806,037 805,037
2007 8221398 822.298
2008 839,245 839,245
2009 858.910 858,910
20f0 875.858 87 A%
2011 _ 820,093 820,093
2012 825,525 825,545
2013 757A56 75 A%
2014 757,740 757,740
2015 866,860 866,860
2016 768,S" 768,544
2017 76SA48 768,648
2018 769.362 7691362
2019 77OA96 77006
2020 772,883 772,8&9
2027 773158! 773,584
2022 771,982 771,982
2M3 776,112 776,112
2029 77SA37 775,487
2025 774A39 774A39
It is understood that installment payments hereunder shall be applied by the Trustee to
the payment of both the Series A Bonds and the Series B Bonds, and that the payment of the
Series A Bonds will be on a basis senior to the payment' of the Series B Bonds, as more
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particularly provided in the respective indentures. If requested by the Trustee, the Agency shall
confirm to the Trustee in a Certificate of the Agency how such an installment payment shall be
so applied.
In the event principal of the Housing Loan shall be prepaid in part pursuant to Section
2.03 hereof, the principal portion of the foregoing schedule of payment amounts shall be
recalculated and reduced in the same amount with respect to each annual installment as the par
amount and corresponding maturity of Bonds redeemed together with the interest thereon, as
further provided in a Certificate of the Agency referred to in Section 2.02(a) of the respective
Indentures to be delivered by the Agency to the Trustee.
in the event the principal of the Housing Loan shall be reduced by the tender and
cancellation of Bonds pursuant to Section 2.D3 hereof, the principal portion of the foregoing
schedule of payment amounts shall be recalculated and reduced in the same amount with
respect to each annual installment as the par amount and corresponding maturity of Bonds so
tendered and cancelled, together with the interest thereon, as further provided in a Certificate of
the Agency to be delivered by the Agency to the Trustee together with the Bonds so tendered
and cancelled.
Interest on each installment of principal of the Housing Loan has been calculated at the
annual interest rate payable by the Authority on the Bonds on the basis of a 360 -day year of
twelve 30 -day months, and shall accrue on the unpaid principal of the Housing Loan from and
including the Dosing Date to but not including the Interest Payment Date with respect to which
such installment of principal is payable. Interest on the Housing Loan shall be payable as of
each Interest Payment Date. Any Installment of principal or interest which is not paid when
due shall continue to accrue interest from and including the Interest Payment Date with respect
to which such principal or interest Is payable to but not including the date of actual payment.
Payments on the Housing Loan shall be payable by the Agency to the Trustee, as
assignee of the Authority under the Indentures, in immediately available funds which constitute
lawful money of the United States of America.
Section 2.03. Pent
Optional PrepavmenG The principal of the Housing Loan shall be subject to optional
prepayment in whole, or in part from any available source of funds, pursuant to and to the
inanner set forth, and at prepayment prices (expressed as a pacerttage of the principal amount
of the Bonds to be redeemed from the proceeds of such prepayment) as set forth in Section
2.02(a) of the Indentures.
The Agency shall, in a Certificate of the Agency delivered to the Trustee and the Bond
Insurer, give the Trustee written notice of Its intention to prepay the'Housing Loan under this
Section and of the amounts and the maturity or maturities of the Bonds to be redeemed
(provided that the Series A Bonds and the Series S Bonds shall be redeemed on a pro rata
basis) and shall trarssfer to the Trustee all amounts required for such prepayment at least thirty
(30) but not more than sixty (60) days prior to the date fixed for such prepayment, unless a
later payment date shall be acceptable to the Trustee
In the event that a portion of the principal of the Housing Loan shall have been prepaid
by the Agency pursuant to "Section, the amount of each future principal installment Be forth
in Section 2.02 shall be reduced as provided in Section 2.02.
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In Bea of depositing cash with the Tru
pursuant to Section 202, the Agency shall
motion any amount of Bonds of like matu
been purchased by the Agency with amounts m
(to the extent such amounts are not required d
the Principal Account during the next twelve
other available amounts, which Bonds, subjec
may be purchased by the Agency at public or
the Agency may in Its discretion determine.. T
by the Agency and tendered to the Trustee in a
calendar year shall be credited towards and sha
required to be made pursuant to Section 2.M or
ee as the principal portion of any insta3huent
nve the option to teller to the Tnrsiee for
:y as the installment next payable, which have
jeposit in the Housing Loan Payment Amount
make any deposit into the Interest Acmzat or
12) months pursuant to Section 3A3) of with
to Section 33664 of the Redevelopment law,
rivate sale as and when and at such prices as
e par amount of any such Bonds so purchased
twelve -month period ending on July 1 in any
reduce the principal portion of the installment
eptember I in such year.
Section 2.o4. Application of Housing Loan Proceeds. (a) On the Closing Date of the
Series A Bonds, the proceeds of the first advance of the Housing Loan shall be disbursed from
amounts on deposit to the Housing Loan Fund established under the Series A Indenttme, as
follow;
0) The Series A Trustee shall deposit into the Costs of Issuance And the
amount of ;476,043.19. . .;
W The Series A Trustee shall deposit into the Reserve Fund establi shed by the
Series A Indenture the amount of $982,987.50.
(iii) The Series A Trustee shall transfer the remaining amount of the first advance
to the Agency for deposit by the Agency in the Low and Moderate Income Housing
Fund.
(b) On the Closing bate of the Series B Bonds, the proceeds of the second advance of
the Housing Loan shall be disbursed from amounts on deposit in the Housing Loan Fund
established under the Series B Indenture, as follows:
(I) Ile Series B Trustee shall deposit into the Costs of Issuance Fund the amount
of $161,364.87.
(ii) The Series B Trustee shall deposit Into the Reserve Fund established by the
Series B Indenture the amount of $656,427.96.
(130 The Series B Trustee shall transfer the remaining amount of the second
advance to Agency for deposit by the Agency In the Low and Moderate Income Housing
Fund.
Section 205. jgterfund Loans. (a) the aggregate amount deposited. in the Low and
Moderate Income Housing Fund pursuant to Section 204 (a)Biq and 204 (b)WO, being the total
amount of $17,040,43994 of Interfund Loans shall be loaned by the low and Moderate Income
Honssmg Funnd to the Project Anaas, as ioBows:
W An Interfund Lean In the amount of E7,361,918.49 Is hereby made to Project Area
No. L E2.7S2, 76926 of fhe amount of the Intefimd loan to Project Aron No. 1 ahail be
immediately transferred by the Trustee, on belailf of the Agency, to the Rwrow Bank for
application in accordance with the 1993 Notes Escrow AgreeaxnY $3,762;749.23 of the amount
of the Interfirmd Loan to Project Area No. I dwE be Immediately transferred by the Trustm on
behalf of the Agency, to the Escrow Bank for application is amordaoce with the 1995 Notes
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Escrow Agreement and the remaining amount shall be deposited by the Agency in the
Redevelopment Find atablissbed for Project Area No. 1;
(ti) An Interfund Loan in the amount of $7 ,533,578.47 is hereby made to Project Area
No. 11. $4,809,32431 of the amount of the Interfund bean to Project Area No. 11 shall be
immediately transferred by the Trustee, on behalf of the Agency, to The Escrow Bunk for
application in accordance with the 1993 Notes Escrow Agreement; $3,840,054.10 of the amount
of the Interfund loan to Project Area No. l shall be immediately transfered by the Trustee, on
behalf of the Agency, to the Escrow Bank for application in accordance with the 1995 Notes
Escrow Agreement and the remaining amount shell be deposited by the Agency in the
Redevelopment Find established for Project Area No. 11; and
(iii) An Interfund Loan in the amount of $2,124,942.84 is hereby made to Project Area
No. 111. $792,406.11 of the amount of the Interfund Loan to Project Area No. Ill shall be
immediately transferred by the Trustee, on behalf of the Agency, to the Escrow Bank for
application in accordance with the 1993 Notes Escrow Agreement; $1,083336.73 of the amount
of the Interfund loan to Project Area No.1 shall be immediately transferred by the Trustee, on
behalf of the Agency, to the Escrow Bank for application In accordance with the 1995 Notes
Escrow Agreement and the remaining amount shall be deposited by the Agency in the
Redevelopment Fund established for Project Area No. 111.
(b) the Interfund Loans shall bear interest at the same interest rate per annum as Is borne
by the Housing Loan and shall be payable in whole or in part upon demand of the Agency for
funds to finance low and moderate income housing redevelopment activities.
(c) An Interfund Loan shall be payable from tax increment revenues allocated to the
Project Area benefited by such Interfund Loan or from the proceeds of loans, advances or
indebtedness available with respect to such Project Area, provided that such payment of tax
Increment revenues is subordinate to the payment of existing or future loans, advances or
indebtedness with respect to such Project Area (unless expressly provided by the Agency to the
contrary).
(d) The Agency Treasurer shall keep accurate accounts of the amounts owing on the
Interfund loans so as to assure that the law and Moderate Income Housing Fund is made
whole with respect to the making of the InterAmd Loan.
Section 2.06. issuance of Subordinate Debt. In addltion to the Housing Loan, the
Agency may issue or tihear Subordinate Debt in such principal amount as shall be determined by
the Agency. The Agency may issue or Incur such Subordinate Debt subject to the following
specific conditions precedent:
(a) The Agency shall be in compliance with all covenants set forth in this
Housing Fand Loan Agreement and
(h) 11; and to the extenk such Subordinate Debt is payable from Housing Set -
Aside Revenues, then the aggregate amount of the principal of and i htesvat to accrue on
the Housing Loan and on all Subordinate Debt coming due and payable following the
iss;aance of such Subordinate Debt shall not exceed the mardmmat amount of Housing
Set -Aside Revenues permitted under the Plan Limit fallowing the lsauance of such
Subordinate Debt
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Section 2.07. Validity of Housing Loan. The validity of the Housing Loan shall not be
dependent upon the completion of the Redevelopment Projector upon the performance by any
person of its obligation with respect to the Redevelopment Project.
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ARTICLE in
PLEDGE OF TAX REVENUES, APPLICATION OF FUNDS
Section 3.01. Pledge of Housing Set -Aside Revenues. The Housing loan shall be equally
secured for the benefit of the Authority and the Owners of the Bonds by a pledge of, security
interest in and lien on all of the Housing Set -Aside Revenues, without preference or priority for
series; issue, number, dated date, sale dale, date of execution or date of delivery. The Housing
Set -Aside Revenues are hereby allocated to the payment of the principal of and interest on the
Housing Loan. Except for the Housing Set -Aside Revenues, no funds or properties of the
Agency shall be pledged to, or otherwise liable for, the payment of principal of or interest or
premium (if any) on the Housing Loan.
Section 3A2 Housing Loan t'avment Account- ueposur or nousmi' aet-rs,ue revenues.
The Agency hereby establishes a special fund to be known as the Housing Loan Payment
Account, which shall be held by the Agency in the Low and Moderate Income Housing Fund.
The Agency shall deposit all of the Housing Set -Aside Revenues received in any Bond Year in
the Housin Loan Payment Account promptly upon receipt thereof by the Agency, unto ouch
Vim (if any) during such Bond Year as the amounts on deposit in the Housing Loan Payment
Account equal the aggregate amounts required to be transferred to the Trustee pursuant to
Section 3.03 below with respect to such Bond Year. Any Housing Set-Aside Revenues received
during such Bond Year in excess of such amounts shall be released from the pledge and Ben
hereunder and may be used for any lawful purposes of the Agency. Prior to the payment in fall
of the principal of and interest and prepayment premium (if any) on the Housing Loan and the
ppaayment in full of all other amounts payable hereunder, the Agency shall not have any
benetdal right or interest in the moneys on deposit in the Housing Loan Payment Account,
except only as provided in this Housing Fund loan Agreement, and such moneys shall be used
and applied as set forth herein.
Section 3.03. Transfer of Housing Set Aside Revenues to Trustee. The Agency shall
withdraw from the Housing Loan Payment Account and transfer to the Trustee the following
amounts at the following times and in the following order of priority:
(a) Payment Amount. No later than the sixth (6th) Business Day preceding each
Interest Payment hate, commenting February 1, 7996, the Agency shall withdraw from
the Housing loan Payment Account and transfer to the Trustee an amount equal to the
payment amount on the Housing loan becoming due and payable on such Interest
Payment Date pursuant to Section 202
(b) Reserve Fund Deposits. In the event that the Trustee shall notify the Agency
pursuant to Section 3.050) of either of the Indentures that the amount on deposit in the
applicable Reserve Fund is less than that Reserve Fund's Reserve Requirement, the
Agency shall immediately withdraw from the Housing Loan Payment Account and
transfer to the Trustee for deposit in such Reserve Fund the Proportionate Share of an
amount of money necessary, together with the amount to be paid to the Trustee
pursuant to Section 3.03(b) of either of the other Housing Fund Loan Agreements, wd
subject to the further provisions of Section 4,02(b), if applicable, to maintain the Reserve
Requirement in such Reserve Fund. No such transfer and deposit need be made to a
Reserve Fluid so long as there shall be on deposit therein a sum at least equal to the
applicable Reserve Requirement under the respective Indentures.
(ei 5 . The Agency shall not be obligated to deposit in the Housing Loan
Payment Account in any Bond Year an amount of Housing Set -Aside Revenues which,
_74-
together with other available amounts In the Housing Loan Payment Account, exceeds
the amounts required to be transferred to the Trustee in such Bond Year pursuant to this
Section 3.03. In the event that for any reason whatsoever any amounts shall remain on
deposit in the Housing Loan Payment Account on any February after malting all of the
transfers theretofore required to be made pursuant to the preceding clauses (a) and (b),
the Agency may withdraw such amounts* from the Housing Loan Payment Account to be
used for any lawful purposes of the Agency.
Section 3.04. Investment of Moneys: Valuation of 'Investments. All moneys in the
Housing Loan Payment Account shall be invested by the Agency solely in Permitted
Investments which are also authorized under the Redevelopmeni Law, maturing not later than
the respective dates on which such moneys ane'estimated by the Agency to be required to be
deposited with the 7hatee pursuant to Section 3.03.
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ARTICLE TV
OTHER COVENANTS OF THE AGENCY
Section 4.01. Pt TM tool Payment. The Agency will punctually pay or cause to be paid
the principal of and interest on the Housing Loan together with any prepayment premiums
thereon in strict conformity with the terms of this Housing Fund Loan Agreement, and it will
faithfully observe and perform all of the conditions, covenants and requirements of this Housing
Fund Loan Agreement
Section 4.02, Lim;ratinrr on Superior Debt. The Agency hereby covenants that, 90 long as
the Housing Loan remains unpaid, the Agency shall not Issue any bonds, notes or other
obligations, enter into any agreement or otherwise incur any loans, advances or indebtedness,
which is in any case secured by a lien on all or any part of the Housing Set -Aside Revenues
which is superior to or on a par; with the lien established hereunder for the security of the
Housing Loan, including Refunding Obligations. The Agency may amend this Loan Agreement
to issue or incur parity bonds within the meaning of Section 3.06 of either the Series A Indenture
or the Series B indenture and the Agency may issue or incur Subordinate Debt pursuant to
Section 206.
Section 4.03. of Claims. The Agency will pay and dbcbwge, or cause to be
paid and discharged, any and all lawful claims for labor, materials or supplies which, if
unpaid, might become a lien or charge upon the properties owned by the Agency or upon the
Housing Set -Aside Revenues or any part thereof, or upon any funds In the hands of the Trustee,
or which might impair the security of the Housing Loan. Nothing herein contained shall require
the Agency to make any sect payment so long as the Agency in good faith shall contest the
validity of said claims.
Section 4.04. Books and Accounts: Financial Statement. The Agency will keep, or cause
to be kept, proper books of re nd cord a accounts, separate from all other records and accounts
of the Agency and the City, in which complete and correct entries shall be made of all
transactions relating to the Housing Set -Aside Revenues, the Interhaul Loans, and the funds
and accounts established by the Indentures and by this Housing Fund Loan Agreement Such
books of record and accounts shall at all times during business hours be subject, upon prior
written request, to the reasonable inspection of the Authority, the Trustee, the Bond Insurer and
the Owners of any Bonds then Outstanding, or their representatives authorized in writing.
The Agency will cause to be prepared and transmitted to the Trustee and the Bond
Insurer annually, within one hundred and eighty (180) days after the dose of each Fiscal Year so
long as any of the Bonds are Outstanding, complete audited financial statements with respect
to such Fiscal Year showing the Housing Set -Aside Revenues, all disbursements from the
Housing Loan Payment Account, the Costs of Issuance Funds, the Revenue Funds and the
Reserve Ponds and the accounts therein, as of the end of such Fiscal Year. The Agency will
furnish a copy of such statements, upon reasonable request, to any Bond Owner.
Section 4.05. Protection of Security and Rights. The Agency will preserve and protect
the security of the Housing Loan and the rights of the Trustee and the Bond Owners with
respect to the Horsing Loan. From and after the Closing Date, the Housing Loan shall be
incontestable by the Agency.
Section 4.06. Maintenance of Housing Set -Aside $avenues: Compltance with Plan Lfmtt
The Agency shall comply with all requirements of the Redevelopment Law to insure the
allocation and payment to it of the Housing Set -Aside Revenues, Including without Hadtation
-14-
the timely filing of any necessary statements of indebtedness with appropriate officials of the
City and (in the case of supplemental revenues and other amounts payable by the State)
appropriate ofHtials of the State of Cailifornia, and anal} (onward inforutation copes of each
such filing to the Trustee The Agency ehaD not make any of the anmuai findings pernutted by
Section 333342(a) of the Redevelopment law lf, and to the extent, any such (findings will
adversely impact the Agency's ability to make the Loan Payments ntquired by Section 2.02 of
this Loan Agreement. The Agency shall not enterinto any'agteemertt with the City ar any other
governmental unit which would have the effect of reducing the amount of Housing Set -Aside
Revenues available to the Agency for payment of the Housing Loan. Without ting the
generality of the foregoing, the Agency covenants that it eball depositor cause to be deposited
in the Low and Moderate Income Housing Fund ail amnounis when, as and if required to be
deposited therein pursuant to the Redevelopment Law. Nothing herein is intended or shall be
construed in any way to prohibit or impose any limitations on the entering into by the Agency of
any such agreement, amendment or supplement which by its term is subordinate to the payment
of the Housing Loan, as provided in Section 206.`
The Agency shall manage its fiscal affairs in 'a manner which ensures that it will have
sufficient Housing Set -Aside Revenues available under the Plan Ludt in the amounts and at the
times required to enable the Agency to pay the principal of and interest and premium (if any)
on the Housing Loan.
Section 4.07. Payment of Expenses• Indemnifleatien. The Agency shall pay to the
Trustee from time to time all reasonable compensation for all services rendered under this
Housing Fund Loan Agreement and the Indentures, including but not limited to all reasonable
expenses, charges, legal and consulting fees and other disbursements and those of its attorneys,
agents and employees, incurred m and about the performance of its powers and duties
hereunder. and thereunder. Upon the occurrence of an Event of Default, the Trustee shall have a
first lien on the Housing Set -Aside Revenues to secure the payment to the Trustee of all
reasonable fees, costs and expenses, including reasonable compensation to its experts,
attorneys and counsel incurred in declaring such Event of Default and in exercising the rights
and remedies set forth in Article V hereof.
The. Agency further covenants and ogre
officers, directors, agents and employees, harml
which it may incur.atising out of or in the oxen
hereunder, including the costs and expenses of
excluding any and all losses, expenses and Ina
intentional misconduct of the Trustee, its off
obligations of the Agency under this paragraph
7iuste O er the indentures and payment of
Housing Fund Loan Agreement
to indemnify and save the Trustee and its
against any losses, expenses and liabilities
t and performance of its powers and duties
efending against any claim of liability, but
titles which are due to the negligence or
trs, directors, agents or employees, The
n0 survive the resignation or removal of the
e Housing Loan and the discharge of this
Section 4.08. No Arbitraee The Agency shall lln ottake, nor pemdt nor suffer to be taken
byy the Trustee, the Authority or otherwise, any action with respect to the proceeds of the
housing Loan whicb, if welt action had been reasonably expected to have been taken, or had
been deliberately and intentionally taken, on the date of issuance of the Bonds would have
caused the Bonds to be "arbitrage bonds" within the meaning of section 148 of the Code
Section 4.09. Rebate Requirement. As required by Section 5.09 of each of the
Indentures, the Agency, on behalf of the Authority, shall take any and al actions necessary to
assure compliance with section 148(f) of the Code, relating to the rebate to the federal
government of excess investment earnings, if any, with respect to this Housing Pund Loan
Agreement and the Bonds.
-1s-
The Agency agrees to furnish all information to, and cooperate fully with the Authority,
the Trustee and their respective officers, employees, agents and attorneys, in order to assure
compliance with the provisions of Section 5.09 of each of the Indentures. In the event that the
Authority shall determine, pursuant to Section 5.09 of either of the Indentures, that any
amounts are due and payable to the United States of America thereunder and that neither the
Authority nor the Trustee has on deposit an amount of available moneys (excluding moneys on
deposit in an Interest Account or a Principal Account or a Reserve Fund and excluding any
other moneys required to pay the principal of or interest or redemption premium, if any, on the
Bonds) to make such payment, the Authority shall promptly notify the Agency of such fact.
Upon receipt of any such notice, the Agency shall promptly pay to the Trustee from available
Housing Set -Aside Revenues or any other source of legally available funds the sum of one
hundred percent (10096) of the amounts determined by the Authority to be due and payable to
the United States of America as a result of the investment of amounts on deposit in any fund or
account established hereunder or under the Indentures.
Section 4.10. Private Activity Bond Limitation. The Agency shall assure that the
proceeds of the Housing Loan are not so used as to cause the Bonds to satisfy the private
business tests of section 141(b) of the Code or the private loan 8naridng test of section 141(c)
of the Code.
Section 4.11. Federal Guarantee Prohibition. The Agency shall not take any action or
permit or softer any action to be taken if the result of the same would be to cause any of the
Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Code.
Section 4.12. Maintenance of Tax Exemption. The Agency shall take all actions
necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners
of the Bonds to the same extent as such interest is permitted to be excluded from gross income
under-the Code as in effect on the date of issuance of the Bonds,
Section 4.13. Continuing Disclosure The Agency hereby covenants and agrees that it
will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
Notwithstanding any other provision of this Housing fund Loan Agreement, failure of the
Agency to comply with the Continuing Disclosure Cerdf ate shall not be an Event of Default
hereunder. However, any Participating Underwriter or any holder or beneficial owner of the
Bonds may take such actions as may be necessary and appropriate, including seeking specific
performance by court order, to cause the Agency to comply with its obligations under this
Section 4.13.
Section 4.14. Report to California Debt Advisory Commission. In accordance with
Section 6599.1 ) of the Government Code, the Agency shall notify the California Debt
Advisory Commission by mail, postage prepaid, within ten (10) days if either (f) the Agency
fails to pay principal and interest payable pursuant to this loan Agreement on any scheduled
payment date or (ii) funds represeri ft all ora portion of a Reserve Requirement are withdrawn
from a Reserve Account to pay principal and /or interest on either the Series A Bonds of the
Series B Bonds (the terms "Reserve Requirement" and "Reserve Accotnt" having the ntearhings
set forth in the Series A Indenture or the Series B Indenture, as applicable).
The notice given pursuant to this Section 4.14 shall consist of a letter to the Comaaleston
stating (1) the tame of the Agency and the Bonds and the date of sale of the Bonds, GO the tyke
of non - payment (draw on Reserve Account or non - payment of such principal or interest), (iii)
the date the draw on the Reserve Account or such norm- payment occurred and (tv) the amount of
the draw on the Reserve Account or the amount of such non - payment.
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Section 4.15. Information Provided to Bond Insurer. The Agency shall provide or cause
to be provided to the Bond Insurer the following: (a) within one hundred twenty (M) days
following the dose of each Fiscal Year, a copy of the adopted final budget of the Agency for the
next succeeding Fiscal Year; (b) a copy of the official statement, offering circular or other
disclosure document relating to any Issue of Agency obligations, including but not Bmiled'to any
issue of parlty Debt; (c) notice of any draw upon the Reserve Fund or of any deficiency in the
Reserve Fund due to market Fluctuation in the value 'of investments credited thereto; and (d)
such additional information as the Bond Insurer may reasonably request from time to time
Section 4.16. Further Assurances, The Agency will adopt, make, execute and deliver
any and all such further resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this Housing
Fund Loan. Agreement and for the better assuring and confirming unto the Trustee, the
Authority and the Owners of the Bonds of the'rights and benefits provided in this Housing
Fmtd loan Agreement.
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ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
Section 5.01. Events of Default and Acceleration of Maturities. The following events
shall constitute Events of Default hereunder,
(a) Failure by the Agency to pay the principal of or interest or prepayment
premiums (if any) on the Housing Loan when and as the same shall become due and
payable.
(b) Failure by the Agency to observe and perform any of the covenants,
agreements or conditions on its part contained in this Housing Fund Loan Agreement,
other than as referred to in the preceding clause (a), for a period of thirty (30) days after
written notice specifying such failure and requesting that it be remedied has been given
to the Agency by the Trustee or the Bond Insurer; provided, however, that if in the
reasonable opinion of the Agency the failure stated in such notke can be corrected, but
not within such thirty (30) day period, the Trustee shall not unreasonably withhold its
consent to an extension of such time if corrective action is instiMted by the Agency
within such thirty (30) day period and diBgendy pursued until such failure is corrected.
(c) The Agency commences a voluntary action under Title 11 of the United
States Code or any substitute or successor statute
If an Event of Default has occurred and is continuing, the Trustee may, but only with the
written consent of the Bond Insurer, or, at the written direction of the Bond insurer, the Trustee
shall, (a) declare the principal of the Housing loan, together with the accrued interest on all
unpaid instaIlment payments thereof, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable, anything in this Housing Fund
Loan Agreement to the contrary notwithstanding, and (b) exercise any other remedies available
to the Trustee In law or at equity. Immediately upon becoming aware of the occurrerace of an
Event of Default, the 'mates shall give notice of such Event of Default to the Agency and the
Bond insurer by telephone, b lecopier or other teleoommuniralion device, promptly confirmed in
writing. This provision, however, is subject to the condition that if, at any time after the
principal of the Housing loan shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been obtained or enterer(, the
Agency shall deposit with the Trustee a sum sufficient to pay as payments on the Housing
Loan matured prior to such declaration, with interest on such overdue payments at the rate
then borne by the Outstanding Bonds, and the reasonable expenses of the Trustee (including but
not limited to attorneys fees), and any and all other defaults known to the Trustee shall have
been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee
to be adequate &hail have been made therefor, them, and In every auch case, the Bond Insurer (or
the Trustee with the written consent of the Bond Insurer) may, by written notice to the Trustee
and the Agency, rescind and annul such declaration and its consequences. However, no such
rescission and annulment shall extend to or shall affect any subsequent default, or shall impair
or exhaust any right or power consequent thereon.
Section S.02 Application of Funds Upon Default. All amounts received by the Trustee
pursuant to any right given or action taken by the Trustee under the provisions of this Housing
Fund Loan Agreement shall be applied by the Trustee in the following order.
-is.
First, to the payment of the fees, costs and expenses of the Trustee in carrying
out the provisions of this Article V, including reasonable compensation to its agents,
attorneys and counsel; and
Second, to the payment of all payments on the Housing Loan then due and
unpaid, with interest on overdue payments to the extent permitted by law at the rate of
interest then borne by overdue payments on the Outstanding Bonds: provided, however,
Mat in the event such amounts shall be insufficient to pay in full the full amount of such
interest and principal, then such amounts shall be applied in the order by which the
overdue payments first became delinquent.
Section 5.03. No Waiver. Nothing in this Article V or In any other provision of this
Housing Fund Loan Agreement, shall affect or impair the obligation of the Agency, which is
absolute and unconditional, to pay from the Housing Set -Aside Revenues and other amounts
Fledged hereunder, the payments and prepayment premiums (V any) on the Housing Loan to
the Trustee, as herein provided, or affect or impair the right of action, which is also absolute
and unconditional, of the Trustee to institute suit to enforce such payment by virtue of the
contract embodied in this Housing Fund loan Agreement.
A waiver of any default by the Trustee shall not affect any subsequent default or impair
any rights or remedies on the subsequent default. No delay or omission of the Trustee to
exercise any right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver of any such default or an acquiescence therein, and every
power and remedy conferred upon the Trustee by the Redevelopment Law, by She Indentum or
by this Article V may be enforced and exercised from time to time and as often as shall be
deemed expedient by the Trustee.
If a suit, action or proceeding to enforce any right or exercise any remedy shall be
abandoned or determined adversely to the Trustee, the Agency and the Trustee shall be restored
to their former positions, rights and remedies as if such suit, action or proceeding had not been
brought or taken.
Section SM. Remedies Not Exclusive No remedy herein conferred upon or reserved to
the Trustee is intended to be exclusive of any other remedy. Every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing, at law or in equity or by statute or otherwise, and may be exeresed without exhausting
and without regard to any other remedy conferred by the Redevelopment law or any other law.
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ARTICLE V1
MISCELLANEOUS
Section 6.01. Benefits Limited' Rights of Bond Insurer. Nothing in this Housing Fund
Loan Agreement, expressed or implied, is intended to give to any person other than the Agency,
the Trustee, the Bond Insurer and the Authority, any right, remedy or claim under or by reason
of this Housing Fund Loan Agreement. All covenants, stipulations, promnises or agreements in
this Housing Fund Loan Agreement contained by and on behalf of the Agency shall be for the
sole and exclusive benefit of the Authority, the Bond Insurer and of. the Trustee acting as trustee
for the benefit of the Owners of the Bonds.
The Bond Insurer shall be deemed to be a third party beneficiary hereunder for all
purposes whatsoever, and shall be entitled to enforce Its rights hereunder as if the Bond Insurer
were made a party hereto. Anything in this Housing Fund Loan Agreement to the contrary
notwithstanding, upon the occurrence and continuation, of an Event of Default, the Bond Insurer
shall be entitled to control and direct the enforcement of all rights and remedies granted to the
Bond Owners, or to the Trustee for the benefit of the Bond Owners, including but not limited to
rights and remedies relating to acceleration of the unpaid principal balance of the Loan and the
Tight to rescind and annul any declaration of such acceleration, and including but not limited to
the right to approve all waivers of any Events of Default.' The rights granted 3o the Bond
Insurer hereunder shall be deemed terminated and shall not be exercisable by the Bond Insurer
durin any period during which the Bond Insurer shall be in payment default under, the Financial
Guaranty Bond.
Anything in this Loan Agreement to the contrary notwithstanding, upon the occurrence
and continuation of an Event of Default, the Bond Insurer shall be entitled to control and direct
the enforcement of alt rigbis and remedies granted thereunder to the Bond Owners, or to the
Trustee for the benefit of the Bond Owners, including but not limited to rights and remedies
relating to acceleration of the unpaid principal balance of the Loan and the right to rescind and
annul any declaration of such acceleration, and including but not limited to the right to approve
all waivers of any Events of Default. The rights granted to the Bond ]usurer hereunder shall be
deemed terminated and shall not be exercisable by the Bond Insurer during any period during
which the Bond Insurer shall be in payment default under the FinancW Guaranty vow.
Section 6.02 Successor is Deemed Included in All References to Predecessor. Whenever
in this Housing Fund loan Agreement either the Agency, the Authority or the Trustee is named
or referred to, such reference shall be deemed to include the successors or assigns thereof, and
all the covenants and agreements in this Housing Farad IA= Agreement contained by or on
behalf of the Agency, the Authority, the Bond Iruum or the Trustee shall bird and inure to the
benefit of the respective successors and assigns thereof whether so expressed or not.
Section 6.03. Disc] ay a of Hnu tg Fund Logn Agmg=t . If the Agency shall pay and
discharge the entire Indebtedness on the Housing loan or any portion thereof In any one or more
of the following ways:
(a) by well and truly paying or causing to be paid the payments and
prepayment premiums (if any) on the Housing Loan or such portion, as and when the
same become due and payable,
(b) by irrevocably depositing with the Trustee, in trust, at or before maturity,
cash in an amount which, together with the available amounts then on deposit in any of
the funds and accounts established pursuant to the Indentures or this Housing Fund
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Loan Agreement, is fully sufficient to pay all payments and prepayment premiums (if
any) on the Housing loan or such portion; or
(c) by irrevocably deposlting with the Trustee or any other fiduciary, in trust,
Federal Securities in such amount as an Independent Accountant shall determine will,
together with the interest to accrue thereon and available moneys then on deposit in the
funds and accounts established pursuant to the Indentures or pursuant to this Housing
Fund Loan Agreement, be fully sufficient to pay and discharge the indebtedness on the
Housing Loan or such portion (including all payments and prepayment premiums) at or
before maturity,
then, at the election of the Agency but only if all other amounts then due and payable hereunder
shall have been paid or provision for their payment made, the pledge of and lien upon the
Housing Set -Aside Revenuers and other funds provided for in this Housing Fund Loan
Agreement and all other obligations of the Trustee, the Authority and the Agency under this
Housing Fund Loan Agreement with respect to the Housing Loan, or such portion, as
applicable, shall cease and terminate, except only the obligation of the Agency to pay or cause
to be paid to the Trustee, from the amounts "so deposited with the Trustee or such other
fiduciary, all sums due with respect to the Housing Loan, or such portion, as applicable, acid all
expenses and costs of the Trustee. Notice of such election shall be filed with the Authority, the
Bond Irmum and the Trustee.
If the Agency shall pa the Housing loan in hill, then the Authority shall cause any
funds thereafter held by the Trustee under the Indentures, which are not required for said
purpose to paid over to the Agency.
Section 6.04. Amendment. This Housing Fund Loan Agreement nay be amended by the
parties hereto but only under the circumstances set forth in, and in accordance with, the
provisions of Section 5.07 of the Indentures. The Authority covenants that the Indentures shall
not be amended without the prior written consent of the Agency.
Section6AS. Waiver of Personal Liability. No member, officer, agent or employee of the
Agency shat be individually or personally liable for the payment of the principal of or interest
on the Housing Loan; but nothing herein conbdned shall relieve any such member, officer, agent
or employee from the performance of any official; duty provided by law.
Section 6.06. Notices. All written notices; to be given under this Housing Fund loan
Agreement shall be given by first class mail or persona) delivery to the party entitled thereto at
Its address set forth below, or at such address as the party may provide to the other party In
writing from time to time. Notice shall be effective 4B hours after deposit m the United States
mail, postage prepaid or, in the case of any notke to the Trustee or the Bond hwurer or in the
case of personal delivery to any person, upon actual receipt at the address ad forth below;
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If to the Authority:
Lake Elsinore Public Financing Authority
130 South Main Street
lake Elsinore, California 92530
Attention: Executive Director
If to the Agency:
Redevelopment Agency of the
lake Elsinore
130 South Main Street
Lake Elsinore, California 92530
Attention: Executive Director
If to the Trustee:
Union Bank
120 South San Pedro Street, 4th Floor
Los Angeles, California 90012
Attention: Corporate Trout Division
If to the Bond Insurer.
Capital Guaranty Insurance Company
Steuart Tower, 22nd Floor
One Market
San Francisco, California 941054413
Attention: Surveillance
Section 6,07, Partial Invalidifg. if any Section, paragraph, sentence, clause, or phrase of
this Housing Fund Loan Agreement shall for any reason be held illegal, Invalid orurnenforceable,
such holding shall not affect the validity of the remaWng portions of this Housing Pend Loan
Agreement. The Agency hereby declares that it would have adopted this Housing Fund Loan
Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof and
authorized the Housing Loan irrespective of the fact that any one or more Sections, paragraphs,
sentences, clauses, or phrases of this Housing Fund loan Agreement may be held illegal, invalid
or unenforceable.
Section 6.08. Immunities of Trustee. All immunities, indemnities, exceptions from
liability and other provisions of the m insofar as they relate to the Trustee shall apply to this
Housing Fund Loan Agreement, The Immunities of the Trustee also extend to its directors,
officers, employees and agents.
Section 6.09. Govertnine Law, This Agreement shall be construed and governed in
accordance with the laws of the State of California.
Section 6.10. Execution In Counterpar . This Housing Fund Loan Agreement xmy be
executed in any number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original; and all such counterparts, or as many of them as the Authority, the
Agency and the Trustee shall preserve undestroyed, shall together constitute but one and the
same instrument.
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IN WITNESS WHEREOF, the REDEVELOPMENT AGENCY OF THE CITY OF LAKE
ELSINORE and the LAKE ELSINORE PUBLIC FINANCING AUTHORITY, have caused this
Housing Fund Loan Agreement to be signed by their respective officers, all as of the day and
year first above written.
Attest:
By S eta4y �—
Attest:
By ��
etary
_Z3_
REDEVEWPMENT AGENCY OF THE
FM
LAKE ELSINORE PUBLIC FNMCING
AU •
IF
EXHIBIT 2
RIVERSIDE COUNTY SUPERIER COURT JUDGEMENT
VALIDATING HOUSING LOANS
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John R. Harper, Esq. (State Bar # 82306) GOVERNMENT ENTITY, EXEMPT
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HARPER & BURNS FROM FILING FEE, PURSUANT
453 South Glassell Street TO GOVERNMENT CODE
Orange, CA 92666 SECTION 6103
(714) 771 -7728
Andrew C. Hall, Esq. (State Bar #34409)
JONES HALL HILL & WHITE
A PROFESSIONAL LAW CORPORATION
Four'Embarcadero Center, 19th %Floor
San Francisco, California 94ill
(415) 391 -5780
torneys for Plaintiff
IE
wrC o4-k
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF RIVERSIDE
LAKE ELSINORE PUBLIC FINANCING
AUTHORITY, a public entity created by
joint powers agreement,
Plaintiff,
Va.
ALL PERSONS INTERESTED IN THE MATTER
OF THE VALIDITY OF TWO SEPARATE SERIES OF
BONDS AUTHORIZED TO BE ISSUEDiBY THE
LAXE ELSINORE PUBLIC FINANCING AUTHORITY
BY AND PURSUANT TO ITS RESOLUTION NO.
PFA 95 -2 (adopted September 26, 1995)
Defendants.
)
NO. 271683
)
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JUD24M
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This matter having come on regularly; for hearing on
Plainti ff's application for judgment; and Harper & Burns, by John
R. Harper, Esq., having appeared for Plaintiff;. and Plaintiff
having. presented a Brief and Affidavit in support of said
application; and good cause`, appearing therefor, IT IS ORDERED,
ADJUDGED, AND DECREED, as follows:
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Judgment
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(1) This action has been properly brought pursuant to Section
660, and following, of the Code of Civil Procedure.
(2) By the adoption by Plaintiff of Resolution No. PFA 95 -2,
on September 26, 1995- ('Resolution No. PFA 95 -21)' the Plaintiff
has duly and lawfully authorized the issuance of its 1995 Series A
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Housing Tax Allocation Bonds (Lake Elsinore Redevelopment Projects
(the 'Series A Bonds.') and its 1995 Series B ';Housing Tax
Allocation Bonds (Lake Elsinore Redevelopment Projects) (the
' Series 8 Bonds') pursuant t07 two separate Indentures, each dated
November 1, 1995, by and between the Plaintiff and Union Bank as
trustee (respectively, the 'Series A Indenture' and the 'Series B
Indenture').
(3) The Series A Bonds and the Series B Bonds (with such
additions or modifications to the Series A Indenture and the
Series B Indenture as shall be necessary or .appropriate to
effectuate the issuance, sale and delivery of the Series A Bonds
and the Series B Bonds), when issued, sold and delivered will be
valid, legal and binding obligations of the Plaintiff payable as
provided in Resolution No. PFA 95 -2 and, as ,applicable, in, the
Series A Indenture and the Series B Indenture.
(4) Pursuant to Resolution No. PFA 95 -2 and pursuant to
Resolution No. RDA 95 -9, adopted by the Redevelopment Agency of
the City of Lake Elsinore (the 'Agency') on September 26, 1995,
the Plaintiff and the Agency have each duly and. lawfully approved
the execution, delivery and performance of the Housing Fund Loan
Agreement, dated as of November 1, 1995, by and, between the
Plaintiff and the Agency (the 'Loan Agreement').
(5) The Loan Agreement (with such additions on ' modification
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Judgment
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as shall be necessary or appropriate to effectuate the purposes of I
the Loan Agreement) when executed and delivered will be legal,
valid and binding obligations of the Plaintiff and the Agency,
respectively, and the provisions of the Loan Agreement, including,
without limitation, the provisions for making of the loan (the
,E
,Housing Loan') to the Agency by the Plaintiff pursuant to the
Loan Agreement, the use by ,the Agency of the proceeds of the
8 Housing Loan to make interfund loans (the • Interfund Loans•) to
9 three different redevelopment project areas of the Agency (as
to further described in Plaintiff s complaint filed in this action)
11 and the use of tax increment revenues in the Agency's Low and
12 Moderate Income Housing (deposited pursuant to Section 33334.3 of
13 the California Health and Safety Code) to repay the Housing Loan
14 and, hence the Series A Bonds and the 'Series B Bonds (without
13 regard to the timeliness of the repayment of the Interfund Loans),
16 are enforceable in accordance with the terms of -the Loa
11 Agreement.
l8 (6) Pursuant'to Section,870 of the Code of Civil Procedure,
19 the Court permanently enjoins the institution by any person of any
20 action,or proceeding raisingcany issue as to which such judgment
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Dated-
Judge of the Superior Court
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Judgment
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John R. Harper, Esq. (State Bar # 82306) GOVERNMENT ENTITY, EXEPIPT
HARPER & BURNS FROM FILING FEE, PURSUANT
453 South Glassell Street TO rQQVERNMENT • CODE
Orange, CA 92666 SECTION 6103
1714) 771 -7728
Andrew C. Hall, Esq. (State Bar #34409)
JONES HALL HILL & WHITE 1'i Ti
A- PROFESSIONAL LAW CORPORATION .TlFi: ¢«
Four Embarcadero Center, 19th Floor
San Francisco, California 94111 + .•,
(415) 391 -5780 1`U
Attorneys for Plaintiff
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF RIVERSIDE
LAKE ELSINORE PUBLIC FINANCING )
AUTHORITY, a public entity created by )
joint powers agreement, )
Plaintiff, )
Vs. )
ALL PERSONS INTERESTED IN THE MAATRER )
OF THE VALIDITY OF TWO SEPARATE SERIES OF )
BONDS AUTHORIZED TO BE ISSUED BY THE )
LAKE ELSINORE PUBLIC FINANCING AUTHORITY )
BY AND PURSUANT TO ITS RESOLUTION NO. )
PFA 95 -2 (adopted September 26, 1995) }
Defendants. 1
N0. 2716Ra
.AFFIDAVIT OF
C. RAY WOOD
IN SUPPORT OF
PLAINTIFF'S
APPLICATION FOR
DEFAULT JUDGMNT
1, C. Ray Wood, am the Treasurer of the Plaintiff. I have
personal knowledge of the allegations set forth in the Complaint
on file in these proceedings. •If I were sworn as a witness, I
could and would testify to the truth of such allegations. I
state:
2, The Lake Elsinore Public Financing Authority (the
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Affidavit in Support of Plaintiff's
Application for Default Judgment
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'Plaintiff') is a public entity created as a joint powers agency
pursuant to a Joint Powers Agreement (the 'Agreement'), dated as
of July 25, 1989, by and between the,City of Lake Elsinore (the
'City'), a municipal corporation organized and existing under the
laws of the State of California, and the Redevelopment Agency of
the City of Lake Elsinore (the 'Agency,), a public body, corporate
and politic organized and. existing under the laws of the State of
California; the Agreement having been entered into by the City and
the Agency pursuant to 'Articles 1 through 4 (commencing with
Section 650D) (the 'Act") of Chapter 5, Division -7, Titled of the
Government Code of the State';of California.
2. Plaintiff is authorized by the Agreement to borrow money
for the purpose of financing, the acquisition of bonds, notes an
other obligations or otherwise to provide .financing for Public
Capital Improvements (as defined in Article 4 of the Act (the
•Bond Law*)) for or on behalf, of the City and the Agency.
3. For the purpose of making a loan to the Agency, the
Plaintiff, on September 26, 1995, adopted Resolution No. PFA 95 -2,
entitled 'A RESOLUTION OF THE LAKE ELSINORE PUBLIC FINANCING
AUTHORITY AUTHORIZING ISSUANCE BY THE AUTHORITY OF, ITS 1995 SERIES
A HOUSING TAX 'ALLOCATION REVENUE BONDS .(LAKE ELSINORE
REDEVELOPMENT PROJECTS) AND OF ITS 1995 SERIES B SUBORDINATE
HOUSING TAX ALLOCATION BONDS (LAKE ELSINORE .REDEVELOPMENT
PROJECTS), AUTHORIZING SALE OF BONDS UPON CERTAIN TERMS AND
CONDITIONS, APPROVING OFFICIAL STATEMENT RELATING TO THE BONDS,
Affidavit in Support of Plaintiff's
Applicationlfbr Default Judgment I
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APPROVING LOAN AGREEMENT RELATING TO THE PROCEEDS OF THE BONDS,
AUTHORIZING IN REM VALIDATION PROCEEDINGS WITH.RESPECT TO THE
FOREGOING AND APPROVING OTHER MATTERS PROPERLY RELATING THERETO`.
A certified copy of Resolution No. PFA 95 -2 is attached hereto as
Exhibit B and hereby made a part hereof.
4. Pursuant to the Bond Law and Resolution No. PFA 95 -2, the
Plaintiff has authorized the issuance of two separate- issues of
Bonds, namely, its 1995 Series A Housing Tax Allocation Bonds
(Lake Elsinore Redevelopment Projects) (the - Series A Bonds') and
its 1995 Series B Subordinate Housing Tax Allocation Revenue Bonds
(Lake Elsinore Redevelopment Projects) (the 'Series B Bonds,) for
the purpose of providing funds to make a loan (the 'Housing Loan")
to the Agency pursuant to a Housing Fund Loan Agreement, dated as
of November 1, 1995, by and between the Plaintiff and the Agency
(the 'Loan Agreement') to finance low and moderate income housing
redevelopment activities of the Agency within•or of benefit to its
Rancho Laguna Redevelopment Project Area No. I, its Rancho Laguna
Redevelopment Project Area No. SI and its Rancho Laguna
Redevelopment Project No. III (together the 'Three Project
Areas').
S. The Series A Bonds and the Series B Bonds are to be
issued pursuant to separate Indentures of Trust (respectively, the
'Series A Indenture' and the •Series B Indenture'), each dated as
of November 1, 1995 and each by and between the Plaintiff and
Union Bank, as trustee.
6. The Plaintiff has heretofore issued its 1995 Series A
Subordinate Tax Allocation Series A Notes in the aggregate
Affidavit in Support of Plaintiff's
Application for Default Judgment
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I principal amount of $8,385,000 (the '1995 Notes'), the proceeds o.
2 which were used to make a loan to each of the Three Project Areas
3 (the 'Prior Loans').
4 7. The net proceeds of'the Housing Loan will be deposited by
S the Agency into the Agency's Low and Moderate Income Housing Fund
6 (established pursuant to Section 33334.3 of the California Health
7 and Safety Code) (the 'Housing Fund') and the amount of such
8 deposit will be concurrently transferred from the Housing Fund by
9 the Agency pursuant to three interfund loans (collectively, the
10 'Interfund Loans') to each of the Three Project Areas to be used
11 (i) to repay the Prior Loans (and, hence, the 1995 Notes), (ii) to
12 finance and refinance additional redevelopment activities within
13 or of benefit-to each of the Three Project Areas and (iii) for
14 certain other uses and purposes.
15 8. Debt service on the Series A Bonds and the Series B Bona.
16 will be paid by the Authority principally from Housing Loan
17 payments made by the Agency pursuant to the Loan Agreement and
18 from certain other loan payments to be made by the Agency to the
19 Authority.
20 9. Because the proceeds of the Housing Loan will be
21 deposited in the Housing Fund to ba used ultimately for low and
22 moderate income housing redevelopment activities of the Agency,
23 Housing Loan payments will be made by the Agency (and, hence, debt
24 service on the Series A Bonds and the Series B Bonds will be paid
25 by the' Authority) from tax increment revenues allocated to the
26 Agency with respect to the Three Project Areas for deposit in the
27 Housing Fund pursuant to 33334.3 of the California Health & Safety
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Affidavit in Support of Plaintiff's
Application'fdr Default Judgment• -
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2 1D. The Loan Agreement provides, among other things, that
3 the Interfund Loans shall bear interest at the same interest rate
4 per annum as is borne by the Housing Loan and shall be payable in
whole or in part upon demand of the Agency for funds to finance
low and moderate income housing redevelopment activities, and that
the Agency Treasurer shall keep accurate accounts of the amounts
owing on the ,Interfund Loans so as to assure that' the Low and
Moderate Income Housing Fund is made whole with respect to the
making of the Interfund Loans.
11. Irrespective of the Agency's agreement; in the Loan
Agreement to repay the Housing Loan on demand, Plaintiff believes
that repayment to the Housing Fund of the Housing Loan by the
Agency is dependent upon future increases in assessed valuations
within the Three Project Areas and, accordingly,: neither the
Plaintiff nor the undersigned can not provide any assurance that
the Housing Loan will be repaid to the Housing Fund in a timely
manner upon demand for funds for low and moderate income housing
redevelopment activities.
12. Plaintiff authorized the execution, delivery and
performance of the Loan Agreement pursuant to Resolution No. PFA
95 -2 and the Agency authorized the execution, delivery and
performance of the Loan Agreement pursuant to Resolution No. RDA
95 -9, adopted September 26, 1995, entitled -A RESOLUTION OF THE
REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE AUTHORIZING AND
DIRECTING THE EXECUTION OF HOUSING FUND LOAN AGREEMENT RELATING
TO THE ISSUANCE OF CERTAIN BONDS BY THE LAKE ELSINORE PUBLIC
Affidavit in Support of plaintiff's
Application for Default Judgment
Icode.
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FINANCING AUTHORITY, APPROVING OFFICIAL STATEMENT RELATING TO SOCF.
BONDS, CONFIRMING CERTAIN FINDINGS OF BENEFIT AND AUTHORIZING AND
APPROVING OTHER MATTERS PROPERLY RELATING THERETO'. A certified
copy of Resolution No. RDA 95 -9 is attached hereto as Exhibit C
and hereby made a part hereof.
13. Pursuant to Resolution No. 95 -64, adopted September 26,
entitled 'A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE.
ELSINORE APPROVING THE BORROWING OF FUNDS BY THE REDEVELOPMENT
AGENCY FROM THE PUBLIC FINANCING AUTHORITY, CONFIRMING CERTAIN
FINDINGS OF BENEFIT WITH RESPECT TO THE USE OF SUCH FUNDS AND
AUTHORIZING AND 'APPROVING OTHER MATTERS PROPERLY RELATING
THERETO', the City Council of the City approved the issuance of
the Series A and Series B Bonds by the Authority and the loan of
the proceeds thereof by the Authority to the Agency pursuant to
the Loan Agreement. A certified copy of Resolution No: 95 -64 i
attached hereto as ,Exhibit D and hereby made a part hereof.
14. Plaintiff has brought this action pursuant to Section
860, and following. of the Code of Civil Procedure, and Resolution
No. PFA 95 -2.
-6-
Affidavit in Support of Plaintiff's
Application ':for Default Judgment
1
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. 20
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16. 1 declare the foregoing to be true and correct under
penalty of perjury, to the best of my knowledge.
Executed at Lake Elsinore, California, November 1995
. Ray wood
-7-
Affidavit an Support of Plaintiffos
Application for Default Judgment
EXHIBIT 3
SCHEDULE OF HOUSING LOAN BALANCES
AND ACCRUED INTEREST
AS OF JANUARY 31, 2012
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EXHIBIT 4
BOND DOCUMENTS
2010 SERIES A TAX ALLOCATION REVENUE BONDS
ATEW ISSUE - BOOK- ENTRYONLY RATINGS
S &P: "AAA" (Insured)
S &P< "A" (underlying)
(See "CONCLUDING INFORMATION - RATINGS ON THE BONDS" herein)
In the opinion ofFulbright & Jaworski L.L.P., Los Angeles, California, Bond Counsel, under existing law interest on the Bonds is
exempt fi,om personal income taxes of the State of California and assuming compliance with the tax covenants described herein,
interest on the Bonds is excluded pursuant to section 103(x) of the Internal RetKnue Code of 1986 (the "Code "),from. the gross
income of the owners thereoffor federal income tax purposes and is not an item ofpreference under section 57(a) of the Code for
purposes ofthefederal alternative nommurn tax. See however, "LEGAL MATTERS -TAX MATTERS" herein regarding certain
other tax considerations.
RIVERSIDE COUNTY - STATE OF CALIFORNIA
$1594359000
CITr LAKE ELSINORE PUBLIC FINANCING
LHKr,,� LSINOKF AUTHORITY
TAX ALLOCATION REVENUE BONDS
(1999 SERIES C REFUNDING),
2010 SERIES A
Dated: Date of Delivery Due: September 1 a shown
on the inside front cover.
The cover page contains certain information for quick reference only. It is not a summary of the issue. Potential
investors must read the entire Official Statement to obtain information essential to making an informed investment
decision. See "BONDOWNERS' RISKS" herein for a discussion of special risk factors that should be considered in
evaluating the investment quality of the Bonds.
Interest on the Bonds is payable semiannually on March I and September 1 of each year, commencing on September 1, 2010,
until maturity or earlier redemption (see "THE BONDS - GENERAL PROVISIONS" and "THE BONDS - REDEMPTION" herein).
The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a financial guaranty
insurance policy to be issued concurrently with the delivery of the Bonds by Assured Guaranty Corp. (see "SOURCES OF
PAYMENT FOR THE BONDS - BOND INSURANCE" herein).
ASSURED
GUARANTY
CORP.
The information contained within this Official Statement was prepared under the direction of the Lake Elsinore Public Financing
Authority (the "Authority ") by the following firm serving as Financing Consultant to the Authority:
l , G*, ROD GUNN ASSOCIATES, INC.
MATURITY SCHEDULE
(see inside cover)
The Bonds are payable solely from the revenues pledged under the Indenture (the "Revenues "), consisting primarily of proceeds
from the repayment of Loans with respect to three separate Redevelopment Projects and the Low and Moderate Income Housing
Fund, as described herein, to be made by the Redevelopment Agency of the City of Lake Elsinore (the "Agency ") to the
Authority and certain other funds held under the Indenture as described herein. The Loans are payable by the Agency solely
from Tax Revenues or Housing Set -Aside Revenues (as defined herein) attributabie to the Redevelopment Project to which such
loan relates, as described herein, or with respect to the Housing Loan solely from Housing Set -Aside Revenues attributable to the
Redevelopment Projects deposited into the Low and Moderate Income Housing Fund (see "SOURCES OF PAYMENT FOR THE
BONDS" and "BONDOWNERS' RISKS" herein).
A portion of the proceeds from the Bonds will be used, on the delivery dale of the Bonds, to refund the Lake Elsinore Public
Financing Authority Tax Allocation Revenue Bonds, 1999 Series C.
It is anticipated that the Bonds, in book -entry form, will be available for delivery through the facilities of The Depository Trust
Company in New York, New York, on or about February 4, 2010 (See "APPENDIX H - DTC AND ROOK - ENTRY -ONLY
SYSTEM ").
The date of the Official Statement is January 26, 2010.
O'C0NN'OR C,0 ANY SECURITIES
.SL,. _M P L' B L I C F t\ A N C E
TABLE OF CONTENTS
INTRODUCTORY STATEMENT .......... i .........:.:.....1
I I
THE AUTHORITY ......................... ...........'..:...............1
:... I1
Authorization and Formation .......... ..............................1
I I
Bond Authorization and Issuance .... ............:.................1
Financing Purpose of the Bonds .... ..............................2
13
THE AGENCY ............................... .......:....i:................2
Formation........................................ ..............................2
18
Tax Allocation Financing ............... ..............................2
18
Redevelopment Agency Project Area Boundaries..:
...... 3
Housing Set -Aside Revenues .......... ..............................4
THE REDEVELOPMENT PROJECTS .......................4
Redevelopment Project No. I .................... ...................
4
Formation......................................... ..........::'.................4
General Description :.... ............................... 1................4
Redevelopment Project No. II ........ .............:................4
21
Formation........................................ ............::................4
21
General Description.... ......... ........................................
5
Redevelopment Project No. III ....... .................:............5
21
Formation ...::................................... ..............................5
General Descrintion ..................:..... ..............................5
21
THELOANS .................................. ..............................6
Project No. I Loan ........................... ............'.........:.......6
22
Authorization ..... ...........................................................
6
Outstanding Bonded indebtedness of ,
_22
Redevelopment Proiect No. I ....... .........:.:.:................6
22
Project No. H Loan ......................... ..............................6
Authorization.....................:............ ..............................6
Outstanding Bonded Indebtedness of
Redevelopment Proiect No. H ...... .............:................7
Project No. III Loan... ...................................................
7
Authorization .................................. ..............................7
25
Outstanding Bonded indebtedness of
26
Redevelopment Project No III ... ..............................7
27
The Housing Loan .......................... ............::................7
28
Authorization .................................. ..............................7
Outstanding Indebtedness of the Low and
Moderate Income Housine Fund .. .............::...............8
SECURITY AND SOURCES OF REPAYMENT ........
8
TheIndenture .................................. ..............................8
28
The Loan Agreements ..................... ............::................8
THE FINANCING PLAN .............. ..............................9
Bond Insurance .............................. .............................9'
The Refunding Program ................ ..............................9
REDEMPTION OF THE BONDS .. .............'................9
Mandatory Redemption from Optional Loan,
30
Prepayments.................................. .............. :...............9
30
Mandatory Sinking Payment Redemption .....:...............9
31
Mandatory Redemption upon Acceleration of the
Loans. ..................................... ....................................
9
THE BONDS GENERAL PROVISIONS ...' :.............
10.
Denominations ............................ ...............................
It)
Registration, Transfer and Exchange ..........................10
32
Payment....................................... ...............................
10
Notice. ......................................................... .............
10
LEGAL MATTERS .................. .................. ... ... .........
10
PROFESSIONAL SERVICES., ..... ............................
I I
FINANCIAL STATEMENTS .................................
:... I1
CONTINUING DISCLOSURE ..................................
I I
AVAILABILITY OF LEGAL DOCUMENTS .............11
SELECTED ESSENTIAL FACTS .............................
13
ESTIMATED SOURCES AND USES OF
FUNDS....... _ ............................... ...............................
18
THEBONDS ............................... .......:.......................
18
THE LOANS ........... : ......... .........................................
19
THEBONDS ................................... .............................20
GENERAL PROVISIONS ............ .............................20
Repayment of the Bonds ................ .............................20
Transfer or Exchange of Bonds ..... .............................20
Bonds Mutilated, Lost, Destroyed or Stolen ...............20
REDEMPTION........................... ...............................
21
Mandatory Sinking Payment Redemption ..................
21
Mandatory Redemption from Optional Loan
Prepayments.............................. ...............................
21
Mandatory Redemption upon Acceleration of the
Loans........................................ ...............................
21
Notice of Redemption; Rescission . .............................21
Open Market Purchase of Bonds . ...............................
22
Selection of Bonds for Redemption ............................22
Effect of Redemption. ...............................................
_22
Partial Redemption ...................... ...............................
22
SCHEDULED DEBT SERVICE ON THE
BONDS....................................... .............................23
SCHEDULED DEBT SERVICE ON THE
LOANS....................................... ............:................24
HousingLoan ................................ .............................24
Redevelopment Project No. l Loan ............................
25
Redevelopment Project No. H Loan ...........................
26
Redevelopment Project No. HI Loan ..........................
27
SOURCES OF PAYMENT. FOR THE BONDS........
28
REPAYMENT OF THE BONDS .. .............................28
TheBonds ..................................... .............................28
ReserveFund ................................. .............................28
REPAYMENT OF.THE LOANS . ...............................
28
Tax Allocation Financing............ . ...............................
28
InGeneral ...................................... .............................28
Allocation of Taxes ..................:..... .............................29
Pledge of Tax Revenues or Housing Set -Aside
Revenues..................................... .............................29
ProiectNo. I Loan ......................... .............................29
Proiect No II Loan ...................... ...............................
30
Proiect No III Loan ..................... ...............................
30
HousingLoan .............................. ...............................
31
Alternative Method of Tax Apportionment
( "Teeter Plan") .......................... ...............................
31
ISSUANCE OF ADDITIONAL DEBT ......................32
TheAuthority ................................. .............................32
TheAgency.................................. ...............................
32
Subordinate Debt ......................... ...............................
33
BOND INSURANCE ........:......... ...............................
33
iv
The Insurance Policy ..................... .............................33
50
TheInsurer ..................................... .............................33
50
BONDOWNERS' RISKS ............... .............................36
THEBONDS .....................:........... .............................36
General...:....................................... .........:...................36
No Liability of the Authority to the Owners ...............36
No Effective Acceleration on De fault ..........:..............
36
Enforceability of Remedies ............ .............................36
Bond Insurer Default ..................... .............................36
54
Investment of Funds... ............................... . ..............
-37
Secondary Market... ............................ .......................
37
THE LOANS ................................. .............................37
55
Risk Factors Relating to the Reduction of Tax
55
Increment Revenues .................... .............................37
56
General........................................... .............:...............37
56
Reduction in Inflationary Rate ....... .............................38
Assessment Anneals . ............................................ .......
39
Proposition 8 Adjustments— ................. ....... .............
39
Lew and Collect ion ................................... .. ...............
40
Property Owner Bankruptcy ..... ... ...............................
40
Risk Factors Related to Real Estate Market
Conditions................................... .............................40
Development Risks.. ...................................................
40
Current Real Estate Market Conditions ......................41
58
Adiustable Rate and Unconventional Mortgage
60
Structures .................................... .............................41
60
Risk Factors Related to Natural and Man-Made
60
Disasters.................:.................... .............................42
Risk Factors Relating to the Loans and the
61
Redevelopment Law .................... ..............:..............42
62
Loans are a Limited Obligation ............................... .-42
Redevelonment Plan Limitations on Tax Revenues
.................................................... .............................43
65
Risk Factors Related to Bankruptcy of the
66
Authority and the Agency ........... .............................43
67
Risk Factors Related to State Budget Legislation... ....
43
Risk Factors Related to Assumptions and
Projections of Tax Revenues ....... .............................45
71
PROPERTY TAXATION IN CALIFORNIA ............
46
CONSTITUTIONAL AMENDMENTS
73
AFFECTING TAX INCREMENT REVENUES.....
46
IMPLEMENTING LEGISLATION .................:.........46
77
CONSTITUTIONAL CHALLENGES TO
79
PROPERTY TAX SYSTEM ......: .............................47
80
PROPERTY TAX COLLECTION
80
PROCEDURES ........................... .............................47
80
SUPPLEMENTAL ASSESSMENTS ..........................47
80
TAX COLLECTION FEES ........... ..........................:..48
81
UNITARY PROPERTY TAX ........ .............................48
81
BUSINESS INVENTORYAND
82
REPLACEMENT REVENUE .... ...........:.................48
82
PROPOSITION 87 .....................................................
49
FUTURE INITIATIVES ....:........... .............................49
-83
THE AUTHORITY
GENERAL.................................... ..............................5 0
AUTHORIZATION ....................... .............................50
TheBonds ...................................... .............................50
TheLoans .................................... ...............................
50
AUTHORITY FINANCIAL STATEMENTS.... .........
50
DEBT SERVICE PAYMENTS ON THE LOANS
AND DEBT SERVICE COVERAGE ON THE
AUTHORITY BONDS ........:..... ...................L.........51
..........53
THE AGENCY ................... ...............................
GOVERNMENT ORGANIZATION .........................
53
AGENCY POWERS ...................... ............................54
REDEVELOPMENT PLANS...., ..................... .........
54
General........................................ ...............................
54
Amended and Restated Redevelopment Plans............
54
Redevelopment Plan Limitations . .......:.......................
55
Redevelopment Plan Expiration .. ...............................
55
Receipt of Tax Increment Time Limits .......................
56
Time Limit on Incurrine Indebtedness ........................
56
Limitation on the Amount of Tax Increment
Receipts...................................... .............................56
Limit on the Amount of Bonded Indebtedness ...........57
AGENCY FINANCIAL ADMINISTRATION ..... .....
57
AnnualBudget .................... ............................... .........57
Agency Accounting Records and Financial
Statements................................... .............................57
Annual Financial Report .............. ...............................
58
Filing of Statement of Indebtedness ............................
58
THE REDEVELOPMENT PROJECTS ...................
60
REDEVELOPMENT PROJECT NO. I ........... :..........
60
General Description ..................... ...............................
60
Assessed Value by Land Use ......... .............................60
Top Ten Taxable Property Owners ................... ' ..........
61
Redevelopment Project No. I Aerial Views....a ...........
P J
62
REDEVELOPMENT PROJECT NO. 11 ....................65
General Description ....................... .....:.......................65
Assessed Value by Land Use ....... ...............................
65
Top Ten Taxable Property Owners .............................
66
Redevelopment Project No. fI Map ............................
67
REDEVELOPMENT PROJECT NO. III ........ :..........
71
General Description ....................... .............................71
Assessed Value by Land Use ....... ....................:..........
71
Top Ten Taxable Property Owners .............................
72
Redevelopment Project No. III Aerial ......... : ...... ........
73
TAX INCREMENT REVENUES ..................... :........77
HISTORICAL TAXABLE VALUAT70NS ................
77
Value of Residential Parcels ........ ...............................
79
ASSESSMENT APPEALS .......... ...............................
80
General.................. _.................... ..............:................
80
Base Year Appeals ....................... ...............................
80
Redevelopment Proiect No I .... .............................
80
Redevelopment Proiect No. If ............. c....................
81
Redevelonment Proiect No. III .... ...............................
81
Proposition 8 Adjustments.: .................. :!� ...................
82
General...._........._........._ ......... ................_._............
82
Prior Proposition 8 Adjustments— ...............................
82
Current Market Conditions.....: ...... : ................. ........
-83
TRANSFERS OF OWNERSHIP ._ ...........................
84
Redevelopment Project No. 1 ....... ...............................
84
Redevelopment Project No. IL................ ........... .........
84
Redevelopment Project No. RI .... ...............................
84
DELINQUENCIES .....................................................
84
FORECLOSURES ......................... .............................85
-1
Redevelopment Project No. I ......... .............................85
SUMMARY OF THE LOAN AGREEMENTS.......
Redevelopment Project No. 11 ....... .............................85
FORM OF LOAN AGREEMENT ...........................
Redevelopment Project No. III ...... .............................86
FORM OF HOUSING FUND LOAN
PASS - THROUGH AGREEMENTS AND
AGREEMENT........................ ...............................
STATUTORY PAYMENTS ........ .............................86
APPENDIXC ................................ ............................0
Pass - Through Agreements ............. .............................86
FISCAL CONSULTANT REPORT .........................0
Statutory Tax Sharing ...................... ............:................89
APPENDIX D ................................ ............................D
County Property Tax Collection Reimbursement ........
91
HOUSING SET - ASIDE ................. .............................91
FUTURE DEVELOPMENT IN THE
REDEVELOPMENT PROJECTS ...........................92
PROJECTED TAX REVENUES AND DEBT
SERVICE COVERAGE .............. .............................95
Projected Tax Revenues and Housing Set -Aside
Revenues..................................... .............................95
Debt Service Coverage Based Upon Projected
Tax Revenues .............................. .............................95
LEGAL MATTERS ....................... ............................100
ENFORCEABILITY OF REMEDIES ......................100
APPROVAL OF LEGAL PROCEEDINGS ..............
100
TAX MATTERS ........................... ............................100
ABSENCE OF LITIGATION ....... ..............::............102
CONCLUDING INFORMATION ...........................103
RATINGS ON THE BONDS ....... ............................103
UNDERWRITING ......... ............................... ...........103
EXPERTS...... .................. ............. ........ ....................103
FINANCIAL STATEMENTS OF THE AGENCY...
103
THE FINANCING CONSULTANT ...:.....................104
FORWARD - LOOKING STATEMENTS ..................
104
ADDITIONAL INFORMATION . ............................104
REFERENCES ............................. ............................104 .
EXECUTION............................... ............................105
APPENDIXA. ................................. ............................A
-1
SUMMARY OFTHE INDENTURE .......................A
-1
APPENDIXB .............................. ............................... B -1
SUMMARY OF THE LOAN AGREEMENTS.......
B-1
FORM OF LOAN AGREEMENT ...........................
B- I
FORM OF HOUSING FUND LOAN
AGREEMENT........................ ...............................
B -I
APPENDIXC ................................ ............................0
-1
FISCAL CONSULTANT REPORT .........................0
-I
APPENDIX D ................................ ............................D
-1
AGENCY AUDITED FINANCIAL
STATEMENTS FOR FISCAL YEAR ENDING
JUNE30, 2009 ......................................... .. ............. D -1
APPENDIXE .............................. ............................... E -1
FORM OF CONTINUING DISCLOSURE
AGREEMENT........................ _.............................. E-1
APPENDIXF .............................. ............................... F -1
SPECIMEN FINANCIAL GUARANTY
INSURANCE POLICY ........... ............................... F -1
APPENDIX G FORM OF OPINION OF BOND
COUNSEL....... ....................... ............................... G -1
APPENDIXH ............................ ............................... H -1
DTC AND BOOK - ENTRY -ONLY SYSTEM......... B -1
vi
Financing Purpose of the Bonds
Pursuant to Resolution No. PFA 99 -3, adopted by the Authority on September 14, 1999, . the Authority
issued its Tax Allocation Revenue Bonds, 1999 Series C (the "Authority 1999C Bonds ") in the principal
amount of $14,180,000 of which $13,170,000 remains outstanding. On the date of delivery of the Bonds,
a portion of the proceeds of the Bonds, together with certain other funds, will be used to redeem the
Authority 1999C Bonds (see "- THE FINANCING PLAN - The Refunding Program" below).
The Bonds are also being issued:
1. To provide funds to make the Loans on the date of delivery of the Bonds;
2. To fund the Reserve Fund (see "SOURCES OF PAYMENT FOR THE BONDS - REPAYMENT OF T11E
BONDS - Reserve Fund" herein); and
3. To pay the expenses of the Authority in connection with the issuance of the Bonds.
(see "ESTIMATED SOURCES AND USES OF FUNDS" and "SOURCES OF PAYMENT FOR THE BONDS —
REPAYMENT OF THE BONDS" herein).
THE AGENCY
Formation
The Agency is a public body, corporate and politic, existing under and by virtue of the Community
Redevelopment Law of the State, constituting Part 1 of Division 24 (commencing with Section 33000) of
the Health and Safety Code of the State (the "Redevelopment Law "). The Agency was activated in July
1980. The City Council of the City (the "City Council "), at the same time, declared itself to be the
members of the Agency and appointed the City Manager to be the Agency's -Executive Director (see
"THE AGENCY" herein).
The Agency is comprised of 3 Redevelopment Projects: (i) the Rancho Laguna Redevelopment Project
No. I (`Redevelopment Project No. P); (ii) the Rancho Laguna Redevelopment Project No. II
( "Redevelopment Project No. II ") and (iii) the Rancho Laguna Redevelopment Project No. III
( "Redevelopment Project No. III "). Collectively Redevelopment Project No. I, Redevelopment Project
No. H and Redevelopment Project No. III are referred to herein as the "Redevelopment Projects" (see
map entitled "Project Area Boundaries" below).
Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based upon an
allocation of taxes collected within a redevelopment project. The taxable valuation of a redevelopment
project last equalized prior to adoption of the redevelopment plan, or base roll, is established and, except
for any period during which the taxable valuation drops below the base year level, the taxing agencies
within the redevelopment project thereafter receive the taxes produced by the levy of the then current tax
rate upon the base roll. Taxes collected upon any increase in taxable valuation over the base roll (except
such portion generated by rates levied to pay voter - approved bonded indebtedness on or after January 1,
1989, for the acquisition or improvement of real property) are allocated to a redevelopment agency (the
"Tax Increment Revenues ") and may be pledged by a redevelopment agency to the repayment of any
indebtedness incurred in financing or refinancing a redevelopment project. Redevelopment agencies
themselves have no authority to levy property taxes and must look specifically to the allocation of taxes
produced as above indicated.
and restates the time limits and financial limits, and (v) improves the format and presentation of the text
and the project areas maps.
General Description. Redevelopment Project No. II has an area of 4,859 acres in three non - contiguous
areas. The first area runs parallel on both sides of Interstate 15, extending in each direction from
Railroad Canyon Road, a major arterial highway (see map entitled "Redevelopment Agency Project Area
Boundaries" above). This area includes -the City Shopping Center; anchored by a 126,000 square foot
Wal -Mart. This area also includes two major subdivisions, Summerhill and Tuscany Hills. Summerhill
includes 428 completed single family 'homes. Tuscany Hills is a planned community, ultimately
consisting of 2,000 homes. 1,020 homes have been constructed and occupied. The second area includes
the municipal baseball stadium area and the Summerly Planned Community, which is located in both
Redevelopment Project No. lI and Redevelopment Project No. III. Approximately 833 single family
homes are planned in the first phase of the Summerly Planned Community. The Summerly Planned
Community is in the early development stages. The third'area is located at the west end of Lake Elsinore
and is developed with commercial and single family homes. Of the 4,859 acres within Redevelopment
Project No. II, 2,398.13 are vacant. In terms of total taxable value, residential uses comprise 60.25% of
the assessed value, commercial uses comprise 19.64% of the assessed value, industrial uses comprise
4.3% of the assessed value and vacant land comprises 11.51% of the assessed value within
Redevelopment Project No. II (see "THE REDEVELOPMENT PROJECTS — REDEVELOPMENT PROJECT
NO. IP' herein for a description of Redevelopment Project No: II).
Redevelopment Project No. III
Formation. The Redevelopment Plan for Redevelopment Project No. III was adopted by Ordinance No.
815 on September 8, 1987, and, thereafter, has been amended three times: by Ordinance No. 987 on
November 22, 1994, to conform time limits to AB 1290,• by Ordinance No. 1249 on February 26, 2008, to
repeal the debt establishment limit for affordable housing debt as provided by SB211 and to extend the
effectiveness date and time limit to repay debt and collect tax increment revenues as provided by
SB1045, and to make certain technical corrections; and by Ordinance No. 1262 on April 28, 2009, to
adopt an Amended and Restated Redevelopment Plan. The Amended and Restated Redevelopment Plan
(i) reflects changes in the Community Redevelopment Law that impose additional requirements and
restrictions not reflected in the original text, (ii) incorporates all prior amendments, (iii) updates the land
use provisions, (iv) clarifies and restates the time limits and financial limits, and (v) improves the format
and presentation of the text and the project areas maps.
General Description. Redevelopment Project No. III, as shown on the map "Redevelopment Agency
ProjectArea Boundaries" above, consists of four (4) non - contiguous parcels of land.
PARCEL 1 is in the Summerly Specific Plan area adjacent to the southeasterly shore line of Lake
Elsinore (the "Lake ") and some of the commercial operations adjacent to and associated with the
municipal airport facility. Parcel 1 contains approximately 1,886 acres.
PARCEL 2 is adjacent to the municipal airport facility and is used for agricultural purposes and a five
(5) acre commercial site. Parcel contains approximately 84.5 acres.
PARCEL 3 is generally referred to as "the Avenues." This area is characterized by older single
family residential units, many of which have been converted to multiple family units, on partially
developed roadways. Parcel 3 contains approximately 466 acres.
PARCEL 4, know as "the Heights," is also a residential area. The roads are generally unpaved. The
area is dominated by steep slopes.' Parcel 4 contains approximately 1,104 acres.
1,151.73 acres of the 3,541 acres within Redevelopment Project No., III are vacant. In terms of taxable
value, residential uses comprise 67.12% of the assessed value, commercial uses comprise 2.55% of the
assessed value, industrial uses comprise 0.32% of the assessed value and vacant land comprises 26.52%
of the assessed value within Redevelopment Project No. III (see "THE REDEVELOPMENT PROJECTS —
REDEVELOPMENT PROJECT NO. III" herein for a description of Redevelopment Project No. III).
THE LOANS
The proceeds of the Bonds will be loaned to the Agency pursuant to the Project No. I Loan (the "Project
No. I Loan"), the Project No. II Loan (the "Project No. II Loan"), the Project No. III Loan (the "Project
No. III Loan"), and the Housing Loan (the "Housing Loan"). Collectively, the Project No. I Loan, the
Project No. II Loan, the Project No. III Loan and the Housing Loan are referred to herein as the "Loans"
Project No. I Loan
Authorization. The Authority will be making the Project No. I Loan to the Agency with respect to the
Redevelopment Project No. I in the amount of $3,055,000. The Agency authorized the Project No. I
Loan by resolution, adopted on November 10, 2009. The Agency has pledged a lien on Redevelopment
Project No. I Tax Revenues to the repayment of the Project No. I Loan.. "Redevelopment Project No. I
Tax Revenues" consist of Tax Increment. Revenues from the Agency's Redevelopment Project No. I,
excluding (i) amounts required to be deposited into the Agency's Low and Moderate Income Housing
Fund, (ii) the SB 2557 County. Administrative fees and collection charges and (iii) amounts required to be
paid pursuant to certain Pass - Through Agreements and Statutory Tax Sharing (as these terms are defined
herein) (see "SOURCES OF PAYMENT FOR THE BONDS," "BONDOWNERS' RISKS" and "TAX INCREMENT
REVENUES" herein).
The pledge of Redevelopment Project No. 1 Tax Revenues is on a subordinate basis with any payments
required under the Agency's. Loan Agreement, dated as of January 1, 1999, with respect to
Redevelopment Project No. I (the "Project No. I 1999A Loan ") and relating to the Lake Elsinore Public
Financing Authority Tax Allocation Revenue Bonds, 1999 Series A (see "Outstanding Bonded
Indebtedness of Redevelopment Project No. I" below). Debt service on the Project No. I Loan and the
Project No. I 1999A Loan is estimated to be covered by Redevelopment Project No. I Tax Revenues
initially by a ratio of approximately 2.24 to 1 and after the annual Redevelopment Project No. I Tax
Revenue Cap is reached, as described herein, by a ratio of 1.51 to 1. In addition, in the event there are
not sufficient Redevelopment Project No. I Tax Revenues to pay debt service on the Project No. I Loan,
the Agency has covenanted to make an intetfund loan from Redevelopment Project No. II,
Redevelopment Project No. III and the Low and Moderate Income Housing Fund (see "SOURCES OF
PAYMENT FOR THE BONDS — REPAYMENT OF THE LOANS — Pledge of Tax Revenues or Housing Set -Aside
Revenues" herein). For an indication of amounts that may be available see Table Nos. 21, 22 and 23
Surplus Revenues, herein.
Outstanding Bonded Indebtedness of Redevelopment Project No. I. Pursuant to an Indenture of
Trust, dated as of January 1, 1999, the Authority issued its Tax Allocation Revenue Bonds, 1999 Series A
Bonds (the "Authority 1999A Bonds ") in the aggregate principal amount of $33,450,000, of which
$28,255,000 currently remains outstanding. Proceeds of the Authority 1999A Bonds were loaned, in
part, by the Authority to the Agency pursuant to a Project No. I Loan Agreement, dated as of January 1,
1999 (the "Project No. 11999A Loan Agreement "). The loan pursuant to the Project No. 11499A Loan
Agreement (the "Project No. I 1999A Loan") was in the principal amount of $18,420,000, of which
$15,255,000 currently remains outstanding. The Project No. 11999A Loan matures on September 1,
2030.
Project No. II Loan
Authorization. The Authority will be making the Project No. II Loan to the Agency with respect to the
Redevelopment Project No. II, in the amount of $5,505,000. The Agency authorized the Project No. II
Loan by resolution, adopted on November 10, 2009. The Agency has pledged a lien on Redevelopment
Project No. 11 Tax Revenues to the repayment of the Project No. II Loan. "Redevelopment Project No. 11
Tax Revenues" consist of Tax Increment-Revenues from the Agency's Redevelopment Project No. II,
excluding (i) amounts required to be deposited into the Agency's Low and Moderate Income Housing
Fund, (ii) the SB 2557 County Administrative fees and collection charges and (iii) amounts required to be
paid pursuant to certain Pass- Through Agreements (as this term is defined herein) (see "SOURCES OF
PAYMENT FOR THE BONDS," "BONDOWNERS' RISKS" and "TAX INCREMENT REVENUES" herein). . '
The pledge of Redevelopment Project No. II Tax Revenues is on a parity basis with any payments
required under the Agency's Loan Agreement, dated as of January 1, 1999, with respect to
Redevelopment Project No. II (the "Project No. If 1999A Loan ") and relating to the Authority 1999A
Bonds (see "Outstanding Bonded Indebtedness of Redevelopment Project No. II" below). Debt service on
the Project No. I1 Loan and the Project No. I1 1999A Loan is estimated to be covered by Redevelopment
Project No. 11 Tax Revenues by a ratio of,approximately 2.62 to I. In addition, in the event there are not
sufficient Redevelopment Project No. II Tax Revenues to pay debt service on the Project No. 11 Loan, the
Agency has covenanted to make an interfund loan from Redevelopment Project No. 1, Redevelopment
Project No. III and the Low and Moderate Income Housing Fund (see "SOURCES OF PAYMENT FOR THE
BONDS - REPAYMENT OF THE LOANS - Pledge of Tax Revenues or Housing Set -Aside Revenues" herein).
For an indication of amounts that may be available see „Table Nos. 20, 22 and 23 Surplus Revenues
herein.
Outstanding Bonded Indebtedness of Redevelopment Project No. II. Proceeds of the Authority
1999A Bonds were also loaned, in part, by the Authority to the Agency pursuant to a Project No. If Loan
Agreement, dated as of January 1, 1999 (the "Project No. II 1999A Loan Agreement). The loan pursuant
to the Project No, II 1999A Loan Agreement (the "Project No. II 1999A Loan ") was in the principal
amount of $15,030,000, of which $13,000,000 currently remains outstanding. The Project No. II 1999A
Loan matures on September 1, 2030.
Project No. III Loan
Authorization. The Authority will be making the Project No. III Loan to the Agency with respect to the
Redevelopment Project No. III in the amount of $2,075,000. The Agency authorized the Project No. III
Loan by resolution, adopted on November 10, 2009. The Agency has pledged a lien on Redevelopment
Project No. III Tax Revenues to the repayment of the Project No. III Loan. "Redevelopment Project No.
III Tax Revenues" consist of Tax Increment Revenues from the Agency's Redevelopment Project No. III,
excluding (i) amounts required to be deposited into the Agency's Low and Moderate Income Housing
Fund, (ii) the SB 2557 County Administrative fees and collection charges and (iii) amounts required to be
paid pursuant to certain Pass - Through Agreements (as this term is defined herein) (see "SOURCES OF
PAYMENT FOR THE BONDS," .. BONDOWN'ERS' RISKS" and ("TAX INCREMENT REVENUES" herein). Debt
service on the Project No. III Loan is estimated to be covered by Redevelopment Project No. III Tax
Revenues by a ratio of approximately 5.50 to 1. In addition, in the event there are not sufficient
Redevelopment Project No. III Tax Revenues to pay debt service on the Project No. III Loan, the Agency
has covenanted to make an interfund loan from Redevelopment Project No. I, Redevelopment Project No.
II and the Low and Moderate Income Housing Fund (see "SOURCES OF PAYMENT FOR THE BONDS -
REPAYMENT OF TIIE LOANS - Pledge of Tax Revenues or Housing Set -Aside Revenues" herein). For an
indication of amounts that may be available see Table Nos. 20, 21 and 23 Surplus Revenues herein.
Outstanding Bonded Indebtedness of Redevelopment Proiect No. III. Redevelopment Project No. III
will not have any other Bonded indebtedness after the closing date for the Bonds.
The Housing Loan
Authorization. The Authority will be making a loan to the Agency with respect to the Low and
Moderate Income Housing Fund (see "Housing Set -Aside Revenues" above), in the amount of $4,800,000.
The Agency authorized the Housing Loan by resolution, adopted on November 10, 2009. The Agency
has pledged Housing Set -Aside Revenues to the repayment of the Housing Loan. The pledge of Housing
Set -Aside Revenues is on a parity basis with any payments required under the Agency's housing loan
incurred in 1995 (the "1995 Housing Loan ") relating to the Lake Elsinore Public Financing Authority
Tax Allocation Revenue Bonds, 1995 Series A. The term "Housing Set -Aside Revenues" means all
amounts required to be deposited by the Agency in the Low and Moderate Income Housing Fund of the
Agency in any Fiscal Year (as defined in the Indenture) pursuant to Section 33334.3 of the
Redevelopment Law (See "INTRODUCTORY STATEMENT - THE AGENCY - Housing Set -Aside Revenues"
above), which amounts are derived from the taxes annually allocated to the Agency with respect to the
Redevelopment Projects pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the
Redevelopment Law and Section 16 of Article XV I of the Constitution of the State and as provided in the
redevelopment plans (see "INTRODUCTORY STATEMENT -THE AGENCY - Tax Allocation Financing" above
and "SOURCES OF PAYMENT FOR THE BONDS," "BONDOWNERS' RISKS" and "TAX INCREMENT
REVENUES" herein). Debt service on the Housing Loan and the 1995 Housing Loan is estimated to be
covered by Housing Set -Aside Revenues by a ratio of approximately 2.98 to 1. In addition, in the event
there are not sufficient Housing Set -Aside Revenues to pay debt service on the Housing Loan, the
Agency has covenanted to make an interfund loan from Redevelopment Project No. I, Redevelopment
Project No. II and Redevelopment Project No. III (see "SOURCES OF PAYMENT FOR THE BONDS -
REPAYMENT OF THE LOANS - Pledge of Tax Revenues or Housing Set -Aside Revenues" herein). For an
indication of amounts that may be available see Table Nos. 20, 21 and 22 Surplus Revenues herein.
Outstanding Indebtedness of the Low and Moderate Income Housing Fund. Pursuant to an
Indenture of Trust, dated as of December 1, 1995, the Authority issued its 1995 Housing Bonds in the
aggregate principal amount of $13,345,000, of which $10,065,000 currently remains outstanding.
Proceeds of the 1995 Housing Bonds were loaned by the Authority to the Agency pursuant to a Loan
Agreement, dated as December 1, 1995 (the "1995 Housing Loan"). The 1995 Housing Loan matures on
September 1, 2025.
SECURITY AND SOURCES OF REPAYMENT
The Indenture
The Bonds are secured under an Indenture of Trust, dated as of February 1, 2010 (the "Indenture "), by
and between the Authority and Union Bank, N.A., Los Angeles, California, as trustee (the "Trustee ") (see
"APPENDIX A - SUMMARY OF THE INDENTURE "). The proceeds of the Bonds will be loaned by the
Authority to the Agency pursuant to the Loans. The Bonds are payable from loan payments to be made
to the Authority under the Loans, from amounts in the Reserve Fund created under the Indenture and
from certain funds and accounts created under the Indenture, and from investment earnings thereon (see
"SOURCES OF PAYMENT FOR THE BONDS" and "BONDOWNERS' RISKS" herein).
The Bonds are limited obligations of the Authority. The Bonds do not constitute a debt or liability
of the City, the State of California (the "State ") or of any political subdivision thereof, other than
the Authority. The Authority shall be obligated to pay the principal of the Bonds, and the interest
thereon, only from the funds described herein, and neither the faith and credit nor the taxing
power of the City, the State or any of its political subdivisions is pledged to the payment of the
principal of or the interest on the Bonds. The Authority has no taxing power.
The Loan Agreements
The Loans are to be made and secured pursuant to the Loan Agreements (the "Loan Agreements ")
authorized by Resolution No. 2009 -15 of the Agency, adopted on November 10, 2009. A description of
the Loan Agreements is set forth in "APPENDIX B - SUMMARY OF THE LOAN AGREEMENTS." The Loans
are made in accordance with the laws of the State, and particularly the Community Redevelopment Law
of the State, constituting Part 1 of Division 24 (commencing with Section 33000) of the Health and
Safety Code of the State.
The Loans are limited obligations of the Agency. The Loans do not constitute a debt or liability of
the State or of any political subdivision thereof, other than the Agency. The Agency, shall be
obligated to pay the principal of the Loans, and the interest thereon, only from the funds described
herein, and neither the faith and credit nor the taxing power of the City, the State or any of its
political subdivisions is pledged to the payment of the principal of or the interest on the Loans.
The Agency has no ad valorem taxing power.
THE LOANS
Under the provisions of the Loan Agreements, the Trustee will receive the proceeds of the Loans and will
apply or credit them as follows:
Sources of Funds
Principal Amount of the Loans
Less Imputed Value of the 1099C
Loans (1)
Total Available Funds
Uses of Funds
Project No. 1 Loam Project No. 11 Loan Project No. III Loan Housing Loan
$3,055,000.00. $5,505,000.00 $2,075,000.00 $4,800,000.00
(2,981,000.00) (5.431.000.00) (2,001,000.00) (4,726,000.00)
$74,000.00 $74,000.00 $74,000.00 $74,000.00
Costs of Issuance tat $74,000.00 $74.000.00 74 000.00 - 74� .000.00
Total - $74,000.00 $74,000.00 $74,000.00 $74,000.00
(1) The Authority will cancel the I999C Loans after the deposits to the Escrow Fund (see "INTRODUCTORY
STATEMENT— THE FINANCING PLAN -The Refunding Program' herein).
(2) Costs of Issuance include fees of Bond Counsel, Agency Counsel, the Financing Consultant, the Trustee and other
costs related to the making of the Loans.
19
EXHIBIT 5
BOND DOCUMENTS
2010 SERIES B TAX ALLLOCATION REVENUE BONDS
NEW ISSUE - BOOK- ENTRYONLY RATINGS
S &P. "AAA" (Insured)
S &P: "A" (underlying)
'(See `.'CONCLUDING INFORMATION - RATINGS ON THE BONDS" herein)
In the opinion of Fulbrighl & ✓aworski L.L.P., Los Angeles, California, Bond Counsel, under existing law interest on the Bonds
is exempt from personal income taxes of the Slate of California and, assuming compliance with the tax covenants described
herein, interest on the Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1956 (the "Code') from the
gross income of the owners thereof for federal income tax purposes and is not an item of preference tender section 57(a) of the
Code for purposes of the federal alternative minimum tax. -See, however, "LEGAL MATTERS - TAX MATTERS" herein
regarding certain other tax considerations.
RIVERSIDE COUNTY STATE OF CALIFORNIA
$1098559000
CeTV or �. LAKE ELSINORE PUBLIC FINANCING
LA KE OLSINORE AUTHORITY
TAX ALLOCATION REVENUE BONDS
(1995 SERIES A REFUNDING)9
2010 SERIES B
Dated: Date of Delivery Due. September I as shown
on the inside front cover.
This cover page contains certain information for:, quick reference only. It is not a summary of the issue. Potential investors
must read the entire Official Statement to obtain information essential to making an informed investment decision. See
`BONDOWNERS' RISKS" herein for a discussion of special risk factors that should be considered in evaluating the
investment quality of the Bonds.
Interest on the Bonds is payable semiannually on March 1 and September l ofeach year, commencing on September 1, 2010,
until maturity or earlier redemption (see "THE BONDS - GENERAL PROVISIONS" and "THE BONDS - REDEMPTION" herein).
The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a financial guaranty
insurance policy to be issued concurrently with the delivery of the Bonds by Assured Guaranty Corp. (see "SOURCES OF
PAYMENT FOR THE BONDS -BOND INSURANCE" herein).
AsSLAMD
GttARAr'J W
CORP.
The information contained within this Official Statement was prepared under the direction of the Lake Elsinore Public Financing
Authority (due "Authority") by the following firm serving as Financing Consultant to the Authority:
!t,' . ;;
�.. (�'. ROD GUNN ASSOCIATES, INC.
MATURITY SCHEDULE
a (see inside covery
The Bonds are payable solely from the revenues pledged under the Indenture (the "Revenues "), consisting primarily of proceeds
from the repayment of a loan with respect to the Low and Moderate Income Housing Fund (the "Housing Loan'.'), as described
herein, to be made by the Redevelopment Agency of the City of Lake Elsinore (the "Agency ") to the Authority and certain other
funds held under the Indenture as described berem, The Housing Loan is payable by the Agency solely from Housing Set -Aside
Revenues (as defined herein) deposited into the Low and Moderate Income Housing Fund (see "SOURCES OF PAYMENT FOR
THE BONDS" and "BONDOWNERS' RISKS" herein) and interfund loans with respect to the Redevelopment Projects to the
extent of available surplus revenues as described herein.
A portion of the proceeds from the Bonds will be used, on the delivery date of the Bonds, to refund the Lake Elsinore Public
Financing Authority 1995 Series A Tax Allocation Revenue Bonds (Lake, Elsinore Redevelopment Projects).
It is anticipated that the Bonds, in book -entry form, will be available for delivery through the facilities of The Depository Trust
Company in New York, New York, on or about May 4, 2010 (See "APPENDIX H - DTC AND BOOK -ENTRY -ONLY
SYSTEM ").
The date of the Ofcial Statement is April 10, 2oia,i
O'CONNOR COMPANY SECURITIES
&r U B L I C F I N A N C E
TABLE OF CONTENTS
INTRODUCTORY STATEMENT
THE AUTHORITY ........................ ..............................1
15
Authorization and Formation .......... ..............................1
15
Bond Authorization and Issuance .... ..............................1
15
Financing Purpose of the Bonds ..... ..............................2
15
THE AGENCY ............................... ..............................2
15
Formation........................................ ..............................2
16
Tax Allocation Financing ................ ..............................2
Redevelopment Agency Project Area Boundaries .........
3
Housing Set -Aside Revenues .......... ..............................4
TIE REDEVELOPMENT PROJECTS .......................4
16
Redevelopment Project No. I .......... ..............................4
16
Formation........................................ ..............................4
16
General Description ........................ ..............................4
17
Redevelopment Project No. II ........ ..............................4
17
Format ion........................................ ..............................4
General Description . ..... ___ ................................. .........
5
Redevelopment Project No. III .I. ..... ..............................5
18
Formation........................................ ..............................5
General Description....._ ................ ._............................5
19
THE HOUSING LOAN .................. ..............................6
20
Authorization.................................. ..............................6
Outstanding Indebtedness of the Low and
Moderate Income Housing Fund .. ..............................6
20
SECURITY AND SOURCES OF REPAYMENT ........6
The Indenture .................................. ..............................6
The Housing Loan Agreement ........ ..............................6
THE FINANCING PLAN .............. ..............................7
Bond Insurance ............................... ..............................7
The Refunding Pro gram .................. ..............................7
REDEMPTION OF THE BONDS . ..............................7
Mandatory Redemption from Optional Loan
22
Prepayments................................. ..............................7
Mandatory Redemption upon Acceleration of the
HousingLoan ............................... ..............................7
23
THE BONDS GENERAL PROVISIONS... ..... ...__._..?
24
Denominations ................................ ..............................7
Registration, Transfer and Exchange ............................8
Payment.......................................... ..............................8
24
Notice.............................................. ..............................8
26
LEGAL MATTERS ........................ ..............................8
26
PROFESSIONAL SERVICES ........ ..............................8
FINANCIAL STATEMENTS ......... ..............................9
CONTINUING DISCLOSURE..... ._ ............................9
26
AVAILABILITY OF LEGAL DOCUMENTS ..............9
SELECTED ESSENTIAL FACTS .............................10
26
ESTIMATED SOURCES AND USES OF
FUNDS........... _ ............................. .............................13
THEBONDS ............................... ...............................
13
Sources of Funds .......................... ...............................
13
Usesof Funds ............................... ...............................
13
THE HOUSING LOAN ..............................................
t4
Sources of Fun ds .......................... ...............................
14
Uses of Funds ............................... ...............................
14
THEBONDS ................................. ...............................
15
GENERAL PROVISIONS .......... ...............................
15
Repayment of the Bonds_ ........... ..........._...................
15
Transfer or Exchange of Bonds ... ...............................
15
Bonds Mutilated, Lost, Destroyed or Stolen ..... .........
15
REDEMPTION.... ............ :....... ... ........... ......... ...........
16
Mandatory Redemption from Optional Loan
Prepayments.............................. ...............................
16
Mandatory Redemption upon Acceleration of the
Housing Loan ........................... ...............................
16
Notice of Redemption; Rescission ..............................
16
Open Market Purchase of Bonds . ...............................
16
Selection of Bonds for Redemption ._ .........................
17
Effect of Redemption ................... ...............................
17
Partial Redemption ........................ ...................:.........17
SCHEDULED DEBT SERVICE ON THE
BONDS..................................... ...............................
18
SCHEDULED DEBT SERVICE ON THE
HOUSINGLOAN .................... ...............................
19
SOURCES OF PAYMENT FOR THE BONDS . ......
20
REPAYMENT OF THE BONDS .... ..........................20
TheBonds ..................................... ...................:.........20
ReserveFund ............................... ...............................
20
REPAYMENT OF THE HOUSING LOAN ...............20
Tax Allocation Financing ............... ..................:..........20
InGeneral ....................................... .................'...........20
Allocation of Taxes ........................ .............................21
Housing Set -Aside Revenues ......... .............................21
Pledge of Housing Set -Aside Revenues ......................
22
Alternative Method of Tax Apportionment
( "Teeter Plan") .......................... ...............................
22
ISSUANCE OF ADDITIONAL DEBT ......................23
TheAuthority ................................. .............................23
TheAgency .................................. ...............................
23
Subordinate Debt ......................... ...............................
24
BOND INSURANCE .................... .............................24
The Insurance Policy ..................... .............................24
TheInsurer .................................. ...............................
24
BONDOWNERS' RISKS ............. ...............................
26
THEBONDS ............................... ...............................
26
General.....................::................... .............................26
No Liability of the Authority to the Owners ...............26
No Effective Acceleration on Default .........................
26
Enforceability, of Remedies ........... ...........................:.26
Bond Insurer Default.... ..............................................
26
Investment of Funds ...................... .............................27
Secondary Market ........................ ...............................
27
THE HOUSING LOAN ................ .............................27
Risk Factors Relating to the Reduction of Tax
Increment Revenues .................... .............................27
General.......................................... .............................27
Reduction in Inflationary Rate ....... .............................28
Assessment Appeals ..................... ...............................
29
Proposition 8 Adjustments ............. .............................29
Levy and Collection ..................... ...............................
30
iv
Property Owner Bankruptcy .......... .............................30
Risk Factors Related to Real Estate Market
Conditions................................... .............................30
Development Risks ........................ .............................30
Current Real Estate Market Conditions ......................30
Adiustable Rate and Unconventional Mortgage
Structures................................... .............................31
Risk Factors Related to Natural and Man -Made
Disasters..........................:........... .............................32
49
Risk Factors Relating to the Housing Loan and,
the Redevelopment Law .............. .............................32
49
Housing Loan is a Limited Obligation ........................32
49
Risk Factors Related to Bankruptcy of the
Authority and the Agency .......... .............................32
51
Risk Factors Related to State Budget Legislation .......
33
Risk Factors Related to Assumptions and
54
Projections of Housing Set -Aside Revenues ............
35
PROPERTY TAXATION IN CALIFORNIA ............
36
CONSTITUTIONAL AMENDMENTS
56
AFFECTING TAX INCREMENT REVENUES.....
36
IMPLEMENTING LEGISLATION ...........................36
CONSTITUTIONAL CHALLENGES TO
60
PROPERTY TAX SYSTEM... ............... ..............
37
PROPERTY TAX COLLECTION
PROCEDURES ........................... .............................37
SUPPLEMENTAL ASSESSMENTS ..........................37
TAX COLLECTION FEES ........... .............................38
66
UNITARY PROPERTY TAX ........ .............................38
BUSINESS INVENTORYAND
REPLACEMENT REVENUE .... .............................38
70
PROPOSITION 87 ........................ .............................38
70
FUTURE INITIATIVES ................ .............................39
70
THE AUTHORITY ........................ ................... ..........40
70
GENERAL..................................... .............................40
AUTHORIZATION....................... .............................40
TheBonds ...................................... .............................40
The Housing Loan ......................... .............................40
72
AUTHORITY FINANCIAL STATEMENTS .............40
DEBT SERVICE PAYMENTS ON THE
HOUSING LOAN AND DEBT SERVICE
COVERAGE ON THE AUTHORITY BONDS ......41
THEAGENCY ................................ .............................42
GOVERNMENT ORGANIZATION ..........................42
DELINQUENCIES ....................... .............................74
AGENCY POWERS ...................... .............................43
FORECLOSURES ......................... .............................74
REDEVELOPMENT PLANS ....... .............................43
Redevelopment Project No. I ....... ...............................
General........................................... .............................43
Redevelopment Project No. 11 ..... ...............................
Amended and Restated Redevelopment Plans ............
43
Redevelopment Plan Limitat ions ... .............................44
PASS - THROUGH AGREEMENTS AND
Redevelopment Plan Expiration ..... .............................44
STATUTORY PAYMENTS ...... ...............................
Receipt of Tax Increment Time Limits ........................
45
Time Limit on Incurring Indebtedness ........................45
REIMBURSEMENT .................. .............................75
Limitation on the Amount of Tax Increment
HOUSING SET -ASIDE .............. ...............................
Receipts....................................... .............................45
FUTURE DEVELOPMENT IN THE
Limit on the Amount of Bonded Indebtedness ............
45
AGENCY FINANCIAL ADMINISTRATION... ........
46
AnnualBudget .......................... .... .............................46
REVENUES AND DEBT SERVICE
Agency Accounting Records and Financial
Statements................................... .............................46
Annual Financial Report ................ .............................47
Filing of Statement of Indebtedness ............................47
THE REDEVELOPMENT PROJECTS .............. ....
49
REDEVELOPMENT PROJECT NO. 1 ......................49
General Descript ion ..................... ...............................
49
Assessed Values by Land Use ...... ...............................
49
Top Ten Taxable Property Owners .............................50
Redevelopment Project No. l Aerial Views ................
51
REDEVELOPMENT PROJECT NO. B ....................
54
General Description ..................... ...............................
54
Assessed Values by Land Use ...... ...............................
54
Top Ten Taxable Property Owners .............................
55
Redevelopment Project No. 11 Map ............................
56
REDEVELOPMENT PROJECT NO. ]IT ...................60
General Description ....................... .............................60
Assessed Values by Land Use ...... ...............................
60
Top Ten Taxable Property Owners .............................61
Redevelopment Project No. III Aerial ........................62
TAX INCREMENT REVENUES .. .............................66
TAXABLE VALUATIONS ........... .............................66
Historical Taxable Valuat ions ...... ...............................
66
Historical Residential Valuat ions ... .............................68
Current Market Conditions ............ .............................69
ASSESSMENT APPEALS .........................................
70
General........................................ ...............................
70
Base Year Appeals ....................... ...............................
70
Redevelopment Project No. I ....... ...............................
70
Redevelopment Project No. IT ....... .............................71
Redevelopment Proiect No. HI ...... .............................71
Proposition 8 Adjustment s ............. .............................72
General........................................ ...............................
72
Prior Proposition 8 Adjustments .... .............................72
TRANSFERS OF OWNERSHIP .. .............................73
Redevelopment Project No. 1 ......... .............................73
Redevelopment Project No. H ....... .............................73
Redevelopment Project No. III ...... .............................74
DELINQUENCIES ....................... .............................74
FORECLOSURES ......................... .............................74
Redevelopment Project No. I ....... ...............................
75
Redevelopment Project No. 11 ..... ...............................
75
Redevelopment Project No. IJJ .... ...............................
75
PASS - THROUGH AGREEMENTS AND
STATUTORY PAYMENTS ...... ...............................
75
COUNTY PROPERTY TAX COLLECTION
REIMBURSEMENT .................. .............................75
HOUSING SET -ASIDE .............. ...............................
76
FUTURE DEVELOPMENT IN THE
REDEVELOPMENT PROJECTS ...........................
76
PROJECTED HOUSING SET -ASIDE
REVENUES AND DEBT SERVICE
COVERAGE............................ ...............................
79
Projected Housing Set -Aside Revenues ......................
79
Debt Service Coverage Based Upon Housing Set -
Aside Revenues ................. : ........ ............ .................
80
LEGAL MATTERS ........................ .............................82
-1
ENFORCEABILITY OF REMEDIES. .......................
82
APPROVAL OF LEGAL PROCEEDINGS ................82
-1
TAX MATTERS ............................ .............................82
ABSENCE OF LITI GATION ........ .............................84
CONCLUDING INFORMATION .............................85
D -1
RATINGS ON THE BONDS ........ .............................85
-1
UNDERWRITING ............:........... .............................85
EXPERTS ...................................... .............................85
E-1
FINANCIAL STATEMENTS OF THE AGENCY .....85
F -1
THE FINANCING CONSULTANT ...........................86
FORWARD - LOOKING STATEMENTS ....................
86
ADDITIONAL INFORMATION .. .............................86
REFERENCES .............................. .............................86
G -1
EXECUTION.............................. ...............................
87
vi
APPENDIXA ................................. ............................A -1
SUM MARY OF THE IN DENTURE ....................... A -I
APPENDIXB .............................. ............................... R -1
SUMMARY OFTHE HOUSING LOAN
AGREEMENT......................... ............................... B-1
APPENDIXC ................................ ............................0
-1
FISCAL CONSULTANT REPORT .........................0
-1
APPENDIXD ................................ ............................D
-1
AGENCY AUDITED FINANCIAL
STATEMENTS FOR FISCAL YEAR ENDING
JUNE30, 2009 ......................................... _ .............
D -1
APPENDIXE .. ............................... ............................E
-1
FORM OF CONTINUING DISCLOSURE
AGREEMENT............................ ............................
E-1
APPENDIXF .............................. ...............................
F -1
SPECIMEN FINANCIAL GUARANTY
INSURANCE POLICY.......... ...............................
F -1
APPENDIX G
FORM OF OPINION OF BOND COUNSEL.....
G -1
APPENDIXH ........................... ...............................
H -1
DTC AND ROOK - ENTRY -ONLY SYSTEM.........
H -1
Financing Purpose of the Bonds
Pursuant to a Resolution, adopted by the Authority on September 26, 1995, the Authority issued its 1995
Series A Tax Allocation Revenue Bonds (Lake Elsinore Redevelopment Projects) (the "Authority 1995A
Bonds ") in the principal amount of $13,345,000 of which $10,065,000 remains outstanding. On the date
of delivery of the Bonds, a portion of the proceeds of the Bonds, together with certain other funds, will
be used to redeem the Authority 1995A Bonds (see "- THE FINANCING PLAN - The Refunding Program"
below).
The Bonds are also being issued:
1. To provide funds to make the Housing Loan on the date of delivery of the Bonds;
2. To fund the Reserve Fund. The amount of Bond proceeds deposited into the Reserve Fund will be
$939,537.50 (an amount equal to the Reserve Requirement) (see "SOURCES OF PAYMENT FOR THE
BONDS - REPAYMENT OF THE BONDS - Reserve Fund" herein); and
3. To pay the expenses of the Authority in connection with the issuance of the Bonds
(see "ESTIMATED SOURCES AND USES OF FUNDS- and l "SOURCES OF PAYMENT FOR THE BONDS -
REPAYMENT OF THE BONDS" herein). ..
THE AGENCY
Formation
The Agency is a public body, corporate and politic, existing under and by virtue of the Community
Redevelopment Law of the State, constituting Part I of Division 24 (commencing with Section 33000) of
the Health and Safety Code of the State (the "Redevelopment Law "). The Agency was activated in July
1980. The City Council of the City (the "City Council "), at the same time, declared itself to be the
members of the Agency and appointed the City Manager to be the, Agency's Executive Director (see
"THE AGENCY" herein). -
The Agency is comprised of 3 Redevelopment Projects: (i) the Rancho Laguna Redevelopment Project
No. I ( "Redevelopment Project No. I "); (ii) the Rancho Laguna Redevelopment Project No. 11
( "Redevelopment Project No. II"), and (iii) the Rancho Laguna Redevelopment Project No. III
(`Redevelopment Project No. III "). Collectively Redevelopment Project No. 1, Redevelopment Project
No. 11 and Redevelopment Project No. III are referred to herein as the "Redevelopment Projects" (see
map entitled "Redevelopment Agency Project Area Boundaries" below).
Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based upon an
allocation of taxes collected within a redevelopment project. The taxable valuation of a redevelopment
project last equalized prior to adoption of the redevelopment plan, or base roll, is established and, except
for any period during which the taxable' Valuation drops below the base year level, the taxing agencies
within the redevelopment project thereafter receive the taxes produced by the levy of the then current tax
rate upon the base roll. Taxes collected upon any increase in taxable valuation over the base roll (except
such portion generated by rates levied to pay voter - approved bonded indebtedness on or after January 1.,
1989, for the acquisition or improvement of real property) are allocated to a redevelopment agency (the
"Tax Increment Revenues ") and may be pledged by a redevelopment'agency to the repayment of any
indebtedness incurred in financing or refinancing a redevelopment project. Redevelopment agencies
themselves have no authority to levy property taxes and must look specifically to the allocation of taxes
produced as above indicated. -
PROJECTS — REDEVELOPMENT PROJECT NO. III" herein for a description of Redevelopment Project NO.
III).
THE HOUSING LOAN
Authorization
The Authority will be making the Housing Loan to the Agency with respect to the Low and Moderate
Income Housing Fund, in the amount of $10,855,000. The Agency authorized the Housing Loan by
resolution, adopted on February 23, 2010. The Agency has pledged Housing Set -Aside Revenues to the
repayment of the Housing Loan. The pledge of Housing Set -Aside Revenues is on a parity basis with any
payments required under the Agency's housing loan (the "2010A Housing Loan") relating to the Lake
Elsinore Public Financing Authority Tax Allocation Revenue Bonds (1999 Series C Refunding), 2010
Series A (the "Authority 2010A Bonds "). The term "Housing Set -Aside Revenues" means all amounts
required to be deposited by the Agency in the Low and Moderate Income Housing Fund of the Agency in
any Fiscal Year (as defined in the Indenture) pursuant to Section 33334.3 of the Redevelopment Law (see
"INTRODUCTORY STATEMENT — THE AGENCY - Housing Set -Aside Revenues" above), which amounts are
derived from the taxes annually allocated to the Agency with respect to the Redevelopment Projects
pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and
Section 16 of Article XVI of the Constitution of the State and as provided in the redevelopment plans
(see "INTRODUCTORY STATEMENT — THE AGENCY - Tax Allocation Financing" above and "SOURCES OF
PAYMENT FOR THE BONDS," "BONDOWNERS' RISKS" and "TAX INCREMENT REVENUES" herein). Debt
service on the Housing Loan and the 2010A Housing Loan is estimated to be covered by Housing Set -
Aside Revenues by a ratio of approximately 3.07 to 1 (see Table No. 20 herein). In addition, in the event
there are not sufficient Housing Set -Aside Revenues to pay debt service on the Housing Loan, the
Agency has covenanted to make an interfund loan(s) from Redevelopment Project No. I, Redevelopment
Project No. U and/or Redevelopment Project No. III (see "SOURCES OF PAYMENT FOR THE BONDS —
REPAYMENT OF THE HOUSING LOAN — Pledge of Housing Set -Aside Revenues" herein).
Outstanding Indebtedness of the Low and Moderate Income Housing Fund
Proceeds of the Authority 2010A Bonds were loaned, in part, by the Authority to the Agency pursuant to
a loan agreement, dated as of February 1, 2010 (the "2010A Housing Loan Agreement "). The 2010A
Housing Loan was in the principal amount of $4,800,000, all of which currently remains outstanding.
SECURITY AND SOURCES OF REPAYMENT
The Indenture
The Bonds are secured under an Indenture of Trust, dated as of April 1, 2010 (the "Indenture "), by and
between the Authority and Union Bank, N.A., Los Angeles, California, as trustee (the "Trustee ") (see
"APPENDIX A - SUMMARY OF THE INDENTURE "). The proceeds of the Bonds will be loaned by the
Authority to the Agency pursuant to the Housing Loan. The Bonds are payable from loan payments to be
made to the Authority under the Housing Loan, from amounts in the Reserve Fund created under the
Indenture and from certain funds and accounts created under the Indenture, and from investment earnings
thereon (see "SOURCES OF PAYMENT FOR THE BONDS" and "BONDOWNERS' RISKS" herein).
The Bonds are limited obligations of the Authority. The Bonds do not constitute a debt or liability
of the City, the State of California (the "State ") or of any political subdivision thereof, other than
the Authority. The Authority shall be obligated to pay the principal of the Bonds, and the interest
thereon, only from the funds described herein, and neither the faith and credit nor the taxing
power of the City, the State or any of its political subdivisions is pledged to the payment of the
principal of or the interest on the Bonds. The Authority has no taxing power.
The Housing Loan Agreement
The Housing Loan is to be made and secured pursuant to the Housing Loan Agreement (the "Housing
Loan Agreement ") authorized by Resolution of the Agency, adopted on February 23, 2010. A description
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