HomeMy WebLinkAbout14-405 Adoption of CC Resolutins 2015-1 to 2015-5 & PFA Resolution 2015-01L I L HOKE
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CITY OF LAKE ELSINORE
JOINT REPORT TO CITY COUNCIL
AND PUBLIC FINANCING AUTHORITY
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
HONORABLE CHAIRPERSON AND MEMBERS OF THE PUBLIC
FINANCING AUTHORITY
FROM: GRANT YATES
CITY MANAGER/EXECUTIVE DIRECTOR
DATE: JANUARY 13, 2015
SUBJECT: Adoption of Resolutions by the City Council Acting as the Legislative
Body of Community Facilities Districts No. 2004 -3 (Rosetta Canyon —
Improvement Areas No. 1 & 2), No. 2005 -1 (Serenity), No. 2005 -6 (City
Center Townhomes), No. 2006 -2 (Viscaya) and No. 2003 -2 (Canyon
Hills) Regarding the Issuance of Special Tax Bonds by Such
Community Facilities Districts
Adoption of a Resolution by the Public Financing Authority
Authorizing the Issuance of its Local Agency Revenue Refunding
Bonds to Purchase the Refunding of Bonds for the Aforementioned
Community Facilities Districts
Recommendation
It is recommended that the City Council approve and adopt the following five (5)
Authorizing Resolutions that approve the issuance of various community facilities district
(CFD) refunding bonds ( "Local Obligations ") to refinance certain outstanding bonds
previously issued for six (6) CFDs:
1. Resolution No. 2015 - RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF CITY OF
LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2004 -3 (ROSETTA
CANYON), AUTHORIZING THE ISSUANCE OF ITS IMPROVEMENT AREA
NO. 1 2015 SPECIAL TAX REFUNDING BONDS IN A PRINCIPAL AMOUNT
NOT TO EXCEED TWENTY -NINE MILLION DOLLARS ($29,000,000) AND ITS
IMPROVEMENT AREA NO. 2 2015 SPECIAL TAX REFUNDING BONDS IN A
PRINCIPAL AMOUNT NOT TO EXCEED TWENTY -SIX MILLION DOLLARS
($26,000,000) AND APPROVING CERTAIN DOCUMENTS AND TAKING
CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
Refunding of Outstanding CFD Bonds
January 13, 2015
Page 2
2. Resolution No. 2015 - RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF CITY OF
LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2005 -1
(SERENITY), AUTHORIZING THE ISSUANCE OF ITS 2015 SPECIAL TAX
REFUNDING BONDS IN A PRINCIPAL AMOUNT NOT TO EXCEED TEN
MILLION DOLLARS ($10,000,000) AND APPROVING CERTAIN DOCUMENTS
AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
3. Resolution No. 2015 - RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF CITY OF
LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2005 -6 (CITY
CENTER TOWNHOMES), AUTHORIZING THE ISSUANCE OF ITS 2015
SPECIAL TAX REFUNDING BONDS IN A PRINCIPAL AMOUNT NOT TO
EXCEED THREE MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS
($3,750,000) AND APPROVING CERTAIN DOCUMENTS AND TAKING
CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
4. Resolution No. 2015 - RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF CITY OF
LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2006 -2 (VISCAYA),
AUTHORIZING THE ISSUANCE OF ITS 2015 SPECIAL TAX REFUNDING
BONDS IN A PRINCIPAL AMOUNT NOT TO EXCEED EIGHT MILLION
DOLLARS ($8,000,000) AND APPROVING CERTAIN DOCUMENTS AND
TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
5. Resolution No. 2015 - RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF CITY OF
LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2003 -2 (CANYON
HILLS), AUTHORIZING THE ISSUANCE OF ITS IMPROVEMENT AREA B
2015 SPECIAL TAX REFUNDING BONDS IN A PRINCIPAL AMOUNT NOT TO
EXCEED TWENTY -NINE MILLION DOLLARS ($29,000,000) AND APPROVING
CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN
CONNECTION THEREWITH
It is recommended the Public Financing Authority approve and adopt the following
Authorizing Resolution that approves the issuance of local agency revenue bonds
( "Authority Bonds ") to purchase the Local Obligations in a pooled financing structure:
Resolution No. 2015 - RESOLUTION OF THE BOARD OF DIRECTORS OF
THE LAKE ELSINORE PUBLIC FINANCING AUTHORITY, RIVERSIDE
COUNTY, CALIFORNIA, AUTHORIZING THE ISSUANCE OF ITS LOCAL
AGENCY REVENUE REFUNDING BONDS IN AN AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED ONE HUNDRED THIRTY -ONE MILLION SEVEN
HUNDRED FIFTY THOUSAND DOLLARS ($131,750,000) AND APPROVING
CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN
CONNECTION THEREWITH
Refunding of Outstanding CFD Bonds
January 13, 2015
Page 3
Background
On August 18, 2005, Improvement Area No. 1 of the Communities Facilities District No.
2004 -3 (Rosetta Canyon) issued the $22,635,000 aggregate principal amount of Special
Tax Bonds, 2005 Series A (the "CFD 2004 -3 IA -1 2005 Bonds "). The CFD 2004 -3 IA -1
2005 Bonds were issued with a 5.20% average coupon and will be callable on
September 1, 2015 at a price of 102 %.
On December 20, 2005, Improvement Area A of the Communities Facilities District No.
2005 -2 (Alberhill Ranch) issued the $24,680,000 aggregate principal amount of Special
Tax Bonds, 2005 Series A (the "CFD 2005 -2 IA -A 2005 Bonds "). The CFD 2005 -2 IA -A
2005 Bonds were issued with a 5.44% average coupon and are currently callable on
any date at a price of 100 %.
On February 7, 2006, Communities Facilities District No. 2005 -1 (Serenity) issued the
$9,180,000 aggregate principal amount of Special Tax Bonds, 2006 Series A (the "CFD
2005 -1 Bonds "). The CFD 2005 -1 Bonds were issued with a 5.24% average coupon
and are currently callable on any date at a price of 100 %.
On May 4, 2006, Communities Facilities District No. 2005 -6 (City Center Townhomes)
issued the $3,525,000 aggregate principal amount of Special Tax Bonds, 2006 Series A
(the "CFD 2005 -6 Bonds "). The CFD 2005 -6 Bonds were issued with a 5.31 % average
coupon and are currently callable on any date at a price of 100 %.
On July 12, 2006, Communities Facilities District No. 2006 -2 (Viscaya) issued the
$7,290,000 aggregate principal amount of Special Tax Bonds, 2006 Series A (the "CFD
2006 -2 Bonds "). The CFD 2006 -2 Bonds were issued with a 5.37% average coupon
and are currently callable on any date at a price of 100 %.
On September 7, 2006, Improvement Area B of the Communities Facilities District No.
2003 -2 (Canyon Hills) issued the $20,570,000 aggregate principal amount of Special
Tax Bonds, 2006 Series A (the "CFD 2003 -2 IA -B 2006 Bonds "). The CFD 2003 -2 IA -B
2006 Bonds were issued with a 5.10% average coupon and are currently callable on
any date at a price of 100°/x.
On September 19, 2006, Improvement Area No. 2 of the Communities Facilities District
No. 2004 -3 (Rosetta Canyon) issued the $23,460,000 aggregate principal amount of
Special Tax Bonds (Improvement Area No. 2), 2006 Series A (the "CFD 2004 -3 IA -2
2006 Bonds "). The CFD 2004 -3 IA -2 2006 Bonds were issued with a 5.22% average
coupon and are currently callable on any date at a price of 100 %.
On December 1, 2011, the Lake Elsinore Public Financing Authority issued the
$1,405,000 aggregate principal amount of Local Agency Revenue Bonds (1996 Series
E Refunding) 2011 Series B (the "2011 Local Agency Revenue Bonds "). The 2011
Series B Local Agency Revenue Bonds were issued with a 5.21 % average coupon and
are currently callable on any date at a price of 102 %.
Refunding of Outstanding CFD Bonds
January 13, 2015
Page 4
On November 12, 2014, the City Council approved Resolution No. 2014 -074 which
authorized the refunding of the above mentioned CFD bonds and appointed the finance
professionals to begin working on the refunding program.
Discussion
In July 2014, the City issued $18,210,000 of Local Agency Revenue Bonds, 2014
Series B to refinance for savings existing special tax revenue bonds for Canyon Hills
Improvement Areas A and C ( "July 2014 Refinancing "). The July 2014 Refinancing
produced significant savings totaling over $2.96 million of present value savings to
property owners (equal to about $204 -$223 of annual CFD tax savings per parcel).
Since that time, municipal bond interest rates have fallen even further based on the
declining price of oil, volatile stock market movements and a very low municipal bond
supply. As a result, the City has a potential opportunity to refund additional outstanding
special tax bonds for more savings to property owners. Staff, along with the City's
proposed financing team, evaluated all of the City's outstanding community facilities
district (CFDs) bonds and determined that there is a potential to realize savings with up
to eight (8) CFDs, based on current market conditions.
The proposed refunding bonds (2015 Refunding Bonds), expected to be issued through
a Marks -Roos pooled financing structure (i.e. Lake Elsinore Public Financing Authority),
will seek to refinance up to eight (8) outstanding CFD bonds with an outstanding total of
over $105 million. Based on current market conditions, six (6) of the outstanding CFD
bonds can be refinanced for significant present value savings totaling about $6.29
million (equal to 8% of the refunded bonds); average savings per parcel will range from
$29 to $327 depending on the specific CFD issue and how much of the potential
savings is used to complete unfinished projects as further discussed below.
The savings generated for each CFD will be used to either: (1) reduce the special taxes
paid by existing property owners, or (2) complete unfinished projects that were originally
approved to be funded from the CFD. Any projects which will be funded from the
savings generated will be of benefit to existing property owners within each respective
CFD. The table on the next page outlines the estimated savings that will be generated
for each CFD and shows how the savings will be used for each CFD (i.e. tax reduction
or applied toward unfinished projects).
District No.
2003 -2 IA-13
2004 -3 IA -1
2004 -3 IA -2
1 2005 -1
1 2005 -6
1 2006 -2
District Name
Canyon Hills
Rosetta
Rosetta
Serenity
City Center
Viscaya
Canyon
Can on
Townhomes
Outstanding Amount
$19,590,000
$21,315,000
$22,590,000
1 $8,330,000
$3,235,000
$7,000,000
Refunding of Outstanding CFD Bonds
January 13, 2015
Page 5
PV Savings ($)
$1,522,467
$964,489
$1,941,383
$793,100
$323,351
$741,751
PV Savings ( %)
7.77%
4.52%
8.59%
9.52%
10.00%
10.60%
Total Annual Savings
N/A
$15,000
N/A
$17,500
$22,500
$55,000
Annual Savings/
N/A
$29
N/A
$75
$156
$327
Parcel
Existing Funds on
Hand
$1,047,315
$917,906
$1,946,770
$944,492
$93,647
$426,276
Total Funds to Be
$7,480,839
$1,691,134
$5,078,237
$1,465,300
N/A
N/A
Used On Projects
Developer
Projects to Be
Reimbursements
Rosetta
Rosetta
Serenity
N/A
N/A
Completed
for completed
Canyon Park
Canyon Park
Park
infrastructure
' Construction and surplus tunds currently being held by the bond trustee for each Ul-u.
For Rosetta Canyon (Improvement Areas 1 & 2) and Serenity, a significant portion or all
of the savings generated will be used to complete unfinished projects in those CFDs.
For Canyon Hills CFD; funds on hand and a significant portion or all of the savings
generated will be used to reimburse the developer for completed infrastructure. For City
Center Townhomes and Viscaya, 100% of the savings will be used to reduce future
special tax payments for existing property owners in those CFDs.
Two additional CFD bonds (Alberhill Ranch & 2011 Local Agency Revenue Bonds) with
an outstanding total of $24.905 million may also be added to the 2015 Refunding
Bonds. The inclusion of the Alberhill Ranch CFD and 2011 Local Agency Revenue
bonds into the refinancing package will depend on further negotiations with existing
property owners (including the current developer of Improvement Area B). The City
Council may be asked at a future meeting to consider a separate authorizing resolution
to approve issuance of refunding bonds for this CFD and including them into the
refinancing package. If the City Council decides not to proceed with the Alberhill and /or
2011 Local Agency Revenue Bond refinancing at this time, the Resolution of the Public
Financing Authority directs staff and legal counsel to make appropriate revisions to the
bond documents to remove Alberhill and /or 2011 Local Agency Revenue Bonds from
the financing.
The proposed 2015 Refunding Bonds will be structured to maximize savings for
property owners by pooling the refunding bonds together. This pooling of issues will
enable the City to reduce bond issuance costs by minimizing the number of refunding
bonds issued. In addition, pooling of issues will allow a larger bond offering to be sold
to investors which will attract stronger investor interest that could lead to lower rates.
The 2015 Refunding Bonds will have a final maturity of 2040; furthermore, each Local
Obligation will be structured with a final maturity that is no greater than the original date
for the existing CFD bond.
Based on current market conditions, the estimated interest rate for the 2015 Refunding
Bonds is expected to be about 4.3 %. The final interest rate structure will be determined
when the 2015 Refunding Bonds are priced and sold. The pricing date is estimated to
be in late February 2015, assuming that interest rates remain attractive. The bond
closing is expected to occur by mid -March 2015.
Refunding of Outstanding CFD Bonds
January 13, 2015
Page 6
Documents to Be Approved
Approval of the Resolutions will authorize the execution of the following refinancing
documents:
• Indenture of Trust (For the Authority Issued 2015 Refunding Bonds)
• Bond Purchase Agreement (For the Authority Issued 2015 Refunding Bonds)
• Local Obligation Bond Indenture (Form to Be Used for Each Local Obligation)
• Escrow Agreement (Form to Be Used for Each Refunded CFD Bond)
• Local Bond Purchase Agreement
• Continuing Disclosure Certificate
Bond Counsel and the City Attorney have reviewed the attached financing documents
on behalf of the Public Financing Authority and the Community Facilities Districts.
The Preliminary Official Statement will be presented at a future Council meeting for
approval before it is distributed to bond investors.
Fiscal Impact
The CFD bond refinancing program currently anticipates generating about $6.29 million
of present value savings (equal to 8% of the refunded bonds). Property owners are
expected to save an estimated $29 and $327 per year in special property taxes
depending on the specific CFD issue and how much of the potential savings is used for
unfinished projects (as described in more detail under the Discussion section of this
report). The level of savings and savings for property owners are subject to market
conditions at the time of pricing.
Prepared by: Jason Simpson
Director of Administrative Services
Approved by: Grant Yates
City Manager
Attachments:
Resolution No. 2015 - RESOLUTION OF THE BOARD OF DIRECTORS OF
THE LAKE ELSINORE PUBLIC FINANCING AUTHORITY, RIVERSIDE
COUNTY, CALIFORNIA, AUTHORIZING THE ISSUANCE OF ITS LOCAL
AGENCY REVENUE REFUNDING BONDS IN AN AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED ONE HUNDRED THIRTY -ONE MILLION SEVEN
HUNDRED FIFTY THOUSAND DOLLARS ($131,750,000) AND APPROVING
CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN
CONNECTION THEREWITH
2. Resolution No. 2015 - RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF CITY OF
Refunding of Outstanding CFD Bonds
January 13, 2015
Page 7
LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2004 -3 (ROSETTA
CANYON), AUTHORIZING THE ISSUANCE OF ITS IMPROVEMENT AREA
NO. 1 2015 SPECIAL TAX REFUNDING BONDS IN A PRINCIPAL AMOUNT
NOT TO EXCEED TWENTY -NINE MILLION DOLLARS ($29,000,000) AND ITS
IMPROVEMENT AREA NO. 2 2015 SPECIAL TAX REFUNDING BONDS IN A
PRINCIPAL AMOUNT NOT TO EXCEED TWENTY -SIX MILLION DOLLARS
($26,000,000) AND APPROVING CERTAIN DOCUMENTS AND TAKING
CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
3. Resolution No. 2015 - RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF CITY OF
LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2005 -1
(SERENITY), AUTHORIZING THE ISSUANCE OF ITS 2015 SPECIAL TAX
REFUNDING BONDS IN A PRINCIPAL AMOUNT NOT TO EXCEED TEN
MILLION DOLLARS ($10,000,000) AND APPROVING CERTAIN DOCUMENTS
AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
4. Resolution No. 2015 - RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF CITY OF
LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2005 -6 (CITY
CENTER TOWNHOMES), AUTHORIZING THE ISSUANCE OF ITS 2015
SPECIAL TAX REFUNDING BONDS IN A PRINCIPAL AMOUNT NOT TO
EXCEED THREE MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS
($3,750,000) AND APPROVING CERTAIN DOCUMENTS AND TAKING
CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
5. Resolution No. 2015 - RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF CITY OF
LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2006 -2 (VISCAYA),
AUTHORIZING THE ISSUANCE OF ITS 2015 SPECIAL TAX REFUNDING
BONDS IN A PRINCIPAL AMOUNT NOT TO EXCEED EIGHT MILLION
DOLLARS ($8,000,000) AND APPROVING CERTAIN DOCUMENTS AND
TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
6. Resolution No. 2015 - RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF CITY OF
LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2003 -2 (CANYON
HILLS), AUTHORIZING THE ISSUANCE OF ITS IMPROVEMENT AREA B
2015 SPECIAL TAX REFUNDING BONDS IN A PRINCIPAL AMOUNT NOT TO
EXCEED TWENTY -NINE MILLION DOLLARS ($29,000,000) AND APPROVING
CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN
CONNECTION THEREWITH
7. Indenture of Trust (For the Authority Issued 2015 Refunding Bonds)
8. Bond Purchase Agreement (For the Authority Issued 2015 Refunding Bonds)
9. Local Obligation Bond Indenture Escrow Agreement (Form to Be Used for Each
Refunded CFD Bond)
10. Local Bond Purchase Agreement
Refunding of Outstanding CFD Bonds
January 13, 2015
Page 8
11. Continuing Disclosure Certificate
RESOLUTION NO. PFA-
RESOLUTION OF THE BOARD OF DIRECTORS OF THE
LAKE ELSINORE PUBLIC FINANCING AUTHORITY,
RIVERSIDE COUNTY, CALIFORNIA, AUTHORIZING THE
ISSUANCE OF ITS LOCAL AGENCY REVENUE
REFUNDING BONDS IN AN AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED ONE HUNDRED THIRTY -ONE
MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS
($131,750,000) AND APPROVING CERTAIN DOCUMENTS
AND TAKING CERTAIN OTHER ACTIONS IN
CONNECTION THEREWITH
WHEREAS, the Lake Elsinore Public Financing Authority (the "Authority ") is a joint
exercise of powers authority duly organized and existing under the provisions of Articles
1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the
Government Code of the State of California (the "Act "), and is authorized pursuant to
Article 4 of the Act (the "Bond Law ") to borrow money for the purpose of financing the
acquisition of bonds, notes and other obligations to provide financing and refinancing for
capital improvements of member entities of the Authority and other local agencies; and
WHEREAS, the City of Lake Elsinore Community Facilities District No. 2004 -3
(Rosetta Canyon) ( "CFD No. 2004 -3 ") previously issued the $22,635,000 City of Lake
Elsinore Community Facilities District No. 2004 -3 (Rosetta Canyon) Special Tax Bonds
(Improvement Area No. 1) 2005 Series A (the "Prior CFD No. 2004 -3 Improvement Area
No. 1 Bonds ") to finance certain public improvements; and
WHEREAS, CFD No. 2004 -3 previously issued the $23,460,000 City of Lake
Elsinore Community Facilities District No. 2004 -3 (Rosetta Canyon) Special Tax Bonds
(Improvement Area No. 2) 2006 Series A (the "Prior CFD No. 2004 -3 Improvement Area
No. 2 Bonds ") to finance certain public improvements; and
WHEREAS, the City of Lake Elsinore Community Facilities District No. 2005 -6
(City Center Townhomes) ( "CFD No. 2005 -6 ") previously issued the $3,525,000 City of
Lake Elsinore Community Facilities District No. 2005 -6 (City Center Townhomes) Special
Tax Bonds 2006 Series A (the "Prior CFD No. 2005 -6 Bonds ") to finance certain public
improvements; and
WHEREAS, the City of Lake Elsinore Community Facilities District No. 2005 -1
(Serenity) ( "CFD No. 2005 -1 ") previously issued the $9,180,000 City of Lake Elsinore
Community Facilities District No. 2005 -1 (Serenity) Special Tax Bonds 2006 Series A (the
"Prior CFD No. 2005 -1 Bonds ") to finance certain public improvements, and
WHEREAS, the City of Lake Elsinore Community Facilities District No. 2005 -2
(Alberhill Ranch) ( "CFD No. 2005 -2 ") previously issued the $24,680,000 City of Lake
Elsinore Community Facilities District No. 2005 -2 (Alberhill Ranch) Special Tax Bonds
Public Finance Authority Resolution No 2015 -
Page 2
(Improvement Area A) 2005 Series A (the "Prior CFD No. 2005 -2 Improvement Area A
Bonds ") to finance certain public improvements; and
WHEREAS, the City of Lake Elsinore Community Facilities District No. 2006 -2
(Viscaya) ( "CFD No. 2006 -2 ") previously issued the $7,290,000 City of Lake Elsinore
Community Facilities District No. 2006 -2 (Viscaya) Special Tax Bonds 2006 Series A (the
"Prior CFD No. 2006 -2 Bonds ") to finance certain public improvements, and
WHEREAS, the City of Lake Elsinore Community Facilities District No. 95 -1 (Lake
Elsinore City Center Public Improvements) ( "CFD No. 95-1") previously issued the
$1,375,000 City of Lake Elsinore Community Facilities District No. 95 -1 (Lake Elsinore
City Center Public Improvements) Special Tax Bonds, 2011 Series (the "Prior CFD No.
95 -1 Bonds ") to refinance certain public improvements; and
WHEREAS, the Authority previously issued the $1,405,000 Lake Elsinore Public
Financing Authority Local Agency Revenue Bonds (1996 Series E Refunding), 2011
Series B (the "Prior Authority Bonds ") to purchase the Prior CFD No. 95 -1 Bonds; and
WHEREAS, the City of Lake Elsinore Community Facilities District No. 2003 -2
(Canyon Hills) ( "CFD No. 2003 -2," together with CFD No. 2004 -3, CFD No. 2005 -6, CFD
No. 2005 -1, CFD No. 2005 -2, CFD No. 2006 -2 and CFD No. 95 -1, the "Community
Facilities Districts ") previously issued the $20,570,000 City of Lake Elsinore Community
Facilities District No. 2003 -2 (Canyon Hills) Special Tax Bonds (Improvement Area B)
2006 Series A (the "Prior CFD No. 2003 -2 Improvement Area B Bonds" and, together
with the Prior CFD No. 2004 -3 Improvement Area No. 1 Bonds, the Prior CFD No. 2004-
3 Improvement Area No. 2 Bonds, the Prior CFD No. 2005 -6 Bonds, the Prior CFD No.
2005 -1 Bonds, the Prior CFD No. 2005 -2 Improvement Area A Bonds, the Prior CFD No.
2006 -2 Bonds, the Prior CFD No. 95 -1 Bonds and the Prior Authority Bonds, the "Prior
Bonds ") to finance certain public improvements; and
WHEREAS, as a result of favorable conditions in the municipal bond market, the
Authority and each of the Community Facilities Districts desire to refund the Prior Bonds
and certain of the Community Facilities Districts desire to issue additional bonds in order
to finance additional public improvements; and
WHEREAS, the Authority, for the purpose of acquiring special tax refunding bonds
of each of the Community Facilities Districts (the "Local Obligations "), the proceeds of
which will be utilized to defease and refund the Prior Bonds and in certain instances to
finance additional public improvements, has determined to issue its Local Agency
Revenue Refunding Bonds Series 2015 (the "Authority Bonds ") pursuant to and secured
by the Indenture (as defined below) providing for the issuance of the Authority Bonds, all
in the manner provided therein; and
WHEREAS, the Authority Bonds will be secured by debt service payments paid
with respect to the Local Obligations, the payment of which will be secured by special tax
liens on taxable property within the respective Community Facilities Districts or
Improvement Areas therein, as applicable; and
Public Finance Authority Resolution No 2015 -
Page 3
WHEREAS, for this financing there has been filed with the Secretary of the Board
of Directors of the Authority the forms of the following documents to be executed by the
Authority with respect to the issuance of the Authority Bonds, which documents the Board
desires to approve for execution as described herein:
(1) The Indenture of Trust, dated as of January 1, 2015 (the "Indenture "), by
and between the Authority and MUFG Union Bank, N.A., as Trustee;
(2) The Bond Purchase Agreement, to be dated the date of sale, by and
between Stifel, Nicolaus & Company, Incorporated and Brandis Tallman LLC, collectively
as Underwriters (the "Underwriters ") and the Authority (the "Bond Purchase Agreement "),
(3) The Local Obligations Bond Purchase Agreement, to be dated the date of
sale, by and among the Authority and the Community Facilities Districts (the "Local Bond
Purchase Agreement "); and
(4) The Continuing Disclosure Certificate executed and delivered by the
Authority (the documents described in (1) through (4) above are collectively referred to
herein as the "Authority Documents ");
WHEREAS, the Board of Directors desires to authorize the preparation of a
Preliminary Official Statement with respect to the Authority Bonds (the "Preliminary
Official Statement "); and
WHEREAS, approval of the Preliminary Official Statement in substantially final
form by the Board of Directors shall occur at a subsequent meeting of the Board of
Directors and such approval shall be a condition precedent to the sale and issuance of
the Authority Bonds; and
WHEREAS, certain of the Community Facilities Districts have held duly noticed
public hearings regarding the issuance of the Local Obligations and determined that such
financings will result in significant public benefits of the type described in Section 6586 of
the Bond Law; and
WHEREAS, the Authority has determined and hereby finds that the issuance of
the Authority Bonds and the acquisition of the Local Obligations will result in significant
public benefits of the type described in Section 6586 of the Bond Law; and
NOW, THEREFORE, the Board Of Directors of the Lake Elsinore Public Financing
Authority does hereby resolve, determine and order as follows:
Section 1. Each of the above recitals is true and correct and is adopted by the
Board of Directors.
Section 2. The Authority Bonds shall be issued in an aggregate principal
amount not to exceed $131,750,000 with the exact principal amount to be determined by
the official signing the Bond Purchase Agreement in accordance with Section 4 below.
Public Finance Authority Resolution No 2015 -
Page 4
The Authority Bonds shall mature on the dates and pay interest at the rates set forth in
the Bond Purchase Agreement to be executed on behalf of the Authority in accordance
with Section 4 below. The Authority Bonds shall be issued under the terms of the
Indenture, the form of which is on file with the Secretary of the Board of Directors. The
form of the Indenture presented at this meeting is hereby approved and each of the
Chairperson of the Board of Directors, the Executive Director and the Treasurer, or their
respective written designees (collectively, the "Authorized Officers "), is hereby authorized
to execute the Indenture, in the form hereby approved, with such additions thereto and
changes therein as the officer or officers executing the same deem necessary to
accomplish the issuance of the Authority Bonds as contemplated by this Resolution.
Approval of such changes shall be conclusively evidenced by the execution and delivery
of the Indenture by one or more of such Authorized Officers.
Section 3. The Authority Bonds shall be executed on behalf of the Authority by
the manual or facsimile signature of the Chairman of the Board of Directors, and the seal
of the Authority, or a facsimile thereof, shall be impressed or imprinted thereon and
attested with the manual or facsimile signature of the Secretary of the Board of Directors.
MUFG Union Bank, N.A. is hereby appointed to act as the trustee for the Authority Bonds
under the Indenture. If the Executive Director determines at any time while the Authority
Bonds are outstanding that another bank should be selected to act as trustee for the
Authority Bonds, in order to ensure the efficient administration of the Authority Bonds,
then the Executive Director, or his designee, is hereby authorized and directed to select
and engage a bank or trust company meeting the requirements set forth in the Indenture
to act as the trustee for the Authority Bonds under the terms of the Indenture.
Section 4. The form of the Bond Purchase Agreement presented at this meeting
is hereby approved; and each of the Authorized Officers is hereby authorized to execute
the Bond Purchase Agreement in the form so approved, with such additions thereto and
changes therein as are necessary to conform the Bond Purchase Agreement to the dates,
amounts and interest rates applicable to the Authority Bonds as of the sale date or to cure
any defect or ambiguity therein. Approval of such additions and changes shall be
conclusively evidenced by the execution and delivery of the Bond Purchase Agreement
by one or more of such Authorized Officers; provided, however, that the Bond Purchase
Agreement shall be signed only if the Underwriters' discount (exclusive of original issue
discount) does not exceed 1.00% of the principal amount of the Authority Bonds and the
true interest cost of the Authority Bonds is less than 5.25 %. Each of the Executive
Director, the Treasurer and their written designees is authorized to determine the day on
which the Authority Bonds are to be priced in order to attempt to produce the lowest
borrowing cost for the Authority and may reject any terms presented by the Underwriters
to the Authority if determined not to be in the best interest of the Authority.
In the event the Executive Director or his written designee determines that the
purchase of one or more of the Local Obligations will not result in sufficient net present
value savings to a Community Facilities District or will not otherwise achieve the purposes
of the Authority set forth in this Resolution, then the Local Obligations of such Community
Facilities District, as applicable, will not be purchased by the Authority, and the Authority
Public Finance Authority Resolution No 2015 -_
Page 5
Documents may be amended to reflect that such Local Obligations will not be purchased
by the Authority. The Board of Directors hereby acknowledges that the Legislative Body
of CFD No. 2005 -2 and the Legislative Body of CFD No. 95 -1 intend to consider approving
the issuance of bonds to defease and refund the Prior CFD No. 2005 -2 Improvement
Area A Bonds and the Prior CFD No. 95 -1 Bonds, respectively. If the Legislative Body
of CFD No. 2005 -2 or the Legislative Body of CFD No. 95 -1 do not approve the issuance
of their respective bonds, the Authorized Officers are hereby authorized and directed to
revise the Authority Documents to remove all references to CFD No. 2005 -2 or CFD No.
95 -1.
Section 5. The form of the Local Bond Purchase Agreement presented at this
meeting is hereby approved; and each of the Authorized Officers is hereby authorized to
execute the Local Bond Purchase Agreement in the form so approved, with such
additions thereto and changes therein as are necessary to conform the Local Bond
Purchase Agreement to the dates, amounts and interest rates applicable to the Local
Obligations as of the sale date or to cure any defect or ambiguity therein. Approval of
such additions and changes shall be conclusively evidenced by the execution and
delivery of the Local Bond Purchase Agreement by one or more of such officers.
Section 6. The form of the Continuing Disclosure Certificate presented at this
meeting is hereby approved; and each of the Authorized Officers is authorized to execute
the Continuing Disclosure Certificate in the form hereby approved, with such additions
thereto and changes therein as the officers executing the same deem necessary to
comply with the requirements of Rule 15c2 -12 of the Securities and Exchange
Commission and to cure any ambiguity or defect therein. Approval of such changes shall
be conclusively evidenced by the execution and delivery of the Continuing Disclosure
Certificate by one or more of such officers.
Section 7. The preparation of a Preliminary Official Statement relating to the
Authority Bonds is hereby authorized. Approval of the Preliminary Official Statement in
substantially final form shall occur at a subsequent meeting of the Board of Directors, and
such approval is hereby made a condition precedent to the sale and issuance of the
Authority Bonds.
Section 8. The Authorized Officers are hereby appointed as the authorized
officers of the Authority for all purposes required to effect the issuance of the Authority
Bonds and are hereby authorized, empowered, and directed, jointly and severally, to do
all such acts and things and to execute all such documents as may be necessary to carry
out and comply with the foregoing actions.
Each of the Executive Director and the Treasurer, or their respective written
designees, acting alone, is hereby authorized to negotiate the terms of a commitment (the
"Insurance Commitment ") for bond insurance for some or all of the Authority Bonds and
a commitment for a reserve fund surety bond (the "Surety Commitment ") for all or a
portion of the Reserve Fund (as defined in the Indenture) from one or more municipal
bond insurance companies (an "Insurer ") and, if such officer determines that the
acquisition either of a policy or a reserve fund surety bond, or both, from an Insurer will
Public Finance Authority Resolution No 2015 -
Page 6
result in net interest rate savings or will result in more annual debt service savings, to pay
the premiums for such policy and surety bond from the proceeds of the Authority Bonds
and to amend the Authority Documents to the extent necessary to conform to the terms
of the Insurance Commitment and the Surety Commitment. Each of the Authorized
Officers, acting alone, is further authorized to execute a reimbursement agreement
required by the Surety Commitment.
Section 9. The Authorized Officers are hereby authorized and directed, to do
any and all things and to execute and deliver any and all documents which they may
deem necessary or advisable in order to consummate the issuance and sale of the
Authority Bonds and otherwise to effectuate the purposes of this Resolution.
Section 10. This Resolution shall take effect immediately upon its adoption.
PASSED, APPROVED AND ADOPTED at a regular meeting of the Board of
Directors of the Lake Elsinore Public Financing Authority this 13th day of January, 2015.
NATASHA JOHNSON
CHAIR
ATTEST:
VIRGINIA BLOOM
SECRETARY
APPROVED AS TO FORM:
BARBARA ZEID LEIBOLD
COUNSEL TO AUTHORITY
Stradling Yocca Carlson & Rauth
Draft of 116115
INDENTURE OF TRUST
by and between
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
and
MUFG UNION BANK, N.A.,
as Trustee
Dated as of 1, 2015
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE BONDS, SERIES 2015
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL SECURITY
Section1.1 Definitions .................................................................................... ..............................2
Section 1.2 Rules of Construction ................................................................. .............................13
Section 1.3 Authorization and Purpose of Bonds .......................................... .............................13
Section1.4 Equal Security ............................................................................. .............................13
ARTICLE II
ISSUANCE OF BONDS
Section2.1
Terms of Bonds ........................................................................... .............................13
Section2.2
Redemption of Bonds .................................................................. .............................15
Section2.3
Form of Bonds ............................................................................ .............................17
Section 2.4
Execution of Bonds ..................................................................... .............................17
Section2.5
Transfer of Bonds ....................................................................... .............................17
Section2.6
Exchange of Bonds ..................................................................... .............................18
Section2.7
Temporary Bonds ........................................................................ .............................18
Section2.8
Bond Register .............................................................................. .............................18
Section 2.9
Bonds Mutilated, Lost, Destroyed or Stolen ............................... .............................18
Section2.10
Book -Entry System ..................................................................... .............................19
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS
Section 3.1 Issuance of Bonds ..................................................................... ............................... 20
Section 3.2 Application of Proceeds of Sale of Bonds and Funds Received from the
Community Facilities Districts ................................................. ............................... 20
Section3.3 Revenue Fund ........................................................................... ............................... 21
Section 3.4 Costs of Issuance Fund ............................................................. ............................... 21
Section3.5 Purchase Fund ........................................................................... ............................... 21
Section3.6 Reserve Fund ............................................................................ ............................... 21
Section3.7 Rebate Fund .............................................................................. ............................... 21
Section3.8 Surplus Fund ............................................................................. ............................... 22
Section 3.9 Administrative Expense Fund .................................................. ............................... 22
Section3.10 Validity of Bonds ...................................................................... ............................... 22
ARTICLE IV
REVENUES; FLOW OF FUNDS
Section 4.1 Pledge of Revenues; Assignment of Rights .............................. ............................... 22
Section 4.2 Receipt, Deposit and Application of Revenues; Revenue Fund .............................. 23
Section4.3 Reserve Fund ............................................................................ ............................... 24
9
TABLE OF CONTENTS
(continued)
Page
Section4.4 Surplus Fund ............................................................................. ............................... 26
Section4.5 Investments ............................................................................... ............................... 26
Section 4.6 Valuation and Disposition of Investments ................................ ............................... 27
ARTICLE V
COVENANTS OF THE AUTHORITY
Section 5.1
Punctual Payment ...................................................................... ...............................
27
Section 5.2
Extension of Payment of Bonds ................................................ ...............................
27
Section 5.3
Against Encumbrances .............................................................. ...............................
28
Section 5.4
Power to Issue Bonds and Make Pledge and Assignment ........ ...............................
28
Section 5.5
Accounting Records and Financial Statements ......................... ...............................
28
Section 5.6
Conditions to Issuance of Additional Obligations .................... ...............................
28
Section5.7
Tax Covenants ............................................................................ .............................29
Section5.8
Rebate Fund .............................................................................. ...............................
30
Section 5.9
Local Obligations ........................................................................ .............................32
Section 5.10
Sale of Local Obligations .......................................................... ...............................
33
Section 5.11
Continuing Disclosure Agreement ............................................ ...............................
33
Section 5.12
Further Assurances .................................................................... ...............................
34
Section 5.13
Pledged Revenues ..................................................................... ...............................
34
ARTICLE VI
THE TRUSTEE
Section 6.1
Appointment of Trustee ............................................................ ...............................
34
Section 6.2
Acceptance of Trusts ................................................................. ...............................
34
Section 6.3
Fees, Charges and Expenses of Trustee ...................................... .............................37
Section 6.4
Notice to Bond Owners of Default ........................................... ...............................
37
Section 6.5
Intervention by Trustee ............................................................... .............................37
Section6.6
Removal of Trustee ..................................................................... .............................38
Section 6.7
Resignation by Trustee ................................................................ .............................38
Section 6.8
Appointment of Successor Trustee ........................................... ...............................
38
Section 6.9
Merger or Consolidation ............................................................. .............................38
Section 6.10
Concerning any Successor Trustee ........................................... ...............................
38
Section 6.11
Appointment of Co- Trustee ...................................................... ...............................
39
Section 6.12
Indemnification; Limited Liability of Trustee .......................... ...............................
39
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE INDENTURE
Section 7.1 Amendment Hereof ................................................................... ............................... 40
Section 7.2 Effect of Supplemental Indenture ............................................. ............................... 41
Section 7.3 Endorsement or Replacement of Bonds After Amendment ...... ............................... 41
Section 7.4 Amendment by Mutual Consent ............................................... ............................... 41
lu
Section 8.1
Section 8.2
Section 8.3
Section 8.4
Section 8.5
Section 8.6
Section 8.7
Section 8.8
Section 9.1
Section 9.2
Section 9.3
Section 9.4
Section 9.5
Section 9.6
Section 9.7
Section 9.8
Section 9.9
Section 9.10
Section 9.11
Section 9.12
Section 9.13
Section 9.14
Section 9.15
Signature Page
Exhibit A
TABLE OF CONTENTS
(continued)
Page
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Eventsof Default ...................................................................... ............................... 41
Remedies; Rights of Bond Owners ............................................. .............................42
Application of Revenues and Other Funds After Event of Default ......................... 42
Power of Trustee to Control Proceedings ................................. ............................... 43
Appointmentof Receivers ........................................................ ............................... 43
NonWaiver ................................................................................. .............................44
Rights and Remedies of Bond Owners ..................................... ............................... 44
Termination of Proceedings ...................................................... ............................... 44
ARTICLE IX
MISCELLANEOUS
Limited Liability of Authority .................................................. ............................... 45
Benefits of Indenture Limited to Parties ................................... ............................... 45
Dischargeof Indenture .............................................................. ............................... 45
Successor is Deemed Included in All References to Predecessor ............................ 46
Content of Certificates .............................................................. ............................... 46
Execution of Documents by Bond Owners ............................... ............................... 47
DisqualifiedBonds .................................................................... ............................... 47
Waiverof Personal Liability ..................................................... ............................... 47
PartialInvalidity ........................................................................ ............................... 47
Destruction of Cancelled Bonds ............................................... ............................... 48
Fundsand Accounts .................................................................... .............................48
Notices...................................................................................... ............................... 48
UnclaimedMoneys ................................................................... ............................... 49
Payment Due on Other than a Business Day ............................ ............................... 49
Notices to and for the Benefit and Standard & Poor' s .............. ............................... 49
Form of Series 2015 Bonds....
iii
............. ............................... S -1
.... A -1
INDENTURE OF TRUST
THIS INDENTURE OF TRUST (this "Indenture "), dated as of , 1, 2015, by and
between the LAKE ELSINORE PUBLIC FINANCING AUTHORITY, a joint powers authority
organized and existing under the laws of the State of California (the "Authority ") and MUFG
UNION BANK, N.A., a national banking association organized and existing under the laws of the
United States of America (the "Trustee ");
WITNESSETH:
WHEREAS, the Lake Elsinore Public Financing Authority (the "Authority ") is a joint
exercise of powers authority duly organized and existing under the provisions of Articles 1 through 4
(commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of
the State of California (the "Act "), and is authorized pursuant to Article 4 of the Act to borrow
money for the purpose of financing the acquisition of bonds, notes and other obligations to provide
financing and refinancing for capital improvements of member entities of the Authority and other
local agencies; and
WHEREAS, each of the Community Facilities Districts (as defined herein) has previously
issued bonds (collectively, the "Prior Bonds ") to finance the acquisition of certain public
improvements; and
WHEREAS, the Authority has determined to issue its Local Agency Revenue Bonds, Series
2015 (the "Bonds ") in the aggregate principal amount of $ for the primary purpose of
acquiring special tax refunding bonds of each of the aforesaid Community Facilities Districts, the
proceeds of which will be utilized to defease and refund the Prior Bonds and for certain Community
Facilities Districts to finance the acquisition of or reimbursement for certain public improvements;
and
WHEREAS, the Bonds will be issued pursuant to and secured by this Indenture in the
manner provided herein; and
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish
and declare the terms and conditions upon which the Bonds are to be issued and to secure the
payment of the principal thereof and interest thereon, the Authority has authorized the execution and
delivery of this Indenture; and
WHEREAS, the Authority hereby certifies that all acts and proceedings required by law
necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the
Trustee and duly issued, the valid, binding and legal special obligations of the Authority, and to
constitute this Indenture 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 the Indenture
have been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal of and the interest and premium (if any) on all Bonds at any time issued and
Outstanding under this Indenture, according to their tenor, and to secure the performance and
observance of all the covenants and conditions therein and herein set forth, and to declare the terms
and conditions upon and subject to which the Bonds are to be issued and received, and in
consideration of the premises and of the mutual covenants herein contained and of the purchase and
acceptance of the Bonds by the Owners thereof, and for other valuable considerations, the receipt and
sufficiency of which is hereby acknowledged, the Authority does hereby covenant and agree with the
Trustee, for the benefit of the respective Owners from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL SECURITY
Section 1.1 Definitions. Unless the context otherwise requires, the terms defined in this
Section shall for all purposes of this Indenture and of any Supplemental Indenture and of the Bonds
and of any certificate, opinion, request or other documents herein mentioned have the meanings
herein specified.
"Act" means Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7,
Title 1 of the Government Code of the State, as it may hereafter be amended from time to time.
"Additional Bonds" means additional bonds issued pursuant to Section 5.6 and secured on a
parity with the Bonds.
"Alternative Penalty Account" means the account by that name established pursuant to
Section 5.8 hereof
"Annual Debt Service" means, for each Bond Year, the sum of (a) the interest payable on the
Outstanding Bonds in such Bond Year, and (b) the principal amount of the Outstanding Bonds
scheduled to be paid in such Bond Year.
"Authority Administrative Expenses" means the fees and expenses of the Trustee, including
legal fees and expenses (including fees and expenses of outside counsel and the allocated costs of
internal attorneys) and the out of pocket expenses incurred by the Trustee, the City and the Authority
in carrying out their duties hereunder including payment of amounts payable to the United States
pursuant to Sections 5.7 and 5.8 hereof.
"Authorized Officer" means the Chairperson, Vice Chairperson, Executive Director or
Treasurer of the Authority or any other Person authorized by the Authority to perform an act or sign
a document on behalf of the Authority for purposes of this Indenture.
"Authori ' means the Lake Elsinore Public Financing Authority, a joint exercise of powers
agency established pursuant to the laws of the State, whose members as of the date hereof are the
City and the Lake Elsinore Redevelopment Agency, until a successor organization shall have become
such, and thereafter "Authority" shall mean such successor organization.
"Beneficial Owners" means the actual purchasers of the Bonds whose ownership interests are
recorded on the books of the DTC Participants.
"Bond Counsel" means any attorney at law or firm of attorneys selected by the Authority, of
nationally recognized standing in matters pertaining to the federal tax exemption of interest on bonds
issued by states and political subdivisions, and duly admitted to practice law before the highest court
of any state of the United States of America.
2
"Bond Law" means the Marks -Roos Local Bond Pooling Act of 1985, constituting Article 4
of the Act (commencing with Section 6584), as it may hereafter be amended from time to time.
"Bond Register" means the registration books for the Bonds maintained by the Trustee in
accordance with Section 2.8 hereof.
"Bonds" means collectively, the Lake Elsinore Public Financing Authority Local Agency
Revenue Bonds, Series 2015 and any Additional Bonds authorized by and at any time Outstanding
pursuant to the Bond Law and this Indenture.
"Bond Year" means each twelve month period extending from September 2 in one calendar
year to September 1 of the succeeding calendar year, except in the case of the initial Bond Year
which shall be the period from the Closing Date of the Bonds to September 1, 2015, both dates
inclusive.
"Business Day" means a day which is not a Saturday or Sunday or a day of the year on which
the New York Stock Exchange or banks in New York, New York or Los Angeles, California, or
where the Trust Office is located, are not required or authorized to remain closed.
"Certificate of the Authority" means a certificate in writing signed by the Executive Director
or Treasurer of the Authority, or by any other officer of the Authority duly authorized in writing by
the Board for that purpose.
"CFD Act" means the Mello -Roos Community Facilities Act of 1982, constituting
Chapter 2.5 (commencing with Section 53311), Article 1 of Division 2 of Title 5 of the Government
Code of that State of California, as amended from time to time.
"Ci1y" means the City of Lake Elsinore, County of Riverside, California.
"Closing Date" means for each Series the date on which the Bonds of such Series were
executed and delivered to the Original Purchaser thereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the United States
Treasury Regulations proposed or in effect with respect thereto.
"Community Facilities District" or "CFD" means any one of the Community Facilities
Districts.
"Community Facilities Districts" means, collectively, CFD No. 2003 -2, CFD No. 2004 -3,
CFD No. 2005 -6, CFD No. 2005 -1, CFD No. 2005 -2 and CFD No. 2006 -2.
"Community Facilities District No. 2003-2" or "CFD No. 2003 -2" means City of Lake
Elsinore Community Facilities District No. 2003 -2 (Canyon Hills), a community facilities district
formed pursuant to the CFD Act.
"Community Facilities District No. 2004 -3" or "CFD No. 2004 -3" means City of Lake
Elsinore Community Facilities District No. 2004 -3 (Rosetta Canyon), a community facilities district
formed pursuant to the CFD Act.
"Community Facilities District No. 2005 -6" or "CFD No. 2005 -6" means City of Lake
Elsinore Community Facilities District No. 2005 -6 (City Center Townhomes), a community facilities
district formed pursuant to the CFD Act.
"Community Facilities District No. 2005 -1" or "CFD No. 2005 -1" means City of Lake
Elsinore Community Facilities District No. 2005 -1 (Serenity), a community facilities district formed
pursuant to the CFD Act.
"Community Facilities District No. 2005 -2" or "CFD No. 2005 -2" means City of Lake
Elsinore Community Facilities District No. 2005 -2 (Alberhill Ranch), a community facilities district
formed pursuant to the CFD Act.
"Community Facilities District No. 2006 -2" or "CFD No. 2006 -2" means City of Lake
Elsinore Community Facilities District No. 2006 -2 (Viscaya), a community facilities district formed
pursuant to the CFD Act.
"Costs of Issuance" means the costs and expenses incurred in connection with the issuance
and sale of the Bonds, the Local Obligations, and the acquisition of the Local Obligations by the
Authority, including the acceptance and initial annual fees and expenses (including legal fees and
expenses) of the Trustee, legal fees and expenses, costs of printing the Bonds and the preliminary and
final Official Statements, fees of financial consultants, the Underwriter's discount and other fees and
expenses set forth in a Request of the Authority.
"Costs of Issuance Fund" means the fund by that name established in Section 3.4.
"Dated Date" means the date on which the Bonds are issued and authenticated by the Trustee.
"Defeasance Securities" means non - callable, non - prepayable obligations of the type set forth
in clauses 1 and 2 of the definition of Permitted Investments.
"DTC" means The Depository Trust Company, New York, New York, and its successors
and assigns.
"DTC Participants" means securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations maintaining accounts with DTC.
"Event of Default" means any of the events described in Section 8.1 hereof.
"Fiscal Agents" means the Fiscal Agents under the Local Obligation Indentures.
"Fiscal Year" means any twelve month period extending from July 1 in one calendar year to
June 30 of the succeeding calendar year, both dates inclusive, or any other twelve month period
selected and designated by the Authority as its official fiscal year period.
"Indenture" means this Indenture of Trust, as originally executed or as it may from time to
time be supplemented, modified or amended by any Supplemental Indenture pursuant to the
provisions hereof.
0
"Independent Accountant" means any accountant or firm of such accountants appointed and
paid by the Authority, and who, or each of whom —
(a) is in fact independent and not under domination of the Authority or the City;
(b) does not have any substantial interest, direct or indirect, in the Authority or
the City; and
(c) is not an officer or employee of the Authority, or the City, but who may be
regularly retained to make annual or other audits of the books of or reports to the Authority or the
City.
"Independent Financial Consultant" means any financial consultant or firm of such
consultants appointed and paid by the Authority, and who, or each of whom —
(a) is in fact independent and not under domination of the Authority or the City;
(b) does not have any substantial interest, direct or indirect, in the Authority or
the City; and
(c) is not an officer or employee of the Authority or the City, but who may be
regularly retained to make annual or other audits of the books of or reports to the Authority or the
City.
"Information Services" means such services providing information with respect to called
bonds in accordance with then current guidelines of the Securities and Exchange Commission, such
as the Trustee may select in its sole discretion.
"Interest Account" means the account by that name established and held by the Trustee
pursuant to Sections 3.3 and 4.2(a) hereof.
"Interest Payment Date" means March 1 and September 1 in each year, beginning
[September 1, 2015], and continuing thereafter so long as any Bonds remain Outstanding.
"Local Obligations" means collectively, the following:
(a) City of Lake Elsinore Community Facilities District No. 2003 -2 (Canyon
Hills) Improvement Area B 2015 Special Tax Refunding Bonds;
(b) City of Lake Elsinore Community Facilities District No. 2004 -3 (Rosetta
Canyon) Improvement Area No. 12015 Special Tax Refunding Bonds;
(c) City of Lake Elsinore Community Facilities District No. 2004 -3 (Rosetta
Canyon) Improvement Area No. 2 2015 Special Tax Refunding Bonds;
(d) City of Lake Elsinore Community Facilities District No. 2005 -6 (City Center
Townhomes) 2015 Special Tax Refunding Bonds;
(e) City of Lake Elsinore Community Facilities District No. 2005 -1 (Serenity)
2015 Special Tax Refunding Bonds;
W
(f) City of Lake Elsinore Community Facilities District No. 2005 -2 (Alberhill
Ranch) Improvement Area A 2015 Special Tax Refunding Bonds; and
(g) City of Lake Elsinore Community Facilities District No. 2006 -2 (Viscaya)
2015 Special Tax Refunding Bonds.
"Local Obligations Delinquency Revenues" means Revenues received by the Trustee from
the Fiscal Agent for a Series of the Local Obligations representing the payment of delinquent debt
service on such Local Obligations.
"Local Obligation Indentures" means the bond indentures executed in connection with the
issuance of the Local Obligations.
"Maximum Annual Debt Service" means, as of the date of any calculation, the largest Annual
Debt Service on a Series during the current or any future Bond Year.
"Original Purchaser" means, collectively, Stifel, Nicolaus & Company, Incorporated and
Brandis Tallman LLC.
"Outstanding" when used as of any particular time with reference to Bonds, means (subject
to the provisions of Section 9.7 hereof) all Bonds theretofore executed and issued by the Authority
and authenticated and delivered by the Trustee under this Indenture except —
(a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for
cancellation pursuant to Section 2.9 hereof;
(b) Bonds paid or deemed to have been paid within the meaning of Section 9.2
hereof or Bonds called for redemption for which funds have been provided as described in
Section 2.2(h) hereof; and
(c) Bonds in lieu of or in substitution for which other Bonds shall have been
executed, issued and delivered pursuant to this Indenture or any Supplemental Indenture.
"Owner" or "Bond Owner ", when used with respect to any Bond, means the person in whose
name the ownership of such Bond shall be registered on the Bond Register.
"Permitted Investments" means any of the following which at the time of investment are
legal investments under the laws of the State for the moneys proposed to be invested therein:
1. Cash (insured at all times by the Federal Deposit Insurance Corporation or
collateralized by Permitted Investments described in clause (2) of the definition thereof).
2. (a) Direct obligations (other than an obligation subject to variation in principal
repayment) of the United States of America ( "United States Treasury Obligations "), (b) obligations
fully and unconditionally guaranteed as to timely payment of principal and interest by the United
States of America, (c) obligations fully and unconditionally guaranteed as to timely payment of
principal and interest by any agency or instrumentality of the United States of America when such
obligations are backed by the full faith and credit of the United States of America, or (d) evidences of
ownership of proportionate interests in future interest and principal payments on obligations
described above held by a bank or trust company as custodian, under which the owner of the
investment is the real party in interest and has the right to proceed directly and individually against
the obligor and the underlying government obligations are not available to any person claiming
through the custodian or to whom the custodian may be obligated.
Federal Housing Administration debentures.
4. The listed obligations of government- sponsored agencies which are not backed by the
full faith and credit of the United States of America:
(a) Federal Home Loan Mortgage Corporation (FHLMC)
(i) Participation certificates (excluded are stripped mortgage securities
which are purchased at prices exceeding their principal amounts)
(ii) Senior Debt obligations
(b) Farm Credit Banks (formerly: Federal Land Banks, Federal
(i) Intermediate Credit Banks and Banks for Cooperatives)
(ii) Consolidated system -wide bonds and notes
(c) Federal Home Loan Banks (FHL Banks)
(i) Consolidated debt obligations
(d) Federal National Mortgage Association (FNMA)
(i) Senior debt obligations
(ii) Mortgage- backed securities (excluded are stripped mortgage
securities which are purchased at prices exceeding their principal amounts)
(e) Financing Corporation (FICO)
(i) Debt obligations
(f) Resolution Funding Corporation (REFCORP)
(i) Debt obligations
5. Unsecured certificates of deposit, time deposits, and bankers' acceptances (having
maturities of not more than 30 days) of any bank (including the Trustee and any affiliate) the short -
term obligations of which are rated "A -1" or better by Standard & Poor's.
6. Deposits the aggregate amount of which are fully insured by the Federal Deposit
Insurance Corporation (FDIC), in banks (including the Trustee and any affiliate) which have capital
and surplus of at least $5 million.
7. Commercial paper (having original maturities of not more than 270 days rated "A-
1 +" by Standard & Poor's and "Prime -1" by Moody's.
8. Money market funds rated "AAm" or "AAm -G" by Standard & Poor's, or better
(including those of the Trustee or its affiliates).
"State Obligations," which means:
(a) Direct general obligations of any state of the United States of America or any
subdivision or agency thereof to which is pledged the full faith and credit of a state the
unsecured general obligation debt of which is rated "AY by Moody's and "A" by Standard
& Poor's, or better, or any obligation fully and unconditionally guaranteed by any state,
subdivision or agency whose unsecured general obligation debt is so rated.
(b) Direct general short -term obligations of any state agency or subdivision or
agency thereof described in (A) above and rated "A -1 +" by Standard & Poor's and "Prime -1"
by Moody's.
(c) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of
any state, state agency or subdivision described in (A) above and rated "AA" or better by
Standard & Poor's and "Aa" or better by Moody's.
10. Pre - refunded municipal obligations rated "AAA" by Standard & Poor's and "Aaa" by
Moody's meeting the following requirements:
(a) the municipal obligations are (1) not subject to redemption prior to maturity
or (2) the paying agent for the municipal obligations has been given irrevocable instructions
concerning their call and redemption and the issuer of the municipal obligations has
covenanted not to redeem such municipal obligations other than as set forth in such
instructions;
(b) the municipal obligations are secured by cash or United States Treasury
Obligations which may be applied only to payment of the principal of, interest and premium
on such municipal obligations;
(c) the principal of and interest on the United States Treasury Obligations (plus
any cash in the escrow) has been verified by the report of independent certified public
accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due
and to become due on the municipal obligations ( "Verification ");
(d) the cash or United States Treasury Obligations serving as security for the
municipal obligations are held by an escrow agent or paying agent in trust for owners of the
municipal obligations;
(e) no substitution of a United States Treasury Obligation shall be permitted
except with another United States Treasury Obligation and upon delivery of a new
Verification; and
(f) the cash or United States Treasury Obligations are not available to satisfy any
other claims, including those by or against the paying agent or escrow agent.
11. Repurchase agreements:
With (1) any domestic bank, or domestic branch of a foreign bank, the long term debt of
which is rated at least "A" by Standard & Poor's and Moody's; or (2) any broker - dealer with "retail
customers" or a related affiliate thereof which broker - dealer has, or the parent company (which
guarantees the provider) of which has, long -term debt rated at least "A" by Standard & Poor's and
Moody's, which broker - dealer falls under the jurisdiction of the Securities Investors Protection
Corporation; or (3) any other entity rated "A" or better by Standard & Poor's and Moody's:
(a) The market value of the collateral is maintained at levels equal to 104% of the
amount of cash transferred by the Trustee to the provider of the repurchase agreement plus
accrued interest with the collateral being valued weekly and marked -to- market at one current
market price plus accrued interest;
(b) The Trustee or a third party acting solely as agent therefor or for the
Authority (the "Holder of the Collateral ") has possession of the collateral or the collateral has
been transferred to the Holder of the Collateral in accordance with applicable state and
federal laws (other than by means of entries on the transferor's books);
(c) The repurchase agreement shall state and an opinion of counsel shall be
rendered at the time such collateral is delivered that the Holder of the Collateral has a
perfected first priority security interest in the collateral, any substituted collateral and all
proceeds thereof (in the case of bearer securities, this means the Holder of the Collateral is in
possession);
(d) The repurchase agreement shall provide that if during its term the provider's
rating by either Moody's or Standard & Poor's is withdrawn or suspended or falls below "A "
by Standard & Poor's or "A3" by Moody's, as appropriate, the provider must, at the direction
of Trustee, within 10 days of receipt of such direction, repurchase all collateral and terminate
the agreement, with no penalty or premium to the Trustee.
Notwithstanding the above, if a repurchase agreement has a term of 270 days or less (with no
evergreen provision), collateral levels need not be as specified in (a) above, so long as such collateral
levels are 103% or better and the provider is rated at least "A" by Standard & Poor's and Moody's,
respectively.
12. Investment agreements with a domestic or foreign bank or corporation (other than a
life or property casualty insurance company) the long -term debt of which or, in the case of a
guaranteed corporation the long -term debt, or, in the case of a monoline financial guaranty insurance
company, claims paying ability, of the guarantor is rated at least "AA" by Standard & Poor's and
"Aa" by Moody's; provided that, by the terms of the investment agreement:
(a) interest payments are to be made to the Trustee at times and in amounts as
necessary to pay debt service on the Bonds;
(b) the invested funds are available for withdrawal without penalty or premium,
at any time upon not more than seven days' prior notice; the Trustee hereby agrees to give or
cause to be given notice in accordance with the terms of the investment agreement so as to
receive funds thereunder with no penalty or premium paid;
we
(c) the investment agreement shall state that it is the unconditional and general
obligation of, and is not subordinated to any other obligation of, the provider thereof, or, in
the case of a bank, that the obligation of the bank to make payments under the agreement
with the obligations of the bank to its other depositors and its other unsecured and
unsubordinated creditors;
(d) the Trustee receives the opinion of domestic counsel (which opinion shall be
addressed to Trustee) that such investment agreement is legal, valid, binding and enforceable
upon the provider in accordance with its terms and of foreign counsel (if applicable) in form
and substance acceptable, and addressed to, the Trustee;
(e) the investment agreement shall provide that if during its term
(i) the provider's rating by either Standard & Poor's or Moody's falls
below "AA -" or "AO", respectively, the provider shall, at its option, within 10 days
of receipt of publication of such downgrade, either (y) collateralize the investment
agreement by delivering or transferring in accordance with applicable state and
federal laws (other than by means of entries on the provider's books) to the Trustee or
a third party acting solely as agent therefor (the "Holder of the Collateral ") collateral
free and clear of any third -party liens or claims the market value of which collateral is
maintained at levels and upon such conditions as would be acceptable to Standard &
Poor's and Moody's to maintain an "A" rating in an "A" rated structured financing
(with a market value approach); or (z) repay the principal of and accrued but unpaid
interest on the investment; and
(ii) the provider's rating by either Standard & Poor's or Moody's is
withdrawn or suspended or falls below "A -" or "A3 ", respectively, the provider must,
at the direction of the Trustee, within 10 days of receipt of such direction, repay the
principal of and accrued but unpaid interest on the investment, in either case with no
penalty or premium to the Trustee; and
(f) the investment agreement shall state and an opinion of counsel shall be
rendered, in the event collateral is required to be pledged by the provider under the terms of
the investment agreement at the time such collateral is delivered, that the Holder of the
Collateral has a perfected first priority security interest in the collateral, any substituted
collateral and all proceeds thereof (in the case of bearer securities, this means the Holder of
the Collateral is in possession);
(g) the investment agreement must provide that if during its term
(i) the provider shall default in its payment obligations, the provider's
obligations under the investment agreement shall, at the direction of the Trustee, be
accelerated and amounts invested and accrued but unpaid interest thereon shall be
repaid to the Trustee, and
(ii) the provider shall become insolvent, not pay its debts as they become
due, be declared or petition to be declared bankrupt, etc. ( "event of insolvency "), the
provider's obligations shall automatically be accelerated and amounts invested and
accrued but unpaid interest thereon shall be repaid to the Trustee.
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13. The State of California Local Agency Investment Fund.
"Principal Account" means the account by that name established and held by the Trustee
pursuant to Sections 3.3 and 4.2(a) hereof.
"Proportionate Share" means, as of the date of calculation for any issue of the Local
Obligations, the ratio derived by dividing the outstanding principal amount of such Local Obligations
by the principal amount of the Outstanding Bonds.
"Purchase Fund" means the fund by that name established and held by the Trustee pursuant
to Section 3.5 hereof.
"Rebate Fund" means the fund by that name established pursuant to Section 5.8 hereof.
"Rebate Regulations" means the Treasury Regulations issued under Section 148(f) of the
Code.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth calendar day
of the month preceding the month in which such Interest Payment Date occurs, whether or not such
day is a Business Day.
"Redemption Fund" means the fund by that name established with respect to any Local
Obligation.
"Request of the Authority" means a written certificate or request executed by an Authorized
Officer.
"Request of the City" means a written certificate or request executed by the Mayor of the
City, its City Manager, its Director of Administrative Services or any other officer of the City duly
authorized by the City Council of the City to sign documents on its behalf with respect to the matters
referred to therein.
"Representation Letter" means the representation letter dated as of the Closing Date for a
Series among the Authority, the Trustee and DTC.
"Reserve Fund" means the fund by that name established and held by the Trustee pursuant to
Section 3.6 hereof.
"Reserve Requirement" means an amount equal to the lowest of (i) 10% of the initial
principal amount of the Bonds, (ii) Maximum Annual Debt Service on the Outstanding Bonds, or
(iii) 125% of Average Annual Debt Service on the Outstanding Bonds. As applied to individual
accounts of the Reserve Fund, the Reserve Requirement shall initially be allocated as set forth in
Section 4.3(a) hereof.
"Responsible Officer" means any officer of the Trustee assigned to administer the Trustee's
duties under this Indenture.
"Revenue Fund" means the fund by that name established and held by the Trustee pursuant to
Sections 3.3 and 4.2 hereof.
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"Revenues" means: (a) all amounts received from the Local Obligations; (b) any proceeds of
the Bonds originally deposited with the Trustee and all moneys deposited and held from time to time
by the Trustee in the funds and accounts established hereunder with respect to the Bonds (other than
the Rebate Fund and the Surplus Fund); and (c) investment income with respect to any moneys held
by the Trustee in the funds and accounts established hereunder with respect to the Bonds (other than
investment income on moneys held in the Rebate Fund and the Surplus Fund).
"Securities Depositories" means The Depository Trust Company, 55 Water Street,
50th Floor, New York, NY 10041 -0099 Attn. Call Notification Department, Fax (212) 855 -7232;
and, in accordance with then current guidelines of the securities and Exchange Commission, such
other addresses and /or such other securities depositories as the Authority may designate in a
Certificate of the Authority delivered to the Trustee.
"Series of Local Obligations" means each of the Local Obligations issued pursuant to the
Local Obligation Indentures.
"Six Month Period" shall mean the period of time beginning on the Closing Date and ending
six months thereafter, and each six month period thereafter until the latest maturity date of the Bonds
(and any obligations that refund the Bonds).
"Special Taxes" means the taxes authorized to be levied by the CFDs on parcels within the
CFDs or the improvement areas therein, as applicable, which have been pledged to repay the CFD
Refunding Bonds pursuant to the CFD Act.
"Standard & Poor's" and "S &P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, its successors and assigns.
"State" means the State of California.
"Supplemental Indenture" means any indenture, agreement or other instrument hereafter duly
executed by the Authority in accordance with the provisions of Article VII of this Indenture.
"Surplus Fund" means the fund by that name established pursuant to Section 3.8 hereof.
"Tax Certificate" means the certificate by that name to be executed by the Authority on the
Closing Date to establish certain facts and expectations and which contains certain covenants
relevant to compliance with the Code.
"Trust Office" means the office of the Trustee at which at any particular time its corporate
trust business with respect to this Indenture shall be administered, which office at the date hereof is
located in Los Angeles, California, or such other place as designated by the Trustee except that with
respect to presentation of Bonds for payment or for registration of transfer and exchange, such term
shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust
agency business shall be conducted.
"Trustee" means MUFG Union Bank, N.A., a national banking association duly organized
and existing under the laws of the United States of America, with a corporate trust office in Los
Angeles, California, and its successors and assigns, and any other corporation or association which
may at any time be substituted in its place as provided in Article VI hereof.
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"Underwriter" means, collectively, Stifel, Nicolaus & Company, Incorporated and Brandis
Tallman LLC, the initial purchasers of the Bonds.
"Yield" has the meaning given to such term in the Code.
Section 1.2 Rules of Construction. All references in this Indenture to "Articles,"
"Sections," and other subdivisions are to the corresponding Articles, Sections or subdivisions of this
Indenture; and the words "herein," "hereof," "hereunder," and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or subdivision hereof.
Section 1.3 Authorization and Purpose of Bonds. The Authority has reviewed all
proceedings heretofore taken relative to the authorization of the Bonds and has found, as a result of
such review, and hereby finds and determines, that all things, conditions and acts required by law to
exist, happen and /or be performed precedent to and in the issuance of the Bonds do exist, have
happened and have been performed in due time, form and manner as required by law, and the
Authority is now authorized under the Bond Law and each and every other requirement of law, to
issue the Bonds in the manner and form provided in this Indenture. Accordingly, the Authority
hereby authorizes the issuance of the Bonds pursuant to the Bond Law and this Indenture for the
primary purpose of providing funds to acquire the Local Obligations.
Section 1.4 Equal Security. In consideration of the acceptance of the Bonds by the
Owners thereof, this Indenture shall be deemed to be and shall constitute a contract between the
Authority and the Owners from time to time of the Bonds; and the covenants and agreements herein
set forth to be performed on behalf of the Authority shall be for the equal and proportionate benefit,
security and protection of all Owners of the Bonds and for the equal and proportionate benefit,
security and protection of all Owners of the Bonds as their respective interests appear without
preference, priority or distinction as to security or otherwise of any of the Bonds over other Bonds or
any of the Bonds over any other Bonds by reason of the number or date thereof or the time of sale,
execution or delivery thereof, or otherwise for any cause whatsoever, except as expressly provided
therein or herein.
ARTICLE II
ISSUANCE OF BONDS
Section 2.1 Terms of Bonds. The Bonds authorized to be issued by the Authority under
and subject to the Bond Law and the terms of this Indenture shall be dated as of their Closing Date
and be designated the "Lake Elsinore Public Financing Authority Local Agency Revenue Bonds,
Series 2015," which shall be issued in the original aggregate principal amount of
Dollars
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The Bonds shall be issued in fully registered form without coupons in denominations of
$5,000 or any integral multiple thereof, so long as no Bond shall have more than one maturity date.
The Bonds shall mature on September 1 in each of the years and in the amounts, and shall bear
interest (calculated on the basis of a 360 -day year of twelve 30 -day months) at the rates, as follows:
Maturity Date
(September I) Principal Amount Interest Rate Per Annum
$
Interest on the Bonds shall be payable on each Interest Payment Date to the person whose
name appears on the Bond Register as the Owner thereof as of the Record Date immediately
preceding each such Interest Payment Date, such interest to be paid by check of the Trustee mailed
on such Interest Payment Date by first class mail, postage prepaid, to the Owner at the address of
such Owner as it appears on the Bond Register or by wire transfer to an account in the United States
of America made on such Interest Payment Date upon written instructions of any Owner of
$1,000,000 or more in aggregate principal amount of Bonds of a Series provided to the Trustee in
writing at least five (5) Business Days before the Record Date for such Interest Payment Date.
Principal of and premium (if any) on any Bond shall be paid upon presentation and surrender thereof,
at maturity or the prior redemption thereof, at the Trust Office of the Trustee. The principal of and
interest and premium (if any) on the Bonds shall be payable in lawful money of the United States of
America.
Each Bond shall bear interest from the Interest Payment Date next preceding the date of
authentication thereof, unless (a) it is authenticated after a Record Date and on or before the
following Interest Payment Date, in which event it shall bear interest from such Interest Payment
Date; or (b) it is authenticated on or before the first Record Date, in which event it shall bear interest
from the Dated Date; provided, however, that if, as of the date of authentication of any Bond, interest
14
thereon is in default, such Bond shall bear interest from the Interest Payment Date to which interest
has previously been paid or made available for payment thereon, or from the Dated Date if no
interest has been paid or made available for payment.
Section 2.2 Redemption of Bonds.
(a) Optional Redemption. The Bonds maturing on or before September 1, 20_
are not subject to optional call and redemption prior to maturity. The Bonds maturing on or after
September 1, 20_ may be redeemed at the option of the Authority, from any source of available
funds, prior to maturity on any date on or after September 1, 20 as a whole, or in part from
maturities of the Local Obligations simultaneously redeemed, if any redemption of Local
Obligations is being made in conjunction with such optional redemption, and otherwise from such
maturities as are selected by the Authority, and by lot within a maturity, at a redemption price equal
to the par amount of the Bonds to be redeemed, together with accrued interest thereon to the date of
redemption, without premium.
Prior to consenting to the optional redemption of any Local Obligation which it has
purchased and is held under this Indenture, the Authority shall deliver to the Trustee a certificate of
an Independent Accountant verifying that, following such optional redemption of the Local
Obligations and redemption of Bonds, the principal and interest generated from the remaining Local
Obligations is adequate to make the timely payment of principal and interest due on the Bonds
remaining Outstanding following such optional redemption. The Authority shall be required to give
the Trustee written notice of its intention to redeem Bonds under this Section (a) at least forty-five
(45) days prior to the date fixed for redemption (or such later date as shall be acceptable to the
Trustee, in the sole determination of the Trustee, such notice intended for the convenience of the
Trustee).
(b) Special Redemption. The Bonds are subject to special redemption on any
Interest Payment Date from proceeds of early redemption of Local Obligations from prepayments of
Special Taxes within a Community Facilities District, in whole or in part, from maturities
corresponding proportionately to the maturities of the Local Obligations simultaneously redeemed,
at the principal amount thereof, plus a premium expressed below as a percentage of the principal
amount so redeemed, plus accrued interest to the date of redemption thereof:
Redemption Dates Premium
(c) Mandatory Sinking; Fund Redemption. The Bonds maturing on September 1,
20_ are subject to mandatory sinking fund redemption prior to maturity, in part, on September 1,
20 , and on each September 1 thereafter by lot, from sinking fund payments at a redemption price
equal to the principal amount of Bonds to be redeemed, together with accrued interest to the date of
redemption, without premium, as follows:
15
Redemption Date Redemption
(September 1) Amount
(maturity)
(d) Notice of Redemption. The Trustee on behalf, and at the expense, of the
Authority shall send notice of any redemption to the respective Owners of any Bonds designated for
redemption at their respective addresses appearing on the Bond Register, and to the Securities
Depositories and to the Information Services, at least thirty (30) but not more than sixty (60) days
prior to the date fixed for redemption. Neither failure to receive any such notice so sent nor any
defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the
cessation of the accrual of interest thereon. Such notice shall state the date of the notice, the
redemption date, the redemption place and the redemption price and shall designate the CUSIP
numbers, Bond numbers and the maturity or maturities (in the event of redemption of all of the
Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and shall require that
such Bonds be then surrendered at the Trust Office of the Trustee for redemption at the redemption
price, giving notice also that further interest on such Bonds will not accrue after the redemption date.
In addition to the foregoing notice, further notice shall be sent by the Trustee in said
form by to any Bondowner whose Bond has been called for redemption but who has failed to submit
his Bond for payment by the date which is sixty days after the redemption date, but no defect in said
further notice nor any failure to give or receive all or any portion of such further notice shall in any
manner defeat the effectiveness of a call for redemption.
In the case of an optional or special redemption of Bonds, such notice may state that
such redemption is subject to receipt by the Trustee, on or before the date fixed for redemption, of
moneys sufficient to pay the redemption price of the Bonds to be redeemed.
Unless funds for the optional or special redemption of any Bonds are irrevocably
deposited with the Trustee prior to rendering notice of redemption to the Bondowners, such notice
shall state that such redemption is subject to the deposit of funds by the Authority. Any notice of
optional redemption shall be cancelled and annulled if for any reason funds will not be or are not
available on the date fixed for redemption for the payment in full of the Bonds then called for
redemption, and such cancellation shall not constitute an Event of Default under this Indenture. The
Authority and the Trustee shall have no liability to the Owners or any other party related to or arising
from such rescission of redemption. The Trustee shall send notice of such rescission of redemption
in the same manner as the original notice of redemption was sent.
Upon the payment by the Trustee from the applicable account in the Revenue Fund of
the redemption price of the Bond being redeemed, each check or other transfer of funds issued for
such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and
maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
(e) Selection of Bonds of a Maturity for Redemption. Unless otherwise provided
hereunder, whenever provision is made in this Indenture or in the applicable Supplemental Indenture
for the redemption of less than all of the Bonds of a maturity, the Trustee shall select the Bonds to be
redeemed from all Bonds of such maturity not previously called for redemption, by lot in any
manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of
16
such selection, all Bonds shall be deemed to be comprised of separate $5,000 authorized
denominations, and such separate authorized denominations shall be treated as separate Bonds
which may be separately redeemed.
(f) Partial Redemption of Bonds. In the event only a portion of any Bond is
called for redemption, then upon surrender of such Bond the Authority shall execute and the Trustee
shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or
Bonds of the same maturity date, of authorized denominations in aggregate principal amount equal
to the unredeemed portion of the Bond to be redeemed.
(g) Effect of Redemption. From and after the date fixed for redemption, if funds
available for the payment of the principal of and interest (and premium, if any) on the Bonds so
called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled
to any benefit under this Indenture other than the right to receive payment of the redemption price,
and no interest shall accrue thereon from and after the redemption date specified in such notice. All
Bonds redeemed pursuant to this Section 2.2 shall be cancelled and destroyed.
Section 2.3 Form of Bonds. The Bonds, the form of Trustee's certificate of
authentication, and the form of assignment to appear thereon, shall be substantially in the form set
forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or
appropriate variations, omissions and insertions, as permitted or required by this Indenture.
Section 2.4 Execution of Bonds. All the Bonds shall, from time to time, be executed on
behalf of the Authority by, or bear the manual or facsimile signature of, one of the members of the
Board of Directors of the Authority and be attested by the manual or facsimile signature of the
Secretary or by any deputy thereof. If any of the directors or officers who shall have signed or sealed
any of the Bonds or whose facsimile signature shall be upon the Bonds shall cease to be such officer
of the Authority before the Bond so signed and sealed shall have been actually authenticated by the
Trustee or delivered, such Bonds nevertheless may be authenticated, issued and delivered with the
same force and effect as though the person or persons who signed or sealed such Bonds or whose
facsimile signature shall be upon the Bonds had not ceased to be such officer of the Authority; and
any such Bond may be signed and sealed on behalf of the Authority by those persons who, at the
actual date of the execution of such Bonds, shall be the proper officers of the Authority, although at
the date of such Bond any such person shall not have been such officer of the Authority.
Only such of the Bonds as shall bear thereon a certificate of authentication in substantially
the form set forth in Exhibit A, manually executed by the Trustee, shall be valid or obligatory for any
purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be
conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered
hereunder and are entitled to the benefits of this Indenture.
Section 2.5 Transfer of Bonds. Subject to Section 2.10, any Bond may in accordance
with its terms, be transferred, upon the Bond Register, by the person in whose name it is registered,
in person or by his duly authorized attorney, upon surrender of such Bond for cancellation,
accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly
executed. Whenever any Bond shall be surrendered for transfer, the Authority shall execute and the
Trustee shall thereupon authenticate and deliver to the transferee a new Bond or Bonds of like tenor,
maturity and aggregate principal amount. No Bonds selected for redemption shall be subject to
17
transfer pursuant to this Section nor shall any Bond be subject to transfer during the fifteen days prior
to the selection of Bonds for redemption.
The cost of printing any Bonds and any services rendered or any expenses incurred by the
Trustee in connection with any transfer or exchange shall be paid by the Authority. However, the
Owners of the Bonds shall be required to pay any tax or other governmental charge required to be
paid for any exchange or registration of transfer and the Owners of the Bonds shall be required to pay
the reasonable fees and expenses of the Trustee and Authority in connection with the replacement of
any mutilated, lost or stolen Bonds.
Section 2.6 Exchange of Bonds. Subject to Section 2. 10, Bonds may be exchanged at
the Trust Office of the Trustee for Bonds of the same tenor and maturity and of other authorized
denominations. No Bonds selected for redemption shall be subject to exchange pursuant to this
Section, nor shall any Bond be subject to exchange during the fifteen days prior to the selection of
Bonds for redemption. The cost of printing Bonds and any services rendered or expenses incurred by
the Trustee in connection with any transfer or exchange shall be paid by the Authority.
Section 2.7 Temporary Bonds. The Bonds may be issued initially in temporary form
exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed,
lithographed or typewritten, shall be of such denominations as may be determined by the Authority
and may contain such reference to any of the provisions of this Indenture as may be appropriate.
Every temporary Bond shall be executed by the Authority and be registered and authenticated by the
Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If
the Authority issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and
thereupon the temporary Bonds may be surrendered for cancellation, in exchange therefor at the
Trust Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such
temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized
denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under
this Indenture as definitive Bonds authenticated and delivered hereunder.
Section 2.8 Bond Register. The Trustee will keep or cause to be kept at its Trust Office
sufficient records for the registration and transfer of the Bonds, which shall be the Bond Register and
shall at all times during regular business hours be open to inspection by the Authority upon
reasonable notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable
regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said
records, Bonds as hereinbefore provided.
Section 2.9 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Trustee
shall thereupon authenticate and deliver, a new Bond of like tenor and authorized denomination in
exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the
Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled by it and
destroyed in accordance with the retention policy of the Trustee then in effect. If any Bond issued
hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be
submitted to the Trustee and, if such evidence be satisfactory to it and indemnity satisfactory to it
shall be given, at the expense of the Bond Owner, the Authority shall execute, and the Trustee shall
thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the
Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been called
for redemption, instead of issuing a substitute Bond the Trustee may pay the same without surrender
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thereof upon receipt of indemnity satisfactory to the Trustee). The Trustee may require payment of a
reasonable fee for each new Bond issued under this Section and of the expenses which may be
incurred by the Authority and the Trustee. Any Bond issued under the provisions of this Section in
lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original contractual
obligation on the part of the Authority whether or not the Bond alleged to be lost, destroyed or stolen
be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits
of this Indenture with all other Bonds secured by this Indenture.
Section 2.10 Book -Entry System.
(a) All Bonds shall be initially issued in the form of a separate single certificated
fully registered Bond for each maturity date of the Bonds. Upon initial issuance, the ownership of
each Bond shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC.
Except as provided in Section 2.10(d) hereof, all Outstanding Bonds shall be registered in the Bond
Register in the name of Cede & Co., as nominee of DTC.
(b) With respect to Bonds registered in the Bond Register in the name of Cede &
Co., as nominee of DTC, the Authority and the Trustee shall have no responsibility or obligation
with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with
respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other
person, other than an Owner, as shown in the Bond Register, of any notice with respect to the Bonds,
including any notice of redemption, or (iii) the payment to any DTC Participant or any other person,
other than an Owner, as shown in the Bond Register, of any amount with respect to principal of,
premium, if any, or interest on the Bonds. The Authority and the Trustee may treat and consider the
person in whose name each Bond is registered in the Bond Register as the holder and absolute owner
of such Bond for the purpose of payment of principal, premium, if any, and interest on such Bond,
for the purpose of giving notices of redemption and other matters with respect to such Bond, for the
purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever.
The Trustee shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the
order of the respective Owners, as shown in the Bond Register, as provided in Section 2.8 hereof, or
their respective attorneys duly authorized in writing, and all such payments shall be valid and
effective to fully satisfy and discharge the Authority's obligations with respect to payment of
principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No
person other than an Owner, as shown in the Bond Register, shall receive a certificated Bond
evidencing the obligation of the Authority to make payments of principal, premium, if any, and
interest pursuant to this Indenture. Upon delivery by DTC to the Trustee of written notice to the
effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to
the provisions herein with respect to record dates, the word "Cede & Co." in this Indenture shall
refer to such new nominee of DTC.
(c) The delivery of the Representation Letter and the Trustee shall not in any way
limit the provisions of Section 2.10(b) hereof or in any other way impose upon the Authority or the
Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than
the Owners, as shown on the Bond Register. The Trustee shall take all action necessary for all
representations in the Representation Letter with respect to the Trustee to be complied with at all
times.
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(d) (i) DTC may determine to discontinue providing its services with respect
to the Bonds at any time by giving written notice to the Authority and the Trustee and discharging its
responsibilities with respect thereto under applicable law.
(ii) The Authority, in its sole discretion and without the consent of any
other person, may terminate the services of DTC with respect to the Bonds if the Authority
determines that:
(A) DTC is unable to discharge its responsibilities with respect to
the Bonds, or
(B) a continuation of the requirement that all Outstanding Bonds
be registered in the Bond Register in the name of Cede & Co., or any other nominee of DTC, is not
in the best interest of the beneficial owners of such Bonds.
(iii) Upon the termination of the services of DTC with respect to the
Bonds pursuant to subsection 2. 1 0(d)(ii)(B) hereof, or upon the discontinuance or termination of the
services of DTC with respect to the Bonds pursuant to subsection 2.10(d)(i) or
subsection 2. 1 0(d)(ii)(A) hereof after which no substitute securities depository willing to undertake
the functions of DTC hereunder can be found which, in the opinion of the Authority, is willing and
able to undertake such functions upon reasonable and customary terms, the Authority is obligated to
deliver Bond certificates, as described in this Indenture and the Bonds shall no longer be restricted to
being registered in the Bond Register in the name of Cede & Co. as nominee of DTC, but may be
registered in whatever name or names DTC shall designate to the Trustee in writing, in accordance
with the provisions of this Indenture.
(e) Notwithstanding any other provisions of this Indenture to the contrary, as
long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with
respect to principal or, premium, if any, and interest on such Bond and all notices with respect to
such Bond shall be made and given, respectively, in the manner provided in the Representation
Letter.
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS
Section 3.1 Issuance of Bonds. Upon the execution and delivery of this Indenture, the
Authority shall execute and deliver the Bonds in the original aggregate principal amount set forth in
Section 2.1 hereof to the Trustee for authentication and delivery to the Original Purchaser thereof
upon the Request of the Authority.
Section 3.2 Application of Proceeds of Sale of Bonds and Funds Received from the
Community Facilities Districts.
(a) Upon the receipt by the Trustee of payment for the Bonds in the amount of
$ , $ of the proceeds of the Bonds shall be deposited in the Purchase Fund for
the acquisition of the Local Obligations in accordance with Section 3.5 hereof.
►T1]
(b) $ of proceeds of the Local Obligations received by the Trustee
from the Fiscal Agents for deposit in the Costs of Issuance Fund shall be deposited in the Costs of
Issuance Fund for the payment of Costs of Issuance in accordance with Section 3.4 hereof.
(c) $ of proceeds of the Local Obligations received by the Trustee
from the Fiscal Agents for deposit in the Reserve Fund shall be deposited in the Reserve Fund as set
forth in Section 4.3(a) hereof to satisfy the Reserve Requirement.
Section 3.3 Revenue Fund. The Trustee shall establish and maintain a separate fund to
be known as the "Revenue Fund" and the following separate accounts therein: Interest Account and
Principal Account. Except as otherwise provided herein, the Trustee shall deposit all Revenues
received after the Closing Date to the Revenue Fund and shall apply amounts in the Revenue Fund as
described in Section 4.2 below.
Section 3.4 Costs of Issuance Fund. The Trustee shall establish and maintain a fund
known as the "Costs of Issuance Fund" into which shall be deposited the amounts set forth in
Section 3.2(b) above. The moneys in the Costs of Issuance Fund shall be used to pay Costs of
Issuance from time to time upon receipt by the Trustee of a Request of the Authority. Each such
Request of the Authority shall be sufficient evidence to the Trustee of the facts stated therein and the
Trustee shall have no duty to confirm the accuracy of such facts. On the date which is one hundred
twenty (120) days following the Closing Date, or upon the earlier receipt by the Trustee of a Request
of the Authority stating that all Costs of Issuance have been paid, the Trustee shall transfer all
remaining amounts in the Costs of Issuance Fund to the Revenue Fund. Upon such transfer, the
Costs of Issuance Fund shall be closed and the Trustee shall no longer be obligated to make
payments for Costs of Issuance. The Authority may at any time file a Request of the Authority
requesting that the Trustee retain a specified amount in the Costs of Issuance Fund and transfer to the
Revenue Fund all remaining amounts, and upon receipt of such request by the Trustee, the Trustee
shall comply with such request.
Section 3.5 Purchase Fund. The Trustee shall establish and maintain a separate fund to
be known as the "Purchase Fund" into which shall be deposited a portion of the proceeds of sale of
the Bonds pursuant to Section 3.2(a) hereof. The Trustee shall use the proceeds of the Bonds to
purchase Local Obligations on the Closing Date; provided, however, that such Local Obligations
may be purchased only if the Trustee has received a certificate of the Original Purchaser of the Bonds
or an Independent Financial Consultant stating that the Revenues to be available to the Trustee,
assuming timely payment of the Local Obligations, will be sufficient to permit the timely payment of
the principal of and interest on all Outstanding Bonds.
Section 3.6 Reserve Fund. The Trustee shall establish and maintain a separate fund to
be known as the "Reserve Fund" and within such fund, accounts to be known as the "CFD No. 2004-
3 Improvement Area No. 1 Reserve Account," the "CFD No. 2004 -3 Improvement Area No. 2
Reserve Account," the "CFD No. 2005 -6 Reserve Account," the "CFD No. 2005 -1 Reserve
Account," the "CFD No. 2005 -2 Improvement Area A Reserve Account," the "CFD No. 2006 -2
Reserve Account" and the "CFD No. 2003 -2 Improvement Area B Reserve Account," which
accounts shall be administered as provided in Section 4.3(a) hereof..
Section 3.7 Rebate Fund. The Trustee shall establish and maintain a separate fund,
when needed, to be known as the "Rebate Fund" and a separate Rebate Account and Alternative
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Penalty Account therein for the Bonds. The Rebate Fund shall be administered as described in
Section 5.8 hereof.
Section 3.8 Surplus Fund. The Trustee shall establish and maintain a separate fund,
when needed, to be known as the "Surplus Fund" which shall be administered as described in
Section 4.4 hereof.
Section 3.9 Administrative Expense Fund. The Trustee shall establish and maintain a
separate fund to be held by the Trustee and known as the "Administrative Expense Fund" into which
shall be deposited the amounts specified in Section 4.2(d). The moneys in the Administrative
Expense Fund shall be used to pay Authority Administrative Expenses or shall be transferred to the
Surplus Fund, in either case, upon receipt of a Requisition of the Authority.
Section 3.10 Validity of Bonds. The validity of the authorization and issuance of the
Bonds shall not be affected in any way by any proceedings taken by the Authority or the City with
respect to the application of the proceeds of the Bonds, and the recital contained in the Bonds that the
same are issued pursuant to the Bond Law shall be conclusive evidence of their validity and of the
regularity of their issuance.
ARTICLE IV
REVENUES; FLOW OF FUNDS
Section 4.1 Pledge of Revenues; Assignment of Rights. Subject to the provisions of
Sections 6.3 and 9.3 hereof, the Bonds shall be secured by a first lien on and pledge (which shall be
effected in the manner and to the extent hereinafter provided) of all of the Revenues. The Bonds
shall be equally secured by a pledge, charge and lien upon the Revenues without priority for any
Bond over any other Bond; and the payment of the interest on and principal of the Bonds and any
premiums upon the redemption of any Bonds shall be and are secured by an exclusive pledge, charge
and lien upon the Revenues. So long as any of the Bonds are Outstanding, the Revenues shall not be
used for any purpose except as is expressly permitted by this Indenture.
The Authority hereby transfers in trust, grants a security interest in and assigns to the Trustee,
for the benefit of the Owners from time to time of the Bonds, respectively, all of the Revenues and all
of the right, title and interest of the Authority in the Local Obligations, subject to the terms of this
Indenture. The Trustee shall be entitled to and shall collect and receive all of the Revenues and any
Revenues collected or received by the Authority shall be deemed to be held, and to have been
collected or received, by the Authority as the agent of the Trustee and shall forthwith be paid by the
Authority to the Trustee. The Trustee also shall be entitled to and, subject to the provisions of this
Indenture, the Trustee shall take all steps, actions and proceedings reasonably necessary in its
judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority
and all of the obligations of the City and the Community Facilities Districts under the Local
Obligations.
Upon the deposit with the Trustee of moneys sufficient to pay all principal of, premium, if
any, and interest on the Bonds, and upon satisfaction of all claims against the Authority hereunder
with respect to the Bonds, including all fees, charges and expenses of the Trustee and the Authority
which are properly payable hereunder, or upon the making of adequate provisions for the payment of
such amounts as permitted hereby, all moneys remaining in all funds and accounts pertaining to such
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Bonds, (except any amounts on deposit in the Rebate Fund and except moneys necessary to pay
principal of, premium, if any, and interest on the Bonds, which moneys shall be held by the Trustee
pursuant to Section 9.3), shall no longer be considered Revenues and are not pledged to repay the
Bonds. Such amounts shall be transferred to the fiscal agent for each Series of Local Obligations
then outstanding proportionately based on their respective Proportionate Share. In the event that the
Local Obligations have been paid or defeased, then any such amounts shall be paid by the Trustee to
the Authority to be used by the Authority for any lawful purpose.
Section 4.2 Receipt, Deposit and Application of Revenues; Revenue Fund. Subject to
Section 4.2(a)(iv) below, all Revenues described in clause (a) of the definition thereof in Section 1.1
shall be promptly deposited by the Trustee upon receipt thereof in the Revenue Fund.
(a) On each Interest Payment Date, the Trustee shall transfer from the Revenue
Fund, and deposit into the following respective accounts for the Bonds, the following amounts in the
following order of priority, the requirements of each such account (including the making up of any
deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier
required deposit) at the time of deposit to be satisfied before any transfer is made to any account
subsequent in priority:
(i) Interest Account. On each Interest Payment Date, the Trustee shall
deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the
Interest Account to equal the amount of interest becoming due and payable on such Interest Payment
Date on all Outstanding Bonds on such date. All moneys in the Interest Account shall be used and
withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it shall become
due and payable (including accrued interest on any Bonds redeemed prior to maturity). In the event
that the amounts on deposit in the Interest Account on any Interest Payment Date, after any transfers
from the Reserve Fund pursuant to Section 4.3 hereof, are insufficient for any reason to pay the
aggregate amount of interest then coming due and payable on the Outstanding Bonds, the Trustee
shall apply such amounts to the payment of interest on each of the Outstanding Bonds on a pro rata
basis.
(ii) Principal Account. On each March 1, the Trustee shall deposit in the
Principal Account an amount equal to one -half of the principal amount of the Bonds that will become
due and payable on the next succeeding September 1. On each September 1 on which principal of
the Bonds shall be payable, the Trustee shall deposit in the Principal Account an amount required to
cause the aggregate amount on deposit in the Principal Account to equal the principal amount of, and
premium (if any) on, the Bonds coming due and payable on such date, or required to be redeemed on
such date pursuant to Section 2.2 hereof; provided, however, that no amount shall be deposited to
effect a redemption pursuant to Section 2.2(a) hereof unless the Trustee has first received a certificate
of an Independent Accountant certifying that such deposit to effect an optional redemption of the
Bonds will not impair the ability of the Authority to make timely payment of the principal of and
interest on the Bonds, assuming for such purposes that the City and the Community Facilities
Districts continue to make timely payments on all Local Obligations not then in default. All moneys
in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of
(i) paying the principal of the Bonds at the maturity thereof or (ii) paying the principal of and
premium (if any) on any Bonds upon the redemption thereof pursuant to Section 2.2 hereof.
(iii) Reserve Fund. On each Interest Payment Date on which the balance
in the Reserve Fund is less than the Reserve Requirement, after making deposits required under (i)
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and (ii) above, the Trustee shall transfer from the Revenue Fund an amount sufficient to increase the
balance in the Reserve Fund to the Reserve Requirement by depositing the amount necessary to make
the various accounts therein combined total the Reserve Requirement, provided the value of the
moneys deposited therein, as invested, shall be valued at market value on such transfer date for
purposes of making such determination.
(iv) Local Obligations Delinquency Revenues. The Trustee shall disburse
or transfer all Revenues representing Local Obligations Delinquency Revenues in the following order
of priority:
First, to make payments required pursuant to Section 8.3 upon the occurrence of an
Event of Default as described in Section 8.1(a),
Second, to the Reserve Fund to replenish the amount on deposit therein to the
Reserve Requirement as set forth in Section 4.3, and
Third, to make the deposits specified in Section 4.2(a)(i) through (iii) above.
(b) If on any Interest Payment Date or date for redemption the amount on deposit
in the Revenue Fund is inadequate to make the transfers described in subsection (a) above as a result
of a payment default on an issue of Local Obligations, the Trustee shall immediately notify the
issuer of such Local Obligations of the amount needed to make the required deposits under
subsection (a) above. In the event that following such notice the Trustee receives additional
payments from the issuer of such Local Obligation to cure such shortfall, the Trustee shall deposit
such amounts to the Revenue Fund for application in accordance with subsection (a) above.
(c) On each Interest Payment Date after making the transfers required under
subsections (a) and (b) above, upon receipt of a Request of the Authority to do so, the Trustee shall
transfer from the Revenue Fund to the Rebate Fund for deposit in the accounts therein the amounts
specified in such Request.
(d) On September 1 of each year, after making the deposits required under
subsections (a), (b), and (c) above, the Trustee shall transfer all amounts remaining on deposit in the
Revenue Fund to the Administrative Expense Fund unless the Trustee has received a Request of the
Authority directing it to transfer all or a portion of the said amounts to the Surplus Fund, in which
case the Trustee shall make the transfer to the Surplus Fund so specified.
Section 4.3 Reserve Fund.
(a) There shall be maintained in the Reserve Fund an amount equal to the
Reserve Requirement of which $ shall be initially deposited in the CFD No. 2004 -3
Improvement Area No. 1 Reserve Account, $ shall be initially deposited in the CFD No.
2004 -3 Improvement Area No. 2 Reserve Account, $ shall be initially deposited in the
CFD No. 2005 -6 Reserve Account, $ shall be initially deposited in the CFD No. 2005 -1
Reserve Account, $ shall be initially deposited in the CFD No. 2005 -2 Improvement
Area A Reserve Account, $ shall be initially deposited in the CFD No. 2006 -2 Reserve
Account and $ shall be initially deposited in the CFD No. 2003 -2 Improvement Area B
Reserve Account; such amounts being the initial Proportionate Share of the Reserve Requirement
for each account. In the event that the amount of the Reserve Requirement is changed, the Trustee
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shall, upon receipt of a Request of the Authority, adjust the Proportionate Share of each account to
reflect the new Reserve Requirement.
(b) Moneys in the Reserve Fund shall be used solely for the purposes set forth in
this Section 4.3. Subject to the limitations set forth in the following paragraph, amounts in the
Reserve Fund may be applied to pay the principal of and interest on the Bonds when the moneys in
the Interest Account and the Principal Account of the Revenue Fund are insufficient therefor. In
addition, amounts in the Reserve Fund may be applied (i) in connection with an optional redemption
of Bonds pursuant to Section 2.2 or a defeasance pursuant to Section 9.3, (ii) when the balance
therein equals the principal and interest due on the Bonds to and including maturity, or (iii) when the
amount in an account of the Reserve Fund is transferred to the Interest Account and the Principal
Account as a credit against the payments due on the Local Obligations secured by such account on
the transfer dates specified in subsection (d) below.
(c) Except as otherwise provided herein, all money in the Reserve Fund and the
Reserve Accounts therein shall be used and withdrawn by the Trustee solely for the purpose of
making transfers as described in this Section 4.3. If the amounts in the Interest Account or the
Principal Account are insufficient to pay the principal of or interest on the Bonds when due or
mandatory sinking fund payments on the Bonds when due, the Trustee shall withdraw from the
applicable Reserve Account or Reserve Accounts an amount equal to the deficiency resulting from
the delinquency in the payment of scheduled debt service on the applicable Series of Local
Obligations and transfer such amount to the Interest Account, the Principal Account or both, as
applicable. If there are insufficient funds on deposit in a Reserve Account to cover a deficiency
resulting from the delinquency in the payment of scheduled debt service on the applicable Series of
Local Obligations, the Trustee shall withdraw from each of the other Reserve Accounts an amount
based upon the Proportionate Share of the Reserve Requirement applicable to each such Reserve
Account of such remaining deficiency and transfer such amounts to the Interest Account, the
Principal Account or both, as applicable. The Trustee shall notify the Authority immediately
following any withdrawal made pursuant to this Section 4.3.
Upon the transfer by the Trustee to the Reserve Fund of Local Obligations Delinquency
Revenues, such Revenues shall be allocated to the Reserve Accounts as follows:
First, to the Reserve Account for any Series of Local Obligations, other than the Reserve
Account to which such Local Obligations Delinquency Revenues relate, that amount necessary to
increase the amount on deposit in such account to the applicable Proportionate Share of the Reserve
Requirement if the deficiency in the amount on deposit in such account resulted from draws on such
account due to delinquencies in the payment of scheduled debt service on that Series of Local
Obligations from which the Local Obligations Delinquency Revenues were received. In the event
that such Local Obligations Delinquency Revenues are insufficient to increase the amount on deposit
in each of applicable Reserve Accounts to the applicable Proportionate Share of the Reserve
Requirement, a Proportionate Share of such Local Obligations Delinquency Revenues shall be
deposited in each such Reserve Account.
Second, after increasing the amount on deposit in each applicable Reserve Account to the
applicable Proportionate Share of the Reserve Requirement pursuant to the first step, to the Reserve
Account for the Series of Local Obligations from which the Local Obligations Delinquency
Revenues were received that amount necessary to replenish the amount on deposit in such Reserve
Account to the applicable Proportionate Share of the Reserve Requirement.
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Third, after making all deposits pursuant to the first and second steps, the remaining Local
Obligations Delinquency Revenues, if any, shall be transferred to the Revenue Fund
(d) When amounts in an account of the Reserve Fund are sufficient to repay the
remaining principal and interest due on the related Local Obligations that will be applied to the
Bonds, such amounts will be transferred to the Interest Account and the Principal Account as a
credit against the payments due on such Local Obligations, with the amount transferred from an
account being deposited first to the Interest Account as a credit on the interest due on such Local
Obligations on such date and the balance being deposited to the Principal Account as a credit on the
principal due on such Local Obligations on such date.
Section 4.4 Surplus Fund. Any amounts transferred to the Surplus Fund pursuant to
subsection 4.2 hereof shall no longer be considered Revenues and are not pledged to repay the
Bonds. So long as Local Obligations are outstanding, on September 1 of each year after setting aside
any amount specified in a Request of the Authority as necessary to pay Administrative Expenses, the
remaining balance, if any, in the Surplus Fund shall (i) be transferred by the Trustee to the City
Treasurer for credit to the special tax fund of the Community Facilities Districts, and each
Community Facilities District shall be credited a percentage of the total amount available on each
September 1 that is equal to the percentage which its outstanding Local Obligation represents of all
outstanding Local Obligations held by the Trustee as of the date of disbursement or (ii) as set forth in
a Request of the City be applied to the redemption of Local Obligations pursuant to the terms of the
Local Obligations Indenture with each Community Facilities District to be credited a percentage of
the total amount available on each September 1 that is equal to the percentage which its outstanding
Local Obligations represents of all outstanding Local Obligations held by the Trustee as of the date
of disbursement. In the event that the Local Obligations have been redeemed or defeased in whole or
in part, then such credit shall be applied among the Community Facilities Districts based on a
Certificate of an Independent Financial Consultant prepared at the direction of the Authorized
Representative of the City. In the event all Community Facilities Districts are no longer obligated to
levy Special Taxes to repay Local Obligations, then any amounts in the Surplus Fund may be used by
the Authority for any lawful purpose, including, but not limited to, the payment of expenses of the
Authority, the City or the Community Facilities Districts relating to the Bonds, the Local
Obligations, the Community Facilities Districts, or any other purpose as specified in a Request of the
Authority delivered to the Trustee.
On September 1 of the year preceding the year of the final maturity of the Bonds, the
remaining balance in the Surplus Fund shall be credited by the Trustee on a proportionate basis, to
each special tax fund established with respect to Local Obligations of the Community Facilities
Districts. Such amounts shall be applied to reduce debt service payments on Local Obligations
Section 4.5 Investments. All moneys in any of the funds or accounts established with
the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted
Investments, as directed pursuant to the Request of the Authority filed with the Trustee at least two
(2) Business Days in advance of the making of such investments. The Trustee shall be entitled to
conclusively rely on any such Request of the Authority and shall be fully protected in relying
thereon. In the absence of any such Request of the Authority the Trustee shall hold such moneys
uninvested. Permitted Investments purchased as an investment of moneys in any fund or account
established pursuant to this Indenture shall be deemed to be part of such fund or account.
All interest or gain derived from the investment of amounts in any of the funds or accounts
established hereunder shall be deposited in the fund or account from which such investment was
made; provided, however, that all interest or gain derived from the investment of amounts in the
accounts of the Reserve Fund shall, to the extent the balance in any account thereof exceeds, on
August 15 of each year, its respective share of the Reserve Requirement as set forth in Section 4.3(a)
hereof, be withdrawn by the Trustee on such August 15, commencing August 15, 2015, and
deposited to the special tax fund of the corresponding Community Facilities District to be applied to
the payment of debt service on the applicable Local Obligations on the next Interest Payment Date.
For purposes of acquiring any investments hereunder, the Trustee may commingle moneys
held by it in any of the funds and accounts held by it hereunder. The Trustee and its affiliates may
act as advisor, sponsor, principal or agent in the acquisition or disposition of any investment and may
impose its customary charges therefor. The Trustee and its affiliates may make any and all
investments permitted herein through its own investment department. The Trustee shall incur no
liability for losses arising from any investments made pursuant to this Section 4.5.
The Authority acknowledges that to the extent regulations of the Comptroller of the Currency
or other applicable regulatory entity grant the Authority the right to receive brokerage confirmations
of security transactions effected by the Trustee as they occur, the Authority specifically waives
receipt of such confirmations to the extent permitted by law. The Authority further understands that
trade confirmations for securities transactions effected by the Trustee will be available upon request
and at no additional cost and other trade confirmations may be obtained from the applicable broker.
The Trustee will furnish the Authority periodic cash transaction statements which include detail for
all investment transactions made by the Trustee hereunder or brokers selected by the Authority.
Upon the Authority's election, such statements will be delivered via the Trustee's online service and
upon electing such service, paper statements will be provided only upon request.
Section 4.6 Valuation and Disposition of Investments. For the purpose of determining
the amount in any fund or account, the value of Permitted Investments credited to such fund or
account shall be valued at the original cost thereof (excluding any brokerage commissions and
excluding any accrued interest) provided that the investment of any funds held in the Reserve Fund,
shall be valued at fair market value and marked to market at least quarterly by the Authority.
ARTICLE V
COVENANTS OF THE AUTHORITY
Section 5.1 Punctual Payment. The Authority shall punctually pay or cause to be paid
the principal and interest and premium (if any) to become due in respect of all the Bonds, in strict
conformity with the terms of the Bonds and of this Indenture, according to the true intent and
meaning thereof, but only out of Revenues, and other assets pledged for such payment as provided in
this Indenture.
Section 5.2 Extension of Payment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and
in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall
be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder,
to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of
27
the Bonds then Outstanding and of all claims for interest thereon which shall have been so extended.
Nothing in this Section shall be deemed to limit the right of the Authority to issue Bonds for the
purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an
extension of maturity of the Bonds.
Section 5.3 Against Encumbrances. The Authority shall not create, or permit the
creation of, any pledge, lien, charge or other encumbrance upon the Revenues, and other assets
pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the pledge
and assignment created by this Indenture. Subject to this limitation, the Authority expressly reserves
the right to enter into one or more other indentures for any of its corporate purposes, including other
programs under the Bond Law, and reserves the right to issue other obligations for such purposes.
Section 5.4 Power to Issue Bonds and Make Pledge and Assignment. The Authority is
duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to pledge and
assign the Revenues, the Local Obligations and other assets purported to be pledged and assigned,
respectively, under this Indenture. The Bonds and the provisions of this Indenture are and will be the
legal, valid and binding limited, special obligations of the Authority in accordance with their terms,
and the Authority and the Trustee shall at all times, subject to the provisions of Article VI hereof and
to the extent permitted by law, defend, preserve and protect said pledge and assignment of the
Revenues, the Local Obligations and other assets and all the rights of the Bond Owners under this
Indenture against all claims and demands of all persons whomsoever.
Section 5.5 Accounting Records and Financial Statements. The Trustee shall at all
times keep, or cause to be kept, proper books of record and account, prepared in accordance with
corporate trust industry standards in which complete and accurate entries shall be made of
transactions made by it relating to the proceeds of Bonds, the Revenues, the Local Obligations and
all funds and accounts established pursuant to this Indenture. Such books of record and account shall
be available for inspection by the Authority and the Community Facilities Districts upon reasonable
prior notice during regular business hours and under reasonable circumstances, in each case as agreed
to by the Trustee.
Not later than 45 days following each Interest Payment Date, the Trustee shall prepare and
file with the Authority a report in the Trustee's standard statement format setting forth: (i) amounts
withdrawn from and deposited into each fund and account maintained by the Trustee under this
Indenture; (ii) the balance on deposit in each fund and account as of the date for which such report is
prepared; and (iii) a brief description of all obligations held as investments in each fund and account.
Copies of such reports may be mailed to any Owner upon the Owner's written request to the Trustee
at the expense of such Owner at a cost not to exceed the Trustee's actual costs of duplication and
mailing.
Section 5.6 Conditions to Issuance of Additional Obligations. Except as set forth in
this Section 5.6, the Authority covenants that no additional bonds, notes or other indebtedness shall
be issued or incurred which are payable out of Revenues in whole or in part.
The Authority may issue Additional Bonds in such principal amount as shall be determined
by the Authority, pursuant to a Supplemental Indenture adopted or entered into by the Authority.
Such Additional Bonds may be issued subject to the following conditions precedent:
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(a) The Authority shall be in compliance with all covenants set forth in this
Indenture and all Supplemental Indentures;
(b) The proceeds of such Additional Bonds shall be applied to accomplish a
refunding of all or a portion of the Bonds or any Additional Bonds Outstanding.
(c) The Supplemental Indenture providing for the issuance of such Additional
Bonds shall provide that interest thereon shall be payable on September 1 and March 1, and
principal thereof shall be payable on September 1 in any year in which principal is payable.
(d) Prior to the delivery of any Additional Bonds, a written certificate must be
provided to the Authority and the Trustee by an Independent Financial Consultant which certifies
that the Annual Debt Service in each Bond Year on the Additional Bonds does not exceed the
Annual Debt Service in each Bond Year on the Bonds defeased or redeemed with the proceeds of
such Additional Bonds.
(e) The Supplemental Indenture providing for the issuance of such Additional
Bonds may provide for the establishment of separate funds and accounts.
(f) No Event of Default shall have occurred and be continuing with respect to the
Bonds or any of the Local Obligations.
(g) The Authority shall deliver to the Trustee a written Certificate of the
Authority certifying that the conditions precedent to the issuance of such Additional Bonds set forth
in subsections (a), (b), (c), (d) and (f) of this Section 5.6 above have been satisfied and that, upon the
issuance of such Additional Bonds an amount equal to the Reserve Requirement, as adjusted (if
necessary) to reflect the issuance of such Additional Bonds will be on deposit in the Reserve Fund.
Section 5.7 Tax Covenants. Notwithstanding any other provision of this Indenture,
absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds
will not be adversely affected for federal income tax purposes, the Authority covenants to comply
with all applicable requirements of the Code necessary to preserve such exclusion from gross income
and specifically covenants, without limiting the generality of the foregoing, as follows:
(a) Private Activity. The Authority will not take or omit to take any action or
make any use of the proceeds of the Bonds or of any other moneys or property which would cause
the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code.
(b) Arbitrage. The Authority will make no use of the proceeds of the Bonds or of
any other amounts or property, regardless of the source, or take or omit to take any action which
would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code.
(c) Federal Guarantee. The Authority will make no use of the proceeds of the
Bonds or take or omit to take any action that would cause the Bonds to be "federally guaranteed"
within the meaning of Section 149(b) of the Code.
(d) Information Reporting. The Authority will take or cause to be taken all
necessary action to comply with the informational reporting requirement of Section 149(e) of the
Code.
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(e) Miscellaneous. The Authority will take no action inconsistent with its
expectations stated in any Tax Certificate executed with respect to the Bonds and will comply with
the covenants and requirements stated therein and incorporated by reference herein.
This Section and the covenants set forth herein shall not be applicable to, and nothing
contained herein shall be deemed to prevent the Authority from issuing Bonds the interest on which
has been determined by the Board to be subject to federal income taxation.
Section 5.8 Rebate Fund.
(a) Establishment. The Trustee shall establish a Rebate Fund, when needed, and
shall maintain therein separate accounts (solely from amounts deposited by the Authority)
designated the "Rebate Account" and the "Alternative Penalty Account." Absent an opinion of
Bond Counsel that the exclusion from gross income for federal income tax purposes of interest on
the Bonds will not be adversely affected, the Authority shall cause to be deposited in each such
account of the Rebate Fund such amounts as are required to be deposited therein pursuant to this
Section and the Tax Certificate. All money at any time deposited in the Rebate Fund shall be held
by the Trustee in trust for payment to the United States Treasury. All amounts on deposit in the
Rebate Fund shall be governed by this Section 5.8 and the Tax Certificate unless and to the extent
that the Authority delivers to the Trustee an opinion of Bond Counsel that the exclusion from gross
income for federal income tax purposes of interest on the Bonds will not be adversely affected if
such requirements are not satisfied. Notwithstanding any other provision of this Indenture, the
Trustee shall be deemed conclusively to have complied with this Section 5.8 and the Tax Certificate
if it follows the directions set forth in any Request of the Authority or Certificate of the Authority
and shall be fully protected in so doing. The Trustee shall have no independent responsibility to, or
liability resulting from its failure to, enforce compliance by the Authority with the terms of this
Section 5.8 or the Tax Certificate.
(b) Rebate Account. The following requirements shall be satisfied with respect
to the Rebate Account:
(i) Annual Computation. Within 55 days of the end of each Bond Year,
the Authority shall calculate or cause to be calculated the amount of rebatable arbitrage, in
accordance with Section 148(f)(2) of the Code and Section 1.148 -3 of the Rebate Regulations (taking
into account any applicable exceptions with respect to the computation of the rebatable arbitrage,
described, if applicable, in the Tax Certificate (e.g., the temporary investments exceptions of
Section 148(f)(4)(B) and (C) of the Code), and taking into account whether the election pursuant to
Section 148(f)(4)(C)(vii) of the Code (the "1' /2% Penalty ") has been made), for this purpose treating
the last day of the applicable Bond Year as a computation date, within the meaning of
Section 1.148 -1(b) of the Rebate Regulations (the "Rebatable Arbitrage "). The Authority shall
obtain expert advice as to the amount of the Rebatable Arbitrage to comply with this Section 5.8.
(ii) Annual Transfer. Within 55 days of the end of each applicable Bond
Year, upon receipt of the Request of the Authority, an amount shall be deposited to the applicable
Rebate Account by the Trustee from any Revenues specified by the Authority in the aforesaid
Request, if and to the extent required so that the balance in the Rebate Account shall equal the
amount of Rebatable Arbitrage so calculated in accordance with (i) of this Subsection (b). In the
event that immediately following the transfer required by the previous sentence, the amount then on
deposit to the credit of a Rebate Account exceeds the amount required to be on deposit therein, upon
call
receipt of a Request of the Authority, the Trustee shall withdraw the excess from the applicable
Rebate Account and then credit the excess to the Revenue Fund.
(iii) Payment to the Treasury. The Trustee shall pay, as directed by
Request of the Authority, to the United States Treasury, out of amounts in the Rebate Account,
(A) Not later than 60 days after the end of (A) the fifth Bond
Year, and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the
Rebatable Arbitrage as set forth in a Certificate of the Authority delivered to the Trustee calculated
as of the end of such Bond Year; and
(B) Not later than 60 days after the payment of all the Bonds, an
amount equal to 100% of the Rebatable Arbitrage as set forth in a Certificate of the Authority
delivered to the Trustee calculated as of the end of such applicable Bonds Year, and any income
attributable to the Rebatable Arbitrage, as set forth in a Certificate of the Authority delivered to the
Trustee computed in accordance with Section 148(f) of the Code.
In the event that, prior to the time of any payment required to be made from a Rebate
Account, the amount in such Rebate Account is not sufficient to make such payment when such
payment is due, the Authority shall calculate or cause to be calculated the amount of such deficiency
and deposit with the Trustee an amount received from any legally available source equal to such
deficiency prior to the time such payment is due. Each payment required to be made pursuant to this
Subsection (b) shall be made to the Internal Revenue Service Center, Ogden, Utah 84207 on or
before the date on which such payment is due, and shall be accompanied by Internal Revenue Service
Form 8038 T (which form shall be completed and provided by the Authority to the Trustee), or shall
be made in such other manner as provided under the Code, in each case as specified in a Request of
the Authority delivered to the Trustee.
(c) Alternative Penalty Account.
(i) Six Month Computation. If the 1'/2% Penalty has been elected, within
85 days of each particular Six Month Period, the Authority shall determine or cause to be determined
whether the 1' /a% Penalty is payable (and the amount of such penalty) as of the close of the
applicable Six Month Period. The Authority shall obtain expert advice in making such
determinations.
(ii) Six Month Transfer. Within 85 days of the close of each Six Month
Period, upon receipt of the Request of the Authority, the Trustee shall deposit in the Alternative
Penalty Account from any source of funds (specified by the Authority in the aforesaid Request), if
and to the extent required, so that the balance in the Alternative Penalty Account for a Series equals
the amount of 1'/2% Penalty (as specified in such Request) due and payable to the United States
Treasury determined by the Authority as provided in subsection (c)(i) above. In the event that
immediately following the transfer provided in the previous sentence, the amount then on deposit to
the credit of the Alternative Penalty Account exceeds the amount required to be on deposit therein to
make the payments required by subsection (c)(iii) below, the Trustee, pursuant to a Certificate of the
Authority, may withdraw the excess from the Alternative Penalty Account and credit the excess to
the Revenue Fund.
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(iii) Payment to the Treasury. The Trustee shall pay, as directed by
Request of the Authority, to the United States Treasury, out of amounts in the Alternative Penalty
Account, not later than 90 days after the close of each Six Month Period the 1 %% Penalty (as
specified by the Authority in the aforesaid Request), if applicable and payable, computed by the
Authority in accordance with Section 148(f)(4) of the Code. In the event that, prior to the time of
any payment required to be made from the Alternative Penalty Account, the amount in such account
is not sufficient to make such payment when such payment is due, the Authority shall calculate the
amount of such deficiency and deposit with the Trustee an amount received from any legally
available source of funds equal to such deficiency for transfer into the Alternative Penalty Account
prior to the time such payment is due. Each payment required to be made pursuant to this
Subsection (c)(iii) shall be made to the Internal Revenue Service, Ogden, Utah 84207 on or before
the date on which such payment is due, and shall be accompanied by Internal Revenue Service
Form 8038 -T (which form shall be completed and provided by the Authority to the Trustee) or shall
be made in such other manner as provided under the Code.
(d) Disposition of Unexpended Funds. Any funds remaining in the accounts of
the Rebate Fund after redemption and payment of the Bonds and the payments of all amounts
described in Subsection (b)(iii) or (c)(iii) (whichever is applicable) or provision made therefor
satisfactory to the Trustee, including accrued interest and payment of all applicable fees to the
Trustee, may, upon written request, be withdrawn by the Trustee and remitted to the Authority and
utilized in any manner by the Authority.
(e) Survival of Defeasance. Notwithstanding anything in this Section to the
contrary, the obligation to comply with the requirements of this Section shall survive the defeasance
of the Bonds.
(f) Trustee. The Trustee shall have no responsibility to monitor or calculate any
amounts payable to the U.S. Treasury pursuant to this Section and shall be deemed conclusively to
have complied with its obligations hereunder if it follows the written instructions of the Authority
given pursuant to this Section.
Section 5.9 Local Obligations. Subject to the provisions of this Indenture (including
Article VI), the Authority and the Trustee, subject to the provisions of this Indenture, shall use
reasonable efforts to collect all amounts due from the Community Facilities Districts pursuant to the
Local Obligations and shall enforce, and take all steps, actions and proceedings which the Authority
and Trustee determine to be reasonably necessary for the enforcement of all of the rights of the
Authority thereunder and for the enforcement of all of the obligations and covenants of the City and
the Community Facilities Districts thereunder. The Authority shall instruct the Community Facilities
Districts to authenticate and deliver to the Trustee the Local Obligations registered in the name of the
Trustee.
The Authority, the Trustee and a Community Facilities District may at any time consent to,
amend or modify any of the Local Obligations of such Community Facilities District pursuant to the
terms thereof, (a) with the prior consent of the Owners of a majority in aggregate principal amount of
the Bonds then Outstanding, or (b) without the consent of any of the Owners if such amendment or
modification is for any one or more of the following purposes:
(a) to add to the covenants and agreements of the Community Facilities Districts
contained in such Local Obligations, other covenants and agreements thereafter to be observed, or to
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limit or surrender any rights or power therein reserved to or conferred upon the Community
Facilities District; or
(b) to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained in such Local Obligations, or
in any other respect whatsoever as the Community Facilities District may deem necessary or
desirable, provided under any circumstances that such modifications or amendments shall not
materially adversely affect the interests of the Owners of the Bonds in the opinion of Bond Counsel
filed with the Trustee; or
(c) to amend any provision thereof to the extent necessary to comply with the
Code, but only if and to the extent such amendment will not, in and of itself, adversely affect the
exclusion from gross income of the interest on any of the Bonds under the Code, in the opinion of
Bond Counsel filed with the Trustee.
Section 5.10 Sale of Local Obligations. Notwithstanding anything in this Indenture to the
contrary, the Authority may cause the Trustee to sell, from time to time, all or a portion of a Series of
Local Obligations, provided that the Authority shall deliver to the Trustee:
(a) a certificate of an Independent Accountant certifying that, following the sale
of such Local Obligations and the Revenues to be paid to the Authority (assuming the timely
payment of amounts due thereon with respect to any Local Obligations not then in default), together
with interest and principal due on any Defeasance Securities pledged to the repayment of the Bonds
and the Revenues then on deposit in the funds and accounts established hereunder (valuing any
Permitted Investments held hereunder at the then fair market value thereof), will be sufficient to pay
the principal of and interest on the Bonds when due;
(b) if any Bonds are then rated by Standard & Poor's a notification from
Standard & Poor's to the effect that such rating will not be withdrawn or reduced as a result of such
sale of Local Obligations; and
(c) an opinion of Bond Counsel that such sale of Local Obligations is authorized
under the provisions of this Indenture and will not adversely affect the exclusion of interest on the
Bonds from gross income for purposes of federal income taxation.
Upon compliance with the foregoing conditions by the Authority, the Trustee shall sell such
Local Obligations in accordance with the Request of the Authority and disburse the proceeds of the
sale of such Local Obligations to the Authority or upon the receipt of a Request of the Authority shall
deposit such proceeds in the Revenue Fund.
Section 5.11 Continuing Disclosure Agreement. The Authority hereby covenants and
agrees that it will comply with and carry out all of its obligations under the Continuing Disclosure
Agreement to be executed and delivered by the Authority and MUFG Union Bank, N.A., as
dissemination agent, in connection with the issuance of the Bonds. Notwithstanding any other
provision of this Indenture, failure of the Authority to comply with the Continuing Disclosure
Agreement shall not be considered an Event of Default; however, any Owner or Beneficial Owner
may take such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the Authority to comply with its obligations under this
Section 5.11. For purposes of this Section, `Beneficial Owner" means any person which has or
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shares the power, directly or indirectly, to make investment decisions concerning ownership of any
Bonds (including persons holding Bonds through nominees, depositories and other intermediaries).
Section 5.12 Further Assurances. The Authority will adopt, make, execute and deliver
any and all such further resolutions, instruments and assurances as may be reasonably necessary or
proper to carry out the intention or to facilitate the performance of this Indenture, and for the better
assuring and confirming unto the Owners of the Bonds the rights and benefits provided in this
Indenture.
Section 5.13 Pledged Revenues. The Authority represents it has not heretofore made a
pledge of, granted a lien on or security interest in, or made an assignment or sale of the Revenues that
ranks on a parity with or prior to the pledge granted under this Indenture. The Authority shall not
hereafter make any pledge or assignment of, lien on, or security interest in the Revenues payable
senior to or on a parity with the pledge of Revenues established under this Indenture.
ARTICLE VI
THE TRUSTEE
Section 6.1 Appointment of Trustee. MUFG Union Bank, N.A., with a corporate trust
office presently located in Los Angeles, California, a national banking association organized and
existing under and by virtue of the laws of the United States of America, is hereby appointed Trustee
by the Authority for the purpose of receiving all moneys required to be deposited with the Trustee
hereunder and to allocate, use and apply the same as provided in this Indenture. The Authority
agrees that it will maintain a Trustee which is a trust company, association or bank of good standing
located in or incorporated under the laws of the State, duly authorized to exercise trust powers, with a
combined capital and surplus of at least Seventy -Five Million Dollars ($75,000,000), and subject to
supervision or examination by federal or state authority, so long as any Bonds are Outstanding. If
such bank, association or trust company publishes a report of condition at least annually pursuant to
law or to the requirements of any supervising or examining authority above referred to, then for the
purpose of this Section 6.1, the combined capital and surplus shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so published.
The Trustee is hereby authorized to pay the principal of and interest and redemption premium
(if any) on the Bonds when duly presented for payment at maturity, or on redemption prior to
maturity, to make regularly scheduled interest payments, and to cancel any Bond upon payment
thereof.
Section 6.2 Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it
by this Indenture, and agrees to perform said trusts, but only upon and subject to the following
express terms and conditions:
(a) The Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default hereunder has occurred (which
has not been cured or waived), the Trustee may exercise such of the rights and powers vested in it by
this Indenture, and shall use the same degree of care and skill and diligence in their exercise, as a
reasonable person would exercise or use under the circumstances in the conduct of his own affairs.
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(b) The Trustee may execute any of the trusts or powers hereof and perform the
duties required of it hereunder by or through attorneys, agents, or receivers, but shall not be
responsible for the acts of any agents, attorneys or receivers appointed by it unless such appointment
was the result of negligence or willful misconduct. The Trustee may consult with and act upon the
advice of counsel (which may be counsel to the Authority) concerning all matters of trust and its
duty hereunder and shall be wholly protected in reliance upon the advice or opinion of such counsel
in respect of any action taken or omitted by it in good faith and in accordance herewith.
(c) The Trustee shall not be responsible for any recital herein, or in the Tax
Certificate or the Bonds, or for any of the supplements thereto or instruments of further assurance, or
for the validity, effectiveness or the sufficiency of the security for the Bonds issued hereunder or
intended to be secured hereby and the Trustee shall not be bound to ascertain or inquire as to the
observance or performance of any covenants, conditions or agreements on the part of the Authority
hereunder or under the Tax Certificate. The Trustee shall have no responsibility, opinion, or liability
with respect to any information, statement, or recital in any offering memorandum, official
statement, or other disclosure material prepared or distributed with respect to the issuance of the
Bonds.
(d) Except as provided in Section 3.2 hereof, the Trustee shall not be accountable
for the use of any proceeds of sale of the Bonds delivered hereunder. The Trustee may become the
Owner of Bonds secured hereby with the same rights which it would have if not the Trustee; may
acquire and dispose of other bonds or evidences of indebtedness of the Authority with the same
rights it would have if it were not the Trustee; and may act as a depository for and permit any of its
officers or directors to act as a member of, or in any other capacity with respect to, any committee
formed to protect the rights of Owners of Bonds, whether or not such committee shall represent the
Owners of the majority in aggregate principal amount of the Bonds then Outstanding.
(e) The Trustee shall be protected and shall incur no liability in acting, or
refraining from acting in good faith and without negligence, in reliance upon any notice, request,
consent, certificate, order, affidavit, letter, telegram, facsimile or other paper or document believed
by it to be genuine and correct and to have been signed or sent by the proper person or persons. Any
action taken or omitted to be taken by the Trustee in good faith and without negligence pursuant to
this Indenture upon the request or authority or consent of any person who at the time of making such
request or giving such authority or consent is the Owner of any Bond, shall be conclusive and
binding upon all future Owners of the same Bond and upon Bonds issued in exchange therefor or in
place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Bond or
to take any action at such person's request unless the ownership of such Bond by such person shall
be reflected on the Bond Register.
(f) As to the existence or non- existence of any fact or as to the sufficiency or
validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a
Certificate of the Authority as sufficient evidence of the facts therein contained and prior to the
occurrence of an Event of Default hereunder of which the Trustee has been given notice or is
deemed to have notice, as provided in Section 6.2(h) hereof, shall also be at liberty to accept a
Certificate of the Authority to the effect that any particular dealing, transaction or action is necessary
or expedient, and shall be fully protected in relying thereon, but may at its discretion secure such
further evidence deemed by it to be necessary or advisable, but shall in no case be bound to secure
the same.
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(g) The permissive right of the Trustee to do things enumerated in this Indenture
shall not be construed as a duty and notwithstanding any other provision of this Indenture, the
Trustee shall not be answerable for other than its negligence or willful misconduct. The immunities
and exceptions from liability of the Trustee shall extend to its officers, directors, employees and
agents.
(h) The Trustee shall not be required to take notice or be deemed to have notice
of any Event of Default hereunder except where a Responsible Officer has actual knowledge of such
Event of Default and except for the failure by the Authority to make any of the payments to the
Trustee required to be made by the Authority pursuant hereto, including payments on the Local
Obligations, or failure by the Authority to file with the Trustee any document required by this
Indenture to be so filed subsequent to the issuance of the Bonds, unless a Responsible Officer shall
be specifically notified in writing of such default by the Authority or by the Owners of at least
twenty five percent (25 %) in aggregate principal amount of the Outstanding Bonds and all notices or
other instruments required by this Indenture to be delivered to the Trustee must, in order to be
effective, be delivered to a Responsible Officer at the Trust Office of the Trustee, and in the absence
of such notice so delivered the Trustee may conclusively assume there is no Event of Default
hereunder except as aforesaid. Delivery of a notice to the officer and address for the Trustee set
forth in Section 9.12 hereof, as updated by the Trustee from time to time, shall be deemed notice to a
Responsible Officer.
(i) At any and all reasonable times the Trustee, and its duly authorized agents,
attorneys, experts, accountants and representatives, shall have the right fully to inspect all books,
papers and records of the Authority pertaining to the Bonds, and to make copies of any of such
books, papers and records such as may be desired but which is not privileged by statute or by law.
0) The Trustee shall not be required to give any bond or surety in respect of the
execution of the said trusts and powers or otherwise in respect of the performance of its duties
hereunder.
(k) Notwithstanding anything elsewhere in this Indenture with respect to the
execution of any Bonds, the withdrawal of any cash, the release of any property, or any action
whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be
required, to demand any showings, certificates, opinions, appraisals or other information, or
corporate action or evidence thereof, as may be deemed desirable by the Trustee in its sole discretion
for the purpose of establishing the right of the Authority to the execution of any Bonds, the
withdrawal of any cash, or the taking of any other action by the Trustee.
(1) Before taking any action referred to in Sections 6.5, 8.2, or this Article, the
Trustee may require that an indemnity bond satisfactory to it be furnished for the reimbursement of
all expenses to which it may be put and to protect it against all liability, except liability which is
adjudicated to have resulted from its negligence or willful misconduct in connection with any such
action.
(m) All moneys received by the Trustee shall, until used or applied or invested as
herein provided, be held in trust for the purposes for which they were received but need not be
segregated from other funds.
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(n) Whether or not expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of, or affording protection to, the Trustee shall be
subject to the provisions of this Article VI.
(o) The Trustee shall not be considered in breach of or in default in its
obligations hereunder or progress in respect thereto in the event of enforced delay ( "unavoidable
delay ") in the performance of such obligations due to unforeseeable causes beyond its control and
without its fault or negligence, including, but not limited to, Acts of God or of the public enemy or
terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to
procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material
or supplies in the open market, litigation or arbitration involving a party or others relating to zoning
or other governmental action or inaction pertaining to the project, malicious mischief,
condemnation, and unusually severe weather or delays of supplies or subcontractors due to such
causes or any similar event and /or occurrences beyond the control of the Trustee.
(p) The Trustee agrees to accept and act upon facsimile or electronic transmission
of written instructions and /or directions pursuant to this Indenture provided, however, that: (a) such
originally executed instructions and /or directions shall be signed by a person as may be designated
and authorized to sign for the party signing such instructions and /or directions, and (b) the Trustee
shall have received a current incumbency certificate containing the specimen signature of such
designated person.
(q) The Trustee shall not be liable in connection with the performance of its
duties hereunder except for its own negligence or willful misconduct.
Section 6.3 Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to
payment and reimbursement by the Authority for reasonable fees for its services rendered hereunder
and all advances (including any interest on advances), counsel fees and expenses (including fees and
expenses of outside counsel and the allocated costs of internal attorneys) and other expenses
reasonably and necessarily made or incurred by the Trustee in connection with such services. Upon
the occurrence of an Event of Default hereunder, but only upon an Event of Default with respect to a
Series, the Trustee shall have a first lien with right of payment prior to payment of any Bond upon
the amounts held in Funds and accounts for such Series hereunder for the foregoing fees, charges and
expenses incurred by it respectively. The Trustee's right to payment of its fees and expenses shall
survive the discharge and payment or defeasance of the Bonds and termination of this Indenture, and
the resignation or removal of the Trustee.
Section 6.4 Notice to Bond Owners of Default. If an Event of Default hereunder occurs
with respect to any Bonds of which the Trustee has been given, or is deemed to have notice, as
provided in Section 6.2(h) hereof, then the Trustee shall promptly give written notice thereof to the
Owner of each such Bond unless such Event of Default shall have been cured before the giving of
such notice.
Section 6.5 Intervention by Trustee. In any judicial proceeding to which the Authority
is a party which, in the opinion of the Trustee and its counsel, has a substantial bearing on the
interests of Owners of any of the Bonds, the Trustee may intervene on behalf of such Bond Owners,
and subject to Section 6.2(1) hereof, shall do so if requested in writing by the Owners of at least
twenty five percent (25 %) in aggregate principal amount of such Bonds then Outstanding.
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Section 6.6 Removal of Trustee. The Owners of a majority in aggregate principal
amount of the Outstanding Bonds may and the Authority may, so long as no Event of Default then
exists, upon 30 days' prior written notice to the Trustee, remove the Trustee initially appointed, and
any successor thereto, by an instrument or concurrent instruments in writing delivered to the Trustee.
Upon any such removal, the Authority shall appoint a successor or successors thereto; provided that
any such successor shall be a bank, association or trust company meeting the requirements set forth
in Section 6.1 hereof.
Section 6.7 Resignation by Trustee. The Trustee and any successor Trustee may at any
time give prior written notice of its intention to resign as Trustee hereunder, such notice to be given
to the Authority, the Community Facilities Districts and the City by registered or certified mail.
Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor Trustee shall become
effective only upon acceptance of appointment by the successor Trustee. Upon such acceptance, the
Authority shall cause notice thereof to be sent to the Bond Owners at their respective addresses set
forth on the Bond Register.
Section 6.8 Appointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 6.6 or 6.7, respectively, the Authority shall promptly
appoint a successor Trustee. In the event the Authority shall for any reason whatsoever fail to
appoint a successor Trustee within thirty (30) days following the delivery to the Trustee of the
instrument described in Section 6.6 or within thirty (30) days following the receipt of notice by the
Authority, the Community Facilities Districts and the City pursuant to Section 6.7, the Trustee may
petition any court of competent jurisdiction for the appointment of a successor Trustee meeting the
requirements of Section 6.1 hereof. Any such successor Trustee appointed by such court shall
become the successor Trustee hereunder notwithstanding any action by the Authority purporting to
appoint a successor Trustee following the expiration of such thirty day period.
Section 6.9 Merger or Consolidation. Any company into which the Trustee may be
merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the Trustee
may sell or transfer all or substantially all of its corporate trust business, provided that such company
shall meet the requirements set forth in Section 6.1 hereof, shall be the successor to the Trustee and
vested with all of the title to the trust estate and all of the trusts, powers, discretions, immunities,
privileges and all other matters as was its predecessor, without the execution or filing of any paper or
further act, anything herein to the contrary notwithstanding. The Trustee may assign its rights, duties
and obligations hereunder in whole or in part, to an affiliate or subsidiary thereof, provided such
Corporation, affiliate or subsidiary shall meet the requirements set forth in Section 6.1 hereof.
Section 6.10 Concerning any Successor Trustee. Every successor Trustee appointed
hereunder shall execute, acknowledge and deliver to its predecessor and also to the Authority an
instrument in writing accepting such appointment hereunder and to the predecessor Trustee an
instrument indemnifying the predecessor Trustee for any costs or claims arising during the time the
successor Trustee serves as Trustee hereunder and thereupon such successor, without any further act,
deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts,
duties and obligations of its predecessors; but such predecessor shall, nevertheless, on the Request of
the Authority, or of the Trustee's successor, execute and deliver an instrument transferring to such
successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and
every predecessor Trustee shall deliver all securities and moneys held by it as the Trustee hereunder
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to its successor. Should any instrument in writing from the Authority be required by any successor
Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties
hereby vested or intended to be vested in the predecessor Trustee, any and all such instruments in
writing shall, on request, be executed, acknowledged and delivered by the Authority.
Section 6.11 Appointment of Co- Trustee. It is the purpose of this Indenture that there
shall be no violation of any law of any jurisdiction (including particularly the law of the State)
denying or restricting the right of banking corporations or associations to transact business as a
trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture, and in
particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee
deems that by reason of any present or future law of any jurisdiction it may not exercise any of the
powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as
herein granted, or take any other action which may be desirable or necessary in connection therewith,
it may be necessary that the Trustee appoint an additional individual or institution as a separate
co- trustee. The following provisions of this Section 6.11 are adopted to these ends.
In the event that the Trustee or the Authority appoints an additional individual or institution
as a separate or co- trustee, each and every remedy, power, right, claim, demand, cause of action,
immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by or
vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such
separate or co- trustee but only to the extent necessary to enable such separate or co- trustee to
exercise such powers, rights and remedies, and every covenant and obligation necessary to the
exercise thereof by such separate or co- trustee shall run to and be enforceable by either of the Trustee
or separate or co- Trustee.
Should any instrument in writing from the Authority be required by the separate trustee or
co- trustee so appointed by the Trustee or the Authority for more fully and certainly vesting in and
confirming to it such properties, rights, powers, trusts, duties and obligations, any and all such
instruments in writing shall, on request, be executed, acknowledged and delivered by the Authority.
In case any separate trustee or co- trustee, or a successor to either, shall become incapable of acting,
resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such
separate trustee or co- trustee, so far as permitted by law, shall vest in and be exercised by the Trustee
until the appointment of a new trustee or successor to such separate trustee or co- trustee.
Section 6.12 Indemnification; Limited Liability of Trustee. The Authority further
covenants and agrees to indemnify and save the Trustee and its officers, officials, directors, agents
and employees, harmless from and against any loss, expense, including legal fees and expenses, and
liabilities which it may incur arising out of or in the exercise and performance of its powers and
duties hereunder, including the costs and expenses of defending against any claim of liability, but
excluding any and all losses, expenses and liabilities which are due to the negligence or intentional
misconduct of the Trustee, its officers, directors, agents or employees. In no event shall the Trustee
be liable for any consequential, punitive or special damages. No provision in this Indenture shall
require the Trustee to risk or expend its own funds or otherwise incur any financial liability
hereunder unless indemnity reasonably satisfactory to it against such liability or risk is provided to it.
The Trustee shall not be liable for any action taken or omitted to be taken by it in accordance with
the direction of a majority (or any lesser amount that may direct the Trustee in accordance with the
provisions of the Indenture) of the Owners of the principal amount of Bonds Outstanding relating to
the time, method and place of conducting any proceeding or remedy available to the Trustee under
this Indenture. The rights of the Trustee and the obligations of the Authority under this Section 6.12
39
shall survive termination of this Indenture, discharge of the Bonds and resignation or removal of the
Trustee.
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE INDENTURE
Section 7.1 Amendment Hereof. This Indenture and the rights and obligations of the
Authority and of the Owners of the Bonds may, with at least five (5) Business Days prior written
notice to Standard & Poor's be modified or amended at any time by a Supplemental Indenture which
shall become binding when the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding are filed with the Trustee. No such modification or amendment shall (a) extend the
maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the
Authority to pay the principal, interest or redemption premiums at the time and place and at the rate
and in the currency provided therein of any Bond without the express written consent of the Owner
of such Bond, (b) reduce the percentage of Bonds required for the written consent to any such
amendment or modification, or (c) without written consent of the Trustee, modify any of the rights or
obligations of the Trustee.
This Indenture and the rights and obligations of the Authority and of the Owners of the
Bonds may, with least five (5) Business Days prior written notice to Standard & Poor's, also be
modified or amended at any time by a Supplemental Indenture which shall become binding upon
adoption, without consent of any Bond Owners, to the extent permitted by law but only for any one
or more of the following purposes
(a) to add to the covenants and agreements of the Authority contained in this
Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any
rights or powers herein reserved to or conferred upon the Authority so long as such addition,
limitation or surrender of such rights or powers shall not materially adversely affect the Owners of
the Bonds; or
(b) to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained in this Indenture, or in any
other respect whatsoever as the Authority may deem necessary or desirable, provided under any
circumstances that such modifications or amendments shall not materially adversely affect the
interests of the Owners of the Bonds; or
(c) to amend any provision hereof relating to the Code as may be necessary or
appropriate to assure compliance with the Code and the exclusion from gross income of interest on
the Bonds, including, but not limited to, amending the procedures set forth in Section 5.8 hereof with
respect to the calculation of Rebatable Arbitrage; or
(d) to amend any provision hereof to place any Additional Bonds on a parity with
the Bonds for all purposes of this Indenture, including, but not limited to, for the purpose of
exercising all rights and remedies hereunder; or
(e) to amend the provisions of Section 4.4 hereof.
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At least 15 days in advance of the execution of any amendment to this Indenture, the Trustee
shall send notice of such amendment and a copy of the proposed text of such amendment to
Standard & Poor's.
The Trustee shall be furnished, at the expense of the Authority, an opinion of Bond Counsel
that any such Supplemental Indenture entered into by the Authority and the Trustee complies with
the provisions of this Article VII and the Trustee may conclusively rely upon such opinion and shall
be fully protected in relying thereon.
Section 7.2 Effect of Supplemental Indenture. From and after the time any
Supplemental Indenture becomes effective pursuant to this Article VII, this Indenture shall be
deemed to be modified and amended in accordance therewith, the respective rights, duties and
obligations of the parties hereto or thereto and all Owners of Outstanding Bonds, as the case may be,
shall thereafter be determined, exercised and enforced hereunder subject in all respects to such
modification and amendment, and all the terms and conditions of this Indenture for any and all
purposes.
Section 7.3 Endorsement or Replacement of Bonds After Amendment. After the
effective date of any action taken as hereinabove provided, the Authority may determine that any
affected Bonds shall bear a notation, by endorsement in form approved by the Authority, as to such
action, and in that case upon demand of the Owner of any Bond Outstanding at such effective date
and presentation of its Bond for that purpose at the Trust Office of the Trustee, a suitable notation as
to such action shall be made on such Bond. If the Authority shall so determine, new Bonds so
modified as, in the opinion of the Authority, shall be necessary to conform to such Bond Owners'
action shall be prepared and executed, and in that case upon demand of the Owner of any Bond
Outstanding at such effective date such new Bonds shall be exchanged at the Trust Office of the
Trustee, without cost to each Bond Owner, for Bonds then Outstanding, upon surrender of such
Outstanding Bonds.
Section 7.4 Amendment by Mutual Consent. The provisions of this Article VII shall
not prevent any Bond Owner from accepting any amendment as to the particular Bond held by such
Owner, provided that due notation thereof is made on such Bond.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Section 8.1 Events of Default. The following events shall be Events of Default
hereunder.
(a) Default in the due and punctual payment of the principal of any Bond when
and as the same shall become due and payable, whether at maturity as therein expressed, by
proceedings for redemption, by declaration or otherwise.
(b) Default in the due and punctual payment of any installment of interest on any
Bond when and as such interest installment shall become due and payable.
(c) Default by the Authority in the observance of any of the other covenants,
agreements or conditions on its part in this Indenture or in the Bonds contained, if such default shall
41
. .ru .. I •.cw. ith 1 ,.
have continued for a period of thirty (30) days after written notice thereof, specifying such default
and requiring the same to be remedied, shall have been given to the Authority by the Trustee, or to
the Authority and the Trustee by the Owners of not less than twenty five percent (25 %) in aggregate
principal amount of the Bonds at the time Outstanding, provided that such default (other than a
default arising from nonpayment of the Trustee's fees and expenses, which must be cured within
such 30 day period) shall not constitute an Event of Default hereunder if the Authority shall
commence to cure such default within said thirty (30) day period and thereafter diligently and in
good faith shall cure such default within a reasonable period of time; or
(d) The filing by the Authority of a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other applicable law of the United States of
America, or if a court of competent jurisdiction shall approve a petition, filed with or without the
consent of the Authority, seeking reorganization under the federal bankruptcy laws or any other
applicable law of the United States of America, or if, under the provisions of any other law for the
relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the
Authority or of the whole or any substantial part of its property.
Section 8.2 Remedies; Rights of Bond Owners. Upon the occurrence of an Event of
Default, the Trustee may pursue any available remedy at law or in equity to enforce the payment of
the principal of, premium, if any, and interest on the Outstanding Bonds, and to enforce any rights of
the Trustee under or with respect to this Indenture. Subject to Section 8.3, in the event of an Event of
Default arising out of a nonpayment of Trustee's fees and expenses, the Trustee may sue the
Authority to seek recovery of its fees and expenses, provided, however, that such recovery may be
made only from the funds of the Authority and not from Revenues.
If an Event of Default shall have occurred and be continuing and if requested to do so by the
Owners of at least twenty -five percent (25 %) in aggregate principal amount of Outstanding Bonds,
and, in each case, if indemnified as provided in Section 6.2(1), the Trustee shall be obligated to
exercise such one or more of the rights and powers conferred by this Article VIII and, as applicable,
under the Local Obligations, as the Trustee, being advised by counsel, shall deem most expedient in
the interests of the Bond Owners.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the
Bond Owners) is intended to be exclusive of any other remedy, but each and every such remedy shall
be cumulative and shall be in addition to any other remedy given to the Trustee or to the Bond
Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of Default shall
impair any such right or power or shall be construed to be a waiver of any such Event of Default or
acquiescence therein; such right or power may be exercised from time to time as often as may be
deemed expedient.
In no event shall the principal of the Bonds be accelerated.
Section 8.3 Application of.Revenues and Other Funds After Event of Default. All
amounts received by the Trustee with respect to the Bonds pursuant to any right given or action taken
by the Trustee under the provisions of this Indenture relating to the Bonds shall be applied by the
Trustee in the following order upon presentation of the several Bonds, and the stamping thereon of
the amount of the payment if only partially paid, or upon the surrender thereof if fully paid —
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First, to the payment of the costs and expenses of the Trustee in declaring such Event of
Default and in carrying out the provisions of this Article VIII, including reasonable compensation to
its agents, attorneys and counsel (including outside counsel and the allocated costs of internal
attorneys), and to the payment of all other outstanding fees and expenses of the Trustee; and
Second, to the payment of the whole amount of interest on and principal of the Bonds then
due and unpaid, with interest on overdue installments of principal and interest to the extent permitted
by law at the net effective rate of interest then borne by the Outstanding Bonds; provided, however,
that in the event such amounts shall be insufficient to pay in full the full amount of such interest and
principal, then such amounts shall be applied in the following order of priority;
(a) first to the payment of all installments of interest on the Bonds then due and
unpaid,
(b) second, to the payment of all installments of principal of the Bonds then due
and unpaid, and
(c) third, to the payment of interest on overdue installments of principal and
interest on Bonds.
Section 8.4 Power of Trustee to Control Proceedings. In the event that the Trustee,
upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or
otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of
the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, it may, in the
exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the
continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action;
provided, however, that the Trustee shall not, unless there no longer continues an Event of Default,
discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or
in equity, if at the time there has been filed with it a written request signed by the Owners of a
majority in aggregate principal amount of the Outstanding Bonds opposing such discontinuance,
withdrawal, compromise, settlement or other such litigation and provided further that the Trustee
shall have the right to decline to comply with such written request unless indemnification satisfactory
to it has been provided. Any suit, action or proceeding which any Owner of Bonds shall have the
right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal
benefit and protection of all Owners of Bonds similarly situated and the Trustee is hereby appointed
(and the successive respective Owners of the Bonds issued hereunder, by taking and holding the
same, shall be conclusively deemed so to have appointed it) the true and lawful attorney in fact of the
respective Owners of the Bonds for the purposes of bringing any such suit, action or proceeding and
to do and perform any and all acts and things for and on behalf of the respective Owners of the
Bonds as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such
attorney in fact.
Section 8.5 Appointment of Receivers. Upon the occurrence of an Event of Default
hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the
rights of the Trustee and of the Bond Owners under this Indenture, the Trustee shall be entitled, as a
matter of right, to the appointment of a receiver or receivers of the Revenues and other amounts
pledged hereunder, pending such proceedings, with such powers as the court making such
appointment shall confer.
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Section 8.6 Non Waiver. Nothing in this Article VIII or in any other provision of this
Indenture, or in the Bonds, shall affect or impair the obligation of the Authority, which is absolute
and unconditional, to pay the interest on and principal of the Bonds to the respective Owners of the
Bonds at the respective dates of maturity, as herein provided, out of the Revenues and other moneys
herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Bond Owners
shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies
on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of any
of the Bonds 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 or Bond Owners by the Bond Law or by this
Article VIII may be enforced and exercised from time to time and as often as shall be deemed
expedient by the Trustee or the Bond Owners, as the case may be.
Section 8.7 Rights and Remedies of Bond Owners. No Owner of any Bond issued
hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any
remedy under or upon this Indenture, unless (a) such Owner shall have previously given to the
Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in
aggregate principal amount of all the Bonds then Outstanding shall have made written request upon
the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding
in its own name; (c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable
to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such
request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of
sixty (60) days after such written request shall have been received by, and said tender of indemnity
shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared,
in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy
hereunder; it being understood and intended that no one or more Owners of Bonds shall have any
right in any manner whatever by his or their action to enforce any right under this Indenture, except
in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of
this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal
benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment of the principal of and interest and
premium (if any) on such Bond as herein provided or to institute suit for the enforcement of any such
payment, shall not be impaired or affected without the written consent of such Owner,
notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.
Section 8.8 Termination of Proceedings. In case the Trustee shall have proceeded to
enforce any right under this Indenture by the appointment of a receiver or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason, or shall have been
determined adversely, then and in every such case, the Authority, the Trustee and the Bond Owners
shall be restored to their former positions and rights hereunder, respectively, with regard to the
property subject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as
if no such proceedings had been taken.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 Limited Liability of Authority. Notwithstanding anything in this Indenture
contained, the Authority shall not be required to advance any moneys derived from any source of
income other than the Revenues or for the payment of the principal of or interest on the Bonds, or
any premiums upon the redemption thereof, or for the performance of any covenants herein
contained (except to the extent any such covenants are expressly payable hereunder from the
Revenues). The Authority may, however, advance funds for any such purpose, provided that such
funds are derived from a source legally available for such purpose and may be used by the Authority
for such purpose without incurring indebtedness.
The Bonds shall be revenue bonds, payable exclusively from the Revenues and other funds as
in this Indenture provided. The general fund of the Authority is not liable, and the credit of the
Authority is not pledged, for the payment of the interest and premium (if any) on or principal of the
Bonds. The Owners of the Bonds shall never have the right to compel the forfeiture of any property
of the Authority. The principal of and interest on the Bonds and any premiums upon the redemption
of any thereof, shall not be a legal or equitable pledge, charge, lien or encumbrance upon any
property of the Authority or upon any of its income, receipts or revenues except the Revenues and
other funds pledged to the payment thereof as in this Indenture provided.
Section 9.2 Benefits of Indenture Limited to Parties. Nothing in this Indenture,
expressed or implied, is intended to give to any person other than the Authority, the Trustee and the
Owners of the Bonds, any right, remedy or claim under or by reason of this Indenture. Any
covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the
Authority shall be for the sole and exclusive benefit of the Trustee and the Owners of Bonds.
Section 9.3 Discharge of Indenture. The Authority may pay and discharge any or all of
the Outstanding Bonds in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest and
premitun (if any) on such Bonds, as and when the same become due and payable;
(b) by irrevocably depositing with the Trustee, in trust, at or before maturity,
money which, together with the available amounts then on deposit in the funds and accounts
established with the Trustee pursuant to this Indenture and available for such purpose, is fully
sufficient to pay such Bonds, including all principal, interest and redemption premiums; or
(c) by irrevocably depositing with the Trustee or any other fiduciary, in trust,
Defeasance Securities in such amount as an Independent Accountant shall determine will, together
with the interest to accrue thereon and available moneys then on deposit in the funds and accounts
established with the Trustee pursuant to this Indenture and available for such purpose, be fully
sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and
redemption premiums) at or before their respective maturity dates.
Any Outstanding Bond or Bonds shall be deemed to have been paid and discharged under
(c) above if (i) in the case of Bonds to be redeemed prior to the maturity thereof, notice of such
redemption shall have been provided pursuant to Section 2.2(d) hereof or provision satisfactory to the
45
Trustee shall have been made for the provision of such notice, (ii) a verification report of an
Independent Accountant shall be delivered to the Trustee, and (iii) an opinion of Bond Counsel shall
be delivered to the Trustee to the effect that the requirements of this Indenture have been satisfied
with respect to such discharge of Bonds. Upon a discharge of one or more Bonds as described
above, and notwithstanding that any of such Bonds shall not have been surrendered for payment, the
pledge of the Revenues, and other funds provided for in this Indenture with respect to such Bonds, as
applicable, and all other pecuniary obligations of the Authority under this Indenture with respect to
such Bonds, shall cease and terminate, except only the obligation of the Authority to comply with the
covenants contained in Sections 5.7 and 6.12 hereof, to pay or cause to be paid to the Owners of such
Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose, to
pay all expenses and costs of the Trustee and to comply with the covenants contained in Section 5.7
hereof. Any funds thereafter held by the Trustee, which are not required for said purposes, shall be
paid over to the Authority or upon a Request of the Authority to the City or the Community Facilities
Districts, as applicable.
Defeasance shall be accomplished only with an irrevocable deposit in escrow of Defeasance
Securities. Further substitutions of securities in the escrow are not permitted. The deposit in the
escrow must be sufficient, without reinvestment, to pay all principal and interest as schedule on the
Bonds to and including the date of redemption.
Section 9.4 Successor is Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture either the Authority is named or referred
to, such reference shall be deemed to include the successor to the powers, duties and functions, with
respect to the management, administration and control of the affairs of the Authority, that are
presently vested in the Authority, and all the covenants, agreements and provisions contained in this
Indenture by or on behalf of the Authority shall bind and inure to the benefit of its successors
whether so expressed or not.
Section 9.5 Content of Certificates. Every certificate by or on behalf of the Authority
with respect to compliance with a condition or covenant provided for in this Indenture shall include
(a) a statement that the person or persons making or giving such certificate have read such covenant
or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions contained in such
certificate are based; (c) a statement that, in the opinion of the signers, they have made or caused to
be made such examination or investigation as is necessary to enable them to express an informed
opinion as to whether or not such covenant or condition has been complied with; and (d) a statement
as to whether, in the opinion of the signers, such condition or covenant has been complied with.
Any such certificate made or given by an officer of the Authority may be based, insofar as it
relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such
officer knows that the certificate or opinion or representations with respect to the matters upon which
his certificate may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should
have known that the same were erroneous. Any such certificate or opinion or representation made or
given by counsel may be based, insofar as it relates to factual matters, on information with respect to
which is in the possession of the Authority, or upon the certificate or opinion of or representations by
an officer or officers of the Authority, unless such counsel knows that the certificate or opinion or
representations with respect to the matters upon which his certificate, opinion or representation may
be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that
the same were erroneous.
Ertl
Section 9.6 Execution of Documents by Bond Owners. Any request, consent or other
instrument required by this Indenture to be signed and executed by Bond Owners may be in any
number of concurrent writings of substantially similar tenor and may be signed or executed by such
Bond Owners in person or by agent or agents duly appointed in writing. Proof of the execution of
any such request, consent or other instrument or of a writing appointing any such agent, shall be
sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the
Authority if made in the manner provided in this Section 9.6.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the affidavit of a witness of such execution or by the
certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to
take acknowledgements of deeds, certifying that the person signing such request, consent or other
instrument or writing acknowledged to him the execution thereof.
The ownership of Bonds shall be conclusively proved by the Bond Register. Any request,
consent or vote of the Owner of any Bond shall bind every future Owner of the same Bond and the
Owner of any Bond issued in exchange therefor or in lieu thereof, in respect of anything done or
suffered to be done by the Trustee or the Authority in pursuance of such request, consent or vote. In
lieu of obtaining any demand, request, direction, consent or waiver in writing, the Trustee may call
and hold a meeting of the Bond Owners upon such notice and in accordance with such rules and
obligation as the Trustee considers fair and reasonable for the purpose of obtaining any such action.
Section 9.7 Disqualified Bonds. In determining whether the Owners of the requisite
aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or
waiver under this Indenture, Bonds which are owned or held by or for the account of the Authority,
the City or the Community Facilities Districts (but excluding Bonds held in any employees' or
retirement fund) shall be disregarded and deemed not to be Outstanding for the purpose of any such
determination, provided, however, that for the purpose of determining whether the Trustee shall be
protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the
Trustee knows to be so owned or held shall be disregarded. Upon request, the Authority shall specify
to the Trustee those Bonds disqualified pursuant to this Section 9.7 and the Trustee may conclusively
rely upon such certificate.
Section 9.8 Waiver of Personal Liability. No officer, agent or employee of the
Authority shall be individually or personally liable for the payment of the interest on or principal of
the Bonds; but nothing herein contained shall relieve any such officer, agent or employee from the
performance of any official duty provided by law.
Section 9.9 Partial Invalidity. If any one or more of the covenants or agreements, or
portions thereof, provided in this Indenture on the part of the Authority (or of the Trustee) to be
performed should be contrary to law, then such covenant or covenants, such agreement or
agreements, or such portions thereof, shall be null and void and shall be deemed separable from the
remaining covenants and agreements or portions thereof and shall in no way affect the validity of this
Indenture or of the Bonds; but the Bond Owners shall retain all rights and benefits accorded to them
under the Bond Law or any other applicable provisions of law. The Authority hereby declares that it
would have entered into this Indenture and each and every other section, paragraph, subdivision,
sentence, clause and phrase hereof and would have authorized the issuance of the Bonds pursuant
hereto irrespective of the fact that any or more sections, paragraphs, subdivisions, sentences, clauses
Eb
or phrases of this Indenture or the application thereof to any person or circumstance may be held to
be unconstitutional, unenforceable or invalid.
Section 9.10 Destruction of Cancelled Bonds. Whenever in this Indenture provision is
made for the surrender to the Authority or the Trustee of any Bonds which have been paid or
cancelled pursuant to the provisions of this Indenture, the Trustee shall destroy such Bonds in
accordance with the retention policy of the Trustee then in effect.
Section 9.11 Funds and Accounts. Any fund or account required by this Indenture to be
established and maintained by the Authority or the Trustee may be established and maintained in the
accounting records of the Authority or the Trustee, as the case may be, either as a fund or an account,
and may, for the purpose of such records, any audits thereof and any reports or statements with
respect thereto, be treated either as a fund or as an account. All such records with respect to all such
funds and accounts held by the Authority shall at all times be maintained in accordance with
generally accepted accounting principles and all such records with respect to all such funds and
accounts held by the Trustee shall be at all times maintained in accordance with corporate trust
industry practices; in each case with due regard for the protection of the security of the Bonds and the
rights of every Owner thereof.
Section 9.12 Notices. Any notice, request, complaint, demand, communication or other
paper shall be sufficiently given and shall be deemed given when delivered or mailed by registered or
certified mail, return receipt requested, postage prepaid, or sent by fax or other electronic
transmission, addressed as follows:
If to the Authority: Lake Elsinore Public Financing Authority
c/o City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
Attention: Director of Administrative Services
If to the Community
Facilities Districts
(as applicable): [Name of Community Facilities District]
c/o City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
Attention: Director of Administrative Services
If to the Trustee: MUFG Union Bank, N.A.
120 South San Pedro Street,
Los Angeles, California 90012
Facsimile: (213) 972 -5694
Email: cashcontrolgroup- LosAngeles @unionbank.com
Facsimile Notice Purposes Only:
E -Mail: Melonee.young_&unionbank.com
With a copy to: AccountAdministration-
C orporateTrustgunionbank. com
48
The Authority, the City and the Trustee may designate any further or different addresses to
which subsequent notices, certificates or other communications shall be sent.
Section 9.13 Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the
Bonds which remain unclaimed for two (2) years after the date when such Bonds have become due
and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys
were held by the Trustee at such date, or for two (2) years after the date of deposit of such moneys if
deposited with the Trustee after said date when such Bonds become due and payable, shall be repaid
by the Trustee to the Authority, as its absolute property and free from trust, and the Trustee shall
thereupon be released and discharged with respect thereto and the Bond Owners shall look only to
the Authority for the payment of such Bonds; provided, however, that before being required to make
such payment to the Authority, the Trustee shall, at the expense of Authority, cause to be mailed to
the Owners of all such Bonds, at their respective addresses appearing on the Bond Register, a notice
that said moneys remain unclaimed and that, after a date in said notice, which date shall not be less
than thirty (30) days after the date of mailing such notice, the balance of such moneys then
unclaimed will be returned to the Authority.
Section 9.14 Payment Due on Other than a Business Day. If the date for making any
payment or the last date for performance of any act or the exercising of any right, as provided in the
Indenture, is not a Business Day, such payment, with no interest accruing for the period after such
nominal date, may be made or act performed or right exercised on the next succeeding Business Day
with the same force and effect as if done on the nominal date provided in this Indenture.
Section 9.15 Notices to and for the Benefit and Standard & Poor's.
(a) In connection with the issuance of Additional Bonds, the Authority shall
deliver to Standard & Poor's a copy of the disclosure document, if any, circulated with respect to
such Additional Bonds.
(b) Standard & Poor's shall receive notice of the resignation or removal of the
Trustee and the appointment of a successor thereto.
(c) Any notice that is required to be given to an Owner of a Bond or to the
Trustee pursuant to the Indenture shall also be provided to Standard & Poor's.
(d) Each of the Authority and the Trustee shall deliver to Standard & Poor's a
copy of any notice which it receives as an owner of a Local Obligation.
[Remainder of page left blank.]
IN WITNESS WHEREOF, the Authority has caused this Indenture to be executed by the
Treasurer of the Authority, attested by its Secretary, and the Trustee has caused this Indenture to be
executed by one of its authorized officers, all as of the day and year first above written.
Attest:
IM
Secretary
LAKE ELSINORE PUBLIC FINANCING
AUTHORITY
Executive Director
MUFG UNION BANK, N.A., as Trustee
0
S -1
Authorized Officer
EXHIBIT A
FORM OF SERIES 2015 BOND
R- $
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE
AUTHORITY OR THE TRUSTEE FOR REGISTRATION OR TRANSFER,
EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST
HEREIN.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE BOND, SERIES 2015
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP NUMBER:
% September 1, 20_ 52015
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
AND NO /100 DOLLARS
The LAKE ELSINORE PUBLIC FINANCING AUTHORITY, a joint powers authority
organized and existing under the laws of the State of California (the "Authority "), for value received,
hereby promises to pay (but only out of the Revenues and other funds hereinafter referred to) to the
Registered Owner identified above or registered assigns (the "Registered Owner "), on the Maturity
Date identified above (subject to any right of prior redemption hereinafter mentioned), the Principal
Amount identified above in lawful money of the United States of America; and to pay interest
thereon at the Interest Rate identified above in like money from the Interest Payment Date (as
hereinafter defined) next preceding the date of authentication of this Bond (unless this Bond is
authenticated on or before an Interest Payment Date and after the fifteenth calendar day of the month
preceding the month in which such Interest Payment Date occurs, in which event it shall bear interest
from such Interest Payment Date, or unless this Bond is authenticated on or prior to [August 15,
2015], in which event it shall bear interest from the Dated Date identified above; provided, however,
that if, at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall
bear interest from the Interest Payment Date to which interest hereon has previously been paid or
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made available for payment), payable semiannually on September 1 and March 1 in each year,
commencing [September 1, 2015] (each, an "Interest Payment Date ") until the Maturity Date stated
above or date of redemption of this Bond. The Principal Amount hereof is payable upon presentation
and surrender hereof at the Trust Office (as defined in the Indenture) of MUFG Union Bank, N.A.
(the "Trustee "). Interest hereon is payable by check of the Trustee mailed by first class mail, postage
prepaid, on each Interest Payment Date to the Registered Owner hereof at the address of the
Registered Owner as it appears on the registration books of the Trustee as of the fifteenth calendar
day of the month preceding the month in which such Interest Payment Date occurs; provided,
however, that payment of interest may be made by wire transfer to an account in the United States of
America to any registered owner of Bonds in the aggregate principal amount of $1,000,000 or more
upon written instructions of any such registered owner filed with the Trustee in writing at least five
(5) Business Days before the Record Date for such Interest Payment Date.
This Bond is one of a duly authorized issue of bonds of the Authority designated the "Lake
Elsinore Public Financing Authority Local Agency Revenue Bonds, Series 2015" (the "Bonds "),
limited in principal amount to Dollars ($[Principal
Amount]), secured by an Indenture of Trust dated as of 1, 2015 (the "Indenture "), by and
between the Authority and the Trustee. Reference is hereby made to the Indenture and all indentures
supplemental thereto for a description of the rights thereunder of the owners of the Bonds, of the
nature and extent of the Revenues (as that term is defined in the Indenture), of the rights, duties and
immunities of the Trustee and of the rights and obligations of the Authority thereunder; and all of the
terms of the Indenture are hereby incorporated herein and constitute a contract between the Authority
and the Registered Owner hereof, and to all of the provisions of which Indenture the Registered
Owner hereof, by acceptance hereof, assents and agrees.
This Bond is a limited obligation of the Authority, payable solely from the Revenues and
funds pledged under the Indenture. This Bond is not a debt of the City of Lake Elsinore (the "City ")
or the State of California (the "State ") or any of its political subdivisions (except the Authority and
only to the extent set forth in the Indenture), and none of said City, the State or any of its political
subdivisions is liable hereon. The Authority has no taxing power.
The Bonds are authorized to be issued pursuant to the provisions of the Marks -Roos Local
Bond Pooling Act of 1985, as amended, constituting Article 4 (commencing with Section 6584) of
Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act ").
The Bonds are limited obligations of the Authority and, as and to the extent set forth in the Indenture,
are payable solely from and secured by a first lien on and pledge of the Revenues and certain other
funds held by the Trustee as provided in the Indenture. The Revenues and such other funds
constitute a trust fund for the security and payment of the principal of and interest on the Bonds,
except to the extent otherwise provided in the Indenture. The full faith and credit of the Authority is
not pledged to the payment of the principal of or interest or redemption premiums (if any) on the
Bonds. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance
upon, any of the property of the Authority or any of its income or receipts, except the Revenues and
such other funds as provided in the Indenture.
The Bonds have been issued to provide funds to purchase certain obligations of various
community facilities districts of the City (the "Community Facilities Districts ") as identified in the
Indenture (collectively, the "Local Obligations "). The Community Facilities Districts or the City, as
applicable, in turn, will take the proceeds that it receives from the sale of the Local Obligations to the
Authority to refund certain outstanding indebtedness of the Community Facilities Districts, all as
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more particularly described in the Indenture. The obligations of the Community Facilities Districts
to make payments of principal and interest on the Local Obligations are limited obligations secured
only as set forth therein.
The Bonds maturing on or before September 1, 20 are not subject to optional call and
redemption prior to maturity. The Bonds maturing on or after September 1, 20_ may be redeemed
at the option of the Authority, from any source of available funds, prior to maturity on any Interest
Payment Date on or after September 1, 20_ as a whole, or in part from maturities of the Local
Obligations simultaneously redeemed, if any redemption of Local Obligations is being made in
conjunction with such optional redemption, and otherwise from such maturities as are selected by the
Authority, and by lot within a maturity, at a redemption price equal to the par amount of the Bonds to
be redeemed, together with accrued interest thereon to the date of redemption, without premium.
The Bonds are subject to special redemption on any Interest Payment Date from proceeds of
early redemption of the Local Obligations from prepayments Special Taxes (as such terms are
defined in the Indenture), in whole or in part, from maturities corresponding proportionately to the
maturities of the Local Obligations simultaneously redeemed at the principal amount thereof, plus a
premium expressed below as a percentage of the principal amount so redeemed, plus accrued interest
to the date of redemption thereof:
Redemption Dates Premium
The Bonds maturing on September 1, 20_ are subject to mandatory sinking fund redemption
prior to maturity, in part, on September 1, 20_, and on each September 1 thereafter by lot, from
sinking fund payments at a redemption price equal to the principal amount of Bonds to be redeemed,
together with accrued interest to the date of redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
(maturity)
In the event that Bonds maturing on September 1, 20_ are redeemed pursuant to the optional
or special redemption provisions described above, the sinking fund payments for the applicable
Series will be reduced as nearly as practicable on a proportionate basis in integral multiples of
$5,000.
The Trustee on behalf, and at the expense of, the Authority shall mail by first class mail,
postage prepaid, notice of any redemption (other than mandatory sinking fund redemption) to the
respective owners of any Bonds designated for redemption, at their respective addresses appearing on
the registration books maintained by the Trustee and to the Securities Depositories and to the
Information Services (as such terms are defined in the Indenture), at least thirty (30) but not more
than sixty (60) days prior to the redemption date; provided, however, that neither failure to receive
A -3
any such notice so mailed nor any defect therein shall affect the validity of the proceedings for the
redemption of such Bonds or the cessation of the accrual of interest thereon.
If this Bond is called for redemption and payment is duly provided therefor as specified in the
Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption.
The Bonds are issuable as fully registered Bonds without coupons in denominations of
$5,000 or any integral multiple thereof. Subject to the limitations and upon payment of the charges,
if any, provided in the Indenture, fully registered Bonds may be exchanged at the Trust Office of the
Trustee for a like aggregate principal amount and maturity of fully registered Bonds of other
authorized denominations.
This Bond is transferable by the Registered Owner hereof, in person or by its attorney duly
authorized in writing, at the Trust Office of the Trustee, but only in the manner, subject to the
limitations and upon payment of the charges provided in the Indenture, and upon surrender and
cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized
denomination or denominations, for the same aggregate principal amount will be issued to the
transferee in exchange herefor. The Trustee shall not be required to register the transfer or exchange
of any Bond (i) during the 15 days prior to selection of Bonds for redemption, or (ii) selected for
redemption.
The Authority and the Trustee may treat the Registered Owner hereof as the absolute owner
hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the
contrary. The Indenture and the rights and obligations of the Authority and of the owners of the
Bonds and of the Trustee may be modified or amended from time to time and at any time in the
manner, to the extent, and upon the terms provided in the Indenture; provided that no such
modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or
otherwise alter or impair the obligation of the Authority to pay the principal, interest or redemption
premiums at the time and place and at the rate and in the currency provided therein of any Bond
without the express written consent of the owner of such Bond, (b) reduce the percentage of Bonds
required for the written consent to any such amendment or modification, or (c) without its written
consent thereto, modify any of the rights or obligations of the Trustee, all as more fully set forth in
the Indenture.
It is hereby certified by the Authority that all things, conditions and acts required to exist, to
have happened and to have been performed precedent to and in the issuance of this Bond do exist,
have happened and have been performed in due time, form and manner as required by the
Constitution and statutes of the State of California and by the Act, and that the amount of this Bond,
together with all other indebtedness of the Authority, does not exceed any limit prescribed by the
Constitution or statutes of the State of California or by the Act.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or
obligatory for any purpose, until the certificate of authentication hereon shall have been signed by the
Trustee.
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IN WITNESS WHEREOF, the LAKE ELSINORE PUBLIC FINANCING AUTHORITY
has caused this Bond to be executed in its name and on its behalf by the facsimile signature of its
Chairman and attested by the facsimile signature of its Secretary, all as of the date set forth above.
Attest:
Secretary
LAKE ELSINORE PUBLIC FINANCING
AUTHORITY
IRA
EM
Chairperson
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within- mentioned Indenture.
Date: , 2015 MUFG UNION BANK, N.A., as Trustee
Authorized Signatory
[FORM OF LEGAL OPINION]
The attached is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a
Professional Corporation, Newport Beach, California, in connection with the issuance of, and dated
as of the date of the original delivery of, the Bonds. A signed copy is on file in my office.
Secretary of the Board of Directors of Lake
Elsinore Public Financing Authority
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto
whose tax identification number is ,
the within mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney to transfer the same on the books of the Trustee with full power of substitution in the
premises.
Dated:
Signature guaranteed:
NOTE: Signature guarantee shall be made by
a guarantor institution participating in the
Securities Transfer Agents Medallion Program
or in such other guarantee program acceptable
to the Trustee.
NOTE: The signatures(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Bond in every particular
without alteration or enlargement or any
change whatsoever
I�7
BOND PURCHASE AGREEMENT
LAKE ELSINORE PUBLICFINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS, SERIES 2015
, 2015
Lake Elsinore Public Financing Authority
130 S. Main Street
Lake Elsinore, CA 92530
Ladies and Gentlemen:
Stifel, Nicolaus & Company, Incorporated (the "Representative ") acting not as a
fiduciary or agent for you, but on behalf of itself and Brandis Tallman LLC ( "Brandis Tallman,"
and collectively with the Representative, the "Underwriter ") offers to enter into this Bond Purchase
Agreement (this "Purchase Agreement ") with the Lake Elsinore Public Financing Authority (the
"Authority ") which will be binding upon the Authority and the Underwriter upon the acceptance
hereof by the Authority. This offer is made subject to its acceptance by the Authority by execution
of this Purchase Agreement and its delivery to the Underwriter on or before 5:00 p.m., California
time, on the date hereof.
The Representative hereby acknowledges that it is duly authorized to execute this
Purchase Agreement and to take all action required or permitted to be taken hereunder by or on
behalf of Brandis Tallman. Any authority, discretion or other power conferred upon the
Representative by this Purchase Agreement may be executed by the Representative alone.
Capitalized terms not otherwise defined herein shall have the meaning provided in the Indenture
(defined below).
Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the
representations, warranties and agreements hereinafter set forth, the Underwriter hereby agrees to
purchase from the Authority for offering to the public, and the Authority hereby agrees to sell to the
Underwriter for such purpose, all (but not less than all) of the Lake Elsinore Public Financing
Authority Local Agency Revenue Refunding Bonds, Series 2015 (the "Bonds "). The purchase price
for the Bonds shall be $ (being the aggregate principal amount thereof
($ ), less an Underwriter's discount of $ , and plus a net original issue
premium of $ ).
The Authority acknowledges and agrees that: (i) the primary role of the Underwriter is to
purchase securities for resale to investors in an arms - length commercial transaction between the
Authority and the Underwriter and that the Underwriter has financial and other interests that differ
from those of the Authority, (ii) the Underwriter is not acting as a municipal advisor, financial
advisor or fiduciary to the Authority or any other person or entity and has not assumed any advisory
or fiduciary responsibility to the Authority with respect to the transaction contemplated hereby and
the discussions, undertakings and proceedings leading thereto (irrespective of whether the
Underwriter have provided other services or is currently providing other services to the Authority on
Lake Elsinore PFA Local Agency 2015 Bonds Bond Purchase Agreement
Lake Elsinore PFA Local Agency 2015 Bonds Bond Purchase Agreement
Error! Unknown document property name.
other matters), (iii) the only obligations the Underwriter has to the Authority with respect to the
transaction contemplated hereby expressly are set forth in this Purchase Agreement, except as
otherwise provided by applicable rules and regulations of the SEC or the rules of the Municipal
Securities Rulemaking Board (the "MSRB "), and (iv) the Authority has consulted their own legal,
accounting, tax, financial and other advisors, as applicable, to the extent each has deemed appropriate
in connection with the transaction contemplated herein. The Authority acknowledges that it has
previously provided the Underwriter with an acknowledgement of receipt of the required
Underwriter disclosure under Rule G -17 of the MSRB.
Section 2. Description of the Bonds. The Authority is a joint exercise of powers
agency organized under the joint exercise of powers act, constituting Article 1 through 4
(commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the
State (the "Joint Powers Act "). The Bonds shall be issued pursuant to an Indenture of Trust (the
"Indenture ") dated as of January 1, 2015 by and between the Authority and MUFG Union Bank,
N.A., as trustee (the "Trustee ") and pursuant to the Marks -Roos Local Bond Pooling Act (the "Bond
Law ") and a resolution of the Authority adopted on , 2015 (the "Bond Resolution "). The
Bonds shall be as described in the Indenture and the Official Statement dated the date hereof relating
to the Bonds (which, together with all exhibits and appendices included therein or attached thereto
and such amendments or supplements thereto which shall be approved by the Underwriter, is
hereinafter called the "Official Statement ").
The proceeds of the Bonds shall be applied by the Authority to finance the purchase of the
following issues of Bonds (the "Local Obligations "):
(a) $ City of Lake Elsinore Community Facilities District No. 2003 -2
(Canyon Hills) Improvement Area B 2015 Special Tax Refunding Bonds (the "CFD No. 2003 -2
Bonds ") being issued by Community Facilities District No. 2003 -02 (Canyon Hills) of the City
( "CFD No. 2003 -02 ") to refund the outstanding Community Facilities District No. 2003 -2 (Canyon
Hills) Improvement Area B, 2006 Series A Bonds (the "Prior CFD No. 2003 -02 Bonds ");
(b) $ Community Facilities District No. 2004 -3 (Rosetta Canyon)
Improvement Area No. 1 2015 Special Tax Refunding Bonds (the "CFD No. 2004 -3 -1 Bonds ")
being issued by Community Facilities District No. 2004 -3 (Rosetta Canyon) of the City ( "CFD No.
2004 -3") to refund the outstanding Community Facilities District No. 2004 -3 (Rosetta Canyon)
Improvement Area No. 1, 2005 Series A Bonds (the "Prior CFD No. 2004 -3 -1 Bonds ");
(c) $ Community Facilities District No. 2004 -3 (Rosetta Canyon)
Improvement Area No. 2 2015 Special Tax Refunding Bonds (the "CFD No. 2004 -3 -2 Bonds ")
being issued by CFD No. 2004 -3 to refund the outstanding Community Facilities District No. 2004 -3
(Rosetta Canyon) Improvement Area No. 2, 2006 Series A Bonds (the "Prior CFD No. 2004 -3 -2
Bonds ");
(d) $ Community Facilities District No. 2005 -1 (Serenity) 2015 Special
Tax Refunding Bonds (the "CFD No. 2005 -1 Bonds ") being issued by Community Facilities District
No. 2005 -1 (Serenity) of the City ( "CFD No. 2005 -1 ") to refund the outstanding Community
Facilities District No. 2005 -1 (Serenity) 2006 Series A Bonds (the "Prior CFD No. 2005 -1 Bonds ");
(e) $ Community Facilities District No. 2005 -2 (Alberhill Ranch)
Improvement Area A 2015 Special Tax Refunding Bonds (the "CFD No. 2005 -2 Bonds ") being
2
Error! Unknown document property name.
issued by Community Facilities District No. 2005 -2 (Alberhill Ranch) of the City ( "CFD No. 2005-
2") to refund the outstanding Community Facilities District No. 2005 -2 (Alberhill Ranch)
Improvement Area A, 2005 Series A Bonds (the "Prior CFD No. 2005 -2 Bonds ");
(f) $ Community Facilities District No. 2005 -6 (City Center
Townhomes) 2015 Special Tax Refunding Bonds (the "CFD No. 2005 -06 Bonds ") being issued by
Community Facilities District No. 2005 -6 (City Center Townhomes) of the City ( "CFD No. 2005 -6 ")
to refund the outstanding Community Facilities District No. 2005 -6 (City Center) 2006 Series A
Bonds (the "Prior CFD No. 2005 -6 Bonds "); and
(g) $ Community Facilities District No. 2006 -2 (Viscaya) 2015
Special Tax Refunding Bonds (the "CFD No. 2006 -2 Bonds ") being issued by Community Facilities
District No. 2006 -2 (Viscaya) of the City ( "CFD No. 2006 -2 ") to refund the outstanding Community
Facilities District No. 2006 -2 (Viscaya) 2006 Series A Bonds (the "Prior CFD No. 2006 -2 Bonds ").
The CFD 2003 -2 Bonds, CFD 2004 -3 -1 Bonds, the CFD No. 2004 -3 -2 Bonds, the CFD
No. 2005 -1 Bonds, the CFD No. 2005 -2 Bonds, the CFD No. 2005 -6 Bonds and the CFD No. 2006 -2
Bonds are collectively referred to as the "Local Obligations."
CFD 2003 -2, CFD No. 2004 -3, CFD No. 2005 -1, CFD No. 2005 -2, CFD No. 2005 -6 and
CFD No. 2006 -2 are collectively referred to as the "CFDs."
The Prior CFD 2003 -2 Bonds, Prior CFD 2004 -3 -1 Bonds, the Prior CFD No. 2004 -3 -2
Bonds, the Prior CFD No. 2005 -1 Bonds, the Prior CFD No. 2005 -2 Bonds, the Prior CFD No. 2005-
6 Bonds and the Prior CFD No. 2006 -2 Bonds are collectively referred to as the "Prior Bonds."
The Local Obligations will be purchased by the Authority in accordance with a Local
Obligations Bond Purchase Agreement dated the date hereof (the "Local Obligations Bond
Purchase Agreement "), by and among the Authority and the CFDs.
Proceeds of the Local Obligations will be used to refund the Prior Bonds in accordance with
seven separate Escrow Agreements, each dated as of January 1, 2015 (the "Escrow Agreements "),
by and between the applicable issuer of the related Prior Bonds and MUFG Union Bank, N.A., as
escrow bank (the "Escrow Bank").
Section 3. Public Offering. The Underwriter agrees to make a bona fide public offering
of all the Bonds initially at the public offering prices (or yields) set forth on Appendix A attached
hereto and incorporated herein by reference. Subsequent to the initial public offering, the
Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary
in connection with the marketing of the Bonds, provided that the Underwriter shall not change the
interest rates set forth on Appendix A. The Bonds may be offered and sold to certain dealers at
prices lower than such initial public offering prices.
Section 4. Delivery of Official Statement. The Authority has delivered or caused to be
delivered to the Underwriter prior to the execution of this Purchase Agreement or the first offering of
the Bonds, whichever first occurs, copies of the Preliminary Official Statement relating to the Bonds
(the "Preliminary Official Statement "). Such Preliminary Official Statement is the official
statement deemed final by the Authority for purposes of Rule 15c2 -12 under the Securities Exchange
Act of 1934 (the "Rule ") and approved for distribution by resolution of the Authority. The Authority
3
Error! Unknown document property name.
shall have executed and delivered to the Underwriter a certification to such effect in the form
attached hereto as Appendix B.
Within seven (7) business days from the date hereof, the Authority shall deliver to the
Underwriter a final Official Statement, executed on behalf of the Authority by an authorized
representative of the Authority and dated the date hereof, which shall include information permitted
to be omitted by paragraph (b)(1) of the Rule and with such other amendments or supplements as
shall have been approved by the Authority and the Underwriter.
The Authority will undertake, pursuant to the Indenture and a continuing disclosure
certificate (the "Continuing Disclosure Certificate "), to provide certain annual financial
information and notices of the occurrence of certain events, if material. A description of this
undertaking is set forth in the Preliminary Official Statement and will also be set forth in the final
Official Statement.
Section 5. The Closing. At 8:00 a.m., California time, on February _, 2015, or at such
other time or on such earlier or later business day as shall have been mutually agreed upon by the
Authority, the City of Lake Elsinore(the "City ") and the Underwriter, the Authority will deliver (i)
through the facilities of The Depository Trust Company, New York, New York, the Bonds in
definitive form (all Bonds being in book -entry form registered in the name of Cede & Co. and
having the CUSIP numbers assigned to them printed thereon), duly executed by the officers of
the Authority, as provided in the Indenture, and (ii) the closing documents hereinafter mentioned at
the offices of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach,
California ( "Bond Counsel') or another place to be mutually agreed upon by the Authority, the City
and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the
Bonds as set forth in Section 1 hereof in immediately available cleared funds. This payment and
delivery, together with the delivery of the aforementioned documents, is herein called the "Closing."
The Bonds will be delivered in such denominations and deposited in the account or accounts
specified by the Underwriter pursuant to written notice not later than five business days prior to
Closing. The Bonds will be made available for checking by the Underwriter at such place as the
Underwriter and the Trustee agree not less than 24 hours prior to the Closing.
Section 6. Representations, Warranties and Covenants. The Authority represents,
warrants and covenants to the Underwriter that:
(a) Due Organization, Existence and Authority. The Authority is a joint powers
authority duly organized and existing under the laws of the State of California, including the Joint
Powers Act, with full right, power and authority to execute, deliver and perform its obligations under
this Purchase Agreement, the Indenture, the Continuing Disclosure Certificate and the Local
Obligations Bond Purchase Agreement (together, the "Authority Documents ") and to carry out and
consummate the transactions contemplated by the Authority Documents and the Official Statement.
(b) Due Authorization and Approval. By all necessary official action of the
Authority, including but not limited to the Bond Resolution, the Authority has duly authorized and
approved the execution and delivery of, and the performance by the Authority of the obligations
contained in, the Authority Documents and as of the date hereof, such authorizations and approvals
are in full force and effect and have not been amended, modified or rescinded. When executed and
delivered, the Authority Documents will constitute the legally valid and binding obligations of the
Authority enforceable in accordance with their respective terms, except as enforcement may be
4
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limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles
relating to or affecting creditors' rights generally. The Authority has complied, and will at the
Closing be in compliance in all respects, with the terms of the Authority Documents and all
provisions of applicable law (including the Bond Law) and its Joint Powers Agreement, in all matters
relating to the adoption of the Bond Resolution and the issuance of the Bonds, including the fling of
all notices as required by the Joint Powers Act.
(c) Official Statement Accurate and Complete. The Preliminary Official
Statement was as of its date, and the final Official Statement is, and at all times subsequent to the
date of the final Official Statement up to and including the Closing will be, true and correct in all
material respects, and the Preliminary Official Statement and the final Official Statement contain,
and up to and including the Closing will contain, no misstatement of any material fact and do not,
and up to and including the Closing will not, omit any statement necessary to make the statements
contained therein, in the light of the circumstances in which such statements were made, not
misleading; provided, however, no representation is made with respect to information therein relating
to The Depository Trust Company and its book -entry only system.
(d) Underwriter's Consent to Amendments and Supplements to Official
Statement. The Authority will advise the Underwriter promptly of any proposal to amend or
supplement the Official Statement and will not effect or consent to any such amendment or
supplement without the consent of the Underwriter, which consent will not be unreasonably
withheld. The Authority will advise the Underwriter promptly of the institution of any proceedings
known to it by any governmental authority prohibiting or otherwise affecting the use of the Official
Statement in connection with the offering, sale or distribution of the Bonds.
(e) No Breach or Default. As of the time of acceptance hereof and as of the time
of the Closing, except as otherwise disclosed in the Official Statement, the Authority is not and will
not be in breach of or in default under any applicable constitutional provision, law or administrative
rule or regulation of the State of California or the United States, or any applicable judgment or decree
or any Indenture, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to
which the Authority is a party or is otherwise subject, and no event has occurred and is continuing
which, with the passage of time or the giving of notice, or both, would constitute a default or event of
default under any such instrument; and, as of such times, except as disclosed in the Official
Statement, the authorization, execution and delivery of the Authority Documents and compliance
with the provisions of each of such agreements or instruments do not and will not conflict with or
constitute a breach of or default under any applicable constitutional provision, law or administrative
rule or regulation of the State of California or the United States, or any applicable judgment, decree,
license, permit, indenture, loan agreement, bond, note, resolution, ordinance, agreement or other
instrument to which the Authority (or any of its officers in their respective capacities as such) is
subject, or by which it or any of its properties is bound, nor will any such authorization, execution,
delivery or compliance result in the creation or imposition of any lien, charge or other security
interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the
terms of any such law, regulation or instrument, except as may be provided by the Authority
Documents.
(f) No Litigation. As of the time of acceptance hereof and the Closing, except as
disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, government authority, public board or body, is or will be pending or
threatened (i) in any way questioning the corporate existence of the Authority or the titles of the
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officers of the Authority to their respective offices; (ii) affecting, contesting or seeking to prohibit,
restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of any
amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way
contesting or affecting the validity of the Bonds or the Authority Documents or the consummation of
the transactions contemplated thereby, or contesting the exclusion of the interest on the Bonds from
taxation or contesting the powers of the Authority and its authority to pledge the revenues securing
the Bonds; (iii) which may result in any material adverse change relating to the Authority; or
(iv) contesting the completeness or accuracy of the Preliminary Official Statement or the final
Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official
Statement or the final Official Statement contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and there is no basis for
any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through
(iv) of this sentence
(g) Certificates of the Authority. Any certificate signed by an official of the
Authority authorized to execute such certificate and delivered to the Underwriter in connection with
the transactions contemplated by the Authority Documents shall be deemed a representation and
warranty by the Authority to the Underwriter as to the truth of the statements therein contained.
(h) Security for Bonds. The Bonds will be paid from Revenues (as defined in the
Indenture) received by or on behalf of the Authority. The Indenture creates a valid pledge of, and
first lien upon, Revenues deposited thereunder and the moneys in certain funds and accounts
established under the Indenture, subject in all cases to the provisions of the Indenture permitting the
application thereof for the purposes and on the terms and conditions set forth therein.
(i) Prior Continuing Disclosure Undertakings. Based on a review of its prior
undertakings under Rule 15c2 -12, and except as disclosed in the Official Statement, the Authority
has never failed within the last five years to comply in all material respects with any previous
undertakings with regard to Rule 15c2 -12 to provide annual reports or notices of material events.
0) No Other Bonds. Between the date of this Purchase Agreement and the
Closing Date, the Authority will not offer or issue any bonds, notes or other obligations of the
Authority for borrowed money not previously disclosed to the Underwriter.
Section 7. Closing Conditions. The Underwriter has entered into this Purchase
Agreement in reliance upon the representations, warranties and covenants herein and the
performance by the Authority of its obligations hereunder, both as of the date hereof and as of the
date of the Closing. The Underwriter's obligations under this Purchase Agreement to purchase and
pay for the Bonds shall be subject to the following additional conditions:
(a) Bring -Down Representation. The representations, warranties and covenants
of the Authority contained herein shall be true, complete and correct at the date hereof and at the time
of the Closing, as if made on the date of the Closing.
(b) Executed Agreements and Performance Thereunder. At the time of the
Closing (i) the Authority Documents shall be in full force and effect, and shall not have been
amended, modified or supplemented except with the written consent of the Underwriter and (ii) there
shall be in full force and effect such resolutions as, in the opinion of Bond Counsel, shall be
6
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necessary in connection with the transactions contemplated by the Official Statement and the
Authority Documents.
(c) Issuance and Purchase of Local Obli ate. Concurrent with the issuance of
the Bonds and the purchase thereof by the Underwriter in accordance with this Purchase Agreement,
the CFDs shall have issued the CFD Bonds, and the Local Obligations shall have been delivered to
the Authority under and in accordance with the Local Obligations Bond Purchase Agreement, and all
conditions set forth in the Local Obligations Bond Purchase Agreement to the issuance and delivery
of the Local Obligations shall have been satisfied.
(d) Closing Documents. At or prior to the Closing, the Underwriter shall receive
each of the documents identified in Section 8.
Section 8. Closing Documents. In addition to the other conditions to the Underwriter's
obligations under this Purchase Agreement to purchase and pay for the Bonds, at or before the
Closing the Underwriter shall receive each of the following documents, provided that the actual
payment for the Bonds by the Underwriter and the acceptance of delivery thereof shall be conclusive
evidence that the requirements of this Section 8 shall have been satisfied or waived by the
Underwriter.
(a) Bond Opinion. An approving opinion of Bond Counsel dated the date of the
Closing and substantially in the form appended to the Official Statement, together with a letter from
such counsel, dated the date of the Closing and addressed to the Underwriter, to the effect that the
foregoing opinion addressed to the Authority may be relied upon by the Underwriter to the same
extent as if such opinion were addressed to them.
(b) Supplemental Opinion. A supplemental opinion or opinions of Bond Counsel
addressed to the Underwriter, in form and substance acceptable to the Underwriter, and dated the
date of the Closing substantially to the following effect:
(i) This Purchase Agreement, the Local Obligations Bond Purchase
Agreement and the Continuing Disclosure Certificate have been duly authorized, executed and
delivered by the Authority and constitute the valid, legal and binding agreements of the Authority,
enforceable in accordance with their respective terms.
(ii) the statements contained in the Official Statement under the captions
"THE BONDS," "SECURITY FOR THE BONDS," "SECURITY FOR THE LOCAL
OBLIGATIONS," "LEGAL MATTERS," and "MISCELLANEOUS- Continuing Disclosure," and in
Appendices B, E and F, insofar as such statements expressly summarize certain provisions of the
Bonds, the Local Obligations, the Indenture, the Escrow Agreements, the other agreements and the
opinion of such firm concerning the exclusion from gross income for federal income tax purposes
and exemption from State of California personal income taxes of interest on the Bonds, are accurate
in all material respects.
(iii) The Bonds are exempt from registration under the Securities Act of
1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act
of 1939, as amended.
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(c) Authority Counsel Opinion. An opinion of Counsel to the Authority, dated
the date of the Closing and addressed to the Underwriter, in form and substance acceptable to Bond
Counsel substantially to the following effect:
(i) The Authority is a joint powers authority duly organized and validly
existing under the laws of the State of California.
(ii) The Bond Resolution has been duly adopted, is in full force and effect
and has not been modified, amended or rescinded.
(iii) The Authority Documents have been duly authorized, executed and
delivered by the Authority and constitute the legal, valid and binding obligation of the Authority
enforceable in accordance with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by
the application of equitable principles, if equitable remedies are sought.
(iv) Except as otherwise disclosed in the Official Statement and to the best
knowledge of such counsel after due inquiry, there is no litigation, proceeding, action, suit, or
investigation at law or in equity before or by any court, governmental authority or body, pending or
threatened against the Authority, challenging the creation, organization or existence of the Authority,
or the validity of the Authority Documents or seeking to restrain or enjoin the repayment of the
Bonds or in any way contesting or affecting the validity of the Authority Documents or contesting
the authority of the Authority to enter into or perform its obligations under any of the Authority
Documents, or under which a determination adverse to the Authority would have a material adverse
effect upon the financial condition or the revenues of the Authority, or which, in any manner,
questions the right of the Authority to pledge the Revenues to the payment of the Bonds.
(d) Trustee /Escrow Agent Counsel Opinion. The opinion of counsel to the
Trustee/Escrow Agent, dated the date of the Closing, addressed to the Underwriter, to the effect that:
(i) The Trustee /Escrow Agent is a national banking association, duly
organized and validly existing under the laws of the United States of America, having full power to
enter into, accept and administer the trust created under the Indenture and the Escrow Agreements.
(ii) The Indenture and the Escrow Agreements have been duly authorized,
executed and delivered by the Trustee /Escrow Agent and constitute the legal, valid and binding
obligations of the Trustee/Escrow Agent enforceable in accordance with their respective terms,
except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the
enforcement of creditors' rights generally and by the application of equitable principles, if equitable
remedies are sought.
(e) Authority Certificate. A certificate of the Authority, dated the date of the
Closing, signed on behalf of the Authority by the Executive Director, Treasurer or other duly
authorized officer of the Authority to the effect that:
(i) The representations, warranties and covenants of the Authority
contained herein are true and correct in all material respects on and as of the date of the Closing as if
made on the date of the Closing and the Authority has complied with all of the terms and conditions
8
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of this Purchase Agreement required to be complied with by the Authority at or prior to the date of
the Closing.
(ii) the representations and warranties of the Authority contained in the
Authority Documents are true and correct in all material respects as of the date hereof as if made on
the date hereof, and the Authority has complied with all agreements, covenants and conditions to be
complied with by the Authority under the Authority Documents as of the date hereof.
(iii) The Authority has complied with all agreements and covenants,
and satisfied all conditions, on its part to be complied with or satisfied under the Purchase
Agreement and under the Authority Documents at or prior to the date hereof;
(iv) No event affecting the Authority has occurred since the date of the
Official Statement which either makes untrue or incorrect in any material respect as of the date
hereof the statements or information relating to the Authority contained in the Official Statement
or is not reflected in the final Official Statement but should be reflected therein in order to make
such statements and information therein not misleading in any material respect.
(f) Trustee /Escrow Agent's Certificate. A certificate of the Trustee /Escrow
Agent, dated the date of Closing, in form and substance acceptable to counsel for the Underwriter, to
the following effect:
(i) The Trustee /Escrow Agent is duly organized and existing as a
national banking association in good standing under the laws of the United States of America, having
the full power and authority to enter into and perform its duties under the Indenture and the Escrow
Agreements.
(ii) The Trustee /Escrow Agent is duly authorized to enter into the
Indenture and the Escrow Agreements.
(iii) To its best knowledge after due inquiry, there is no action, suit,
proceeding or investigation, at law or in equity, before or by any court or governmental district,
public board or body pending against the Trustee /Escrow Agent or threatened against the
Trustee /Escrow Agent which in the reasonable judgment of the Trustee /Escrow Agent would affect
the existence of the Trustee /Escrow Agent or in any way contesting or affecting the validity or
enforceability of the Indenture or contesting the powers of the Trustee/Escrow Agent or its authority
to enter into and perform its obligation under the Indenture and the Escrow Agreements.
(iv) Disclosure Counsel Letter. A letter from Jones Hall, A Professional
Law Corporation, dated the Closing Date and addressed to the Authority and to the Underwriter, to
the effect that, without having undertaken to determine independently the accuracy or completeness
of the statements contained in the Official Statement, but on the basis of their participation in
conferences with representatives of the City, the Authority, the CFDs, the Trustee /Escrow Agent and
the Verification Agent and others, and their examination of certain documents, nothing has come to
their attention which has led them to believe that the Official Statement, as of its date and as of the
Closing Date, contained any untrue statement of a material fact or omited to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (except that no opinion or belief need be expressed as
to any financial statements or other financial, statistical or engineering data or forecasts, numbers,
9
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charts, estimates, projections, assumptions, or expressions of opinion, any information about
valuation, appraisals, absorption, archeological or environmental matters, or any information about
The Depository Trust Company or the book - entry -only system);
(g) Original Executed Documents. An original executed copy of each of the
Authority Documents, along with original executed copies of the Escrow Agreements and the
Continuing Disclosure Certificate.
(h) Certificate of Special Tax Consultants. Certificate in form and substance as
set forth in Exhibit C hereto, of Albert A. Webb Associates, Riverside, California (the "Special Tax
Consultant "), dated as of the Closing Date.
(i) Escrow Verification. An escrow verification report of (the
"Verification Agent ") with respect to the refunding of the Prior Bonds.
0) Additional Documents. Such additional certificates, instruments and other
documents as Bond Counsel, Underwriter's Counsel, the Authority or the Underwriter may
reasonably deem necessary.
If the Authority shall be unable to satisfy the conditions contained in this Purchase
Agreement, or if the obligations of the Underwriter shall be terminated for any reason permitted by
this Purchase Agreement, this Purchase Agreement shall terminate and neither the Underwriter nor
the Authority shall be under further obligation hereunder, except as further set forth in Section 10.
Section 9. Termination Events. The Underwriter shall have the right to terminate this
Purchase Agreement, without liability therefor, by notification to the Authority if at any time
between the date hereof and prior to the Closing:
(a) any event shall occur which causes any statement contained in the Official
Statement to be materially misleading or results in a failure of the Official Statement to state a
material fact necessary to make the statements in the Official Statement, in the light of the
circumstances under which they were made, not misleading; or
(b) the marketability of the Bonds or the market price thereof or the ability of the
Underwriter to enforce contracts for the sale of the Bonds, in the opinion of the Underwriter, has
been materially adversely affected by an amendment to the Constitution of the United States or by
any legislation in or by the Congress of the United States or by the State, or the amendment of
legislation pending as of the date of this Purchase Agreement in the Congress of the United States, or
the recommendation to Congress or endorsement for passage (by press release, other form of notice
or otherwise) of legislation by the President of the United States, the Treasury Department of the
United States, the Internal Revenue Service or the Chairman or ranking minority member of the
Committee on Finance of the United States Senate or the Committee on Ways and Means of the
United States House of Representatives, or the proposal for consideration of legislation by either
such Committee or by any member thereof, or the presentment of legislation for consideration as an
option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress
of the United States, or the favorable reporting for passage of legislation to either House of the
Congress of the United States by a Committee of such House to which such legislation has been
referred for consideration, or any decision of any Federal or State court or any ruling or regulation
(final, temporary or proposed) or official statement on behalf of the United States Treasury
10
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Department, the Internal Revenue Service or other federal or State authority materially adversely
affecting the federal or State tax status of the Authority, or the interest on bonds or notes or
obligations of the general character of the Bonds; or
(c) any legislation, ordinance, rule or regulation shall be introduced in, or be
enacted by any governmental body, department or authority of the State, or a decision by any court of
competent jurisdiction within the State or any court of the United States shall be rendered which, in
the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds
or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or
(d) legislation shall be enacted by the Congress of the United States, or a decision
by a court of the United States shall be rendered, or a stop order, ruling, regulation or official
statement by, or on behalf of, the Securities and Exchange Commission or any other governmental
district having jurisdiction of the subject matter shall be issued or made to the effect that the
issuance, offering or sale of obligations of the general character of the Bonds, or the issuance,
offering or sale of the Bonds, including all underlying obligations, as contemplated hereby or by the
Official Statement, is in violation or would be in violation of, or that obligations of the general
character of the Bonds, or the Bonds, are not exempt from registration under, any provision of the
federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that
the Indenture needs to be qualified under the Trust Indenture Act of 1939, as amended and as then in
effect; or
(e) any event occurs or any information becomes known to the Underwriter
that causes the Underwriter to reasonably believe that the final Official Statement as then
amended or supplemented includes an untrue statement of a material fact, or omits to state any
material fact necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading; or
(f) there is in force a general suspension of trading on the New York Stock
Exchange, the effect of which on the financial markets of the United States is such as, in the
reasonable judgment of the Underwriter, would materially adversely affect the market for or
market price of the Bonds or the ability of the Underwrites to enforce contracts for the sale of the
Bonds; or
(g) any proceeding is pending or threatened by the Securities and Exchange
Commission against the Authority; or
(h) additional material restrictions not in force as of the date hereof shall have
been imposed upon trading in securities generally by any governmental authority or by any national
securities exchange which restrictions materially adversely affect the Underwriter's ability to trade
the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or
(i) a general banking moratorium shall have been established by federal, New
York or California authorities; or
0) the New York Stock Exchange or other national securities exchange, or
any governmental authority, imposes, as to the Bonds or obligations of the general character of
the Bonds, any material restrictions not now in force, or increases materially those now in force,
11
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with respect to the extension of credit by, or the charge to the net capital requirements of, the
Underwriter; or
(k) the United States has become engaged in hostilities which have resulted in a
declaration of war or a national emergency or there has occurred any other outbreak of hostilities or a
national or international calamity or crisis, or there has occurred any escalation of existing hostilities,
calamity or crisis, financial or otherwise, the effect of which on the financial markets of the United
States being such as, in the reasonable opinion of the Underwriter, would affect materially and
adversely the ability of the Underwriter to market the Bonds; or
(1) the commencement of any action, suit or proceeding described in
Section 6(f)(i) or (ii) with respect to either the Authority or the City which, in the judgment of the
Underwriter, materially adversely affects the market price of the Bonds;
(m) an amendment to the federal or State constitution is enacted or action is
taken by any federal or State court, legislative body, regulatory body or other authority
materially adversely affecting the tax status of the Authority, its property, income or securities
(or interest thereon), the validity or enforceability of the Special Taxes or the ability of the
Authority to issue the Bonds or any of CFDs to issue its respective series of Local Obligations,
or the levy of any of the Special Taxes, as contemplated by the Bond Resolution, this Purchase
Agreement and the Official Statement.
Section 10. Expenses. The Underwriter shall be under no obligation to pay and the
Authority shall pay or cause to be paid the expenses incident to the performance of the obligations of
the Authority hereunder including but not limited to (a) the costs of the preparation and printing, or
other reproduction (for distribution on or prior to the date hereof) of the Authority Documents and
the cost of preparing, printing, issuing and delivering the definitive Bonds, (b) the fees and
disbursements of any counsel, financial advisors, accountants or other experts or consultants retained
by the Authority and the City; (c) the fees and disbursements of Bond Counsel; and (d) the cost of
printing of the Preliminary Official Statement and any supplements and amendments thereto and the
cost of printing of the Official Statement, including the requisite number of copies thereof for
distribution by the Underwriter.
The Underwriter shall pay and the Authority shall be under no obligation to pay all expenses
incurred by it in connection with the public offering and distribution of the Bonds, including but not
limited to (a) reporting fees chargeable by the California Debt and Investment Advisory
Commission, (b) the Underwriter's Counsel's fee, and (c) CUSIP Service Bureau fees.
Section 11. Notice. Any notice or other communication to be given to the Authority
under this Purchase Agreement may be given by delivering the same in writing to such entity at the
address set forth above. Any notice or other communication to be given to the Underwriter under
this Purchase Agreement may be given by delivering the same in writing to: Stifel, Nicolaus &
Company, Incorporated, 515 South Figueroa Street, Suite 1060, Los Angeles, CA 90071, Attention:
John Kim and Brandis Tallman LLC, 22 Battery Street, Suite 500, San Francisco, California
94111 Attention: Rick Brandis.
Section 12. Entire Agreement. This Purchase Agreement, when accepted by the
Authority, shall constitute the entire agreement between the Authority and the Underwriter and is
made solely for the benefit of the Authority and the Underwriter (including the successors or assigns
12
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of any Underwriter). No other person shall acquire or have any right hereunder by virtue hereof,
except as provided herein. All the Authority's representations, warranties and agreements in this
Purchase Agreement shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter.
Section 13. Counterparts. This Purchase Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same instrument.
Section 14. Severability. In case any one or more of the provisions contained herein
shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision hereof.
Section 15. Governing Law. The validity, interpretation and performance of this
Purchase Agreement shall be governed by the laws of the State of California.
13
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Section 16. No Assignment. The rights and obligations created by this Purchase
Agreement shall not be subject to assignment by the Underwriter or the Authority without the prior
written consent of the other parties hereto.
STIFEL, NICOLAUS & COMPANY,
INCORPORATED, as Representative of the
Underwriter
:
Accepted as of the date first stated above:
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
Treasurer
Time of Execution:
S -1
�I
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Managing Director
APPENDIX A
MATURITY SCHEDULE
Principal Principal
Payment Date Amount Interest Rate Yield Price
(c) Priced to call on September 1, 20_ at par.
A -1
A -1
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APPENDIX B
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS, SERIES 2015
RULE 15c2 -12 CERTIFICATE
The undersigned hereby certifies and represents that he or she is a duly appointed and acting
authorized officer of the Lake Elsinore Public Financing Authority (the "Authority "), and as such is
duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on
behalf of the Authority as follows:
(1) This Certificate is delivered in connection with the offering and sale of the
Lake Elsinore Public Financing Authority Local Agency Revenue Refunding Bonds, Series
2015 (the "Bonds ") in order to enable the underwriter of the Bonds to comply with Securities
and Exchange Commission Rule 15c2 -12 under the Securities Exchange Act of 1934 (the
"Rule ").
(2) In connection with the offering and sale of the Bonds, there has been prepared
a Preliminary Official Statement (the "Preliminary Official Statement ").
(3) As used herein, "Permitted Omissions" shall mean the offering price(s),
interest rate(s), selling compensation, aggregate principal amount, principal amount per
maturity, delivery dates, ratings and other terms of the Bonds depending on such matters, all
with respect to the Bonds.
(4) The Preliminary Official Statement is, except for the Permitted Omissions,
deemed final within the meaning of the Rule.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of this _ day of
, 2015.
LAKE ELSINORE PUBLIC FINANCING
AUTHORITY
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APPENDIX C
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS, SERIES 2015
CERTIFICATE OF SPECIAL TAX CONSULTANT
Albert A. Webb Associates, Riverside, California ( "Special Tax Consultant "), was retained
as Special Tax Consultant and assisted in the preparation of the Official Statement dated
, 2015 (the "Official Statement ") relating to the above - referenced bonds (the
"Bonds ").
With respect to each of the CFDs and the related Local Obligations, we hereby certify as
follows:
(i) Based upon the Special Tax Consultant's review of the Official Statement and such
other documents as it deems relevant in the circumstances, the Special Tax Consultant hereby
certifies that the Special Tax in the CFD, if collected in the maximum amounts permitted pursuant to
the rate and method of apportionment for the CFD, would generate at least 110% of the gross annual
debt service on the Local Obligation, provided that the annual debt service figures on the attached
debt service schedule, which were relied upon by Special Tax Consultant, are substantially true and
correct.
(ii) Although the Special Tax, if collected in the maximum amounts pursuant to the rate
and method of apportionment, will generate at least 110% of the gross annual debt service payable
with respect to the Local Obligation each year, no representation is made herein as to actual amounts
that will be collected in future years.
(iii) All information with respect to the rate and method of apportionment for the CFD in
the Official Statements true and correct as of the date of the Official Statement and as of the date
hereof.
(iv) All information supplied by us for use in the Official Statement was true and correct
as of the date of the Official Statement and remains true and correct as of the date hereof and such
information does not contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading.
Dated: 2015
ALBERT A. WEBB ASSOCIATES
LON
C -1
C -1
Error! Unknown document property name.
Stradling Yocca Carlson & Routh
Draft of 116114
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO.
2015 SPECIAL TAX REFUNDING BONDS
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Escrow Agreement "), made and entered into as of
January 1, 2015, by and between City of Lake Elsinore Community Facilities District No.
( ) (the "District "), and MUFG Union Bank, N.A. (the "Escrow Agent "), a
national banking association organized and existing under the laws of the United States of America
and being qualified to accept and administer the escrow hereby created.
WITNESSETH:
WHEREAS, the District has heretofore issued its City of Lake Elsinore Community
Facilities District No. ( ) Special Tax Bonds, Series _ (the
"Prior Bonds "), pursuant to the terms of that certain Fiscal Agent Agreement dated as of (the
"Prior Fiscal Agent Agreement "), by and between the District and MUFG Union Bank, N.A.
(formerly known as Union Bank of California, N.A.), as fiscal agent (the "Prior Fiscal Agent "); and
WHEREAS, the District has determined to cause the issuance and sale of its 2015 Special
Tax Refunding Bonds (the "CFD Bonds "), in connection with the issuance of the Lake Elsinore
Public Financing Authority Local Agency Revenue Bonds, Series 2015 (the "Authority Bonds ") for
the purpose of providing moneys to the Escrow Agent, which will be sufficient (when combined with
moneys to be provided from other sources) to redeem on , 2015 (the "Redemption
Date ") the Prior Bonds maturing on and after September 1, 2015 at a redemption price equal to 100%
of the principal amount to be redeemed, together with accrued interest to the Redemption Date (the
"Redemption Price "); and
WHEREAS, pursuant to Section 2 of this Escrow Agreement, the District will cause a
prescribed portion of the proceeds of the CFD Bonds to be set aside with the Escrow Agent, together
with certain funds held by the Prior Fiscal Agent with respect to the Prior Bonds to be set aside with
the Escrow Agent, in order to provide for the payment of the Redemption Price of the Prior Bonds,
such proceeds and funds to be deposited in an escrow fund to be created hereunder to be maintained
by the Escrow Agent to be held uninvested in the Escrow Fund, and such amount has been certified
by to be sufficient to pay when and as due the Redemption Price of the Prior Bonds
set forth in Schedule II hereto;
NOW, THEREFORE, the District and the Escrow Agent hereby agree as follows:
SECTION 1. Establishment and Maintenance of Escrow Fund. The Escrow Agent agrees
to establish and maintain, until the Prior Bonds have been paid in full, a fund designated as the "City
of Lake Elsinore Community Facilities District No. Escrow Fund" (the "Escrow Fund "),
and to hold the moneys therein at all times as a special and separate escrow fund (wholly segregated
from all other securities, investments or moneys on deposit with the Escrow Agent). All moneys in
the Escrow Fund are hereby irrevocably pledged, subject to the provisions of Section 2 hereof, to
secure the payment when due of the Redemption Price of the Prior Bonds.
SECTION 2. Funding of the Escrow Fund.
(a) The District agrees that, not later than , 2015 (the "Closing
Date "), the District will cause to be transferred to the Escrow Agent for deposit in the Escrow Fund:
(i) from MUFG Union Bank, N.A., as fiscal agent (the "Fiscal Agent ")
under the Bond Indenture (the "Indenture ") dated as of January 1, 2015, between the District and the
Fiscal Agent, the amount of $ from the proceeds of sale of the CFD Bonds; and
(ii) from the Prior Fiscal Agent the sum of $ , from amounts
held under the Prior Fiscal Agent Agreement on account of the Prior Bonds.
(b) The District hereby directs the Escrow Agent to hold such funds uninvested
in the Escrow Fund.
SECTION 3. Payment and Redemption of the Prior Bonds. The District hereby requests
and irrevocably instructs the Escrow Agent to transfer, subject to the provisions of Section 2 hereof,
all moneys deposited in the Escrow Fund, to the Prior Fiscal Agent to pay the Redemption Price of
the remaining outstanding Prior Bonds on the Redemption Date. Upon payment in full of the Prior
Bonds, the Escrow Agent shall transfer any moneys remaining in the Escrow Fund to the District
and, after provision for payment of amounts due the Prior Fiscal Agent and the Escrow Agent
pursuant to Section 6 and 11 hereof, this Escrow Agreement shall terminate. The Escrow Fund cash
flow for the Escrow Fund is set forth in Schedule II attached hereto.
SECTION 4. Notices of Defeasance and Redemption of the Prior Bonds. The District
hereby instructs the Escrow Agent to mail, first class, postage prepaid, a notice to the Prior
Bondowners in the form attached hereto as Schedule I -A stating that the defeasance of the Prior
Bonds has occurred. The District further instructs the Escrow Agent to mail, first class, postage
prepaid, by not later than 30 days prior to the Redemption Date a notice in substantially the form
attached hereto as Schedule I -B of redemption with respect to the Prior Bonds in accordance with the
procedures set forth in Section 4.3 of the Prior Fiscal Agent Agreement.
SECTION 5. Notice of Possible Deficiencies. If at any time the Escrow Agent has actual
knowledge that the moneys in the Escrow Fund will not be sufficient to make all payments required
by Section 3 hereof, the Escrow Agent shall notify the District in writing as soon as is reasonably
practicable, of such fact, the amount of such deficiency and if known, the reason therefor; provided,
however, that the District shall have no liability for any such deficiency.
SECTION 6. Fees and Costs. The Escrow Agent shall receive its reasonable fees and
expenses as previously agreed to by the Escrow Agent and the District and any other reasonable fees
and expenses of the Escrow Agent approved by the District. The parties hereto agree that the duties
and obligations of the Escrow Agent shall be as expressly provided herein, and no implied duties or
obligations shall be read into this Escrow Agreement against the Escrow Agent. The fees of and the
costs incurred by the Escrow Agent shall in no event be deducted or payable from, or constitute a lien
against, the Escrow Fund.
SECTION 7. Merizer or Consolidation. Any company into which the Escrow Agent may
be merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the Escrow
Agent may sell or transfer all or substantially all of its corporate trust business, provided such
company shall be eligible under this Escrow Agreement, shall be the successor of such Escrow Agent
without the execution or filing of any paper or any further act, notwithstanding anything herein to the
contrary.
SECTION 8. Severability. If any section, paragraph, sentence, clause or provision of this
Escrow Agreement shall for any reason be held to be invalid or unenforceable, the invalidity or
unenforceability of such section, paragraph, sentence, clause or provisions shall not affect any of the
remaining provisions of this Escrow Agreement.
SECTION 9. Execution of Counterparts. This Escrow Agreement may be executed in any
number of counterparts, each of which shall for all purposes be deemed to be an original and all of
which shall together constitute but one and the same instrument.
SECTION 10. Applicable Law. This Escrow Agreement shall be governed by and construed
in accordance with the laws of the State of California.
SECTION 11. Indemnification. The District agrees to indemnify, hold harmless and defend
the Escrow Agent, its officers, employees, directors, and agents, to the extent permitted by law from
and against any and all losses, damages, claims, actions, liabilities, costs and expenses of whatever
nature, kind or character (including, without limitation, attorneys' fees, litigation and court costs,
amounts paid in settlement and amounts paid to discharge judgments) which may be imposed on, or
incurred by or asserted against the Escrow Agent directly or indirectly arising out of or related to any
claim, suit, investigation, proceeding or action commenced or threatened as a result the execution by
the Escrow Agent of this Escrow Agreement, the performance of its obligations hereunder, or of the
payment of the Prior Bonds; provided, however, that this indemnification shall not cover any losses
or expenses incurred by the Escrow Agent as a result of its negligence or willful misconduct. The
agreements of the District hereunder shall survive the discharge of the Prior Fiscal Agent Agreement
and the payment of the Redemption Price and the resignation or removal of the Prior Fiscal Agent.
SECTION 12. Immunities and Liability of Escrow Agent.
(a) The Escrow Agent undertakes to perform only such duties as are expressly
and specifically set forth in this Escrow Agreement, and no implied duties or obligations shall be
read into this Escrow Agreement against Escrow Agent.
(b) The Escrow Agent shall not have any liability hereunder except to the extent
of its own negligence or willful misconduct. In no event shall the Escrow Agent be liable for any
special, indirect or consequential damages, even if the Escrow Agent or the District knows of the
possibility of such damages. The Escrow Agent shall have no duty or responsibility under this
Escrow Agreement in the case of any default in the performance of the covenants or agreements
contained in the resolutions and fiscal agent agreements relating to the Prior Bonds. The Escrow
Agent is not required to resolve conflicting demands to money or property in its possession under
this Escrow Agreement.
(c) The Escrow Agent may consult with counsel of its own choice, and the
opinion of such counsel shall be full and complete authorization to take or suffer in good faith any
action hereunder in accordance with such opinion of counsel.
(d) The Escrow Agent shall not be responsible for any of the recitals or
representations contained herein.
(e) The Escrow Agent may become the owner of, or acquire any interest in, any
of the Prior Bonds with the same rights that it would have if it were not the Escrow Agent and may
engage or be interested in any financial or other transaction with the District.
(f) The Escrow Agent shall not be liable for the accuracy of any calculations
provided as to the sufficiency of the moneys deposited with it to pay the prescribed Prior Bonds.
(g) The Escrow Agent shall not be liable for any action or omission of the
District under this Escrow Agreement.
(h) Whenever in the administration of this Escrow Agreement the Escrow Agent
shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering
any action hereunder, such matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or willful misconduct on the part of the Escrow Agent,
be deemed to be conclusively proved and established by a certificate of any authorized representative
of the District, and such certificate shall, in the absence of negligence or willful misconduct on the
part of the Escrow Agent, be full warrant to the Escrow Agent for any action taken or suffered in
good faith by it under the provisions of this Escrow Agreement.
(i) The Escrow Agent may conclusively rely, as to the truth and accuracy of the
statements and correctness of the opinions and the calculations provided to it in connection with this
Escrow Agreement and shall be protected in acting, or refraining from acting, upon any written
notice, instruction, request, certificate, document or opinion furnished to the Escrow Agent in
compliance with this Escrow Agreement and reasonably believed by the Escrow Agent to have been
signed or presented by the proper party, and it need not investigate any fact or matter stated in such
notice, instruction, request, certificate or opinion.
0) The Escrow Agent shall incur no liability for losses arising from any
investment made pursuant to this Agreement.
(k) No provision of this Agreement shall require the Escrow Agent to expend or
risk its own funds or otherwise incur any financial liability in the performance or exercise of any of
its duties hereunder, or in the exercise of its rights or powers.
(1) The liability of the Escrow Agent to make the payments required by this
Agreement shall be limited to the moneys in the Escrow Fund.
(m) The Escrow Agent shall furnish the District periodic cash transaction
statements which include detail for all investment transactions effected by the Escrow Agent or
brokers selected by the District. Upon the District's election, such statements will be delivered via
the Escrow Agent's online service and upon electing such service, paper statements will be provided
only upon request. The District waives the right to receive brokerage confirmations of security
transactions effected by the Escrow Agent as they occur, to the extent permitted by law. The District
further understands that trade confirmations for securities transactions effected by the Escrow Agent
will be available upon request and at no additional cost and other trade confirmations may be
obtained from the applicable broker.
4
SECTION 13. Termination and Modification of Agreement. Upon final payment in full of
the principal of and interest on the Prior Bonds pursuant to this Escrow Agreement, all obligations of
the Escrow Agent under this Escrow Agreement shall cease and terminate, except for the obligation
of the Escrow Agent to pay or cause to be paid to the owners of the Prior Bonds not presented for
payment all sums due thereon and the obligation of the District to pay to the Escrow Agent any
amounts due and owing to the Escrow Agent hereunder. This Escrow Agreement may not be
amended or modified in any manner which is materially adverse to the Owners of the Prior Bonds
without the unanimous prior written consent of the Owners of the Prior Bonds.
IN WITNESS WHEREOF, City of Lake Elsinore Community Facilities District No.
( ) and MUFG Union Bank, N.A., as Escrow Agent, have caused this Escrow
Agreement to be executed each on its behalf by duly authorized officers as of the day and year first
above written.
ATTEST:
City Clerk of the City of Lake Elsinore
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO.
Mayor of the City of Lake Elsinore
MUFG UNION BANK, N.A., as Escrow Agent
By:
Its: Authorized Officer
S -1
SCHEDULE I -A
FORM OF NOTICE OF DEFEASANCE
NOTICE OF DEFEASANCE OF
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. (_
SPECIAL TAX BONDS, SERIES _
Notice is hereby given to the holders of all of the outstanding $ City of Lake
Elsinore Community Facilities District No. ( ) Special Tax Bonds,
Series _ maturing on and after September 1, 2015 (the "Refunded Bonds ") (i) that there has
been deposited with MUFG Union Bank, N.A., as Escrow Agent (the "Escrow Agent "), moneys
under the Escrow Agreement, dated as of January 1, 2015 (the "Escrow Agreement "), between City
of Lake Elsinore Community Facilities District No. ( ) (the
"District ") and the Escrow Agent, which shall be sufficient and available to redeem on ,
2015 the Refunded Bonds at a redemption price (expressed as a percentage of the principal amount
of the Refunded Bonds to be redeemed) equal to 100 %; (ii) that the Escrow Agent has been
irrevocably instructed to redeem on , 2015 such Refunded Bonds; and (iii) that the
Refunded Bonds are deemed to be paid in accordance with Section 9.1 of the Fiscal Agent
Agreement by and between the District and MUFG Union Bank, N.A. (formerly known as Union
Bank of California, N.A.), as fiscal agent, dated as of , pursuant to which the Refunded
Bonds were issued.
Dated this day of 2015.
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO.
MUFG UNION BANK, N.A.
as Escrow Agent
SCHEDULE I -A
SCHEDULE I -B
FORM OF NOTICE OF REDEMPTION
NOTICE OF REDEMPTION OF
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. L
SPECIAL TAX BONDS, SERIES
NOTICE IS HEREBY GIVEN to the owners of the above - captioned Special Tax Bonds,
Series _ (the "Bonds ") of the City of Lake Elsinore Community Facilities District No.
( ) (the "District') pursuant to the Fiscal Agent Agreement, dated as of
(the " Trust Agreement'), by and between the District and MUFG Union Bank, N.A. (formerly
known as Union Bank of California, N.A.), as fiscal agent (the " Fiscal Agent'), that the Bonds in
the principal amount of $ listed below (the "Refunded Bonds ") have been called for
redemption on , 2015 (the "Redemption Date ").
Maturity Date
CUSIP (September I) Rate Amount Price
The Refunded Bonds will be payable on the Redemption Date at a redemption price of 100% of
the principal amount plus accrued interest to such date (the "Redemption Price "). The Redemption Price
of the Refunded Bonds will become due and payable on the Redemption Date. Interest with respect to the
Refunded Bonds will cease to accrue on and after the Redemption Date, and such Refunded Bonds will be
surrendered to the Fiscal Agent.
All Refunded Bonds are required to be surrendered to the principal corporate office of the
Fiscal Agent, on the Redemption Date at the following locations. If the Refunded Bonds are mailed, the
use of registered, insured mail is recommended:
By Hand: By Registered or Certified By Air Courier:
Mail:
If the Owner of any Refunded Bond subject to optional redemption fails to deliver such Refunded
Bond to the Fiscal Agent on the Redemption Date, such Refunded Bond shall nevertheless be
deemed redeemed on the Redemption Date and the Owner of such Refunded Bond shall have no rights in
respect thereof except to receive payment of the Redemption Price from funds held by MUFG Union
SCHEDULE I -B
Bank, N.A., as escrow agent (the "Escrow Agent ") under the Escrow Agreement dated as of January 1,
2015, by and between the Escrow Agent and the District, for such payment.
DATED this _ day of 92015.
MUFG UNION BANK, N.A., as Escrow Agent
SCHEDULE I -A
. I yca I- -. '-N ILK i-.
SCHEDULE II
REDEMPTION PRICE OF PRIOR BONDS
Payment Principal Debt
Date Redeemed Interest Premium Payment
/2015 $ $
Cash deposited on , 2015 in the Escrow Fund in the amount of $ and held
uninvested in the Escrow Fund.
SCHEDULEII
Stradling Yocca Carlson & Rauth
Draft of 116115
BONDINDENTURE
Between
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. ( )
and
MUFG UNION BANK, N.A.,
as Fiscal Agent
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. ( )
2015 SPECIAL TAX REFUNDING BONDS
Dated as of 1, 2015
rte I .1% \ 11g i c . \
Table of Contents
Page
ARTICLE I
DEFINITIONS
Section1.1. Definitions ....................................................................................... ..............................2
ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1.
Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds ..........................12
Section 2.2.
Type and Nature of Bonds and Parity Bonds ................................. .............................12
Section 2.3.
Equality of Bonds and Parity Bonds and Pledge of Net Special Taxes ......................13
Section 2.4.
Description of Bonds; Interest Rates ............................................. .............................13
Section 2.5.
Place and Form of Payment ........................................................... .............................14
Section 2.6.
Form of Bonds and Parity Bonds ................................................... .............................15
Section 2.7.
Execution and Authentication ........................................................ .............................15
Section2.8.
Bond Register ................................................................................. .............................16
Section 2.9.
Registration of Exchange or Transfer ............................................ .............................16
Section 2.10.
Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds ........ .............................16
Section 2.11.
Validity of Bonds and Parity Bonds .............................................. .............................17
ARTICLE III
CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds .................................. .............................17
Section 3.2. Deposits to and Disbursements from Special Tax Fund ................ .............................18
Section 3.3. Administrative Expense Fund ........................................................ .............................19
Section 3.4. Interest Account and Principal Account of the Special Tax Fund .............................. 20
Section 3.5. Redemption Account of the Special Tax Fund ............................ ............................... 20
Section3.6. Surplus Fund ................................................................................ ............................... 21
Section 3.7. Improvement Fund ......................................................................... .............................21
Section3.8. Investments .................................................................................. ............................... 22
ARTICLE IV
REDEMPTION OF BONDS AND PARITY BONDS
Section4.1. Redemption of Bonds .................................................................. ............................... 23
Section 4.2. Selection of Bonds and Parity Bonds for Redemption ................ ............................... 24
Section 4.3. Notice of Redemption .................................................................. ............................... 25
Section 4.4. Partial Redemption of Bonds or Parity Bonds ............................. ............................... 26
Section 4.5. Effect of Notice and Availability of Redemption Money ............ ............................... 26
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty 27
Section5.2. Covenants ..................................................................................... ............................... 27
Table of Contents
(continued)
Page
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent ................... 30
Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent .......................... 31
Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity
Bonds........................................................................................... ............................... 32
ARTICLE VII
FISCAL AGENT
Section7.1. Fiscal Agent ................................................................................... .............................33
Section 7.2. Removal of Fiscal Agent ............................................................. ............................... 33
Section 7.3. Resignation of Fiscal Agent ......................................................... ............................... 34
Section 7.4. Liability of Fiscal Agent .............................................................. ............................... 34
Section 7.5. Merger or Consolidation ................................................................ .............................35
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1.
Events of Default ......................................................................... ............................... 36
Section 8.2.
Remedies of Owners .................................................................... ...............................
36
Section 8.3.
Application of Revenues and Other Funds After Default ............ ...............................
37
Section 8.4.
Power of Fiscal Agent to Control Proceedings ............................ ...............................
37
Section 8.5.
Appointment of Receivers ........................................................... ...............................
38
Section8.6.
Non - Waiver .................................................................................... .............................38
Section 8.7.
Limitations on Rights and Remedies of Owners ......................... ...............................
38
Section 8.8.
Termination of Proceedings ........................................................... .............................39
ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section9.1. Defeasance ..................................................................................... .............................39
Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional
Indebtedness................................................................................. ............................... 40
ARTICLE X
MISCELLANEOUS
Section 10.1.
Cancellation of Bonds and Parity Bonds .................
Section 10.2.
Execution of Documents and Proof of Ownership..
Section 10.3.
Unclaimed Moneys ................... ...............................
Section 10.4.
Provisions Constitute Contract . ...............................
Section 10.5.
Future Contracts ........................ ...............................
Section 10.6.
Further Assurances .................... ...............................
Section 10.7.
Severability ............................... ...............................
Section 10.8.
Notices ...................................... ...............................
HH
.................... ............................... 42
.................... ............................... 42
.................... ............................... 43
.................... ............................... 43
.................... ............................... 44
.................... ............................... 44
.................... ............................... 44
.................... ............................... 44
Table of Contents
(continued)
Page
SignaturePage .................................................................................................... ............................... S -1
EXHIBIT A FORM OF 2015 SPECIAL TAX REFUNDING BOND .......... ............................... A -1
iii
BOND INDENTURE
THIS BOND INDENTURE dated as of 1, 2015 (the "Indenture "), is made and
entered into by the City of Lake Elsinore Community Facilities District No.
( ) and MUFG Union Bank, N.A., as fiscal agent, and governs the terms of the
Community Facilities District No. ( ) 2015 Special Tax Refunding Bonds and
any Parity Bonds issued in accordance herewith from time to time.
RECITALS:
WHEREAS, the City Council of the City of Lake Elsinore, located in Riverside County,
California (hereinafter sometimes referred to as the "legislative body of the District "), has heretofore
undertaken proceedings to form the City of Lake Elsinore Community Facilities District
No. ( ) (the "District ") pursuant to the terms and provisions of the
Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2,
Title 5, of the Government Code of the State of California (the "Act "); and
[WHEREAS, the District is authorized to finance certain public facilities and other
governmental facilities that are necessary to meet increased demands placed upon the City of Lake
Elsinore as a result of development or rehabilitation occurring within the District, which facilities
may be physically located outside the boundaries of the District; and]
WHEREAS, the District has previously issued its Prior Bonds (as defined herein) to finance
certain public improvements [and certain public improvements authorized to be financed remain
uncompleted and without an adequate funding source]; and
WHEREAS, on , 2015, the legislative body of the District adopted Resolution
No. (the "Resolution ") authorizing the issuance and sale of special tax bonds for the District
pursuant to this Indenture designated as the "City of Lake Elsinore Community Facilities District
No. ( ) 2015 Special Tax Refunding Bonds" (the "Bonds "); and
WHEREAS, it is in the public interest and for the benefit of the District, the persons
responsible for the payment of special taxes and the owners of the Bonds that the District enter into
this Indenture to provide for the issuance of the Bonds, the disbursement of proceeds of the Bonds,
the disposition of the special taxes securing the bonds, and the administration and payment of the
Bonds; and
WHEREAS, all things necessary to cause the Bonds, when authenticated by the Fiscal Agent
and issued as provided in the Act, the Resolution and this Indenture, to be legal, valid and binding
and limited obligations in accordance with their terms, and all things necessary to cause the creation,
authorization, execution and delivery of this Indenture and the creation, authorization, execution and
issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized;
NOW, THEREFORE, in order to establish the terms and conditions upon and subject to
which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants
contained herein and of the purchase and acceptance of the Bonds by the Owners thereof, and for
other valuable consideration, the receipt of which is hereby acknowledged, the District does hereby
covenant and agree, for the benefit of the Owners of the Bonds as follows:
1
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall
have the following meanings:
"Account" means any account created pursuant to this Indenture.
"Act" means the Mello -Roos Community Facilities Act of 1982, as amended, Sections 53311
et seq, of the California Government Code.
"Administrative Expenses" means the administrative costs with respect to the calculation and
collection of the Special Taxes, including all attorneys' fees and other costs related thereto, the fees
and expenses of the Fiscal Agent, any fees and related costs for credit enhancement for Bonds or
which are not otherwise paid as Costs of Issuance, any costs related to the District's compliance with
state and federal laws requiring continuing disclosure of information concerning the Bonds, the
District, and any other costs otherwise incurred by the City on behalf of the District in order to carry
out the purposes of the District as set forth in the Resolution of Formation and any obligation of the
District hereunder. Administrative Expenses shall also include the administrative costs with respect
to the collection of Delinquency Proceeds.
"Administrative Expense Fund" means the fund by that name created and established
pursuant to Section 3.1 hereof.
"Administrative Expense Requirement" means $ provided that at its option, the
District may establish the Administrative Expense Requirement for any Bond Year subsequent to the
initial Bond Year at any amount larger than $ that is not in excess of the lesser of (a) 102% of
the Administrative Expense Requirement applicable in the immediately preceding Bond Year or
(b) the remainder of (i) the sum of the Maximum Special Tax applicable to each Parcel of Taxable
Property in the Fiscal Year that ends in such Bond Year minus (ii) 110% of Annual Debt Service for
such Bond Year.
"Annual Debt Service" means the principal amount of any Outstanding Bonds or Parity
Bonds payable in a Bond Year either at maturity or pursuant to a Sinking Fund Payment and any
interest payable on any Outstanding Bonds or Parity Bonds in such Bond Year, if the Bonds and any
Parity Bonds are retired as scheduled.
"Authority" means the Lake Elsinore Public Financing Authority.
"Authority Bonds" means any bonds outstanding under the Authority Indenture, which are
secured by payments made on the Bonds.
"Authority Indenture" means that certain Indenture of Trust, dated as of 1, 2015,
by and between the Authority and the Authority Trustee, pursuant to which the Authority Bonds are
issued.
"Authority Trustee" means MUFG Union Bank, N.A. or any successor thereto appointed
pursuant to the Authority Indenture.
2
"Authorized Investments" means any of the following investments, if and to the extent the
same are at the time legal for investment of the District's funds (the Fiscal Agent is entitled to rely
upon investment direction from the District as a certification that such investment is an Authorized
Investment):
Cash (insured at all times by the Federal Deposit Insurance Corporation).
2. (a) Direct obligations (other than an obligation subject to variation in
principal repayment) of the United States of America ( "United States Treasury Obligations "),
(b) obligations fully and unconditionally guaranteed as to timely payment of principal and
interest by the United States of America, (c) obligations fully and unconditionally guaranteed
as to timely payment of principal and interest by any agency or instrumentality of the United
States of America when such obligations are backed by the full faith and credit of the United
States of America, or (d) evidences of ownership of proportionate interests in future interest
and principal payments on obligations described above held by a bank or trust company as
custodian, under which the owner of the investment is the real party in interest and has the
right to proceed directly and individually against the obligor and the underlying government
obligations are not available to any person claiming through the custodian or to whom the
custodian may be obligated.
3. Federal Housing Administration debentures.
4. The listed obligations of government- sponsored agencies which are not
backed by the full faith and credit of the United States of America:
(a) Federal Home Loan Mortgage Corporation (FHLMC)
(i) Participation certificates (excluded are stripped mortgage
securities which are purchased at prices exceeding their principal
amounts)
(ii) Senior Debt obligations
(b) Farm Credit Banks (formerly: Federal Land Banks, Federal
(i) Intermediate Credit Banks and Banks for Cooperatives)
(ii) Consolidated system -wide bonds and notes
(c) Federal Home Loan Banks (FHL Banks)
(i) Consolidated debt obligations
(d) Federal National Mortgage Association (FNMA)
(i) Senior debt obligations
(ii) Mortgage- backed securities (excluded are stripped mortgage
securities which are purchased at prices exceeding their principal
amounts)
(e) Financing Corporation (FICO)
(i) Debt obligations
(f) Resolution Funding Corporation (REFCORP)
(i) Debt obligations
5. Unsecured certificates of deposit, time deposits, demand deposits, and
bankers' acceptances (having maturities of not more than 30 days) of any bank (including the
Fiscal Agent and any affiliate) the short -term obligations of which are rated "A -1" or better
by Standard & Poor's.
6. Deposits the aggregate amount of which are fully insured by the Federal
Deposit Insurance Corporation (FDIC), in banks (including the Fiscal Agent and any
affiliate) which have capital and surplus of at least $5 million.
7. Commercial paper (having original maturities of not more than 270 days rated
"A -1 +" by Standard & Poor's and "Prime -1" by Moody's.
8. Money market funds rated "AAm" or "AAm -G" by Standard & Poor's, or
better (including those of the Fiscal Agent or its affiliates).
9. "State Obligations," which means:
(a) Direct general obligations of any state of the United States of
America or any subdivision or agency thereof to which is pledged the full faith and
credit of a state the unsecured general obligation debt of which is rated "A3" by
Moody's and "A" by Standard & Poor's, or better, or any obligation fully and
unconditionally guaranteed by any state, subdivision or agency whose unsecured
general obligation debt is so rated.
(b) Direct general short -term obligations of any state agency or
subdivision or agency thereof described in (A) above and rated "A -1 +" by Standard
& Poor's and "Prime -1" by Moody's.
(c) Special Revenue Bonds (as defined in the United States Bankruptcy
Code) of any state, state agency or subdivision described in (A) above and rated
"AA" or better by Standard & Poor's and "Aa" or better by Moody's.
10. Pre - refunded municipal obligations rated "AAA" by Standard & Poor's and
"Aaa" by Moody's meeting the following requirements:
(a) the municipal obligations are (1) not subject to redemption prior to
maturity or (2) the paying agent for the municipal obligations has been given
irrevocable instructions concerning their call and redemption and the issuer of the
municipal obligations has covenanted not to redeem such municipal obligations other
than as set forth in such instructions;
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(b) the municipal obligations are secured by cash or United States
Treasury Obligations which may be applied only to payment of the principal of,
interest and premium on such municipal obligations;
(c) the principal of and interest on the United States Treasury Obligations
(plus any cash in the escrow) has been verified by the report of independent certified
public accountants to be sufficient to pay in full all principal of, interest, and
premium, if any, due and to become due on the municipal obligations
( "Verification ");
(d) the cash or United States Treasury Obligations serving as security for
the municipal obligations are held by an escrow agent or paying agent in trust for
owners of the municipal obligations;
(e) no substitution of a United States Treasury Obligation shall be
permitted except with another United States Treasury Obligation and upon delivery
of a new Verification; and
(f) the cash or United States Treasury Obligations are not available to
satisfy any other claims, including those by or against the paying agent or escrow
agent.
11. Repurchase agreements:
With (1) any domestic bank, or domestic branch of a foreign bank, the long term debt
of which is rated at least "A" by Standard & Poor's and Moody's; or (2) any broker - dealer
with "retail customers" or a related affiliate thereof which broker - dealer has, or the parent
company (which guarantees the provider) of which has, long -term debt rated at least "A" by
Standard & Poor's and Moody's, which broker - dealer falls under the jurisdiction of the
Securities Investors Protection Corporation; or (3) any other entity rated "A" or better by
Standard & Poor's and Moody's, provided that:
(a) The market value of the collateral is maintained at levels equal to
104% of the amount of cash transferred by the Fiscal Agent or the District to the
provider of the repurchase agreement plus accrued interest with the collateral being
valued weekly and marked -to- market at one current market price plus accrued
interest;
(b) The Fiscal Agent or a third party acting solely as agent therefor or for
the District (the "Holder of the Collateral ") has possession of the collateral or the
collateral has been transferred to the Holder of the Collateral in accordance with
applicable state and federal laws (other than by means of entries on the transferor's
books);
(c) The repurchase agreement shall state and an opinion of counsel shall
be rendered at the time such collateral is delivered that the Holder of the Collateral
has a perfected first priority security interest in the collateral, any substituted
collateral and all proceeds thereof (in the case of bearer securities, this means the
Holder of the Collateral is in possession);
(d) The repurchase agreement shall provide that if during its term the
provider's rating by either Moody's or Standard & Poor's is withdrawn or suspended
or falls below "A " by Standard & Poor's or "A3" by Moody's, as appropriate, the
provider must, at the direction of Fiscal Agent or the District, within 10 days of
receipt of such direction, repurchase all collateral and terminate the agreement, with
no penalty or premium to the Fiscal Agent or the District.
Notwithstanding the above, if a repurchase agreement has a term of 270 days or less
(with no evergreen provision), collateral levels need not be as specified in (a) above, so long
as such collateral levels are 103% or better and the provider is rated at least "A" by Standard
& Poor's and Moody's, respectively.
12. Investment agreements with a domestic or foreign bank or corporation (other
than a life or property casualty insurance company) the long -term debt of which or, in the
case of a guaranteed corporation the long -term debt, or, in the case of a monoline financial
guaranty insurance company, claims paying ability, of the guarantor is rated at least "AA" by
Standard & Poor's and "Aa" by Moody's; provided that, by the terms of the investment
agreement:
(a) interest payments are to be made to the Fiscal Agent or the District at
times and in amounts as necessary to pay debt service (or, if the investment
agreement is for the Improvement Fund, construction draws) on the Bonds;
(b) the invested funds are available for withdrawal without penalty or
premium, at any time upon not more than seven days' prior notice; the Fiscal Agent
or the District hereby agrees to give or cause to be given notice in accordance with
the terms of the investment agreement so as to receive funds thereunder with no
penalty or premium paid;
(c) the investment agreement shall state that is the unconditional and
general obligation of, and is not subordinated to any other obligation of, the provider
thereof, or, in the case of a bank, that the obligation of the bank to make payments
under the agreement ranks pari passu with the obligations of the bank to its other
depositors and its other unsecured and unsubordinated creditors;
(d) the Fiscal Agent or the District receives the opinion of domestic
counsel (which opinion shall be addressed to Fiscal Agent or the District) that such
investment agreement is legal, valid, binding and enforceable upon the provider in
accordance with its terms and of foreign counsel (if applicable) in form and substance
acceptable, and addressed to, the Fiscal Agent or the District;
(e) the investment agreement shall provide that if during its term
(i) the provider's rating by either Standard & Poor's or Moody's
falls below "AA -" or "Aa3 ", respectively, the provider shall, at its option,
within 10 days of receipt of publication of such downgrade, either (y)
collateralize the investment agreement by delivering or transferring in
accordance with applicable state and federal laws (other than by means of
entries on the provider's books) to the District, the Fiscal Agent or a third
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party acting solely as agent therefor (the "Holder of the Collateral ") collateral
free and clear of any third -party liens or claims the market value of which
collateral is maintained at levels and upon such conditions as would be
acceptable to Standard & Poor's and Moody's to maintain an "A" rating in an
"A" rated structured financing (with a market value approach); or (z) repay
the principal of and accrued but unpaid interest on the investment; and
(ii) the provider's rating by either Standard & Poor's or Moody's
is withdrawn or suspended or falls below "A -" or "A3 ", respectively, the
provider must, at the direction of the Fiscal Agent or the District, within 10
days of receipt of such direction, repay the principal of and accrued but
unpaid interest on the investment, in either case with no penalty or premium
to the Fiscal Agent or District; and
(f) the investment agreement shall state and an opinion of counsel shall
be rendered, in the event collateral is required to be pledged by the provider under the
terms of the investment agreement at the time such collateral is delivered, that the
Holder of the Collateral has a perfected first priority security interest in the collateral,
any substituted collateral and all proceeds thereof (in the case of bearer securities, this
means the Holder of the Collateral is in possession);
(g) the investment agreement must provide that if during its term
(i) the provider shall default in its payment obligations, the
provider's obligations under the investment agreement shall, at the direction
of the Fiscal Agent or the District, be accelerated and amounts invested and
accrued but unpaid interest thereon shall be repaid to the Fiscal Agent or the
District, and
(ii) the provider shall become insolvent, not pay its debts as they
become due, be declared or petition to be declared bankrupt, etc. ( "event of
insolvency "), the provider's obligations shall automatically be accelerated
and amounts invested and accrued but unpaid interest thereon shall be repaid
to the Fiscal Agent or the District.
13. The State of California Local Agency Investment Fund.
"Authorized Representative of the City" means the means the Mayor, City Manager,
Assistant City Manager, Director of Administrative Services, Finance Manager or City Clerk of the
City, or any other officer or employee authorized by the City Council of the City or by an Authorized
Officer to undertake the action referenced in this Agreement as required to be undertaken by an
Authorized Representative of the City.
"Bond Counsel" means an attorney at law or a firm of attorneys selected by the District of
nationally recognized standing in matters pertaining to the tax - exempt nature of interest on bonds
issued by states and their political subdivisions duly admitted to the practice of law before the highest
court of any state of the United States of America or the District of Columbia.
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h,... "I IM
"Bond Register" means the books which the Fiscal Agent shall keep or cause to be kept on
which the registration and transfer of the Bonds and any Parity Bonds shall be recorded.
"Bondowner" or "Owner" means the person or persons in whose name or names any Bond or
Parity Bond is registered.
"Bonds" means the $ City of Lake Elsinore Community Facilities District
No. ( ) 2015 Special Tax Refunding Bonds.
"Bond Year" means the twelve month period commencing on September 1 of each year and
ending on September 1 of the following year, except that the first Bond Year for the Bonds or an
issue of Parity Bonds shall begin on the Delivery Date and end on the first September 1 which is not
more than 12 months after the Delivery Date.
"Business Day" means a day which is not a Saturday or Sunday or a day of the year on which
banks in New York, New York, Los Angeles, California, or the city where the corporate trust office
of the Fiscal Agent is located, are not required or authorized to remain closed.
"Certificate of an Authorized Representative" means a written certificate or warrant request
executed by an Authorized Representative of the City.
"City" means the City of Lake Elsinore, County of Riverside, California.
"City Council" means the City Council of the City.
"Code" means the Internal Revenue Code of 1986, as amended, and any Regulations, rulings,
judicial decisions, and notices, announcements, and other releases of the United States Treasury
Department or Internal Revenue Service interpreting and construing it.
"Costs of Issuance" shall have the meaning set forth in the Authority Indenture.
"Defeasance Securities" means non - callable, non - prepayable obligations of the type set forth
in clauses (1) and (2) of the definition of Authorized Investments.
"Delinquency Proceeds" means the amounts collected from the redemption of delinquent
Special Taxes including the penalties and interest thereon and from the sale of property sold as a
result of the foreclosure of the lien of the Special Tax resulting from the delinquency in the payment
of Special Taxes due and payable on such property.
"Delivery Date" means, with respect to the Bonds and each issue of Parity Bonds, the date on
which the bonds of such issue were issued and delivered to the initial purchasers thereof.
"District" means the City of Lake Elsinore Community Facilities District No.
established pursuant to the Act and the Resolution of Formation.
"Escrow Agent" means MUFG Union Bank, N.A., acting as escrow agent pursuant to the
Escrow Agreement.
"Escrow Agreement" means that Escrow Agreement, dated as of 1, 2015, between
the District and the Escrow Agent relating to the defeasance and refunding of the Prior Bonds.
"Fiscal Agent" means MUFG Union Bank, N.A., a national banking association duly
organized and existing under the laws of the United States of America, at its corporate trust office in
Los Angeles, California, and its successors or assigns, or any other bank, association or trust
company which may at any time be substituted in its place as provided in Sections 7.2 or 7.3 and any
successor thereto.
"Fiscal Year" means the period beginning on July 1 of each year and ending on the next
following June 30.
"Gross Special Taxes" means the amount of all Special Taxes received by the District,
together with the proceeds collected from the sale of property pursuant to the foreclosure provisions
of this Indenture for the delinquency of such Special Taxes remaining after the payment of all costs
related to such foreclosure actions.
[ "Improvement Fund" means the funds by that name established pursuant to Section 3. 1.]
"Independent Financial Consultant" means a financial consultant or firm of such consultants
generally recognized to be well qualified in the financial consulting field, appointed and paid by the
District, who, or each of whom:
(1) is in fact independent and not under the domination of the District or the City;
(2) does not have any substantial interest, direct or indirect, in the District or the
City; and
(3) is not connected with the District or the City as a member, officer or
employee of the District or the City, but who may be regularly retained to make annual or other
reports to the District or the City.
"Indenture" means this Bond Indenture, together with any Supplemental Indenture approved
pursuant to Article 6 hereof.
"Interest Payment Date" means each March 1 and September 1, commencing [September 1,
2015], and the final maturity date of the Bonds; provided, however, that, if any such day is not a
Business Day, interest up to the Interest Payment Date, and in the case of the final Interest Payment
Date to and including such date, will be paid on the Business Day next preceding such date.
"Maximum Annual Debt Service" means the maximum sum obtained for any Bond Year
prior to the final maturity of the Bonds and any Parity Bonds by adding the following for each Bond
Year:
(1) the principal amount of all Outstanding Bonds and Parity Bonds payable in
such Bond Year either at maturity or pursuant to a Sinking Fund Payment; and
(2) the interest payable on the aggregate principal amount of all Bonds and Parity
Bonds Outstanding in such Bond Year if the Bonds and Parity Bonds are retired as scheduled.
" Moody's" means Moody's Investors Service, its successors and assigns.
"Net Special Taxes" means Gross Special Taxes minus amounts set aside to pay
Administrative Expenses.
"Ordinance" means Ordinance No. 1139 adopted by the legislative body of the District on
February 8, 2005, providing for the levying of the Special Tax.
"Outstanding" or "Outstanding Bonds and Parity Bonds" means all Bonds and Parity Bonds
theretofore issued by the District, except:
(1) Bonds and Parity Bonds theretofore cancelled or surrendered for cancellation
in accordance with Section 10.1 hereof;
(2) Bonds and Parity Bonds for payment or redemption of which moneys shall
have been theretofore deposited in trust (whether upon or prior to the maturity or the redemption date
of such Bonds or Parity Bonds), provided that, if such Bonds or Parity Bonds are to be redeemed
prior to the maturity thereof, notice of such redemption shall have been given as provided in this
Indenture or any applicable Supplemental Indenture for Parity Bonds; and
(3) Bonds and Parity Bonds which have been surrendered to the Fiscal Agent for
transfer or exchange pursuant to Section 2.9 hereof or for which a replacement has been issued
pursuant to Section 2.10 hereof.
"Parity Bonds" mean bonds or other securities issued by the District and secured by a lien on
the Net Special Taxes which is on parity with the lien thereon securing the Bonds.
"Person" means natural persons, firms, corporations, partnerships, associations, trusts, public
bodies and other entities.
"Prepayments" means any amounts paid by the District to the Fiscal Agent and designated by
the District as a prepayment of Special Taxes for one or more parcels in the District made in
accordance with the Rate and Method of Apportionment.
"Principal Office of the Fiscal Agent" means the corporate trust office of the Fiscal Agent in
Los Angeles, California, provided that for purposes of payment, redemption, exchange, transfer,
surrender and cancellation of Bonds and Parity Bonds, such term means the corporate trust office of
the Fiscal Agent in Los Angeles, California, or such other office as the Fiscal Agent may from time
to time designate in writing to the District and the Owners.
"Prior Bonds" means the District's Special Tax Bonds, 2006 Series A currently outstanding
in the aggregate principal amount of $8,330,000.
"Prior Fiscal Agent" means MUFG Union Bank, N.A. (formerly known as Union Bank of
California, N.A.), as fiscal agent under the Prior Fiscal Agent Agreement.
"Prior Fiscal Agent Agreement" means the Fiscal Agent Agreement dated as of February 1,
2006 by and between the Prior Fiscal Agent and the District.
"Project" means those public facilities described in the Resolution of Formation which have
been acquired or constructed within and outside of the District, including all engineering, planning
10
and design services and other incidental expenses related to such facilities and other facilities, if any,
authorized by the qualified electors within the District from time to time.
[ "Project Costs" means the amounts necessary to finance the Project, to create and replenish
any necessary reserve funds, to pay the initial and annual costs associated with the Bonds, including,
but not limited to, remarketing, credit enhancement, Fiscal Agent and other fees and expenses
relating to the issuance of the Bonds or the formation of the District, and to pay any other "incidental
expenses" of the District, as such term is defined in the Act.]
"Proportionate Share" means, with respect to the calculation set forth in Section 3.2(b)(4), as
of the date of calculation, a fraction equal to (A) the principal amount of the Bonds Outstanding
divided by (B) the sum of the principal amount of all of the Local Obligations (as defined in the
Authority Indenture) Outstanding.
"Rate and Method of Apportionment" means that certain Rate and Method of Apportionment
of Special Tax approved pursuant to the Resolution of Formation, as amended in accordance with the
Act and this Indenture.
"Rating Agency" means Moody's and Standard & Poor's, or both, as the context requires.
"Record Date" means the fifteenth day of the month preceding an Interest Payment Date,
regardless of whether such day is a Business Day.
"Regulations" means the regulations adopted or proposed by the Department of Treasury
from time to time with respect to obligations issued pursuant to Section 103 of the Code.
"Reserve Account" means the District's Account of the Reserve Fund established under the
Authority Indenture.
"Reserve Fund" means the fund by that name established by the Authority Indenture.
"Reserve Requirement" shall have the meaning given such term in the Authority Indenture.
"Resolution of Formation" means Resolution No. 2005 -20 adopted by the City Council on
January 25, 2005, pursuant to which the City formed the District.
"Sinking Fund Payment" means the annual payment to be deposited in the Redemption
Account to redeem a portion of the Term Bonds in accordance with any annual sinking fund payment
schedule to retire any Parity Bonds which are designated as Term Bonds.
"Special Tax Fund" means the fund by that name created and established pursuant to
Section 3.1 hereof.
"Special Taxes" means the taxes authorized to be levied by the District on property within
the District in accordance with the Ordinance, the Resolution of Formation, the Act and the voter
approval obtained at the January 25, 2005 election in the District.
"Standard & Poor's" means Standard & Poor's Ratings Group, a division of McGraw -Hill,
its successors and assigns.
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. .. 1 IN Mki 1�.. . 1 .
"Supplemental Indenture" means any supplemental indenture amending or supplementing
this Indenture.
"Surplus Fund" means the fund by that name created and established pursuant to Section 3.1
hereof.
"Term Bonds" means the Bonds maturing on September 1, 20_.
"Treasurer" means the person who is acting in the capacity as finance director or
administrative services director to the City
ARTICLE II
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds.
Under and pursuant to the Act, the Bonds in the aggregate principal amount of $ shall be
issued for the purposes of (a) refunding and defeasing the Prior Bonds, [(b) financing the Project],
(c) funding the District's share of the Costs of Issuance and (d) funding the Reserve Account.
Section 2.2. Type and Nature of Bonds and Parity Bonds. Neither the faith and credit
nor the taxing power of the City, the State of California or any political subdivision thereof other
than the District is pledged to the payment of the Bonds or any Parity Bonds. Except for the Net
Special Taxes, no other taxes are pledged to the payment of the Bonds and Parity Bonds. The Bonds
and any Parity Bonds are not general or special obligations of the City nor general obligations of the
District, but are limited obligations of the District payable solely from certain amounts deposited by
the District in the Special Tax Fund, as more fully described herein. The District's limited obligation
to pay the principal of, premium, if any, and interest on the Bonds and any Parity Bonds from
amounts in the Special Tax Fund is absolute and unconditional, free of deductions and without any
abatement, offset, recoupment, diminution or set -off whatsoever. No Owner of the Bonds or any
Parity Bonds may compel the exercise of the taxing power by the District (except as pertains to the
Special Taxes) or the City or the forfeiture of any of their property. The principal of and interest on
the Bonds and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of
the City, the State of California or any of its political subdivisions within the meaning of any
constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal
or equitable pledge, charge, lien, or encumbrance upon any of the District's property, or upon any of
its income, receipts or revenues, except the Net Special Taxes and other amounts in the Special Tax
Fund which are, under the terms of this Indenture and the Act, set aside for the payment of the Bonds
and interest thereon and neither the members of the legislative body of the District or the City
Council nor any persons executing the Bonds are liable personally on the Bonds by reason of their
issuance.
Notwithstanding anything to the contrary contained in this Indenture, the District shall not be
required to advance any money derived from any source of income other than the Net Special Taxes
for the payment of the interest on or the principal of or premium on the Bonds or any Parity Bonds,
or for the performance of any covenants contained herein. The District may, however, advance funds
for any such purpose, provided that such funds are derived from a source legally available for such
purpose.
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Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Special Taxes.
Subject only to the provisions of this Indenture permitting the application thereof for the purposes
and on the terms and conditions set forth herein, in order to secure the payment of the principal of
and interest on the Bonds and any Parity Bonds in accordance with their terms, the provisions of this
Indenture and the Act, the District hereby pledges to the Owners, and grants thereto a lien on and a
security interest in, all of the Net Special Taxes and any other amounts held in the Special Tax Fund.
Said pledge shall constitute a first lien on and security interest in such assets, which shall
immediately attach to such assets and be effective, binding and enforceable against the District, its
successors, purchasers of any of such assets, creditors and all others asserting rights therein, to the
extent set forth in, and in accordance with, this Indenture, irrespective of whether those parties have
notice of the pledge of, lien on and security interest in such assets and without the need for any
physical delivery, recordation, filing or further act. Pursuant to the Act and this Indenture, the Bonds
and any Parity Bonds shall be equally payable from the Net Special Taxes and other amounts in the
Special Tax Fund, without priority for number, date of the Bonds or Parity Bonds, date of sale, date
of execution, or date of delivery, and the payment of the interest on and principal of the Bonds and
any Parity Bonds and any premiums upon the redemption thereof, shall be exclusively paid from the
Net Special Taxes and other amounts in the Special Tax Fund, which are hereby set aside for the
payment of the Bonds and any Parity Bonds. Amounts in the Special Tax Fund shall constitute a
trust fund held for the benefit of the Owners to be applied to the payment of the interest on and
principal of the Bonds and any Parity Bonds and so long as any of the Bonds and any Parity Bonds or
interest thereon remain Outstanding shall not be used for any other purpose, except as permitted by
this Indenture or any Supplemental Indenture. Notwithstanding any provision contained in this
Indenture to the contrary, Net Special Taxes deposited in the Rebate Fund and the Surplus Fund shall
no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Rebate
Fund, the Surplus Fund, [the Improvement Fund] or the Administrative Expense Fund shall be
construed as a trust fund held for the benefit of the Owners.
Nothing in this Indenture or any Supplemental Indenture shall preclude; (a) subject to the
limitations herein, the redemption prior to maturity of any Bonds or Parity Bonds subject to call and
redemption and payment of said Bonds or Parity Bonds from proceeds of refunding bonds issued
under the Act as the same now exists or as hereafter amended, or under any other law of the State of
California; or (b) the issuance, subject to the limitations contained herein, of Parity Bonds which
shall be payable from Net Special Taxes.
Section 2.4. Description of Bonds; Interest Rates. The Bonds and any Parity Bonds
shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof.
The Bonds and any Parity Bonds of each issue shall be numbered as desired by the Fiscal Agent.
The Bonds shall be designated "CITY OF LAKE ELSINORE COMMUNITY FACILITIES
DISTRICT NO. ( ) 2015 SPECIAL TAX REFUNDING BONDS." The
Bonds shall be dated as of their Delivery Date and shall mature and be payable on September 1 in the
years and in the aggregate principal amounts and shall be subject to and shall bear interest at the rates
set forth in the table below payable on [September 1, 2015] and each Interest Payment Date
thereafter:
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.. 11% :. . SAN 1 1 . J.ita 1
Maturity Date
(September 1) Principal Amount Interest Rate
Interest shall be payable on each Bond and Parity Bond from the date established in
accordance with Section 2.5 below on each Interest Payment Date thereafter until the principal sum
of that Bond or Parity Bond has been paid; provided, however, that if at the maturity date of any
Bond funds are available for the payment or redemption thereof in full, in accordance with the terms
of this Indenture, such Bonds and Parity Bonds shall then cease to bear interest. Interest due on the
Bonds and Parity Bonds shall be calculated on the basis of a 360 -day year comprised of twelve
30 -day months.
Section 2.5. Place and Form of Payment. The Bonds and Parity Bonds shall be payable
both as to principal and interest, and as to any premiums upon the redemption thereof, in lawful
money of the United States of America. The principal of the Bonds and Parity Bonds and any
premiums due upon the redemption thereof shall be payable upon presentation and surrender thereof
at the Principal Office of the Fiscal Agent, or at the designated office of any successor Fiscal Agent;
provided that so long as the Authority or the Authority Trustee on its behalf is the registered owner
of all the Bonds, such presentment is not required. Interest on any Bond shall be payable from the
Interest Payment Date next preceding the date of authentication of that Bond, unless (i) such date of
authentication is an Interest Payment Date in which event interest shall be payable from such date of
authentication, (ii) the date of authentication is after a Record Date but prior to the immediately
succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment
Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to
the close of business on the first Record Date occurring after the issuance of such Bond or Parity
Bond, in which event interest shall be payable from the dated date of such Bond or Parity Bond;
provided, however, that if at the time of authentication of such Bond or Parity Bond, interest is in
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default, interest on that Bond or Parity Bond shall be payable from the last Interest Payment Date to
which the interest has been paid or made available for payment or, if no interest has been paid or
made available for payment on that Bond or Parity Bond, interest on that Bond or Parity Bond shall
be payable from its dated date. Interest on any Bond or Parity Bond shall be paid to the person
whose name shall appear in the Bond Register as the Owner of such Bond or Parity Bond as of the
close of business on the Record Date. Such interest shall be paid by check of the Fiscal Agent
mailed on the applicable Interest Payment Date by first class mail, postage prepaid, to such
Bondowner at his or her address as it appears on the Bond Register. In addition, upon a request in
writing received by the Fiscal Agent on or before the applicable Record Date from an Owner of
$1,000,000 or more in principal amount of the Bonds, payment shall be made on the Interest
Payment Date by wire transfer in immediately available funds to an account designated by such
Owner.
Section 2.6. Form of Bonds and Parity Bonds. The definitive Bonds may be printed
from steel engraved or lithographic plates or may be typewritten. The Bonds and the certificate of
authentication shall be substantially in the form attached hereto as Exhibit A, which forms are hereby
approved and adopted as the forms of such Bonds and any Parity Bonds and of the certificate of
authentication.
Notwithstanding any provision in this Indenture to the contrary, the District may, in its sole
discretion, elect to issue the Bonds and any Parity Bonds in book entry form.
Until definitive Bonds or Parity Bonds shall be prepared, the District may cause to be
executed and delivered in lieu of such definitive Bonds or Parity Bonds temporary bonds in typed,
printed, lithographed or engraved form and in fully registered form, subject to the same provisions,
limitations and conditions as are applicable in the case of definitive Bonds or Parity Bonds, except
that they may be in any denominations authorized by the District. Until exchanged for definitive
Bonds or Parity Bonds, any temporary bond shall be entitled and subject to the same benefits and
provisions of this Indenture as definitive Bonds and Parity Bonds. If the District issues temporary
Bonds, it shall execute and furnish definitive Bonds or Parity Bonds, as applicable, without
unnecessary delay and thereupon any temporary Bond or Parity Bond may be surrendered to the
Fiscal Agent at its office, without expense to the Owner, in exchange for a definitive Bond or Parity
Bond of the same issue, maturity, interest rate and principal amount in any authorized denomination.
All temporary Bonds and Parity Bonds so surrendered shall be cancelled by the Fiscal Agent and
shall not be reissued.
Section 2.7. Execution and Authentication. The Bonds and Parity Bonds shall be signed
on behalf of the District by the manual or facsimile signature of the Mayor of the City and by the
manual or facsimile signature of the City Clerk, or any duly appointed deputy clerk, in their capacity
as officers of the District, and the seal of the District (or a facsimile thereof) shall be impressed,
imprinted, engraved or otherwise reproduced thereon, and attested by the signature of the City Clerk.
In case any one or more of the officers who shall have signed or sealed any of the Bonds or Parity
Bonds shall cease to be such officer before the Bonds or Parity Bonds so signed and sealed have been
authenticated and delivered by the Fiscal Agent (including new Bonds or Parity Bonds delivered
pursuant to the provisions hereof with reference to the transfer and exchange of Bonds or Parity
Bonds or to lost, stolen, destroyed or mutilated Bonds), such Bonds or Parity Bonds shall
nevertheless be valid and may be authenticated and delivered as herein provided, and may be issued
as if the person who signed or sealed such Bonds had not ceased to hold such office.
15
Only the Bonds as shall bear thereon such certificate of authentication in the form set forth in
Exhibit A attached hereto shall be entitled to any right or benefit under this Indenture, and no Bond
shall be valid or obligatory for any purpose until such certificate of authentication shall have been
duly executed by the Fiscal Agent.
Section 2.8. Bond Register. The Fiscal Agent will keep or cause to be kept, at its office,
sufficient books for the registration and transfer of the Bonds and any Parity Bonds which shall upon
reasonable prior notice be open to inspection by the District during all regular business hours, and,
subject to the limitations set forth in Section 2.9 below, upon presentation for such purpose, the
Fiscal Agent shall, under such reasonable regulations as it may prescribe, with reasonable notice,
register or transfer or cause to be transferred on said Bond Register, Bonds and any Parity Bonds as
herein provided.
The District and the Fiscal Agent may treat the Owner of any Bond or Parity Bond whose
name appears on the Bond Register as the absolute Owner of that Bond or Parity Bond for any and
all purposes, and the District and the Fiscal Agent shall not be affected by any notice to the contrary.
The District and the Fiscal Agent may rely on the address of the Bondowner as it appears in the Bond
Register for any and all purposes. It shall be the duty of the Bondowner to give written notice to the
Fiscal Agent of any change in the Bondowner's address so that the Bond Register may be revised
accordingly.
Section 2.9. Registration of Exchange or Transfer. Subject to the limitations set forth
in the following paragraph, the registration of any Bond or Parity Bond may, in accordance with its
terms, be transferred upon the Bond Register by the person in whose name it is registered, in person
or by his or her duly authorized attorney, upon surrender of such Bond or Parity Bond for
cancellation at the office of the Fiscal Agent, accompanied by delivery of written instrument of
transfer in a form acceptable to the Fiscal Agent and duly executed by the Bondowner or his or her
duly authorized attorney.
Bonds or Parity Bonds may be exchanged at the office of the Fiscal Agent for a like
aggregate principal amount of Bonds or Parity Bonds for other authorized denominations of the same
maturity and issue. The Fiscal Agent shall not collect from the Owner any charge for any new Bond
or Parity Bond issued upon any exchange or transfer, but shall require the Bondowner requesting
such exchange or transfer to pay any tax or other governmental charge required to be paid with
respect to such exchange or transfer. The cost of printing Bonds and any services rendered or
expenses incurred by the Fiscal Agent in connection with any transfer or exchange shall be paid by
the District. Whenever any Bonds or Parity Bonds shall be surrendered for registration of transfer or
exchange, the District shall execute and the Fiscal Agent shall authenticate and deliver a new Bond
or Bonds or a new Parity Bond or Parity Bonds, as applicable, of the same issue and maturity, for a
like aggregate principal amount; provided that the Fiscal Agent shall not be required to register
transfers or make exchanges of (i) Bonds or Parity Bonds for a period of 15 days next preceding any
selection of the Bonds or Parity Bonds to be redeemed, or (ii) any Bonds or Parity Bonds chosen for
redemption.
Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds. If any Bond
or Parity Bond shall become mutilated, the District shall execute, and the Fiscal Agent shall
authenticate and deliver, a new Bond or Parity Bond of like tenor, date, issue and maturity in
exchange and substitution for the Bond or Parity Bond so mutilated, but only upon surrender to the
Fiscal Agent of the Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so
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surrendered to the Fiscal Agent shall be cancelled by the Fiscal Agent pursuant to Section 10.1
hereof. If any Bond or Parity Bond shall be lost, destroyed or stolen, evidence of such loss,
destruction or theft may be submitted to the Fiscal Agent and, if such evidence is satisfactory to the
Fiscal Agent and, if any indemnity satisfactory to the Fiscal Agent shall be given, the District shall
execute and the Fiscal Agent shall authenticate and deliver, a new Bond or Parity Bond, as
applicable, of like tenor, maturity and issue, numbered and dated as the Fiscal Agent shall determine
in lieu of and in substitution for the Bond or Parity Bond so lost, destroyed or stolen. Any Bond or
Parity Bond issued in lieu of any Bond or Parity Bond alleged to be mutilated, lost, destroyed or
stolen, shall be equally and proportionately entitled to the benefits hereof with all other Bonds or
Parity Bonds issued hereunder. The Fiscal Agent shall not treat both the original Bond or Parity
Bond and any replacement Bond or Parity Bond as being Outstanding for the purpose of determining
the principal amount of Bonds or Parity Bonds which may be executed, authenticated and delivered
hereunder or for the purpose of determining any percentage of Bonds or Parity Bonds Outstanding
hereunder, but both the original and replacement Bond or Parity Bond shall be treated as one and the
same. Notwithstanding any other provision of this Section, in lieu of delivering a new Bond or Parity
Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the Fiscal Agent
may make payment with respect to such Bonds or Parity Bonds
Section 2.11. Validity of Bonds and Parity Bonds. The validity of the authorization and
issuance of the Bonds and any Parity Bonds shall not be affected in any way by any defect in any
proceedings taken by the District for the financing of the Project, the refunding of the Prior Bonds,
and the recital contained in the Bonds or any Parity Bonds that the same are issued pursuant to the
Act and other applicable laws of the State shall be conclusive evidence of their validity and of the
regularity of their issuance.
ARTICLE III
CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds.
(a) There is hereby created and established and shall be maintained by the Fiscal
Agent the following funds and accounts:
(1) The Community Facilities District No. Special Tax Fund
(the "Special Tax Fund ") (in which there shall be established and created an Interest Account, a
Principal Account and a Redemption Account);
(2) The Community Facilities District No. Administrative
Expense Fund (the "Administrative Expense Fund ");
(3) [The Community Facilities District No. Improvement Fund
(the "Improvement Fund "); and]
(4) The Community Facilities District No. Surplus Fund (the
"Surplus Fund ")
The amounts on deposit in the foregoing funds and accounts shall be held by the Fiscal Agent
on behalf of the District and shall be invested and disbursed in accordance with the provisions of this
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Article 3. The investment earnings thereon shall be disbursed in accordance with the provisions of
Section 3.8 hereof.
(b) Proceeds from the sale of the Bonds in the amount of $ , together
with moneys transferred from the Prior Fiscal Agent under the Prior Fiscal Agent Agreement in the
amount of $ shall be received by the Fiscal Agent and deposited or transferred on the
Delivery Date as follows:
(1) $ (comprised of $ of the proceeds of the sale of
the Bonds, together with $ of the moneys received from the Prior Fiscal Agent under the
Prior Fiscal Agent Agreement) shall be transferred to the Escrow Agent for deposit in the escrow
fund created under the Escrow Agreement,
(2) $ of the proceeds of the sale of the Bonds representing the
District's share of the Costs of Issuance shall be immediately transferred to the Authority Trustee for
deposit in the Cost of Issuance Fund (as such term is defined in the Authority Indenture),
(3) $ of the proceeds of the sale of the Bonds shall be transferred
to the Authority Trustee for deposit in the Reserve Account, and
(4) [$ of the proceeds of the sale of the Bonds shall be
deposited in the Improvement Fund.]
The Fiscal Agent may, in its discretion, establish a temporary fund or account in its books
and records to facilitate such transfers.
Section 3.2. Deposits to and Disbursements from Special Tax Fund.
(a) The Fiscal Agent shall deposit Delinquency Proceeds as follows:
(1) the amount specified by the District as representing past due interest
on the Bonds shall be deposited to the Interest Account of the Special Tax Fund; and
(2) the amount specified by the District as representing past due principal
of the Bonds shall be deposited to the Principal Account of the Special Tax Fund.
(b) [The portion of any Prepayment received by the District that is the "Future
Facilities Amount" thereof (as defined in the Rate and Method of Apportionment) shall be identified
as such by the District and transferred to the Fiscal Agent for deposit in the Improvement Fund.] The
portion of any Prepayment received by the District that is to be applied to the redemption of Bonds
shall be identified as such by the District and transferred to the Fiscal Agent for deposit in the
Redemption Account. Except for the foregoing portion of any Prepayment to be deposited to the
Redemption Account [or the Improvement Fund, as applicable,] the District shall, as soon as
practicable, transfer the Special Taxes received by the District to the Fiscal Agent for deposit in the
Special Tax Fund to be held by the Fiscal Agent for the Owners. The Fiscal Agent shall transfer the
Special Taxes on deposit in the Special Tax Fund on the dates and in the amounts set forth in the
following Sections, in the following order of priority, to:
(1) the District for deposit in the Administrative Expense Fund an amount
equal to the Administrative Expense Requirement or, if the Fiscal Agent receives written direction
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from the District to transfer a lesser amount, then such lesser amount, provided that not more than
one -half of the Administrative Expense Requirement shall be so transferred in any Fiscal Year prior
to the date on which the balance on deposit in the Interest Account of the Special Tax Fund is at least
equal to the interest payable on the Bonds on March 1;
(2) the Interest Account of the Special Tax Fund the amount necessary to
cause the balance on deposit therein to be equal to the interest on the Bonds payable on the next
succeeding Interest Payment Date;
(3) the Principal Account of the Special Tax Fund the amount necessary
to cause the balance on deposit therein to be equal to the principal amount of the Bonds and /or the
Sinking Fund Payment payable on the next succeeding September 1; provided that not more than
one -half of the principal amount and /or the Sinking Fund Payment payable on the next succeeding
September 1 shall be deposited in the Principal Account prior to March 1 until (i) the balance on
deposit in the Administrative Expense Fund equals the Administrative Expense Requirement, or such
lesser amount directed by the District in writing to the Fiscal Agent, and (ii) the balance on deposit in
the Interest Account equals the interest payable on the Bonds through September 1;
(4) transfer to the Authority Trustee for deposit in the Reserve Account
the amount necessary to cause the balance on deposit therein to equal the District's Proportionate
Share of the Reserve Requirement;
(5) the Redemption Account of the Special Tax Fund; and
(6) the Surplus Fund.
At least ten (10) Business Days prior to each Interest Payment Date, the Fiscal Agent shall
notify the District in writing the amount of Special Taxes required to pay the principal of and interest
on the Bonds on the next succeeding Interest Payment Date and the amount necessary to cause the
balance on deposit in the Reserve Account to equal the District's Proportionate Share, if any. The
Fiscal Agent shall notify the Authority Trustee at least five (5) Business Days prior to each Interest
Payment Date if there is not on deposit with the Fiscal Agent, after making all of the transfers
required hereunder, moneys sufficient to pay the principal of and interest on the Bonds.
Section 3.3. Administrative Expense Fund. The Fiscal Agent shall transfer from the
first available Special Taxes in the Special Tax Fund to the District for deposit in the Administrative
Expense Fund an amount such that the total amounts so transferred to the District in any Bond Year
do not exceed the Administrative Expense Requirement. In the event Administrative Expenses
exceed the Administrative Expense Requirement in any Bond Year, the total amount transferred in a
Bond Year shall not exceed the Administrative Expense Requirement until such time as there has
been deposited to the Interest Account and the Principal Account an amount, together with any
amounts already on deposit therein, that is sufficient to pay the interest and principal on all Bonds
and Parity Bonds due in such Bond Year and to restore the Reserve Account to the Proportionate
Share of the Reserve Requirement. Notwithstanding the foregoing, at the direction of the District,
amounts in excess of the Administrative Expense Requirement may be transferred to the
Administrative Expense Fund prior to the transfers to the Interest Account, the Principal Account and
the Redemption Account pursuant to Sections 3.4 and 3.5 below to the extent necessary to collect
delinquent Special Taxes. Following the required transfers pursuant to Sections 3.4 and 3.5 below of
amounts sufficient to pay the interest and principal on all Bonds due in a Bond Year and to restore
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the Reserve Account to the Proportionate Share of the Reserve Requirement, an Authorized
Representative of the City may direct the Fiscal Agent, in writing, to transfer additional amounts
from the Special Tax Fund to the District for deposit into the Administrative Expense Fund. Moneys
in the Administrative Expense Fund may be invested in any Authorized Investments.
Section 3.4. Interest Account and Principal Account of the Special Tax Fund. The
principal of and interest due on the Bonds and any Parity Bonds until maturity, other than principal
due upon redemption, shall be paid by the Fiscal Agent from the Principal Account and the Interest
Account of the Special Tax Fund, respectively. For the purpose of assuring that the payment of
principal of and interest on the Bonds and any Parity Bonds will be made when due, after making the
transfer required by Section 3.3, at least five Business Days prior to each March 1 and September 1,
the Fiscal Agent shall make the following transfers from the Special Tax Fund first to the Interest
Account and then to the Principal Account; provided, however, that to the extent that deposits have
been made in the Interest Account or the Principal Account from the proceeds of the sale of an issue
of the Bonds, any Parity Bonds, or otherwise, the transfer from the Special Tax Fund need not be
made. At least fifteen (15) days prior to an Interest Payment Date, the Fiscal Agent shall notify the
Authority and the Authority Trustee if there are insufficient funds to provide for the payment of
principal and interest due on the Bonds on such Interest Payment Date.
Section 3.5. Redemption Account of the Special Tax Fund.
(a) After making the transfers and deposits required by Sections 3.3 and 3.4
above, and in accordance with the District's election to call Bonds for optional redemption as set
forth in Section 4.1(a) hereof, or to call Parity Bonds for optional redemption as set forth in any
Supplemental Indenture for Parity Bonds, the Fiscal Agent shall transfer from the Special Tax Fund
and deposit in the Redemption Account moneys available for the purpose and sufficient to pay the
principal and the premiums, if any, payable on the Bonds or Parity Bonds called for optional
redemption; provided, however, that amounts in the Special Tax Fund may be applied to optionally
redeem Bonds and Parity Bonds only if immediately following such redemption the amount in the
Reserve Account will equal the Proportionate Share of the Reserve Requirement.
(b) Prepayments deposited to the Redemption Account shall be applied on the
redemption date established pursuant to Section 4.1(c) hereof for the use of such Prepayments to the
payment of the principal of, premium, and interest on the Bonds and Parity Bonds to be redeemed
with such Prepayments.
(c) Moneys set aside in the Redemption Account shall be used solely for the
purpose of redeeming Bonds and Parity Bonds and shall be applied on or after the redemption date to
the payment of principal of and premium, if any, on the Bonds or Parity Bonds to be redeemed upon
presentation and surrender of such Bonds or Parity Bonds and in the case of an optional redemption
or an extraordinary redemption from Prepayments to pay the interest thereon; provided, however,
that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption
Account, other than Prepayments, may be used to purchase Outstanding Bonds or Parity Bonds in the
manner hereinafter provided. Purchases of Outstanding Bonds or Parity Bonds may be made by the
District at public or private sale as and when and at such prices as the District may in its discretion
determine but only at prices (including brokerage or other expenses) not more than par plus accrued
interest, plus, in the case of moneys set aside for an optional redemption, the premium applicable at
the next following call date according to the premium schedule established pursuant to Section 4.1(a)
hereof, or in the case of Parity Bonds the premium established in any Supplemental Indenture. Any
20
accrued interest payable upon the purchase of Bonds or Parity Bonds may be paid from the amount
reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next
following Interest Payment Date.
Section 3.6. Surplus Fund. After making the transfers required by Sections 3.3 and 3.4
hereof, as soon as practicable after each September 1, and in any event prior to each October 1, the
Fiscal Agent shall transfer all remaining amounts in the Special Tax Fund to the Surplus Fund, unless
on or prior to such date, it has received a Certificate of an Authorized Representative directing that
certain amounts be retained in the Special Tax Fund because the District has included such amounts
as being available in the Special Tax Fund in calculating the amount of the levy of Special Taxes for
such Fiscal Year pursuant to Section 5.2(b) hereof. Moneys deposited in the Surplus Fund will be
transferred by the Fiscal Agent at the direction of an Authorized Representative of the City (i) to the
Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund to pay
the principal of, including Sinking Fund Payments, premium, if any, and interest on the Bonds and
any Parity Bonds when due in the event that moneys in the Special Tax Fund and the Reserve
Account are insufficient therefor, (ii) to the Reserve Account in order to replenish the Reserve
Account to the Proportionate Share of the Reserve Requirement, (iii) to the Administrative Expense
Fund to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative
Expense Fund are insufficient to pay Administrative Expenses, (iv) for any other lawful purpose of
the District.
The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the Parity
Bonds and may be used by the District for any lawful purpose. In the event that the District
reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any
Outstanding Bonds or Parity Bonds, the District will notify the Fiscal Agent in a Certificate of an
Authorized Representative and the Fiscal Agent will segregate such amount into a separate
subaccount and the moneys on deposit in such subaccount of the Surplus Fund shall be invested at
the written direction of the District in Authorized Investments the interest on which is excludable
from gross income under Section 103 of the Code (other than bonds the interest on which is a tax
preference item for purposes of computing the alternative minimum tax of individuals and
corporations under the Code) or in Authorized Investments at a yield not in excess of the yield on the
issue of Bonds or Parity Bonds to which such amounts are to be applied, unless, in the opinion of
Bond Counsel, investment at a higher yield will not adversely affect the exclusion from gross income
for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a
tax - exempt basis for federal income tax purposes.
Section 3.7. Improvement Fund.
(a) [The moneys in the Improvement Fund shall be applied exclusively to pay
Project Costs and shall be disbursed by the Fiscal Agent, as directed by the District, in accordance
with a Certificate of an Authorized Representative.
(b) Upon receipt of a Certificate of an Authorized Representative of the District
stating that all or a specified portion of the amount remaining in the Improvement Fund is no longer
needed to pay Project Costs, the Fiscal Agent shall: (i) transfer all or such specified portion, as
applicable, of the moneys remaining on deposit in the Improvement Fund to the Interest Account, the
Principal Account or Redemption Account of the Special Tax Fund or to the Surplus Fund, as
directed in such certificate, provided that in connection with any direction to transfer amounts to the
Surplus Fund there shall have been delivered to the Fiscal Agent with such certificate an opinion of
21
Bond Counsel to the effect that such transfer to the Surplus Fund will not adversely affect the
exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity
Bonds which were issued on a tax exempt basis for federal income tax purposes; and (ii) thereafter,
close the Improvement Fund.]
Section 3.8. Investments. Moneys held in any of the Accounts under this Indenture shall
be invested by the Fiscal Agent or the District, as applicable, in accordance with the limitations set
forth below only in Authorized Investments which shall be deemed at all times to be a part of such
Accounts. Any loss resulting from such Authorized Investments shall be credited or charged to the
Account from which such investment was made, and any investment earnings on amounts deposited
in the Special Tax Fund, and each Account therein, and of the Surplus Fund shall be deposited in
those respective Funds and Accounts. Moneys in the Accounts held under this Indenture may be
invested by the District or the Fiscal Agent as directed in writing by the District, as applicable from
time to time, in Authorized Investments subject to the following restrictions:
(a) Moneys in the Interest Account, the Principal Account, and the Redemption
Account of the Special Tax Fund shall be invested only in Authorized Investments which will by
their terms mature, or are available for withdrawal without penalty, on such dates so as to ensure the
payment of principal of, premium, if any, and interest on the Bonds as the same become due.
(b) [Moneys in the Improvement Fund shall be invested in Authorized
Investments which will by their terms mature, or in the case of an Investment Agreement are
available without penalty, as close as practicable to the date the District estimates the moneys
represented by the particular investment will be needed for withdrawal from the Improvement Fund.
Notwithstanding anything herein to the contrary, the District shall instruct the Fiscal Agent that
amounts in the Improvement Fund three years after the Delivery Date for the Bonds shall be invested
only in Authorized Investments the interest on which is excluded from gross income under Section
103 of the Code (other than bonds the interest on which is a tax preference item for purposes of
computing the alternative minimum tax of individuals and corporations under the Code) or in
Authorized Investments at a yield not in excess of the yield on the issue of Bonds, unless in the
opinion of Bond Counsel such restriction is not necessary to prevent interest on the Bonds from
being included in gross income for federal income tax purposes.]
(c) In the absence of written investment directions from the District, the Fiscal
Agent shall hold monies uninvested.
The District or the Fiscal Agent, as applicable, shall sell, or present for redemption, any
Authorized Investment whenever it may be necessary to do so in order to provide moneys to meet
any payment or transfer to such Accounts or from such Accounts to which such Authorized
Investments is credited. For the purpose of determining at any given time the balance in any such
Accounts, any such investments constituting a part of such Accounts shall be valued at the lower of
the cost or the market value thereof, exclusive of accrued interest, at least semiannually. In making
any valuations hereunder, the District or the Fiscal Agent, as applicable, may utilize such
computerized securities pricing services as may be available to it, including, without limitation, those
available through its regular accounting system, and conclusively rely thereon. Notwithstanding
anything herein to the contrary, the District or the Fiscal Agent, as applicable, shall not be
responsible for any loss from investments, sales or transfers undertaken in accordance with the
provisions of this Indenture.
22
The Fiscal Agent or the District, as applicable, may act as principal or agent in the making or
disposing of any investment. The Fiscal Agent or the District, as applicable, may sell, or present for
redemption, any Authorized Investment so purchased whenever it shall be necessary to provide
moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or
account to which such Authorized Investment is credited, and, subject to the provisions of
Section 7.4, the Fiscal Agent or the District, as applicable, shall not be liable or responsible for any
loss resulting from such investment. For investment purposes, the Fiscal Agent or the District, as
applicable, may commingle the funds and accounts established hereunder, but shall account for each
separately.
The District acknowledges that, to the extent regulations of the Comptroller of the Currency
or other applicable regulatory entity grant the District the right to receive brokerage confirmations of
security transactions effected by the Fiscal Agent as they occur, the District specifically waives
receipt of such confirmations to the extent permitted by law. The District further understands that
trade confirmations for securities transactions effected by the Fiscal Agent will be available upon
request and at no additional cost and other trade confirmations may be obtained from the applicable
broker. The Fiscal Agent will furnish the District periodic cash transaction statements which shall
include detail for all investment transactions made by the Fiscal Agent hereunder or brokers selected
by the District. Upon the District's election, such statements will be delivered via the Fiscal Agent's
online service and upon electing such service, paper statements will be provided only upon request.
The Fiscal Agent and its affiliates may act as sponsor, advisor, depository, principal or agent in the
holding, acquisition or disposition of any investment.
ARTICLE IV
REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds.
(a) Optional Redemption.
The Bonds maturing on or after September 1, 20 may be redeemed, at the option of
the District from any source of funds on any date on or after September 1, 20_, in whole, or in part
from such maturities as are selected by the District and by lot within a maturity, at a redemption price
equal to the principal amount to be redeemed, together with accrued interest to the date of
redemption, without premium.
In the event the District elects to redeem Bonds as provided above, the District shall
give written notice to the Fiscal Agent of its election to so redeem, the redemption date and the
principal amount of the Bonds to be redeemed. The notice to the Fiscal Agent shall be given at least
60 but no more than 90 days prior to the redemption date, or by such later date as is acceptable to the
Fiscal Agent, in its sole discretion. So long as the Bonds are owned by the Authority, the Bonds may
be redeemed pursuant to this Section 4.1(a) only with the prior consent of the Authority as set forth
in the Authority Indenture.
(b) Mandatory Sinking Fund Redemption.
The Term Bonds maturing on September 1, 20_ shall be called before maturity and
redeemed, from the Sinking Fund Payments that have been deposited into the Principal Account, on
23
.ru I "tw
September 1, 20_, and on each September 1 thereafter prior to maturity, in accordance with the
schedule of Sinking Fund Payments set forth below. The Term Bonds so called for redemption shall
be selected by the Fiscal Agent by lot and shall be redeemed at a redemption price for each redeemed
Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date,
without premium, as follows:
BONDS MATURING SEPTEMBER 1, 20_
Redemption Dates
(September 1) Principal Amount
(maturity)
If the District purchases Term Bonds and delivers them to the Fiscal Agent at least 45 days
prior to an applicable redemption date, the principal amount of the Term Bonds so purchased shall be
credited to reduce the Sinking Fund Payment due on such redemption date for the applicable maturity
of the Term Bonds. All Term Bonds purchased pursuant to this subsection shall be cancelled
pursuant to Section 10.1.
In the event of a partial optional redemption or extraordinary mandatory redemption of Term
Bonds, each of the remaining Sinking Fund Payments for such Term Bonds, as described above, will
be reduced, as nearly as practicable, on a pro rata basis.
(c) Extraordinary Redemption.
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata
basis among maturities, on any Interest Payment Date, and shall be redeemed by the Fiscal Agent,
from Prepayments deposited to the Redemption Account pursuant to Section 3.2 at the following
redemption prices, expressed as a percentage of the principal amount to be redeemed, together with
accrued interest to the redemption date:
Premium
(d) The redemption provisions for Parity Bonds shall be set forth in a
Supplemental Indenture.
Section 4.2. Selection of Bonds and Parity Bonds for Redemption. If less than all of
the Bonds or Parity Bonds Outstanding are to be redeemed, the portion of any Bond or Parity Bond
of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or
an integral multiple thereof. In selecting portions of such Bonds or Parity Bonds for redemption, the
Fiscal Agent shall treat such Bonds or Parity Bonds, as applicable, as representing that number of
Bonds or Parity Bonds of $5,000 denominations which is obtained by dividing the principal amount
of such Bonds or Parity Bonds to be redeemed in part by $5,000. The procedure for the selection of
Parity Bonds for redemption may be modified as set forth in the Supplemental Indenture for such
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Parity Bonds. The Fiscal Agent shall promptly notify the District, in writing, of the Bonds or Parity
Bonds, or portions thereof, selected for redemption.
Section 4.3. Notice of Redemption. When Bonds or Parity Bonds are due for redemption
under Section 4.1 above or under another redemption provision set forth in a Supplemental Indenture
relating to any Parity Bonds, the Fiscal Agent shall give notice, in the name of the District, of the
redemption of such Bonds or Parity Bonds; provided, however, that a notice of a redemption to be
made from other than from Sinking Fund Payments may be conditioned on there being on deposit on
the redemption date sufficient money to pay the redemption price of the Bonds or Parity Bonds to be
redeemed. Such notice of redemption shall (a) specify the CUSIP numbers (if any), the bond
numbers and the maturity date or dates of the Bonds or Parity Bonds selected for redemption, except
that where all of the Bonds or all of an issue of Parity Bonds are subject to redemption, or all the
Bonds or Parity Bonds of one maturity, are to be redeemed, the bond numbers of such issue need not
be specified; (b) state the date fixed for redemption and surrender of the Bonds or Parity Bonds to be
redeemed; (c) state the redemption price; (d) state the place or places where the Bonds or Parity
Bonds are to be redeemed; (e) in the case of Bonds or Parity Bonds to be redeemed only in part, state
the portion of such Bond or Parity Bond which is to be redeemed; (f) state the date of issue of the
Bonds or Parity Bonds as originally issued; (g) state the rate of interest borne by each Bond or Parity
Bond being redeemed; and (h) state any other descriptive information needed to identify accurately
the Bonds or Parity Bonds being redeemed as shall be specified by the Fiscal Agent. Such notice
shall further state that on the date fixed for redemption, there shall become due and payable on each
Bond, Parity Bond or portion thereof called for redemption, the principal thereof, together with any
premium, and interest accrued to the redemption date, and that from and after such date, interest
thereon shall cease to accrue and be payable. At least 30 days but no more than 45 days prior to the
redemption date, the Fiscal Agent shall send a copy of such notice to the respective Owners thereof
at their addresses appearing on the Bond Register, and to the original purchaser of the Bonds or
Parity Bonds, as applicable. The actual receipt by the Owner of any Bond or Parity Bond or the
original purchaser of any Bond or Parity Bond of notice of such redemption shall not be a condition
precedent to redemption, and neither the failure to receive nor any defect in such notice shall affect
the validity of the proceedings for the redemption of such Bonds or Parity Bonds, or the cessation of
interest on the redemption date. A certificate by the Fiscal Agent that notice of such redemption has
been given as herein provided shall be conclusive as against all parties and the Owner shall not be
entitled to show that he or she failed to receive notice of such redemption. Notwithstanding the
foregoing, so long as the Authority or the Authority Trustee on the Authority's behalf is the
registered owner of the Bonds, no such notices need be provided.
In addition to the foregoing notice, further notice shall be given by the Fiscal Agent as set out
below if the Bonds or Parity Bonds are not owned by the Authority at the time the notice of
redemption is given pursuant to this Section 4.3, provided that no defect in said further notice nor any
failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of
a call for redemption if notice thereof is given as above prescribed.
Each further notice of redemption shall be sent at least two days before notice of redemption
is mailed to the Bondowners pursuant to the first paragraph of this Section by registered or certified
mail, overnight delivery service or any other means acceptable to the registered securities depository
listed below and to any other registered securities depositories then in the business of holding
substantial amounts of obligations of types comprising the Bonds and Parity Bonds as shall be
specified by the Fiscal Agent and to any national information services that disseminate notice of
redemption of obligations such as the Bonds and Parity Bonds as determined by the Fiscal Agent:
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Registered Securities Depositories
The Depository Trust Company
55 Water Street
New York, New York 10041
Attention: Redemption Area
Telecopy: (212) 855 -7232 or (212) 855 -7233
Any notice of optional redemption shall be cancelled and annulled if for any reason funds
will not be or are not available on the date fixed for redemption for the payment in full of the Bonds
then called for redemption, and such cancellation shall not constitute an Event of Default under this
Indenture. The District and the Fiscal Agent shall have no liability to the Owners or any other party
related to or arising from such rescission of redemption. The Fiscal Agent shall mail notice of such
rescission of redemption in the same manner as the original notice of redemption was sent.
Upon the payment of the redemption price of any Bonds and Parity Bonds being redeemed,
each check or other transfer of funds issued for such purpose shall to the extent practicable bear the
CUSIP number, if any, identifying, by issue and maturity, the Bonds and Parity Bonds being
redeemed with the proceeds of such check or other transfer.
Section 4.4. Partial Redemption of Bonds or Parity Bonds. Upon surrender of any
Bond or Parity Bond to be redeemed in part only, the District shall execute and the Fiscal Agent shall
authenticate and deliver to the Bondowner, at the expense of the District, a new Bond or Bonds or a
new Parity Bond or Parity Bonds of authorized denominations equal in aggregate principal amount to
the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity
or, in the case of surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to the
foregoing limitations.
Section 4.5. Effect of Notice and Availability of Redemption Money. Notice of
redemption having been duly given, as provided in Section 4.3 hereof, and the amount necessary for
the redemption having been made available for that purpose and being available therefor on the date
fixed for such redemption:
(a) The Bonds and Parity Bonds, or portions thereof, designated for redemption
shall, on the date fixed for redemption, become due and payable at the redemption price thereof as
provided in this Indenture or in any Supplemental Indenture with respect to any Parity Bonds,
anything in this Indenture or in the Bonds or the Parity Bonds to the contrary notwithstanding;
(b) Upon presentation and surrender thereof at the office of the Fiscal Agent, the
redemption price of such Bonds and Parity Bonds shall be paid to the Owners thereof; provided that
so long as the Authority or the Authority Trustee on the Authority's behalf is the registered owner of
the Bonds no such presentment is required;
(c) As of the redemption date the Bonds or the Parity Bonds, or portions thereof
so designated for redemption shall be deemed to be no longer Outstanding and such Bonds or Parity
Bonds, or portions thereof, shall cease to bear further interest; and
(d) As of the date fixed for redemption no Owner of any of the Bonds, Parity
Bonds or portions thereof so designated for redemption shall be entitled to any of the benefits of this
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Indenture or any Supplemental Indenture, or to any other rights, except with respect to payment of
the redemption price and interest accrued to the redemption date from the amounts so made
available.
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty. The District shall preserve and protect the security pledged
hereunder to the Bonds and any Parity Bonds against all claims and demands of all persons.
Section 5.2. Covenants. So long as any of the Bonds or Parity Bonds issued hereunder
are Outstanding and unpaid, the District makes the following covenants with the Bondowners under
the provisions of the Act and this Indenture (to be performed by the District or its proper officers,
agents or employees), which covenants are necessary and desirable to secure the Bonds and Parity
Bonds and tend to make them more marketable; provided, however, that said covenants do not
require the District to expend any funds or moneys other than the Special Taxes and other amounts
deposited to the Special Tax Fund:
(a) Punctual Payment; Against Encumbrances. The District covenants that it will
receive all Special Taxes in trust for the Owners and will instruct the Treasurer to deposit all Special
Taxes with the Fiscal Agent immediately upon their apportionment to the District, and the District
shall have no beneficial right or interest in the amounts so deposited except as provided by this
Indenture. All such Special Taxes shall be disbursed, allocated and applied solely to the uses and
purposes set forth herein, and shall be accounted for separately and apart from all other money,
funds, accounts or other resources of the District.
The District covenants that it will duly and punctually pay or cause to be paid the
principal of and interest on every Bond and Parity Bond issued hereunder, together with the
premium, if any, thereon on the date, at the place and in the manner set forth in the Bonds and the
Parity Bonds and in accordance with this Indenture to the extent that Net Special Taxes and other
amounts pledged hereunder are available therefor, and that the payments into the Funds and
Accounts created hereunder will be made, all in strict conformity with the terms of the Bonds, any
Parity Bonds, and this Indenture, and that it will faithfully observe and perform all of the conditions,
covenants and requirements of this Indenture and all Supplemental Indentures and of the Bonds and
any Parity Bonds issued hereunder.
The District will not mortgage or otherwise encumber, pledge or place any charge
upon any of the Net Special Taxes except as provided in this Indenture, and will not issue any
obligation or security having a lien or charge upon the Net Special Taxes superior to or on a parity
with the Bonds, other than Parity Bonds. Nothing herein shall prevent the District from issuing or
incurring indebtedness which is payable from a pledge of Net Special Taxes which is subordinate in
all respects to the pledge of Net Special Taxes to repay the Bonds and the Parity Bonds.
(b) Levy of Special Tax. So long as any Bonds or Parity Bonds issued under this
Indenture are Outstanding, the legislative body of the District covenants to levy the Special Tax in an
amount sufficient, together with other amounts on deposit in the Special Tax Fund and available for
such purpose, to pay (1) the principal of and interest on the Bonds and any Parity Bonds when due,
(2) the Administrative Expenses, and (3) any amounts required to replenish the Reserve Account
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resulting from the delinquency in the payment of scheduled debt service on the Bonds or any Parity
Bonds (collectively, the "Special Tax Requirement "). The District further covenants that it will take
no actions that would discontinue or cause the discontinuance of the Special Tax levy or the
District's authority to levy the Special Tax for so long as the Bonds and any Parity Bonds are
Outstanding.
(c) Commence Foreclosure Proceedings. The District covenants for the benefit
of the Owners of the Bonds and any Parity Bonds that it (i) will commence judicial foreclosure
proceedings against parcels with delinquent Special Taxes in excess of $ by the October 1
following the close of each Fiscal Year in which such Special Taxes were due and (ii) will
commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the
October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount
which is less than 95% of the total Special Tax levied and the amount on deposit in the Reserve
Account is at less than the Proportionate Share of the Reserve Requirement, and (iii) will diligently
pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that,
notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel
so long as the amount in the Reserve Account is at least equal to the Proportionate Share of the
Reserve Requirement. The District may, but shall not be obligated to, advance funds from any
source of legally available funds in order to maintain the Reserve Account.
The District covenants that it will deposit the net proceeds of any foreclosure and any
other Delinquency Proceeds in the Special Tax Fund and will apply such proceeds remaining after
the payment of Administrative Expenses to pay any delinquent installments of principal or interest
due on the Bonds and any Parity Bonds, to make current payments of principal and interest on the
Bonds and any Parity Bonds and to replenish any draw on the Reserve Account resulting from the
delinquency in the payment of scheduled debt service on the Bonds or any Parity Bonds.
(d) Payment of Claims. The District will pay and discharge any and all lawful
claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Net
Special Taxes or other funds in the Special Tax Fund, or which might impair the security of the
Bonds or any Parity Bonds then Outstanding; provided that nothing herein contained shall require the
District to make any such payments so long as the District in good faith shall contest the validity of
any such claims.
(e) Books and Accounts. The District will keep proper books of records and
accounts, separate from all other records and accounts of the District, in which complete and correct
entries shall be made of all transactions relating to the Project, the levy of the Special Tax and the
deposits to the Special Tax Fund. Such books of records and accounts shall at all times during
business hours be subject to the inspection of the Fiscal Agent or of the Owners of not less than 10%
of the principal amount of the Bonds or the Owners of not less than 10% of any issue of Parity Bonds
then Outstanding or their representatives authorized in writing.
(f) Federal Tax Covenants. Notwithstanding any other provision of this
Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest on the
Authority Bonds issued on a tax - exempt basis for federal income tax purposes will not be adversely
affected for federal income tax purposes, the District covenants to comply with all applicable
requirements of the Code necessary to preserve such exclusion from gross income and specifically
covenants, without limiting the generality of the foregoing, as follows:
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(1) Private Activity. The District will take no action or refrain from
taking any action or make any use of the proceeds of the Bonds or any Parity Bonds or of any other
moneys or property which would cause the Authority Bonds issued on a tax - exempt basis for federal
income tax purposes to be "private activity bonds" within the meaning of Section 141 of the Code;
(2) Arbitrage. The District will make no use of the proceeds of the Bonds
or any Parity Bonds or of any other amounts or property, regardless of the source, or take any action
or refrain from taking any action which will cause the Authority Bonds issued on a tax - exempt basis
for federal income tax purposes to be "arbitrage bonds" within the meaning of Section 148 of the
Code;
(3) Federal Guaranty. The District will make no use of the proceeds of
the Bonds or any Parity Bonds or take or omit to take any action that would cause the Authority
Bonds issued on a tax - exempt basis for federal income tax purposes to be "federally guaranteed"
within the meaning of Section 149(b) of the Code;
(4) Hedge Bonds. The District will make no use of the proceeds of the
Bonds or any Parity Bonds or any other amounts or property, regardless of the source, or take any
action or refrain from taking any action that would cause the Authority Bonds issued on a tax - exempt
basis for federal income tax purposes to be considered "hedge bonds" within the meaning of
Section 149(g) of the Code unless the District takes all necessary action to assure compliance with
the requirements of Section 149(g) of the Code to maintain the exclusion from gross income for
federal income tax purposes of interest on the Authority Bonds; and
(5) Other Tax Exempt Issues. The District will not use proceeds of other
tax exempt securities to redeem any Bonds or Parity Bonds without first obtaining the written
opinion of Bond Counsel that doing so will not impair the exclusion from gross income for federal
income tax purposes of interest on the Authority Bonds issued on a tax - exempt basis.
(g) Reduction of Maximum Special Taxes. The District hereby finds and
determines that, historically, delinquencies in the payment of special taxes authorized pursuant to the
Act in community facilities districts in Southern California have from time to time been at levels
requiring the levy of special taxes at the maximum authorized rates in order to make timely payment
of principal of and interest on the outstanding indebtedness of such community facilities districts.
For this reason, the District hereby determines that a reduction in the maximum Special Tax rates
authorized to be levied on parcels in the District below the levels provided in this Section 5.2(g)
would interfere with the timely retirement of the Bonds and Parity Bonds. The District determines it
to be necessary in order to preserve the security for the Bonds and Parity Bonds to covenant, and, to
the maximum extent that the law permits it to do so, the District hereby does covenant, that it shall
not initiate proceedings to reduce the maximum Special Tax rates for the District, unless, in
connection therewith, (i) the District receives a certificate from one or more Independent Financial
Consultants which, when taken together, certify that, on the basis of the parcels of land and
improvements existing in the District as of the July 1 preceding the reduction, the maximum amount
of the Special Tax which may be levied on then existing Developed Property (as defined in the Rate
and Method of Apportionment then in effect in the District) in each Bond Year for any Bonds and
Parity Bonds Outstanding will equal at least 110% of the sum of the estimated Administrative
Expenses and gross debt service in each Bond Year on all Bonds and Parity Bonds to remain
Outstanding after the reduction is approved, (ii) the District finds that any reduction made under such
conditions will not adversely affect the interests of the Owners of the Bonds and Parity Bonds, and
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(iii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any
Parity Bonds. For purposes of estimating Administrative Expenses for the foregoing calculation, the
Independent Financial Consultants shall compute the Administrative Expenses for the current Fiscal
Year and escalate that amount by two percent (2 %) in each subsequent Fiscal Year.
(h) Covenants to Defend. The District covenants that, in the event that any
initiative is adopted by the qualified electors in the District which purports to reduce the minimum or
the maximum Special Tax below the levels specified in Section 5.2(g) above or to limit the power of
the District to levy the Special Taxes for the purposes set forth in Section 5.2(b) above, it will
commence and pursue legal action in order to preserve its ability to comply with such covenants.
(i) Limitation on Right to Tender Bonds. The District hereby covenants that it
will not adopt any policy pursuant to Section 53344.1 of the Act permitting the tender of Bonds or
Parity Bonds in full payment or partial payment of any Special Taxes unless the District shall have
first received a certificate from an Independent Financial Consultant that the acceptance of such a
tender will not result in the District having insufficient Special Tax revenues to pay the principal of
and interest on the Bonds and Parity Bonds when due.
0) Further Assurances. The District shall make, execute and deliver any and all
such further agreements, instruments and assurances as may be reasonably necessary or proper to
carry out the intention or to facilitate the performance of this Indenture and for the better assuring
and confirming unto the Owners of the Bonds and any Parity Bonds of the rights and benefits
provided in this Indenture.
(k) Subordinate Debt. Any indebtedness of the District evidenced by any
subordinated debt and any renewals or extensions thereof (herein called "Subordinated
Indebtedness "), shall at all times be wholly subordinate and junior in right of payment to any and all
indebtedness of the District under this Indenture (herein called "Superior Indebtedness "). Following
an event of default under this Indenture, no Subordinated Indebtedness shall be paid prior to any
Superior Indebtedness in any fiscal year of the District. If the holder of the Subordinated
Indebtedness is a commercial bank, savings bank, savings and loan association or other financial
institution which is authorized by law to accept and hold deposits of money or issue certificates of
deposit, such holder must agree to waive any common law or statutory right of setoff with respect to
any deposits of the District maintained with or held by such holder.
(1) Pledged Net Special Taxes. The District represents it has not heretofore made
a pledge of, granted at a lien on or security interest in, or made an assignment or sale of the Net
Special Taxes that ranks on a parity with or prior to the pledge granted under this Indenture. The
District, except as may be provided otherwise in this Indenture, shall not hereafter make any pledge
or assignment of, lien on, or security interest in the Net Special Taxes payable senior to or on a parity
with the pledge of Net Special Taxes established under this Indenture.
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent.
The District may from time to time, and at any time, without notice to or consent of any of the
Bondowners, adopt Supplemental Indentures for any of the following purposes:
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(a) to cure any ambiguity, to correct or supplement any provisions herein which
may be inconsistent with any other provision herein, or to make any other provision with respect to
matters or questions arising under this Indenture or in any additional resolution or order, provided
that such action is not materially adverse to the interests of the Bondowners;
(b) to add to the covenants and agreements of and the limitations and the
restrictions upon the District contained in this Indenture, other covenants, agreements, limitations and
restrictions to be observed by the District which are not contrary to or inconsistent with this
Indenture as theretofore in effect or which further secure Bond or Parity Bond payments;
(c) to provide for the issuance of any Parity Bonds, and to provide the terms and
conditions under which such Parity Bonds may be issued, subject to and in accordance with the
provisions of this Indenture;
(d) to modify, amend or supplement this Indenture in such manner as to permit
the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal
statute hereafter in effect, or to comply with the Code or regulations issued thereunder, and to add
such other terms, conditions and provisions as may be permitted by said act or similar federal statute,
and which shall not materially adversely affect the interests of the Owners of the Bonds or any Parity
Bonds then Outstanding; or
(e) to modify, alter or amend the rate and method of apportionment of the Special
Taxes in any manner so long as such changes do not reduce the maximum Special Taxes that may be
levied in each year on property within the District to an amount which is less than 110% of the sum
of estimated Administrative Expenses and principal and interest due in each corresponding future
Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such
amendment; or
(f) to modify, alter, amend or supplement this Indenture in any other respect
which is not materially adverse to the Bondowners.
Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent.
Exclusive of the Supplemental Indentures described in Section 6.1, the Owners of not less than a
majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding shall have the
right to consent to and approve the adoption by the District of such Supplemental Indentures as shall
be deemed necessary or desirable by the District, for the purpose of waiving, modifying, altering,
amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this
Indenture; provided, however, that nothing herein shall permit, or be construed as permitting, (a) an
extension of the maturity date of the principal, or the payment date of interest on, any Bond or Parity
Bond, (b) a reduction in the principal amount of, or redemption premium on, any Bond or Parity
Bond or the rate of interest thereon, (c) a preference or priority of any Bond or Parity Bond over any
other Bond or Parity Bond, or (d) a reduction in the aggregate principal amount of the Bonds and
Parity Bonds the Owners of which are required to consent to such Supplemental Indenture, without
the consent of the Owners of all Bonds and Parity Bonds then Outstanding.
If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to
the terms of this Section shall require the consent of the Bondowners, the District shall so notify the
Fiscal Agent and shall deliver to the Fiscal Agent a copy of the proposed Supplemental Indenture.
The Fiscal Agent shall, at the expense of the District, cause notice of the proposed Supplemental
31
Indenture to be mailed, by first class mail, postage prepaid, to all Bondowners at their addresses as
they appear in the Bond Register (if the Authority or the Authority Trustee on the Authority's behalf
is the owner of all the Bonds, such amendment may be delivered by other communication methods).
Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state
that a copy thereof is on file at the office of the Fiscal Agent for inspection by all Bondowners. The
failure of any Bondowners to receive such notice shall not affect the validity of such Supplemental
Indenture when consented to and approved by the Owners of not less than a majority in aggregate
principal amount of the Bonds and Parity Bonds Outstanding as required by this Section. Whenever
at any time within one year after the date of the first mailing of such notice, the Fiscal Agent shall
receive an instrument or instruments purporting to be executed by the Owners of not less than a
majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding, which
instrument or instruments shall refer to the proposed Supplemental Indenture described in such
notice, and shall specifically consent to and approve the adoption thereof by the District substantially
in the form of the copy referred to in such notice as on file with the Fiscal Agent, such proposed
Supplemental Indenture, when duly adopted by the District, shall thereafter become a part of the
proceedings for the issuance of the Bonds and any Parity Bonds. In determining whether the Owners
of a majority of the aggregate principal amount of the Bonds and Parity Bonds have consented to the
adoption of any Supplemental Indenture, Bonds or Parity Bonds which are owned by the District or
by any person directly or indirectly controlling or controlled by or under the direct or indirect
common control with the District, shall be disregarded and shall be treated as though they were not
Outstanding for the purpose of any such determination.
Upon the adoption of any Supplemental Indenture and the receipt of consent to any such
Supplemental Indenture from the Owners of not less than a majority in aggregate principal amount of
the Outstanding Bonds and Parity Bonds in instances where such consent is required pursuant to the
provisions of this section, this Indenture shall be, and shall be deemed to be, modified and amended
in accordance therewith, and the respective rights, duties and obligations under this Indenture of the
District and all Owners of Outstanding Bonds and Parity Bonds shall thereafter be determined,
exercised and enforced hereunder, subject in all respects to such modifications and amendments.
The Fiscal Agent may in its discretion, but shall not be obligated to, enter into any such
Supplemental Indenture authorized by Sections 6.1 and 6.2 which affects the Fiscal Agent's own
rights, duties or immunities under this Indenture or otherwise.
Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or
Parity Bonds. After the effective date of any action taken as hereinabove provided, the District may
determine that the Bonds or any Parity Bonds may bear a notation, by endorsement in form approved
by the District, as to such action, and in that case upon demand of the Owner of any Outstanding
Bond or Parity Bond at such effective date and presentation of his Bond or Parity Bond for the
purpose at the office of the Fiscal Agent or at such additional offices as the Fiscal Agent may select
and designate for that purpose, a suitable notation as to such action shall be made on such Bonds or
Parity Bonds. If the District shall so determine, new Bonds or Parity Bonds so modified as, in the
opinion of the District, shall be necessary to conform to such action shall be prepared and executed,
and in that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective
date such new Bonds or Parity Bonds shall be exchanged at the office of the Fiscal Agent or at such
additional offices as the Fiscal Agent may select and designate for that purpose, without cost to each
Owner of Outstanding Bonds or Parity Bonds, upon surrender of such Outstanding Bonds or Parity
Bonds.
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ARTICLE VII
FISCAL AGENT
Section 7.1. Fiscal Agent. MUFG Union Bank, N.A., shall be the Fiscal Agent for the
Bonds and any Parity Bonds unless and until another Fiscal Agent is appointed by the District
hereunder. The District may, at any time, appoint a successor Fiscal Agent satisfying the
requirements of Section 7.2 below for the purpose of receiving all money which the District is
required to deposit with the Fiscal Agent hereunder and to allocate, use and apply the same as
provided in this Indenture; provided, however, that the Fiscal Agent shall be at all times the same
entity as the Authority Trustee.
The Fiscal Agent is hereby authorized to and shall mail by first class mail, postage prepaid,
or wire transfer in accordance with Section 2.5 above, interest payments to the Bondowners, to select
Bonds and Parity Bonds for redemption, and to maintain the Bond Register. The Fiscal Agent is
hereby authorized to pay the principal of and premium, if any, on the Bonds and Parity Bonds when
the same are duly presented to it for payment at maturity or on call and redemption, to provide for the
registration of transfer and exchange of Bonds and Parity Bonds presented to it for such purposes, to
provide for the cancellation of Bonds and Parity Bonds all as provided in this Indenture, and to
provide for the authentication of Bonds and Parity Bonds, and shall perform all other duties assigned
to or imposed on it as provided in this Indenture. The Fiscal Agent shall keep accurate records of all
funds administered by it and all Bonds and Parity Bonds paid, discharged and cancelled by it.
The Fiscal Agent is hereby authorized to redeem the Bonds and Parity Bonds when duly
presented for payment at maturity, or on redemption prior to maturity. The Fiscal Agent shall cancel
all Bonds and Parity Bonds upon payment thereof in accordance with the provisions of Section 10.1
hereof.
The District shall from time to time, subject to any agreement between the District and the
Fiscal Agent then in force, pay to the Fiscal Agent compensation for its services, reimburse the Fiscal
Agent for all its advances and expenditures, including, but not limited to, advances to and fees and
expenses of independent accountants or counsel employed by it in the exercise and performance of
its powers and duties hereunder, and indemnify and save the Fiscal Agent, its officers, directors,
employees and agents, harmless from and against costs, damages, claims, expenses and liabilities,
including, without limitation, fees and expenses of its attorneys, not arising from its own negligence
or willful misconduct which it may incur in the exercise and performance of its powers and duties
hereunder. In no event shall the Fiscal Agent be liable for any consequential, punitive or special
damages. The foregoing obligation of the District to indemnify the Fiscal Agent shall survive the
removal or resignation of the Fiscal Agent or the discharge of the Bonds.
Section 7.2. Removal of Fiscal Agent. The District may at any time at its sole discretion
remove the Fiscal Agent initially appointed, and any successor thereto, by delivering to the Fiscal
Agent a written notice of its decision to remove the Fiscal Agent and may appoint a successor or
successors thereto; provided that any such successor shall be a bank, association or trust company
having a combined capital (exclusive of borrowed capital) and surplus of at least $75,000,000, and
subject to supervision or examination by federal or state authority. Any removal shall become
effective only upon acceptance of appointment by the successor Fiscal Agent. If any bank,
association or trust company appointed as a successor publishes a report of condition at least
annually, pursuant to law or to the requirements of any supervising or examining authority above
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referred to, then for the purposes of this section the combined capital and surplus of such bank,
association or trust company shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. Any removal of the Fiscal Agent and appointment of a
successor Fiscal Agent shall become effective only upon acceptance of appointment by the successor
Fiscal Agent and notice being sent by the successor Fiscal Agent to the Bondowners of the successor
Fiscal Agent's identity and address.
Section 7.3. Resignation of Fiscal Agent. The Fiscal Agent may at any time resign by
giving written notice to the District and by giving to the Owners notice of such resignation, which
notice shall be sent to the Owners at their addresses appearing in the registration books in the office
of the Fiscal Agent. Upon receiving such notice of resignation, the District shall promptly appoint a
successor Fiscal Agent satisfying the criteria in Section 7.2 above by an instrument in writing. Any
resignation or removal of the Fiscal Agent and appointment of a successor Fiscal Agent shall become
effective only upon acceptance of appointment by the successor Fiscal Agent. If no successor Fiscal
Agent shall have been appointed and have accepted appointment within forty -five (45) days of giving
notice of removal or notice of resignation as aforesaid, the resigning Fiscal Agent or any Owner (on
behalf of itself and all other Owners) may petition any court of competent jurisdiction for the
appointment of a successor Fiscal Agent, and such court may thereupon, after such notice (if any) as
it may deem proper, appoint such successor Fiscal Agent.
Section 7.4. Liability of Fiscal Agent. The recitals of fact and all promises, covenants
and agreements contained herein and in the Bonds and any Parity Bonds shall be taken as statements,
promises, covenants and agreements of the District, and the Fiscal Agent assumes no responsibility
for the correctness of the same and makes no representations as to the validity or sufficiency of this
Indenture, the Bonds or any Parity Bonds, and shall incur no responsibility in respect thereof, other
than in connection with its duties or obligations specifically set forth herein, in the Bonds and any
Parity Bonds, or in the certificate of authentication assigned to or imposed upon the Fiscal Agent.
The Fiscal Agent shall be under no responsibility or duty with respect to the issuance of the Bonds or
any Parity Bonds for value. The Fiscal Agent shall not be liable in connection with the performance
of its duties hereunder, except for its own negligence or willful misconduct.
The Fiscal Agent shall be protected in acting upon any notice, resolution, request, consent,
order, certificate, report, Bond, Parity Bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties. The Fiscal Agent may consult
with counsel, who may be counsel to the District, with regard to legal questions, and the opinion of
such counsel shall be full and complete authorization and protection in respect of any action taken or
suffered hereunder in good faith and in accordance therewith.
The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond or
Parity Bond unless and until such Bond or Parity Bond is submitted for inspection, if required, and
his title thereto satisfactorily established, if disputed.
Whenever in the administration of its duties under this Indenture the Fiscal Agent shall deem
it necessary or desirable that a matter be proved or established prior to taking or suffering any action
hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed)
may, in the absence of bad faith on the part of the Fiscal Agent, be deemed to be conclusively proved
and established by a written certificate of the District, and such certificate shall be full warrant to the
Fiscal Agent for any action taken or suffered under the provisions of this Indenture upon the faith
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thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such
matter or may require such additional evidence as to it may seem reasonable.
The Fiscal Agent shall have no duty or obligation whatsoever to enforce the collection of
Special Taxes or other funds to be deposited with it hereunder, or as to the correctness of any
amounts received, but its liability shall be limited to the proper accounting for such funds as it shall
actually receive. No provision in this Bond Indenture shall require the Fiscal Agent to expend or risk
its own funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of its rights or powers.
The Fiscal Agent shall not be deemed to have knowledge of any default or event of default
until an officer at the Fiscal Agent's corporate trust office responsible for the administration of its
duties hereunder shall have actual knowledge thereof or the Fiscal Agent shall have received written
notice thereof at its corporate trust office.
The Fiscal Agent shall not be considered in breach of or in default in its obligations
hereunder or progress in respect thereto in the event of enforced delay ( "unavoidable delay ") in the
performance of such obligations due to unforeseeable causes beyond its control and without its fault
or negligence, including, but not limited to, Acts of God or of the public enemy or terrorists or acts of
a government.
The Fiscal Agent shall have no responsibility or liability with respect to any information,
statements or recital in any offering memorandum or other disclosure material prepared or distributed
with respect to the issuance of the Bonds.
The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested
in it by this Indenture at the request, order or direction of any of the Owners pursuant to the
provisions of this Indenture unless such Owners shall have offered to the Fiscal Agent reasonable
security or indemnity against the costs, expenses and liabilities which may be incurred therein or
thereby.
The Fiscal Agent, prior to the occurrence of an Event of Default and after the curing or
waiver of all Events of Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in the Indenture. In case an Event of Default has occurred
(which has not been cured or waived) the Fiscal Agent shall exercise such of the rights and powers
vested in it by the Indenture, and use the same degree of care and skill in accordance with corporate
trust industry standards.
The Fiscal Agent agrees to accept and act upon facsimile or electronic transmission of written
instructions and /or directions pursuant to this Indenture provided, however, that: (a) such originally
executed instructions and /or directions shall be signed by a person as may be designated and
authorized to sign for the party signing such instructions and /or directions, and (b) the Fiscal Agent
shall have received a current incumbency certificate containing the specimen signature of such
designated person.
Section 7.5. Merger or Consolidation. Any company into which the Fiscal Agent may
be merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the Fiscal
Agent may sell or transfer all or substantially all of its corporate trust business, shall be the successor
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to the Fiscal Agent without the execution or filing of any paper or further act, anything herein to the
contrary notwithstanding.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default. Any one or more of the following events shall constitute
an "event of default ":
(a) Default in the due and punctual payment of the principal of or redemption
premium, if any, on any Bond or Parity Bond when and as the same shall become due and payable,
whether at maturity as therein expressed, by declaration or otherwise;
(b) Default in the due and punctual payment of the interest on any Bond or Parity
Bond when and as the same shall become due and payable; or
(c) Except as described in (a) or (b), default shall be made by the District in the
observance of any of the agreements, conditions or covenants on its part contained in this Indenture,
the Bonds or any Parity Bonds, and such default shall have continued for a period of 30 days after the
District shall have been given notice in writing of such default by the Fiscal Agent or the Owners of
25% in aggregate principal amount of the Outstanding Bonds and Parity Bonds.
The Fiscal Agent agrees to give notice to the Owners immediately upon the occurrence of an
event of default under (a) or (b) above and within 30 days of the Fiscal Agent's knowledge of an
event of default under (c) above.
Section 8.2. Remedies of Owners. Upon the occurrence of an Event of Default, the
Fiscal Agent may pursue any available remedy at law or in equity to enforce the payment of the
principal of, premium, if any, and interest on the Outstanding Bonds and Parity Bonds, and to
enforce any rights of the Fiscal Agent under or with respect to this Indenture, including:
(a) By mandamus or other suit or proceeding at law or in equity to enforce his
rights against the District and any of the members, officers and employees of the District, and to
compel the District or any such members, officers or employees to perform and carry out their duties
under the Act and their agreements with the Owners as provided in this Indenture;
(b) By suit in equity to enjoin any actions or things which are unlawful or violate
the rights of the Owners; or
(c) By a suit in equity to require the District and its members, officers and
employees to account as the trustee of an express trust.
If an Event of Default shall have occurred and be continuing and if requested so to do by the
Owners of at least twenty -five percent (25 %) in aggregate principal amount Outstanding Bonds and
Parity Bonds and is indemnified to its satisfaction, the Fiscal Agent shall be obligated to exercise
such one or more of the rights and powers conferred by this Article VIII, as the Fiscal Agent, being
advised by counsel, shall deem most expedient in the interests of the Owners of the Bonds and Parity
Bonds.
No remedy herein conferred upon or reserved to the Fiscal Agent or to the Owners is
intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by
statute or otherwise, and may be exercised without exhausting and without regard to any other
remedy conferred by the Act or any other law.
The Bonds and any Parity Bonds are not subject to acceleration prior to maturity.
Section 8.3. Application of Revenues and Other Funds After Default. All amounts
received by the Fiscal Agent pursuant to any right given or action taken by the Fiscal Agent under
the provisions of this Indenture relating to the Bonds and Parity Bonds shall be applied by the Fiscal
Agent in the following order upon presentation of the several Bonds and Parity Bonds:
First, to the payment of the fees, costs and expenses of the Fiscal Agent in declaring
such Event of Default and in carrying out the provisions of this Article VIII, including reasonable
compensation to its agents, attorneys and counsel, and to the payment of all other outstanding fees
and expenses of the Fiscal Agent; and
Second, to the payment of the whole amount of interest on and principal of the Bonds
and Parity Bonds then due and unpaid, with interest on overdue installments of principal and interest
to the extent permitted by law at the net effective rate of interest then borne by the Outstanding
Bonds and Parity Bonds; provided, however, that in the event such amounts shall be insufficient to
pay in full the full amount of such interest and principal, then such amounts shall be applied in the
following order of priority:
(a) first to the payment of all installments of interest on the Bonds and Parity
Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing,
(b) second, to the payment of all installments of principal, including Sinking
Fund Payments, of the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the
total amount then due and owing, and
(c) third, to the payment of interest on overdue installments of principal and
interest on the Bonds and Parity Bonds on a pro rata basis based on the total amount then due and
owing.
Section 8.4. Power of Fiscal Agent to Control Proceedings. In the event that the Fiscal
Agent, upon the happening of an Event of Default, shall have taken any action, by judicial
proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon
the request of the Owners of twenty -five percent (25 %) in aggregate principal amount of the Bonds
and Parity Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the
best interests of the Owners of the Bonds and Parity Bonds, with respect to the continuance,
discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided,
however, that the Fiscal Agent shall not, unless there no longer continues an Event of Default,
discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or
in equity, if at the time there has been filed with it a written request signed by the Owners of a
majority in aggregate principal amount of the Outstanding Bonds and Parity Bonds hereunder
opposing such discontinuance, withdrawal, compromise, settlement or other such litigation. Any
suit, action or proceeding which any Owner of Bonds or Parity Bonds shall have the right to bring to
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enforce any right or remedy hereunder may be brought by the Fiscal Agent for the equal benefit and
protection of all Owners of Bonds and Parity Bonds similarly situated and the Fiscal Agent is hereby
appointed (and the successive respective Owners of the Bonds and Parity Bonds issued hereunder, by
taking and holding the same, shall be conclusively deemed so to have appointed it) the true and
lawful attorney in fact of the respective Owners of the Bonds and Parity Bonds for the purposes of
bringing any such suit, action or proceeding and to do and perform any and all acts and things for and
on behalf of the respective Owners of the Bonds and Parity Bonds as a class or classes, as may be
necessary or advisable in the opinion of the Fiscal Agent as such attorney -in -fact.
Section 8.5. Appointment of Receivers. Upon the occurrence of an Event of Default
hereunder, and upon the fling of a suit or other commencement of judicial proceedings to enforce the
rights of the Fiscal Agent and of the Owners of the Bonds and Parity Bonds under this Indenture, the
Fiscal Agent shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the
Net Special Taxes and other amounts pledged hereunder, pending such proceedings, with such
powers as the court making such appointment shall confer.
Section 8.6. Non - Waiver. Nothing in this Article VIII or in any other provision of this
Indenture, or in the Bonds or the Parity Bonds, shall affect or impair the obligation of the District,
which is absolute and unconditional, to pay the interest on and principal of the Bonds and Parity
Bonds to the respective Owners of the Bonds and Parity Bonds at the respective dates of maturity, as
herein provided, out of the Net Special Taxes and other moneys herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Fiscal Agent or any Owners shall
not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on
any such subsequent default or breach. No delay or omission of the Fiscal Agent or any Owner of
any of the Bonds or Parity Bonds 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 Fiscal Agent or the Owners
by the Act or by this Article VIII may be enforced and exercised from time to time and as often as
shall be deemed expedient by the Fiscal Agent or the Owners, as the case may be.
Section 8.7. Limitations on Rights and Remedies of Owners. No Owner of any Bond
or Parity Bond issued hereunder shall have the right to institute any suit, action or proceeding at law
or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have
previously given to the Fiscal Agent written notice of the occurrence of an Event of Default; (b) the
Owners of a majority in aggregate principal amount of all the Bonds and Parity Bonds then
Outstanding shall have made written request upon the Fiscal Agent to exercise the powers
hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners
shall have tendered to the Fiscal Agent indemnity reasonably acceptable to the Fiscal Agent against
the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Fiscal
Agent shall have refused or omitted to comply with such request for a period of sixty (60) days after
such written request shall have been received by, and said tender of indemnity shall have been made
to, the Fiscal Agent.
Such notification, request, tender of indemnity and refusal or omission are hereby declared,
in every case, to be conditions precedent to the exercise by any Owner of Bonds and Parity Bonds of
any remedy hereunder; it being understood and intended that no one or more Owners of Bonds and
Parity Bonds shall have any right in any manner whatever by his or their action to enforce any right
under this Indenture, except in the manner herein provided, and that all proceedings at law or in
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equity to enforce any provision of this Indenture shall be instituted, had and maintained in the
manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds and Parity
Bonds.
The right of any Owner of any Bond and Parity Bond to receive payment of the principal of
and interest and premium (if any) on such Bond and Parity Bond as herein provided or to institute
suit for the enforcement of any such payment, shall not be impaired or affected without the written
consent of such Owner, notwithstanding the foregoing provisions of this Section or any other
provision of this Indenture.
Section 8.8. Termination of Proceedings. In case the Fiscal Agent shall have proceeded
to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason, or shall have been
determined adversely, then and in every such case, the District, the Fiscal Agent and the Owners
shall be restored to their former positions and rights hereunder, respectively, with regard to the
property subject to this Indenture, and all rights, remedies and powers of the Fiscal Agent shall
continue as if no such proceedings had been taken.
ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance. If the District shall pay or cause to be paid, or there shall
otherwise be paid, to the Owner of an Outstanding Bond or Parity Bond the interest due thereon and
the principal thereof, at the times and in the manner stipulated in this Indenture or any Supplemental
Indenture, then the Owner of such Bond or Parity Bond shall cease to be entitled to the pledge of Net
Special Taxes, and, other than as set forth below, all covenants, agreements and other obligations of
the District to the Owner of such Bond or Parity Bond under this Indenture and any Supplemental
Indenture relating to such Parity Bond shall thereupon cease, terminate and become void and be
discharged and satisfied. In the event of a defeasance of all Outstanding Bonds and Parity Bonds
pursuant to this Section, the Fiscal Agent shall execute and deliver to the District all such instruments
as may be desirable to evidence such discharge and satisfaction, and the Fiscal Agent shall pay over
or deliver to the District's general fund all money or securities held by it pursuant to this Indenture
which are not required for the payment of the principal of, premium, if any, and interest due on such
Bonds and Parity Bonds.
Any Outstanding Bond or Parity Bond shall be deemed to have been paid within the meaning
expressed in the first paragraph of this Section if such Bond or Parity Bond is paid in any one or
more of the following ways:
(a) by paying or causing to be paid the principal of, premium, if any, and interest
on such Bond or Parity Bond, as and when the same become due and payable;
(b) by depositing with the Fiscal Agent, in trust, at or before maturity, money
which, together with the amounts then on deposit in the Special Tax Fund (exclusive of the
Administrative Expense Fund) and available for such purpose, is fully sufficient to pay the principal
of, premium, if any, and interest on such Bond or Parity Bond, as and when the same shall become
due and payable; or
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(c) by depositing with the Fiscal Agent or another escrow bank appointed by the
District, in trust, Defeasance Securities, in which the District may lawfully invest its money, in such
amount as will be sufficient, together with the interest to accrue thereon and moneys then on deposit
in the Special Tax Fund (exclusive of the Administrative Expense Fund) and available for such
purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium,
if any, and interest on such Bond or Parity Bond, as and when the same shall become due and
payable;
then, at the election of the District, and notwithstanding that any Outstanding Bonds and Parity
Bonds shall not have been surrendered for payment, all obligations of the District under this
Indenture and any Supplemental Indenture with respect to such Bond or Parity Bond shall cease and
terminate, except for the obligation of the Fiscal Agent to pay or cause to be paid to the Owners of
any such Bond or Parity Bond not so surrendered and paid, all sums due thereon. Notice of such
election shall be filed with the Fiscal Agent not less than ten days prior to the proposed defeasance
date, or such shorter period of time as may be acceptable to the Fiscal Agent. In connection with a
defeasance under (b) or (c) above, there shall be provided to the District a verification report from an
independent nationally recognized certified public accountant, stating its opinion as to the sufficiency
of the moneys or securities deposited with the Fiscal Agent or the escrow bank to pay and discharge
the principal of, premium, if any, and interest on all Outstanding Bonds and Parity Bonds to be
defeased in accordance with this Section, as and when the same shall become due and payable, and
an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to
the effect that the Bonds or Parity Bonds being defeased have been legally defeased in accordance
with this Indenture and any applicable Supplemental Indenture.
Upon a defeasance, the Fiscal Agent, upon request of the District, shall release the rights of
the Owners of such Bonds and Parity Bonds which have been defeased under this Indenture and any
Supplemental Indenture and execute and deliver to the District all such instruments as may be
desirable to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder
of all Outstanding Bonds and Parity Bonds, the Fiscal Agent shall pay over or deliver to the District
any funds held by the Fiscal Agent at the time of a defeasance, which are not required for the purpose
of paying and discharging the principal of or interest on the Bonds and Parity Bonds when due. The
Fiscal Agent shall, at the written direction of the District, mail, first class, postage prepaid, a notice to
the Bondowners whose Bonds or Parity Bonds have been defeased, in the form directed by the
District, stating that the defeasance has occurred.
Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional
Indebtedness. The District may at any time after the issuance and delivery of the Bonds hereunder
issue Parity Bonds payable from the Net Special Taxes and other amounts deposited in the Special
Tax Fund and secured by a lien and charge upon such amounts equal to the lien and charge securing
the Outstanding Bonds and any other Parity Bonds theretofore issued hereunder or under any
Supplemental Indenture; provided, however, that Parity Bonds may only be issued for the purpose of
refunding all or a portion of the Bonds or any Parity Bonds then Outstanding. The District shall not
incur any additional bonded indebtedness payable from Net Special Taxes, including any additional
bonded indebtedness subordinate to the Bonds, except for Parity Bonds which satisfy the
requirements of this Indenture set forth in Section 9.2 thereof. Parity Bonds which may only be
issued to effect a partial refunding will be issued subject to the following additional specific
conditions, which are hereby made conditions precedent to the issuance of any such Parity Bonds:
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(a) The District shall be in compliance with all covenants set forth in this
Indenture and any Supplemental Indenture then in effect and a certificate of the District to that effect
shall have been filed with the Fiscal Agent; provided, however, that Parity Bonds may be issued
notwithstanding that the District is not in compliance with all such covenants so long as immediately
following the issuance of such Parity Bonds the District will be in compliance with all such
covenants.
(b) The issuance of such Parity Bonds shall have been duly authorized pursuant
to the Act and all applicable laws, and the issuance of such Parity Bonds shall have been provided for
by a Supplemental Indenture duly adopted by the District which shall specify the following:
(1) The purpose for which such Parity Bonds are to be issued and the
fund or funds into which the proceeds thereof are to be deposited, including a provision requiring the
proceeds of such Parity Bonds to be applied solely for the purpose of refunding any Outstanding
Bonds or Parity Bonds, including payment of all costs and the funding of all reserves incidental to or
connected with such refunding;
(2) The authorized principal amount of such Parity Bonds;
(3) The date and the maturity date or dates of such Parity Bonds;
provided that (i) each maturity date shall fall on a September 1, (ii) all such Parity Bonds of like
maturity shall be identical in all respects, except as to number, and (iii) fixed serial maturities or
Sinking Fund Payments, or any combination thereof, shall be established to provide for the
retirement of all such Parity Bonds on or before their respective maturity dates;
(4) The description of the Parity Bonds, the place of payment thereof and
the procedure for execution and authentication;
(5) The denominations and method of numbering of such Parity Bonds;
(6) The amount and due date of each mandatory Sinking Fund Payment,
if any, for such Parity Bonds;
(7) The amount, if any, to be deposited from the proceeds of such Parity
Bonds in the Reserve Account to increase the amount therein to the Proportionate Share;
(8) The form of such Parity Bonds; and
(9) Such other provisions as are necessary or appropriate and not
inconsistent with this Indenture.
(c) The District shall have received the following documents or money or
securities, all of such documents dated or certified, as the case may be, as of the date of delivery of
such Parity Bonds by the Fiscal Agent (unless the Fiscal Agent shall accept any of such documents
bearing a prior date):
(1) A certified copy of the Supplemental Indenture authorizing the
issuance of such Parity Bonds;
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(2) A written request of the District as to the delivery of such Parity
Bonds;
(3) An opinion of Bond Counsel and /or general counsel to the District to
the effect that (a) the District has the right and power under the Act to adopt this Indenture and the
Supplemental Indentures relating to such Parity Bonds, and this Indenture and all such Supplemental
Indentures have been duly and lawfully adopted by the District, are in full force and effect and are
valid and binding upon the District and enforceable in accordance with their terms (except as
enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws
relating to the enforcement of creditors' rights); (b) this Indenture creates the valid pledge which it
purports to create of the Net Special Taxes and other amounts as provided in this Indenture, subject
to the application thereof to the purposes and on the conditions permitted by this Indenture; and
(c) such Parity Bonds are valid and binding limited obligations of the District, enforceable in
accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar laws relating to the enforcement of creditors' rights) and the terms of
this Indenture and all Supplemental Indentures thereto and entitled to the benefits of this Indenture
and all such Supplemental Indentures, and such Parity Bonds have been duly and validly authorized
and issued in accordance with the Act (or other applicable laws) and this Indenture and all such
Supplemental Indentures.
(4) A certificate of the District containing such statements as may be
reasonably necessary to show compliance with the requirements of this Indenture;
(5) A certificate of an Independent Financial Consultant certifying that in
each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding
following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service
on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds;
(6) Such further documents, money and securities as are required by the
provisions of this Indenture and the Supplemental Indenture providing for the issuance of such Parity
Bonds; and
(d) No Event of Default shall have occurred and be continuing with respect to the
Bonds or the Authority Bonds.
ARTICLE X
MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds. All Bonds and Parity Bonds
surrendered to the Fiscal Agent for payment upon maturity or for redemption shall be upon payment
therefor, and any Bond or Parity Bond purchased by the District as authorized herein and delivered to
the Fiscal Agent for such purpose shall be, cancelled forthwith and shall not be reissued. The Fiscal
Agent shall destroy such Bonds and Parity Bonds, as provided by law, and furnish to the District a
certificate of such destruction.
Section 10.2. Execution of Documents and Proof of Ownership. Any request, direction,
consent, revocation of consent, or other instrument in writing required or permitted by this Indenture
to be signed or executed by Bondowners may be in any number of concurrent instruments of similar
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tenor may be signed or executed by such Owners in person or by their attorneys appointed by an
instrument in writing for that purpose, or by the bank, trust company or other depository for such
Bonds. Proof of the execution of any such instrument, or of any instrument appointing any such
attorney, and of the ownership of Bonds or Parity Bonds shall be sufficient for the purposes of this
Indenture (except as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or his or her attorney of any
such instrument and of any instrument appointing any such attorney, may be proved by a signature
guarantee of any bank or trust company located within the United States of America. Where any
such instrument is executed by an officer of a corporation or association or a member of a partnership
on behalf of such corporation, association or partnership, such signature guarantee shall also
constitute sufficient proof of his authority.
(b) As to any Bond or Parity Bond, the person in whose name the same shall be
registered in the Bond Register shall be deemed and regarded as the absolute owner thereof for all
purposes, and payment of or on account of the principal of any such Bond or Parity Bond, and the
interest thereon, shall be made only to or upon the order of the registered Owner thereof or his or her
legal representative. All such payments shall be valid and effectual to satisfy and discharge the
liability upon such Bond or Parity Bond and the interest thereon to the extent of the sum or sums to
be paid. Neither the District nor the Fiscal Agent shall be affected by any notice to the contrary.
Nothing contained in this Indenture shall be construed as limiting the Fiscal Agent or the
District to such proof, it being intended that the Fiscal Agent or the District may accept any other
evidence of the matters herein stated which the Fiscal Agent or the District may deem sufficient.
Any request or consent of the Owner of any Bond or Parity Bond shall bind every future Owner of
the same Bond or Parity Bond in respect of anything done or suffered to be done by the Fiscal Agent
or the District in pursuance of such request or consent.
Section 10.3. Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, any money held by the Fiscal Agent or the Fiscal Agent in trust for the payment and
discharge of any of the Outstanding Bonds and Parity Bonds which remain unclaimed for two years
after the date when such Outstanding Bonds or Parity Bonds have become due and payable, if such
money was held by the Fiscal Agent or the Fiscal Agent in trust at such date, or for two years after
the date of deposit of such money if deposited with the Fiscal Agent or the Fiscal Agent in trust after
the date when such Outstanding Bonds or Parity Bonds become due and payable, shall be repaid by
the Fiscal Agent or the Fiscal Agent to the District, as its absolute property and free from trust, and
the Fiscal Agent or the Fiscal Agent shall thereupon be released and discharged with respect thereto
and the Owners shall look only to the District for the payment of such Outstanding Bonds or Parity
Bonds; provided, however, that, before being required to make any such payment to the District, the
Fiscal Agent at the written request of the District or the Fiscal Agent shall, at the expense of the
District, cause to be mailed by first -class mail, postage prepaid, to the registered Owners of such
Outstanding Bonds or Parity Bonds at their addresses as they appear on the registration books of the
Fiscal Agent a notice that said money remains unclaimed and that, after a date named in said notice,
which date shall not be less than 30 days after the date of the mailing of such notice, the balance of
such money then unclaimed will be returned to the District.
Section 10.4. Provisions Constitute Contract. The provisions of this Indenture shall
constitute a contract between the District and the Bondowners and the provisions hereof shall be
construed in accordance with the laws of the State of California.
43
In case any suit, action or proceeding to enforce any right or exercise any remedy shall be
brought or taken and, should said suit, action or proceeding be abandoned, or be determined
adversely to the Bondowners or the Fiscal Agent, then the District, the Fiscal Agent and the
Bondowners shall be restored to their former positions, rights and remedies as if such suit, action or
proceeding had not been brought or taken.
After the issuance and delivery of the Bonds this Indenture shall be irrepealable, but shall be
subject to modifications to the extent and in the manner provided in this Indenture, but to no greater
extent and in no other manner.
Section 10.5. Future Contracts. Nothing herein contained shall be deemed to restrict or
prohibit the District from making contracts or creating bonded or other indebtedness payable from a
pledge of the Net Special Taxes which is subordinate to the pledge hereunder, or which is payable
from the general fund of the District or from taxes or any source other than the Net Special Taxes and
other amounts pledged hereunder.
Section 10.6. Further Assurances. The District will adopt, make, execute and deliver any
and all such further resolutions, instruments and assurances as may be reasonably necessary or proper
to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring
and confirming unto the Owners of the Bonds or any Parity Bonds the rights and benefits provided in
this Indenture.
Section 10.7. Severability. If any covenant, agreement or provision, or any portion
thereof, contained in this Indenture, or the application thereof to any person or circumstance, is held
to be unconstitutional, invalid or unenforceable, the remainder of this Indenture and the application
of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances,
shall be deemed severable and shall not be affected thereby, and this Indenture, the Bonds and any
Parity Bonds issued pursuant hereto shall remain valid and the Bondowners shall retain all valid
rights and benefits accorded to them under the laws of the State of California.
Section 10.8. Notices. Any notices required to be given to the District with respect to the
Bonds or this Indenture shall be mailed, first class , postage prepaid, or personally delivered to the
Director of Administrative Services of the City, 130 South Main Street, Lake Elsinore, CA 92530,
and all notices to the Fiscal Agent shall be sent via courier or fax or electronic transmission or
mailed, first class, postage prepaid, or personally delivered to the Fiscal Agent, MUFG Union Bank,
N.A., 120 South San Pedro Street, 4th Floor, Los Angeles, CA 90012, Attention: Corporate Trust
Services, fax: 213- 972 -5694, email: melonee.young @unionbank.com with a copy to:
AccountAdministration-CorporateTrust@unionbank.com.
44
IN WITNESS WHEREOF, CITY OF LAKE ELSINORE COMMUNITY FACILITIES
DISTRICT NO. ( ) has caused this Bond Indenture to be signed by its Mayor
and Clerk, and MUFG UNION BANK, N.A. in token of its acceptance of the duties of the Fiscal
Agent created hereunder, has caused this Bond Indenture to be signed in its corporate name by its
officer identified below, all as of the day and year first above written.
ATTEST:
City Clerk of the City of Lake Elsinore
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO.
Ii
Mayor of the City of Lake Elsinore
MUFG UNION BANK, N.A., as Fiscal Agent
By:
Its: Authorized Officer
S -1
u , . I 1-1z. . 1 1111 I�t
EXHIBIT A
FORM OF 2015 SPECIAL TAX REFUNDING BOND
No. _ $[PRINCIPAL AMOUNT]
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. L
2015 SPECIAL TAX REFUNDING BOND
INTEREST RATE: MATURITYDATE: DATED DATE:
% September 1, 20_ , 2015
REGISTERED OWNER: MUFG UNION BANK, N.A., as Trustee under that certain Indenture
of Trust dated as of 1, 2015 by and between the Lake
Elsinore Public Financing Authority and MUFG Union Bank, N.A.
PRINCIPAL AMOUNT:
NO /100 DOLLARS
AND
CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO.
( ) (the "District ") situated in the County of Riverside, State of California, FOR
VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture
(as hereinafter defined), to the Registered Owner named above, or registered assigns, on the Maturity
Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set
forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as
hereinafter defined) next preceding the date of authentication hereof, unless (i) the date of
authentication is an Interest Payment Date in which event interest shall be payable from such date of
authentication, (ii) the date of authentication is after a Record Date (as hereinafter defined) but prior
to the immediately succeeding Interest Payment Date, in which event interest shall be payable from
the Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of
authentication is prior to the close of business on the first Record Date in which event interest shall
be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the time of
authentication of this Bond interest is in default, interest on this Bond shall be payable from the last
Interest Payment Date to which the interest has been paid or made available for payment or, if no
interest has been paid or made available for payment, interest on this Bond shall be payable from the
Dated Date set forth above. Interest will be paid semiannually on March 1 and September 1 and the
final maturity date of the Bonds (each an "Interest Payment Date "), commencing [September 1,
2015] at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available
for payment. Except as otherwise provided in the Indenture, the principal of and premium, if any, on
A -1
this Bond are payable to the Registered Owner hereof in lawful money of the United States of
America upon presentation and surrender of this Bond at the Principal Office of the Fiscal Agent (as
such term is defined in the Indenture), initially MUFG Union Bank, N.A. (the "Fiscal Agent ").
Interest on this Bond shall be paid by check of the Fiscal Agent mailed, by first class mail, postage
prepaid, or in certain circumstances described in the Indenture by wire transfer to an account within
the United States of America, to the Registered Owner hereof as of the close of business on the
fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the
"Record Date ") at such Registered Owner's address as it appears on the registration books
maintained by the Fiscal Agent.
This Bond is one of a duly authorized issue of "City of Lake Elsinore Community Facilities
District No. ( ) 2015 Special Tax Refunding Bonds" (the "Bonds ") issued in
the aggregate principal amount of $ pursuant to the Mello -Roos Community Facilities Act
of 1982, as amended, being Sections 53311, et seq., of the California Government Code (the "Act ")
for the purpose of [financing certain public facilities], refinancing outstanding special tax bonds of
the District, funding a reserve account and paying certain costs related to the issuance of the Bonds.
The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution
adopted by the City Council of the City, acting in its capacity as the legislative body of the District
(the "Legislative Body "), on , 2015, and a Bond Indenture, dated as of 1, 2015, by
and between the District and the Fiscal Agent, executed in connection therewith (the "Indenture "),
and this reference incorporates the Indenture herein, and by acceptance hereof the Registered Owner
of this Bond assents to said terms and conditions. The Indenture is adopted under and this Bond is
issued under, and both are to be construed in accordance with, the laws of the State of California.
Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this
Bond are payable solely from the portion (the "Net Special Taxes ") of the annual special taxes
authorized under the Act to be levied and collected within the District (the "Special Taxes ") and
certain other amounts pledged to the repayment of the Bonds as set forth in the Indenture. Any
amounts for the payment hereof shall be limited to the Net Special Taxes pledged and collected,
which include foreclosure proceeds received following a default in payment of the Special Taxes and
other amounts deposited to the Special Tax Fund established under the Indenture, except to the extent
that other provision for payment has been made by the Legislative Body, as may be permitted by law.
The District has covenanted for the benefit of the owners of the Bonds that under certain
circumstances described in the Indenture it will commence and diligently pursue to completion
appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied
for payment of principal and interest on the Bonds.
The Bonds may be redeemed, at the option of the District from any source of funds, on any
Interest Payment Date on or after September 1, 20_, in whole, or in part from such maturities as are
selected by the District and by lot within a maturity, at the a redemption price equal to the principal
amount thereof, together with accrued interest to the date of redemption, without premium.
The Bonds maturing on September 1, 20_ shall be called before maturity and redeemed,
from Sinking Fund Payments deposited into the Principal Account, on September 1, 20_, on each
September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments
set forth in the Indenture at a redemption price equal to the principal amount thereof, plus accrued
interest to the redemption date, without premium.
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The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis
among maturities, on any Interest Payment Date, and shall be redeemed by the Fiscal Agent, from
Prepayments deposited to the Redemption Account at the following redemption prices, expressed as
a percentage of the principal amount to be redeemed, together with accrued interest to the redemption
date:
Redemption Dates Premium
of
.0
Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the
registered owners thereof not less than 30 nor more than 45 days prior to the redemption date by first
class mail, postage prepaid, to the addresses set forth in the registration books. Neither a failure of
the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of
the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to
accrue interest on the specified redemption date; provided that funds for the redemption are on
deposit with the Fiscal Agent on the redemption date. Thereafter, the registered owners of such
Bonds shall have no rights except to receive payment of the redemption price upon the surrender of
the Bonds.
This Bond shall be registered in the name of the Registered Owner hereof, as to both
principal and interest, and the District and the Fiscal Agent may treat the Registered Owner hereof as
the absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully registered form in the denomination of $5,000 or any
integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of
other authorized denominations of the same issue and maturity, all as more fully set forth in the
Indenture. This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the Principal Office of the Fiscal Agent, but only in the manner, subject
to the limitations and upon payment of the charges provided in the Indenture, upon surrender and
cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or
denominations for the same aggregate principal amount of the same issue and maturity will be issued
to the transferee in exchange therefor.
The Fiscal Agent shall not be required to register transfers or make exchanges of (i) any
Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any
Bonds chosen for redemption.
The rights and obligations of the District and of the registered owners of the Bonds may be
amended at any time, and in certain cases without notice to or the consent of the registered owners, to
the extent and upon the terms provided in the Indenture.
THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OF LAKE
ELSINORE OR OF THE DISTRICT FOR WHICH THE CITY OF LAKE ELSINORE OR THE
DISTRICT IS OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED,
GENERAL OR SPECIAL TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED
HEREIN. THE BONDS ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE FROM
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THE PORTION OF THE SPECIAL TAXES AND OTHER AMOUNTS PLEDGED UNDER THE
INDENTURE BUT ARE NOT A DEBT OF THE CITY OF LAKE ELSINORE, THE STATE OF
CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF
ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been dated and signed by the Fiscal Agent.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required by law to exist, happen and be performed precedent to and in the issuance of this
Bond do exist, have happened and have been performed in due time, form and manner as required by
law, and that the amount of this Bond, together with all other indebtedness of the District, does not
exceed any debt limit prescribed by the laws or Constitution of the State of California.
IN WITNESS WHEREOF, City of Lake Elsinore Community Facilities District No.
( ) has caused this Bond to be dated as of , 2015, to be signed on behalf of
the District by the Mayor by his facsimile signature and attested by the facsimile signature of the City
Clerk.
Mayor of the City of Lake Elsinore
ATTEST:
City Clerk of the City of Lake Elsinore
[FORM OF FISCAL AGENT'S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within- defined Indenture.
Dated: , 2015 MUFG UNION BANK, N.A., as Fiscal Agent
Bv:
Its: Authorized Officer
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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a
Professional Corporation, in connection with the issuance of, and dated as of the date of the original
delivery of, the Bonds. A signed copy is on file in my office.
City Clerk of the City of Lake Elsinore
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto
whose tax identification number is
the within - mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney to transfer the same on the books of the Fiscal Agent with full power of substitution in the
premises.
Dated:
Signature guaranteed:
NOTE: Signature guarantee shall be made by a
guarantor institution participating in the
Securities Transfer Agents Medallion Program or
in such other guarantee program acceptable to
the Fiscal Agent.
NOTE: The signatures(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Bond in every particular
without alteration or enlargement or any change
whatsoever.
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1
CONTINUING DISCLOSURE CERTIFICATE
THIS CONTINUING DISCLOSURE CERTIFICATE ( "Disclosure Certificate "), dated as of
, 2015, is executed and delivered by the LAKE ELSINORE PUBLIC FINANCING
AUTHORITY (the "Issuer ") in connection with the issuance of $ aggregate principal
amount the Lake Elsinore Public Financing Authority Local Agency Revenue Refunding Bonds,
Series 2015 (the "Bonds "). The Bonds are being issued pursuant to an Indenture of Trust,
dated as of 1, 2015 (the "Indenture "), by and between MUFG Union Bank, N.A., as
trustee (the "Trustee "), and the Issuer.
The Issuer covenants and agrees as follows:
Section 1. Purpose of the Disclosure Agreement. This Disclosure Certificate is
being executed and delivered by the Issuer for the benefit of the Owners and Beneficial Owners
of the Bonds and in order to assist the Underwriters in complying with Rule 15c2- 12(b)(5) of the
Securities and Exchange Commission.
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which
apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this
Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and
as described in, Section 3 and 4 of this Disclosure Certificate.
"Annual Report Date" means not later than December 31 of each year.
"City" means the City of Lake Elsinore.
"Dissemination Agent" means , or any successor Dissemination Agent
designated in writing by the City and which has filed with the City a written acceptance of such
designation.
"Districts" means, collectively, the following:
(a)
Community Facilities District No.
2003 -02 (Canyon Hills) of the City,
(b)
Community Facilities District No.
2004 -3 (Rosetta Canyon) of the City,
(c)
Community Facilities District No.
2005 -1 (Serenity) of the City,
(d)
Community Facilities District No.
2005 -2 (Alberhill Ranch) of the City,
(e)
Community Facilities District No.
2005 -6 (City Center Townhomes) of the City,
and
(f)
Community Facilities District No.
2006 -2 (Viscaya) of the City.
"Listed Events" means any of the events listed in Section 5(a) of this Disclosure
Certificate.
"Local Obligations" means, collectively, the following:
(a) Community Facilities District No. 2003 -2 (Canyon Hills) Improvement Area B
2015 Special Tax Refunding Bonds,
(b) Community Facilities District No. 2004 -3 (Rosetta Canyon) Improvement Area
No. 1 2015 Special Tax Refunding Bonds,
(c) Community Facilities District No. 2004 -3 (Rosetta Canyon) Improvement Area
No. 2 2015 Special Tax Refunding Bonds,
(d) Community Facilities District No. 2005 -1 (Serenity) 2015 Special Tax Refunding
Bonds,
(e) Community Facilities District No. 2005 -2 (Alberhill Ranch) Improvement Area A
2015 Special Tax Refunding Bonds,
(f) Community Facilities District No. 2005 -6 (City Center Townhomes) 2015 Special
Tax Refunding Bonds,
(g) Community Facilities District No. 2006 -2 (Viscaya) 2015 Special Tax Refunding
Bonds.
"MSRB" means the Municipal Securities Rulemaking Board, which has been designated
by the Securities and Exchange Commission as the sole repository of disclosure information for
purposes of the Rule, or any other repository of disclosure information that may be designated
by the Securities and Exchange Commission as such for purposes of the Rule in the future.
"Official Statement" means the final official statement executed by the City in connection
with the issuance of the Bonds.
"Participating Underwriter" means Stifel, Nicolaus & Company, Incorporated, the original
underwriter of the Bonds required to comply with the Rule in connection with offering of the
Bonds.
"Rule" means Rule 15c2- 12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as it may be amended from time to time.
Section 3. Provision of Annual Reports.
(a) The Issuer shall, or shall cause the Dissemination Agent to, not later than the
Annual Report Date, commencing February 15, 2016, with the report for the 2014 -15 fiscal year,
provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that
is consistent with the requirements of Section 4 of this Disclosure Certificate. The filing of the
Official Statement shall serve as the first Annual Report. Not later than 15 Business Days prior
to the Annual Report Date, the Issuer shall provide the Annual Report to the Dissemination
Agent (if other than the Issuer). If by 15 Business Days prior to the Annual Report Date the
Dissemination Agent (if other than the Issuer) has not received a copy of the Annual Report, the
Dissemination Agent shall contact the Issuer to determine if the Issuer is in compliance with the
previous sentence. The Annual Report may be submitted as a single document or as separate
documents comprising a package, and may include by reference other information as provided
2
in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the
Issuer may be submitted separately from the balance of the Annual Report, and later than the
Annual Report Date, if not available by that date. If the Issuer's fiscal year changes, it shall give
notice of such change in the same manner as for a Listed Event under Section 5(c). The Issuer
shall provide a written certification with each Annual Report furnished to the Dissemination
Agent to the effect that such Annual Report constitutes the Annual Report required to be
furnished by the Issuer hereunder.
(b) If the Issuer does not provide (or cause the Dissemination Agent to provide) an
Annual Report by the Annual Report Date, the Issuer shall provide (or cause the Dissemination
Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in
substantially the form attached as Exhibit A.
(c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then - applicable
rules and electronic format prescribed by the MSRB for the filing of annual continuing
disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City
certifying that the Annual Report has been provided pursuant to this Disclosure
Certificate, and stating the date it was provided.
Section 4. Content of Annual Reports. The Issuer's Annual Report shall contain or
incorporate by reference the following:
(a) Financial Statements. The Issuer's audited financial statements prepared in
accordance with generally accepted accounting principles as promulgated to apply to
governmental entities from time to time by the Governmental Accounting Standards Board. If
the Issuer's audited financial statements are not available by the Annual Report Date, the
Annual Report shall contain unaudited financial statements in a format similar to the financial
statements contained in the final Official Statement, and the audited financial statements shall
be filed in the same manner as the Annual Report when they become available.
(b) Financial and Operating Data. Unless otherwise provided in the audited financial
statements filed on or before the Annual Report Date, financial information and operating data
with respect to the City for the preceding fiscal year, substantially similar to that provided in the
corresponding tables in the Official Statement:
(i) the principal amount of the Bonds outstanding as of the September 2
preceding the filing of the Annual Report;
(ii) the balance in each fund under the Indenture and the Reserve
Requirement as of the September 2 preceding the filing of the Annual Report;
(iii) any changes to the Rates and Methods of Apportionment of the Special
Taxes approved or submitted to the qualified electors for approval prior to the filing of the
Annual Report and a description of any parcels for which the Special Taxes have been
prepaid in the Fiscal Year for which the Annual Report is being prepared;
(iv) if the assessed valuation of a District has decreased from the amount
stated in the Official Statement, an update of the estimated assessed value -to -lien ratio
for the Districts (and with respect to the applicable Improvement Area) substantially in
the form of Table 4 in the Official Statement based upon the most recent Special Tax
levy preceding the date of the Annual Report and on the assessed values of property for
the current fiscal year;
(v) the percentage of the maximum Special Taxes levied by the Districts with
respect to each series of Local Obligations;
(vi) the status of any foreclosure actions being pursued by the Districts with
respect to delinquent Special Taxes;
(vii) a table showing by District (and with respect to the applicable
Improvement Area) the total Special Taxes levied and the total Special Taxes collected
for the prior fiscal year and the total Special Taxes that remain unpaid for each prior
fiscal year in which Special Taxes were levied and the number of delinquent parcels in
each District (and with respect to the applicable Improvement Area); and
(viii) any information not already included under (i) through (viii) above that the
Issuer is required to file in its annual report to the California Debt and Investment
Advisory Commission pursuant to the provisions of the Mello -Roos Community Facilities
Act of 1982, as amended.
(c) In addition to any of the information expressly required to be provided under this
Disclosure Certificate, the Issuer shall provide such further material information, if any, as may
be necessary to make the specifically required statements, in the light of the circumstances
under which they are made, not misleading.
(d) Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the Issuer or related public entities,
which are available to the public on the MSRB's Internet web site or filed with the Securities and
Exchange Commission. The Issuer shall clearly identify each such other document so included
by reference.
Section 5. Reporting of Significant Events.
(a) The Issuer shall give, or cause to be given, notice of the occurrence of any of the
following Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non - payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial
difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform.
4
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue
(IRS Form 5701 -TEB) or other material notices or determinations with
respect to the tax status of the security, or other material events affecting
the tax status of the security.
(7) Modifications to rights of security holders, if material.
(8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the
securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the Issuer or
other obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the
Issuer or an obligated person, or the sale of all or substantially all of the
assets of the Issuer or an obligated person (other than in the ordinary
course of business), the entry into a definitive agreement to undertake
such an action, or the termination of a definitive agreement relating to any
such actions, other than pursuant to its terms, if material.
(14) Appointment of a successor or additional trustee or the change of name
of a trustee, if material.
(b) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, the
Issuer shall, or shall cause the Dissemination Agent (if not the Issuer) to, file a notice of such
occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely
manner not in excess of 10 business days after the occurrence of the Listed Event.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9)
above need not be given under this subsection any earlier than the notice (if any) of the
underlying event is given to holders of affected Bonds under the Indenture.
(c) The Issuer acknowledges that the events described in subparagraphs (a)(2),
(a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain
the qualifier "if material" and that subparagraph (a)(6) also contains the qualifier "material" with
respect to certain notices, determinations or other events affecting the tax status of the Bonds.
The Issuer shall cause a notice to be filed as set forth in paragraph (b) above with respect to
any such event only to the extent that it determines the event's occurrence is material for
purposes of U.S. federal securities law. Whenever the Issuer obtains knowledge of the
occurrence of any of these Listed Events, the Issuer will as soon as possible determine if such
event would be material under applicable federal securities law. If such event is determined to
be material, the Issuer will cause a notice to be filed as set forth in paragraph (b) above.
5
(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12)
above is considered to occur when any of the following occur: the appointment of a receiver,
fiscal agent, or similar officer for the Issuer in a proceeding under the United States Bankruptcy
Code or in any other proceeding under state or federal law in which a court or governmental
authority has assumed jurisdiction over substantially all of the assets or business of the Issuer,
or if such jurisdiction has been assumed by leaving the existing governing body and officials or
officers in possession but subject to the supervision and orders of a court or governmental
authority, or the entry of an order confirming a plan of reorganization, arrangement, or
liquidation by a court or governmental authority having supervision or jurisdiction over
substantially all of the assets or business of the Issuer.
Section 6. Identifying Information for Filings with the MSRB. All documents provided to
the MSRB under the Disclosure Certificate shall be accompanied by identifying information as
prescribed by the MSRB.
Section 7. Termination of Reportinq Obligation. The Issuer's obligations under this
Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the
Issuer shall give notice of such termination in the same manner as for a Listed Event under
Section 5(c).
Section 8. Dissemination Agent. The Issuer may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate,
and may discharge any Dissemination Agent, with or without appointing a successor
Dissemination Agent. The initial Dissemination Agent shall be . Any
Dissemination Agent may resign by providing 30 days' written notice to the Issuer.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this
Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or
5(a), it may only be made in connection with a change in circumstances that arises from
a change in legal requirements, change in law, or change in the identity, nature, or
status of an obligated person with respect to the Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in
the opinion of nationally recognized bond counsel, have complied with the requirements
of the Rule at the time of the primary offering of the Bonds, after taking into account any
amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of
the Bonds in the manner provided in the Indenture for amendments to the Indenture with
the consent of holders, or (ii) does not, in the opinion of nationally recognized bond
counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report
is amended pursuant to the provisions hereof, the first Annual Report filed pursuant hereto
containing the amended operating data or financial information shall explain, in narrative form,
the reasons for the amendment and the impact of the change in the type of operating data or
financial information being provided.
M
If an amendment is made to this Disclosure Certificate modifying the accounting
principles to be followed in preparing financial statements, the Annual Report for the year in
which the change is made shall present a comparison between the financial statements or
information prepared on the basis of the new accounting principles and those prepared on the
basis of the former accounting principles. The comparison shall include a qualitative discussion
of the differences in the accounting principles and the impact of the change in the accounting
principles on the presentation of the financial information, in order to provide information to
investors to enable them to evaluate the ability of the Issuer to meet its obligations. To the
extent reasonably feasible, the comparison shall be quantitative.
A notice of any amendment made pursuant to this Section 9 shall be filed in the same
manner as for a Listed Event under Section 5(c).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed
to prevent the Issuer from disseminating any other information, using the means of
dissemination set forth in this Disclosure Certificate or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to
include any information in any Annual Report or notice of occurrence of a Listed Event in
addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have
no obligation under this Disclosure Certificate to update such information or include it in any
future Annual Report or notice of occurrence of a Listed Event.
Section 11. Default. If the Issuer fails to comply with any provision of this Disclosure
Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may
take such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the Issuer to comply with its obligations under this
Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event
of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the
event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to
compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure
Certificate, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers,
directors, employees and agents, harmless against any loss, expense and liabilities which they
may incur arising out of or in the exercise or performance of its powers and duties hereunder,
including the costs and expenses (including attorneys fees) of defending against any claim of
liability, but excluding liabilities due to the Dissemination Agent's negligence or willful
misconduct. The Dissemination Agent shall have no duty or obligation to review any information
provided to it by the Issuer hereunder, and shall not be deemed to be acting in any fiduciary
capacity for the Issuer, the Bond holders or any other party. The obligations of the Issuer under
this Section shall survive resignation or removal of the Dissemination Agent and payment of the
Bonds.
(b) The Dissemination Agent shall be paid compensation by the Issuer for its services
provided hereunder in accordance with its schedule of fees as amended from time to time, and
shall be reimbursed for all expenses, legal fees and advances made or incurred by the
Dissemination Agent in the performance of its duties hereunder.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of
the Issuer, the Dissemination Agent, the Participating Underwriter and the holders and
beneficial owners from time to time of the Bonds, and shall create no rights in any other person
or entity.
Section 14. Counterparts. This Disclosure Certificate may be executed in several
counterparts, each of which shall be regarded as an original, and all of which shall constitute
one and the same instrument.
Date: .2015
AGREED AND ACCEPTED:
as Dissemination Agent
Name:
Title:
P
LAKE ELSINORE PUBLIC FINANCING
AUTHORITY
LIM
Name:
Title:
EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Lake Elsinore Public Financing Authority
Name of Issue: Lake Elsinore Public Financing Authority Local Agency Revenue
Bonds, Series 2015
Date of Issuance: 12015
NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with
respect to the above -named Bonds as required by the Indenture, dated as of
1, 2015, by and between the Issuer and MUFG Union Bank, N.A., as trustee. The City
anticipates that the Annual Report will be filed by
Dated:
DISSEMINATION AGENT:
By:
Its:
NEW ISSUE -FULL BOOK ENTRY RATING: S &P: " "
(See "MISCELLANEOUS — Rating" herein)
In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California ( "Bond
Counsel'), under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and
compliance with certain covenants and requirements described herein, interest on the Bonds is excluded from gross income
for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative
minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest on the Bonds is
exempt from State of California personal income tax. See "LEGAL MATTERS— Tax Matters."
Dated: Date of Delivery
$112,620,000*
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS, SERIES 2015
Due: September 1 as shown on inside cover
The Bonds described in this Official Statement are being issued by the Lake Elsinore Public Financing Authority
(the "Authority ") to acquire certain special tax [refunding] obligations (the "Local Obligations ") of community facilities districts
(the "Districts "), formed by the City of Lake Elsinore (the "City "). The Local Obligations are being issued to refund outstanding
bonds issued by the Districts [and to finance acquisition of public capital facilities]. See "FINANCING PLAN."
The Bonds are payable solely from "Revenues" pledged by the Authority pursuant to that certain Indenture of Trust,
dated as of February 1, 2015 (the "Indenture "), by and between the Authority and MUFG Union Bank, N.A. (the "Trustee ").
Revenues consist primarily of debt service on the Local Obligations paid to the Authority by the Districts. See "SECURITY
FOR THE BONDS."
Each Local Obligation will be secured a pledge of and payable from Net Special Taxes, consisting of the revenues
generated by the levy of special taxes in the applicable Districts or improvement areas in the Districts (the "Taxing
Jurisdictions "), less amounts used to pay administrative expenses. The Net Special Taxes in one Taxing Jurisdiction are
not available to pay debt service on the Local Obligation of another Taxing Jurisdiction.
The Bonds will be issued in denominations of $5,000 or any integral multiple thereof. Interest on the Bonds is
payable on September 1, 2015 and semiannually thereafter on March 1 and September 1 each year. The Bonds will be
initially issued only in book -entry form and registered in the name of Cede & Co. as nominee of The Depository Trust
Company, New York, New York ( "DTC "), which will act as securities depository of the Bonds. Principal and interest (and
premium, if any) on the Bonds is payable by the Trustee to DTC, which remits such payments to its Participants for
subsequent distribution to the beneficial owners of the Bonds. See "THE BONDS — General Provisions" and — Book -Entry
Only System."
The Bonds may be subject to redemption prior to maturity as described herein. See "THE BONDS — Redemption."
The Authority has applied for a policy of municipal bond insurance to insure the payment of the principal and interest
on the Bonds when due. The Authority will evaluate any available insurance commitments in connection with the pricing of
the Bonds.
CERTAIN EVENTS COULD AFFECT THE ABILITY OF THE AUTHORITY TO PAY THE PRINCIPAL OF AND
INTEREST ON THE BONDS WHEN DUE. THE PURCHASE OF THE BONDS INVOLVES SIGNIFICANT INVESTMENT
RISKS, AND THE BONDS MAY NOT BE SUITABLE INVESTMENTS FOR MANY INVESTORS. SEE THE SECTION OF
THIS OFFICIAL STATEMENT ENTITLED "SPECIAL RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISK
FACTORS THAT SHOULD BE CONSIDERED, IN ADDITION TO THE OTHER MATTERS SET FORTH HEREIN, IN
EVALUATING THE INVESTMENT QUALITY OF THE BONDS.
Maturity Schedule
(see inside 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 the making of an informed investment
decision.
The Bonds are offered when, as and if issued and accepted by Stifel, Nicolaus & Company, Incorporated and
Brandis Tallman LLC, the Underwriters, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, a
Professional Corporation, Newport Beach, California, as Bond Counsel. Jones Hall, A Professional Law Corporation, is
acting as disclosure counsel to the Authority. The City Attorney of the City of Lake Elsinore will pass upon certain matters
for the Authority and the Districts. [Underwriter's Counsel] It is anticipated that the Bonds in definitive form will be available
for delivery to DTC or its agent on or about February _, 2015.
STIFEL
[LOGO]
Dated: 2015
Preliminary; subject to change.
BRANDIS TALLMAN
[LOGO]
MATURITY SCHEDULE*
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS, SERIES 2015
Maturity Principal
(September 1) Amount Interest Rate Yield Price CUSIPt No.
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
20291
2030'
2031
% Term Bonds due , Yield: % Price: CUSIPt No.
Preliminary, subject to change.
t Copyright 2014, CUSIP Global Services, and a registered trademark of the American Bankers Association. CUSIP data is
provided by CUSIP Global Services, which is managed on behalf of American Bankers Association by S &P Capital IQ. Neither
the Authority nor the Underwriter assumes any responsibility for the accuracy of the CUSIP data.
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
BOARD OF DIRECTORS /CITY COUNCIL
Daryl Hickman, Chair
Brian Tisdale, Vice Chair
Natasha Johnson, Member
Robert Magee, Member
Steve Manos, Member
AUTHORITY STAFF
Grant Yates, City Manager
Jason Simpson, Director of Administrative Services
David Bilby, Finance Manager
PROFESSIONAL SERVICES
FINANCIAL ADVISOR
Urban Futures, Inc.
Orange, California
BOND COUNSEL
Stradling Yocca Carlson & Rauth, a Professional Corporation
Newport Beach, California
DISCLOSURE COUNSEL
Jones Hall, A Professional Law Corporation
San Francisco, California
TRUSTEE /FISCAL AGENT /ESCROW AGENT
MUFG Union Bank, N.A.
Los Angeles, California
SPECIAL TAX CONSULTANT
Albert A. Webb Associates
Riverside, California
VERIFICATION AGENT
Investment in the Bonds involves risks that are not appropriate for certain investors. Therefore,
only persons with substantial financial resources (in net worth or income) who understand (either alone or
with competent investment advice) those risks should consider such an investment.
Except where otherwise indicated, all information contained in this Official Statement has been
provided by the Authority or the City. No dealer, broker, salesperson or other person has been authorized
by the Authority, the City, the Districts, the Trustee or the Underwriters to give any information or to make
any representations in connection with the offer or sale of the Bonds other than those contained herein;
and, if given or made, such other information or representations must not be relied upon as having been
authorized by the Authority, the City, the Districts, the Trustee or the Underwriters. This Official Statement
does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the
Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer,
solicitation or sale.
The information set forth herein which has been obtained from third party sources is believed to be
reliable but is not guaranteed as to accuracy or completeness by the Districts, the City or the Authority.
This Official Statement is not to be construed as a contract with the purchasers or Owners of the Bonds.
Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion,
whether or not expressly so described herein, are intended solely as such are not to be construed as
representations of fact.
The Underwriters have provided the following sentence for inclusion in this Official Statement:
The Underwriters have reviewed the information in this Official Statement in
accordance with, and as a part of, its responsibilities to investors under the federal
securities laws as applied to the facts and circumstances of this transaction, but the
Underwriters do not guarantee the accuracy of completeness of such information.
The information and expressions of opinion herein are subject to change without notice and neither
the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of the Authority, the City, the Districts or any
other parties described herein since the date hereof. All summaries of the Indenture or other documents
are made subject to the provisions of such documents respectively and do not purport to be complete
statements of any or all of such provisions. Reference is hereby made to such documents on file with the
City for further information in connection therewith.
Certain statements included or incorporated by reference in this Official Statement constitute
"forward- looking statements" within the meaning of the United States Private Securities Litigation Reform
Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and
Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally
identifiable by the terminology used such as "plan," "expect," "estimate," "project," "budget" or other similar
words.
The achievement of certain results or other expectations contained in such forward- looking
statements involve known and unknown risks, uncertainties and other factors which may cause actual
results, performance or achievements described to be materially different from any future results,
performance or achievements expressed or implied by such forward- looking statements. The Authority
does not plan to issue any updates or revisions to the forward- looking statements set forth in this Official
Statement. The Authority is obligated to provide continuing disclosure for certain historical information only.
See the caption "MISCELLANEOUS — Continuing Disclosure" herein.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITERS MAY
OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
The City maintains a website, but the information on the website is not incorporated in this Official
Statement.
TABLE OF CONTENTS
INTRODUCTION.................................................. ...............................
FinancingPurpose ......................................... ...............................
The Bonds; The Local Obligations ................ ...............................
LegalAuthority ............................................... ...............................
Sources of Payment for the Bonds and the Local Obligations.....
Description of the Bonds ............................... ...............................
TheCity ......................................................... ...............................
TheAuthority ................................................. ...............................
Professionals Involved in the Offering ........... ...............................
Continuing Disclosure .................................... ...............................
Bond Insurance .............................................. ...............................
FINANCING PLAN .................................. ...............................
Purpose of Issue and the Refunding Plan .......................
Estimated Sources and Uses of Funds ...........................
THEBONDS ............................................................................ ...............................
General Provisions ............................................................ ...............................
Redemption....................................................................... ...............................
Payment, Registration, Transfer and Exchange of Bonds ...............................
Book -Entry Only System ................................................... ...............................
Estimated Debt Service Schedules: Bonds and Local Obligations .................
Debt Service Coverage for the Bonds ............................... ...............................
SECURITY FOR THE BONDS ................................................ ...............................
General.............................................................................. ...............................
Revenues and Flow of Funds ............................................ ...............................
ReserveFund .................................................................... ...............................
SurplusFund ..................................................................... ...............................
No Additional Bonds Except to Refund Bonds .................. ...............................
SECURITY FOR THE LOCAL OBLIGATIONS ........................ ...............................
General.............................................................................. ...............................
Special Taxes; Gross Special Taxes; Net Special Taxes . ...............................
Administrative Expense Requirement ............................... ...............................
Local Obligation Parity Bonds ........................................... ...............................
Priorityof Lien .................................................................... ...............................
Covenants of the Districts .................................................. ...............................
THE COMMUNITY FACILITIES DISTRICTS ............................. ...............................
The Districts in the Aggregate .............................................. ...............................
SPECIAL RISK FACTORS ......................................................... ...............................
Risks of Real Estate Secured Investments Generally .......... ...............................
The Bonds are Limited Obligations of the Authority ............. ...............................
NoObligation of City ............................................................. ...............................
Potential Early Redemption of Bonds from Prepayments .... ...............................
Payment of Special Taxes is not a Personal Obligation of the Property Owners
AssessedValuations ............................................................ ...............................
LandValues .......................................................................... ...............................
NaturalDisasters .................................................................. ...............................
Hazardous Substances ......................................................... ...............................
Parity Taxes and Special Assessments ............................... ...............................
Payment of the Special Tax is not a Personal Obligation of the Owners .............
Disclosures to Future Purchasers ......................................... ...............................
Special Tax Delinquencies .................................................... ...............................
Insufficiency of Special Taxes ............................................... ...............................
FDIC /Federal Government Interests in Properties ................ ...............................
Bankruptcy and Foreclosure .................................................. ...............................
R
Paqe
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31
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31
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32
33
33
33
34
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35
35
36
38
TABLE OF CONTENTS
(continued)
Page
NoAcceleration Provision ..................................................................................... ...............................
38
Limitationson Remedies ....................................................................................... ...............................
38
Lossof Tax Exemption .......................................................................................... ...............................
38
IRS Audit of Tax - Exempt Bond Issues .................................................................. ...............................
39
Impact of Legislative Proposals, Clarifications of the Code and Court Decisions on Tax Exemption
. 39
LimitedSecondary Market ..................................................................................... ...............................
39
Proposition218 ...................................................................................................... ...............................
40
BallotInitiatives ........................................................................................................ .............................41
D -1
APPENDIX A
INFORMATION REGARDING THE COMMUNITY FACILITIES DISTRICTS...
A -1
APPENDIX B
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS ........... ...............................
B -1
APPENDIX C
DEMOGRAPHIC INFORMATION REGARDING THE CITY OF LAKE ELSINORE
AND THE COUNTY OF RIVERSIDE ................................. ...............................
C -1
APPENDIX D
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR EACH
TAXING JURISDICTION .................................................... ...............................
D -1
APPENDIX E
FORM OF BOND COUNSEL OPINION ............................. ...............................
E -1
APPENDIX F
FORM OF CONTINUING DISCLOSURE CERTIFICATE ...... ............................F
-1
APPENDIX G
DTC AND THE BOOK - ENTRY -ONLY SYSTEM ................ ...............................
G -1
M
... 41
... 41
... 43
... 43
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... 44
... 44
...44
... 45
... 45
Regional Map
OFFICIAL STATEMENT
$112,620,000*
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE REFUNDING BONDS, SERIES 2015
INTRODUCTION
The purpose of this Official Statement, which includes the cover page and Appendices
(the "Official Statement "), is to provide certain information concerning the sale and issuance of
the Lake Elsinore Public Financing Authority Local Agency Revenue Refunding Bonds, Series
2015 (the "Bonds "). The Bonds are issued pursuant to an Indenture of Trust dated as of February
1, 2015 (the "Indenture "), by and between the Lake Elsinore Public Financing Authority (the
"Authority ") and MUFG Union Bank, N.A., as trustee (the "Trustee ").
This Introduction is not a summary of this Official Statement. It is only a brief description
of and guide to, and is qualified by, more complete and detailed information contained in the entire
Official Statement and the documents summarized or described herein. A full review should be
made of the entire Official Statement. The offering of the Bonds to potential investors is made
only by means of the entire Official Statement.
Financing Purpose
Purpose of the Bonds. The Bonds are being issued by the Authority to acquire the
"Local Obligations" described below (see "FINANCING PLAN ").
Purpose of the Local Obligations. The net proceeds of the Local Obligations, along
with other available funds, will be used as follows (see "FINANCING PLAN" herein):
(i) to make deposits into seven separate escrow funds (collectively, the
"Escrow Funds ") to be held by MUFG Union Bank, N.A., as escrow agent (the "Escrow
Agent') pursuant to seven separate Escrow Agreements, each dated as of February 1,
2015 (collectively, the "Escrow Agreements ") for the purpose of paying (A) principal and
interest on the Prior Bonds (as defined below) through their redemption dates (each a
"Redemption Date ") and (B) the remaining outstanding principal of the Prior Bonds (and
applicable redemption premiums) on the applicable Redemption Date;
(ii) to pay the costs of issuing the Bonds; and
(iii) to find separate accounts for each Local Obligation in a Reserve Fund held
by the Trustee for the Bonds.
The Bonds; The Local Obligations
The Bonds. The Bonds are payable from "Revenues," as more completely defined
below, generally consisting of revenues received by the Authority as the result of the payment of
debt service on the Local Obligations, and amounts held in the funds and accounts established
and held for the benefit of the Bonds under the Indenture. See "SECURITY FOR THE BONDS."
` Preliminary; subject to change.
-1-
Local Obligations. The Local Obligations consist of the following seven separate series
of bonds issued by or on behalf of various community facilities districts or improvement areas
therein (the "Taxing Jurisdictions ") formed by the City of Lake Elsinore (the "City "):
CFD No. 2003 -2 Bonds: $44,921,717* City of Lake Elsinore Community Facilities
District No. 2003 -2 (Canyon Hills) Improvement Area B 2015 Special Tax Refunding
Bonds (the "CFD No. 2003 -2 Bonds ") being issued by Community Facilities District
No. 2003 -02 (Canyon Hills) of the City ( "CFD No. 2003 -02 ") to refund the outstanding
Community Facilities District No. 2003 -2 (Canyon Hills) Improvement Area B, 2006 Series
A Bonds (the "Prior CFD No. 2003 -02 Bonds "). The CFD No. 2003 -2 Bonds are payable
from Special Taxes levied on taxable property in CFD No. 2003 -2. See Appendix
A - "INFORMATION REGARDING THE COMMUNITY FACILITIES DISTRICTS — CFD
No. 2003 -2 (Improvement Area B)."
CFD No. 2004 -3 -1 Bonds: $36,074,287* Community Facilities District No. 2004-
3 (Rosetta Canyon) Improvement Area No. 1 2015 Special Tax Refunding Bonds (the
"CFD No. 2004 -3 -1 Bonds ") being issued by Community Facilities District No. 2004 -3
(Rosetta Canyon) of the City ( "CFD No. 2004 -3 ") to refund the outstanding Community
Facilities District No. 2004 -3 (Rosetta Canyon) Improvement Area No. 1, 2005 Series A
Bonds (the "Prior CFD No. 2004 -3 -1 Bonds "). The CFD No. 2004 -3 -1 Bonds are payable
from Special Taxes levied on taxable property in Improvement Area No. 1 of CFD
No. 2004 -3. See Appendix A- "INFORMATION REGARDING THE COMMUNITY
FACILITIES DISTRICTS — CFD No. 2003 -2 (Improvement Area No. 1)."
CFD No. 2004 -3 -2 Bonds: $44,910,173* Community Facilities District No. 2004-
3 (Rosetta Canyon) Improvement Area No. 2 2015 Special Tax Refunding Bonds (the
"CFD No. 2004 -3 -2 Bonds ") being issued by CFD No. 2004 -3 to refund the outstanding
Community Facilities District No. 2004 -3 (Rosetta Canyon) Improvement Area No. 2, 2006
Series A Bonds (the "Prior CFD No. 2004 -3 -2 Bonds "). The CFD No. 2004 -3 -2 Bonds
are payable from Special Taxes levied on taxable property in Improvement Area No. 2 of
CFD No. 2004 -3. See Appendix A- "INFORMATION REGARDING THE COMMUNITY
FACILITIES DISTRICTS — CFD No. 2003 -2 (Improvement Area No. 2)."
CFD No. 2005 -1 Bonds: $13,723,167* Community Facilities District No. 2005 -1
(Serenity) 2015 Special Tax Refunding Bonds (the "CFD No. 2005 -1 Bonds ") being
issued by Community Facilities District No. 2005 -1 (Serenity) of the City ( "CFD No. 2005-
1") to refund the outstanding Community Facilities District No. 2005 -1 (Serenity) 2006
Series A Bonds (the "Prior CFD No. 2005 -1 Bonds "). The CFD No. 2005 -1 Bonds are
payable from Special Taxes levied on taxable property in CFD No. 2005 -1. See
Appendix A - "INFORMATION REGARDING THE COMMUNITY FACILITIES DISTRICTS
— CFD No. 2005 -1."
CFD No. 2005 -2 Bonds: $37,321,438* Community Facilities District No. 2005 -2
(Alberhill Ranch) Improvement Area A 2015 Special Tax Refunding Bonds (the "CFD
No. 2005 -2 Bonds ") being issued by Community Facilities District No. 2005 -2 (Alberhill
Ranch) of the City ( "CFD No. 2005 -2 ") to refund the outstanding Community Facilities
District No. 2005 -2 (Alberhill Ranch) Improvement Area A, 2005 Series A Bonds (the
"Prior CFD No. 2005 -2 Bonds "). The CFD No. 2005 -2 Bonds are payable from Special
Taxes levied on taxable property in Improvement Area A of CFD No. 2005 -2. See
+ Preliminary; subject to change.
-2-
Appendix A - "INFORMATION REGARDING THE COMMUNITY FACILITIES DISTRICTS
— CFD No. 2005 -2 (Improvement Area A)."
CFD No. 2005 -6 Bonds: $5,179,709* Community Facilities District No. 2005 -6
(City Center Townhomes) 2015 Special Tax Refunding Bonds (the "CFD No. 2005 -06
Bonds ") being issued by Community Facilities District No. 2005 -6 (City Center
Townhomes) of the City ( "CFD No. 2005 -6 ") to refund the outstanding Community
Facilities District No. 2005 -6 (City Center) 2006 Series A Bonds (the "Prior CFD No. 2005-
6 Bonds "). The CFD No. 2005 -6 Bonds are payable from Special Taxes levied on taxable
property in CFD No. 2005 -6. See Appendix A - "INFORMATION REGARDING THE
COMMUNITY FACILITIES DISTRICTS — CFD No. 2005 -6."
CFD No. 2006 -2 Bonds: $11,284,857* Community Facilities District No. 2006 -2
(Viscaya) 2015 Special Tax Refunding Bonds (the "CFD No. 2006 -2 Bonds ") being issued
by Community Facilities District No. 2006 -2 (Viscaya) of the City ( "CFD No. 2006 -2 ") to
refund the outstanding Community Facilities District No. 2006 -2 (Viscaya) 2006 Series A
Bonds (the "Prior CFD No. 2006 -2 Bonds "). The CFD No. 2006 -2 Bonds are payable
from Special Taxes levied on taxable property in CFD No. 2006 -2. See
Appendix A - "INFORMATION REGARDING THE COMMUNITY FACILITIES DISTRICTS
— CFD No. 2006 -2."
CFD 2003 -2, CFD No. 2004 -3, CFD No. 2005 -1, CFD No. 2005 -2, CFD No. 2005 -6 and
CFD No. 2006 -2 are collectively referred to in this Official Statement as the "Districts." The
Improvement Areas in the Districts listed above are referred to collectively as the "Improvement
Areas," and the Districts and the Improvement Areas are referred to collectively as the "Taxing
Jurisdictions."
The CFD 2003 -2 Bonds, CFD 2004 -3 -1 Bonds, the CFD No. 2004 -3 -2 Bonds, the CFD
No. 2005 -1 Bonds, the CFD No. 2005 -2 Bonds, the CFD No. 2005 -6 Bonds and the CFD No.
2006 -2 Bonds are collectively referred to in this Official Statement as the "Local Obligations."
The Prior CFD 2003 -2 Bonds, Prior CFD 2004 -3 -1 Bonds, the Prior CFD No. 2004 -3 -2
Bonds, the Prior CFD No. 2005 -1 Bonds, the Prior CFD No. 2005 -2 Bonds, the Prior CFD No.
2005 -6 Bonds and the Prior CFD No. 2006 -2 Bonds are collectively referred to in this Official
Statement as the "Prior Bonds."
Legal Authority
The Bonds. The Bonds are being issued under Article 4 of Chapter 5 of Division 7 of
Title 1 of the Government Code of the State of California (the "Act ") and the Indenture.
The Local Obligations. The Local Obligations are being issued pursuant to the
Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2,
Title 5 of the Government Code of the State of California (the "Act "), and [seven] separate Bond
Indentures, each dated as of February 1, 2015 (each, a "Local Obligation Bond Indenture "),
each by and between the applicable District and MUFG Union Bank, N.A., as fiscal agent.
Preliminary; subject to change.
-3-
Sources of Payment for the Bonds and the Local Obligations
The Bonds are secured by a first lien on and pledge of all of the Revenues. "Revenues"
are defined in the Indenture to include:
(a) all amounts received from the Local Obligations;
(b) any proceeds of the Bonds originally deposited with the Trustee and all moneys
deposited and held from time to time by the Trustee in the funds and accounts established under
the Indenture with respect to the Bonds (other than the Rebate Fund and the Surplus Fund); and
(c) investment income with respect to any moneys held by the Trustee in the funds
and accounts established under the Indenture with respect to the Bonds (other than investment
income on moneys held in the Rebate Fund and the Surplus Fund).
See "SECURITY FOR THE BONDS — Revenues and Flow of Funds."
Local Obligations. Each Local Obligation will be payable from Net Special Taxes
collected in the applicable Taxing Jurisdiction as a result of the levy of Special Taxes. See
"SECURITY FOR THE LOCAL OBLIGATIONS."
The Local Obligations are not cross - collateralized. In other words, Special Taxes
from one Taxing Jurisdiction cannot be used to cover any shortfall in the payment of debt
service on the Local Obligation of another Taxing Jurisdiction.
Description of the Bonds
Payments. Interest is payable on September 1, 2015, and semiannually thereafter on
March 1 and September 1 each year (each, an "Interest Payment Date "). Principal of and
premium, if any, on the Bonds will be payable by the Trustee. See "THE BONDS — General
Provisions" and " — Book -Entry Only System."
Denominations. The Bonds will be issued in denominations of $5,000 each or integral
multiples thereof.
Redemption. The Bonds are subject to redemption prior to their maturity. See "THE
BONDS — Redemption" herein.
Record Date. The Indenture defines "Record Date" as the 15th calendar day of the
month preceding the month in which the related Interest Payment Date occurs, whether or not a
Business Day.
Registration, transfers and exchanges. The Bonds will be issued as fully registered
bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New
York, New York ( "DTC "), and will be available to actual purchasers of the Bonds (the "Beneficial
Owners ") under the book -entry system maintained by DTC. See "THE BONDS — Payment,
Registration, Transfer and Exchange of Bonds" and "— Book -Entry Only System."
-4-
The City
The City was founded in 1883 and incorporated as a general law city effective April 23,
1888 in San Diego County. In 1893, the Elsinore Valley, previously located in San Diego County,
became part of the new County of Riverside (the "County "). The City encompasses approximately
43 square miles, with over 10 miles of lake shore, and is located at the southwestern end of the
County, 73 miles east of downtown Los Angeles and 74 miles north of downtown San Diego. As
of June 30, 2014, the City of Lake Elsinore's population was approximately 56,718.
Neither the Bonds nor the Local Obligations are a debt of the City or the County,
and no revenues of the City or County are pledged to repayment of the Bonds or the Local
Obligations.
The Authority
The Authority is a joint exercise of powers authority organized and existing pursuant to the
Act. Its members are the City and the Successor Agency to the Redevelopment Agency of the
City. [discuss duration of the Successor Agency]
Professionals Involved in the Offering
All proceedings in connection with the issuance of the Bonds are subject to the approval
of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond
Counsel. Albert A. Webb Associates is acting as Special Tax Consultant to the Authority. MUFG
Union Bank, N.A., Los Angeles, California, will act as the Trustee /Fiscal Agent /Escrow Agent.
Urban Futures, Inc., Orange, California, is acting as financial advisor to the Authority. Jones Hall,
A Professional Law Corporation, is acting as Disclosure Counsel to the Authority. The City
Attorney of the City acts as counsel for the Districts and the Authority. Stifel, Nicolaus & Company,
Incorporated and Brandis Tallman LLC are acting as Underwriters in connection with the issuance
and delivery of the Bonds. [Underwriter's counsel] will
provide escrow verification services.
Bond Counsel, Disclosure Counsel, Underwriter's Counsel, the Financial Advisor, the
Underwriters and the Special Tax Consultant will receive compensation contingent upon issuance
of the Bonds. Stradling Yocca Carlson & Rauth, a Professional Corporation, represents the
Underwriters in connection with financings unrelated to the Bonds and the Local Obligations.
Continuing Disclosure
The Authority will execute a Continuing Disclosure Certificate and will covenant therein for
the benefit of holders and beneficial owners of the Bonds to provide certain financial information
and operating data relating to the Authority and the Taxing Jurisdictions by not later than
December 31 of each year. See "MISCELLANEOUS — Continuing Disclosure."
Bond Insurance
The Authority has applied for a policy of municipal bond insurance to insure the payment
of the principal and interest on the Bonds when due. The Authority will evaluate any available
insurance commitments in connection with the pricing of the Bonds.
-5-
FINANCING PLAN
Purpose of Issue and the Refunding Plan
Acquisition of the Local Obligations. The Authority is issuing the Bonds to purchase
the Local Obligations.
Refunding of the Prior Bonds. Certain proceeds of the Local Obligations, along with
other available moneys, will be deposited into the Escrow Funds pursuant to the Escrow
Agreements, and will also be used to pay the costs of issuing the Bonds and the Local Obligations
and fund separate accounts in a Reserve Fund held by the Trustee.
Funds deposited into the Escrow Funds pursuant to the Escrow Agreements will be used
to pay principal and interest payable on the Prior Bonds through the Redemption Dates identified
below, and to redeem the remaining outstanding principal amount of the Prior Bonds, as follows:
(a) Prior CFD No. 2003 -2 Bonds: Proceeds of the CFD No. 2003 -2 Bonds deposited
into an Escrow Fund relating to the Prior CFD No. 2003 -2 Bonds will be used (i) to pay debt
service on the Prior CFD No. 2003 -2 Bonds through September 1, 2015 and (ii) on September 1,
2015, to redeem the Prior CFD No. 2003 -2 Bonds maturing on and after September 1, 2015 at a
redemption price equal to 102% of the principal amount to be redeemed, together with accrued
interest to the redemption date.
(b) Prior CFD No. 2004 -3 -1 Bonds: Proceeds of the CFD No. 2004 -3 -1 Bonds
deposited into an Escrow Fund relating to the Prior CFD No. 2004 -3 -1 Bonds will be used to
redeem the outstanding Prior CFD No. 2004 -3 -1 Bonds on March 23, 2015 at a redemption price
equal to 100% of the principal amount to be redeemed, together with accrued interest to the
redemption date.
(c) Prior CFD No. 2004 -3 -2 Bonds: Proceeds of the CFD No. 2004 -3 -2 Bonds
deposited into an Escrow Fund relating to the Prior CFD No. 2004 -3 -2 Bonds will be used to
redeem the outstanding Prior CFD No. 2004 -3 -2 Bonds on March 23, 2015 at a redemption price
equal to 100% of the principal amount to be redeemed, together with accrued interest to the
redemption date.
(d) (e) Prior CFD No. 2005 -1 Bonds: Proceeds of the CFD No. 2005 -1 Bonds
deposited into an Escrow Fund relating to the Prior CFD No. 2005 -1 Bonds will be used to redeem
the outstanding Prior CFD No. 2005 -1 Bonds on March 23, 2015 at a redemption price equal to
100% of the principal amount to be redeemed, together with accrued interest to the redemption
date.
(e) Prior CFD No. 2005 -2 Bonds: Proceeds of the CFD No. 2005 -2 Bonds deposited
into an Escrow Fund relating to the Prior CFD No. 2005 -2 Bonds will be used to redeem the
outstanding Prior CFD No. 2005 -2 Bonds on March 23, 2015 at a redemption price equal to 100%
of the principal amount to be redeemed, together with accrued interest to the redemption date.
(f) Prior CFD No. 2005 -6 Bonds: Proceeds of the CFD No. 2005 -6 Bonds deposited
into an Escrow Fund relating to the Prior CFD No. 2005 -6 Bonds will be used to redeem the
to
outstanding Prior CFD No. 2005 -6 Bonds on March 23, 2015 at a redemption price equal to 100%
of the principal amount to be redeemed, together with accrued interest to the redemption date.
(g) Prior CFD No. 2006 -2 Bonds: Proceeds of the CFD No. 2006 -2 Bonds deposited
into an Escrow Fund relating to the Prior CFD No. 2006 -2 Bonds will be used to redeem the
outstanding Prior CFD No. 2006 -2 Bonds on March 23, 2015 at a redemption price equal to 100%
of the principal amount to be redeemed, together with accrued interest to the redemption date.
Certain moneys in the existing funds and accounts relating to the Prior Bonds also will be
transferred to the Escrow Funds and be applied to the defeasance of the Prior Bonds. See " —
Estimated Sources and Uses of Funds" below. See also "MISCELLANEOUS — Verification of
Mathematical Accuracy" below.
Estimated Sources and Uses of Funds
follows:
The Bonds. The anticipated sources and uses of funds relating to the Bonds are as
Sources:
Principal Amount of the Bonds
Underwriters' Discount
Net Original Issue Premium /Original Issue Discount
Funds on Hand Held Under Prior Bonds Indentures
Total Sources
Uses:
Escrow Funds(')
Cost of Issuance Fund (2)
Reserve Fund(3)
Total Uses
Total
(') Proceeds of the Bonds will be used to acquire the Local Obligations. The Fiscal Agent for each of the Local
Obligations will transfer to the Escrow Agent funds held in existing funds and accounts relating to the Prior Bonds,
together with Bond proceeds received from the Authority from the purchase of the Local Obligations, to separate
Escrow Funds to defease each issuance of Prior Bonds. See the sources and uses of funds for the Local
Obligations below.
(2) The Fiscal Agent for each of the Local Obligations will transfer to the Trustee for deposit in the Costs of Issuance
Fund each Taxing Jurisdiction's proportionate share of the costs of issuance of the Bonds.
(3) The Fiscal Agent for each of the Local Obligations will transfer to the Trustee for deposit into such Taxing
Jurisdiction's account in the Reserve Fund each Taxing Jurisdiction's proportionate share of the Reserve
Requirement with respect to the Bonds.
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11
THE BONDS
General Provisions
The Bonds will be dated their date of delivery, and the Bonds will be issued in the
aggregate principal amounts set forth on the inside front cover. The Bonds will bear interest from
their dated date at the rates per annum set forth on the inside front cover hereof, payable
semiannually on each March 1 and September 1, commencing September 1, 2015 (each, an
"Interest Payment Date "), and will mature in the amounts and on the dates set forth on the inside
front cover. The Bonds will be issued in fully registered form in denominations of $5,000 each or
any integral multiple thereof.
Interest on the Bonds will be payable on each Interest Payment Date to the person whose
name appears on the Bond Register as the Owner as of the Record Date immediately preceding
each Interest Payment Date. Interest will be paid by check of the Trustee mailed on the Interest
Payment Date by first class mail, postage prepaid, to the Owner at the address as it appears on
the Bond Register or by wire transfer to an account in the United States of America upon
instructions of any Owner of $1,000,000 or more in aggregate principal amount of Bonds provided
to the Trustee, in writing, at least five Business Days before the Record Date for such Interest
Payment Date. The Bonds are issued in fully registered form and will be registered in the name
of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( "DTC ").
DTC will act as securities depository of the Bonds. Ownership interests in the Bonds may be
purchased in book -entry form only in denominations of $5,000 and any integral multiple. See "-
Book -Entry Only System."
Principal of and premium (if any) on any Bond will be paid upon presentation and surrender
thereof, at maturity or the prior redemption thereof, at the Trust Office of the Trustee.
Each Bond will bear interest from the Interest Payment Date next preceding the date of
authentication thereof, unless (a) it is authenticated after a Record Date (the 15th calendar day
of the month preceding an Interest Payment Date, whether or not it is a Business Day) and on or
before the following Interest Payment Date, in which event it will bear interest from such Interest
Payment Date; or (b) it is authenticated on or before August 15, 2015, in which event it will bear
interest from the Dated Date; provided, however, that if, as of the date of authentication of any
Bond, interest thereon is in default, such Bond will bear interest from the Interest Payment Date
to which interest has previously been paid or made available for payment thereon, or from the
Dated Date if no interest has been paid or made available for payment.
Redemption
Optional Redemption. The Bonds maturing on or before September 1, 20_ are not
subject to optional call and redemption prior to maturity. The Bonds maturing on or after
September 1, 20_ may be redeemed at the option of the Authority, from any source of available
funds, prior to maturity on any date on or after September 1, 20 as a whole, or in part from
maturities of the Local Obligations simultaneously redeemed, if any redemption of Local
Obligations is being made in conjunction with such optional redemption, and otherwise from such
maturities as are selected by the Authority, and by lot within a maturity, at a redemption price
equal to the par amount of the Bonds to be redeemed, together with accrued interest thereon to
the date of redemption, without premium.
M
Prior to consenting to the optional prepayment of any Local Obligation which it has
purchased, the Authority will deliver to the Trustee a certificate of an Independent Accountant
verifying that, following such optional prepayment of the Local Obligations and redemption of
Bonds, the principal and interest generated from the remaining Local Obligations is adequate to
make the timely payment of principal and interest due on the Bonds will remain Outstanding under
the Indenture following such optional redemption.
Special Redemption. The Bonds are subject to special redemption on any Interest
Payment Date from proceeds of early redemption of Local Obligations from the prepayment of
Special Taxes within a Taxing Jurisdiction in connection with Local Obligations, in whole or in
part, from maturities corresponding proportionately to the maturities of the Local Obligations
simultaneously redeemed, at the principal amount thereof, plus a premium expressed below as a
percentage of the principal amount so redeemed, plus accrued interest to the date of redemption
thereof:
Redemption Dates Premium
Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20_ are
subject to mandatory sinking fund redemption prior to maturity, in part, on September 1, 20
and on each September 1 thereafter by lot, from sinking fund payments at a redemption price
equal to the principal amount of Bonds to be redeemed, together with accrued interest to the date
of redemption, without premium, as follows:
Redemption Date Redemption
(September 1) Amount
Notice of Redemption. The Trustee on behalf, and at the expense, of the Authority will
mail (by first class mail, postage prepaid) notice of any redemption to the Bond Insurer and the
respective Owners of any Bonds designated for redemption at their respective addresses
appearing on the Bond Register, and to the Securities Depositories and to the Information
Services, at least thirty (30) but not more than sixty (60) days prior to the date fixed for redemption.
Neither failure to receive any such notice so mailed nor any defect therein will affect the validity
of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest
thereon. The notice will state the date of the notice, the redemption date, the redemption place
and the redemption price and will designate the CUSIP numbers, the Bond numbers and the
maturity or maturities (in the event of redemption of all of the Bonds of such maturity or maturities
in whole) of the Bonds to be redeemed, and will require that such Bonds be then surrendered at
the Trust Office of the Trustee for redemption at the redemption price, giving notice also that
further interest on such Bonds will not accrue after the redemption date.
In addition, further notice will be given by the Trustee by first class mail to any Bondowner
whose Bond has been called for redemption but who has failed to submit his Bond for payment
by the date which is sixty days after the redemption date, but no defect in said further notice nor
-10-
any failure to give or receive all or any portion of such further notice will in any manner defeat the
effectiveness of a call for redemption.
In the case of an optional or special redemption of Bonds, such notice may state that such
redemption is subject to receipt by the Trustee, on or before the date fixed for redemption, of
moneys sufficient to pay the redemption price of the Bonds to be redeemed. Unless funds for the
optional or special redemption of any Bonds are irrevocably deposited with the Trustee prior to
rendering notice of redemption to the Bondowners, such notice shall state that such redemption
is subject to the deposit of funds by the Authority. Any notice of optional redemption shall be
cancelled and annulled if for any reason funds will not be or are not available on the date fixed for
redemption for the payment in full of the Bonds then called for redemption, and such cancellation
shall not constitute an Event of Default under the Indenture.
Selection of Bonds of a Maturity for Redemption. Unless otherwise provided in the
Indenture, whenever provision is made for the redemption of less than all of the Bonds of a
maturity, the Trustee will select the Bonds to be redeemed from all Bonds of such maturity not
previously called for redemption, by lot in any manner which the Trustee in its sole discretion
deems appropriate and fair. For purposes of such selection, all Bonds will be deemed to be
comprised of separate $5,000 authorized denominations, and such separate authorized
denominations will be treated as separate Bonds which may be separately redeemed.
Partial Redemption of Bonds. In the event only a portion of any Bond is called for
redemption, then upon surrender of such Bond the Authority will execute and the Trustee shall
authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or
Bonds of the same maturity date, of authorized denominations in aggregate principal amount
equal to the unredeemed portion of the Bond to be redeemed.
Effect of Redemption. From and after the date fixed for redemption, if funds available
for the payment of the principal of and interest (and premium, if any) on the Bonds so called for
redemption have been duly provided, such Bonds so called will cease to be entitled to any benefit
under the Indenture other than the right to receive payment of the redemption price, and no
interest will accrue thereon from and after the redemption date specified in such notice.
Payment, Registration, Transfer and Exchange of Bonds
Book -Entry Only System. The Bonds will be issued as fully registered bonds, registered
in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York
( "DTC "), and will be available to actual purchasers of the Bonds (the "Beneficial Owners ") in the
denominations set forth above, under the book -entry system maintained by DTC, only through
brokers and dealers who are or act through securities brokers and dealers, banks, trust
companies, clearing corporations and other organizations maintaining accounts with DTC ( "DTC
Participants ") as described herein. Beneficial Owners will not be entitled to receive physical
delivery of the Bonds. See "THE BONDS — Book -Entry Only System." In the event that the
book - entry-only system is no longer used with respect to the Bonds, the Bonds will be registered
and transferred in accordance with the Indenture. See "THE BONDS — Book -Entry Only
System."
Transfer of Bonds. Subject to the book -entry only provisions of the Indenture, any Bond
may in accordance with its terms, be transferred, upon the Bond Register maintained by the
Trustee, by the person in whose name it is registered, in person or by his duly authorized attorney,
upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of
-11-
transfer in a form approved by the Trustee, duly executed. Whenever any Bond is surrendered
for transfer, the Authority will execute and the Trustee will authenticate and deliver to the
transferee a new Bond or Bonds of like tenor, maturity and aggregate principal amount. No Bonds
selected for redemption will be subject to transfer, nor shall any Bond be subject to transfer during
the fifteen days prior to the selection of Bonds for redemption.
The cost of printing any Bonds and any services rendered or any expenses incurred by
the Trustee in connection with any transfer or exchange will be paid by the Authority. However,
the Owners of the Bonds will be required to pay any tax or other governmental charge required
to be paid for any exchange or registration of transfer and the Owners of the Bonds will be required
to pay the reasonable fees and expenses of the Trustee and Authority in connection with the
replacement of any mutilated, lost or stolen Bonds.
Exchange of Bonds. Subject to the book -entry only provisions of the Indenture, Bonds
may be exchanged at the Trust Office of the Trustee for Bonds of the same tenor and maturity
and of other authorized denominations. No Bonds selected for redemption will be subject to
exchange, nor shall any Bond be subject to exchange during the fifteen days prior to the selection
of Bonds for redemption.
Bond Register. The Trustee will keep or cause to be kept at its Trust Office sufficient
records for the registration and transfer of the Bonds, which will be the Bond Register and shall
at all times during regular business hours be open to inspection by the Authority upon reasonable
notice; and, upon presentation for such purpose, the Trustee will, under such reasonable
regulations as it may prescribe, register or transfer or cause to be registered or transferred, on
said records, Bonds as hereinbefore provided.
Book -Entry Only System
While the Bonds are subject to the book -entry system, the principal, interest and any
redemption premium with respect to a Bond will be paid by the Trustee to DTC, which in turn is
obligated to remit such payment to its DTC Participants for subsequent disbursement to Beneficial
Owners of the Bonds, as described in Appendix G — "DTC AND THE BOOK - ENTRY -ONLY
SYSTEM." So long as Cede & Co. is the registered owner of the Bonds, references in this Official
Statement to the Owners of the Bonds will mean Cede & Co. and not the Beneficial Owners of
the Bonds. The Authority gives no assurance that DTC or the DTC Participants will
distribute payments or notices to Beneficial Owners.
-12-
Estimated Debt Service Schedules: Bonds and Local Obligations
The Local Obligations acquired with proceeds of the Bonds mature on different dates.
Consequently, the source of security for debt service on the Bonds varies depending upon the
characteristics of the underlying Taxing Jurisdictions. The following table presents the debt
service schedule for the Bonds, assuming there are no redemptions of Bonds prior to their
respective maturities (other than as a result of mandatory sinking fund payments).
TABLE 1
DEBT SERVICE SCHEDULE FOR THE BONDS
Year Ending Total
September 1 Principal Interest Debt Service
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Total
-13-
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D 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
N N N N N N N N N N N N N N N N N N N N N N N
r
Debt Service Coverage for the Bonds
Scheduled payments of principal of, including mandatory sinking fund payments, and
interest on the Bonds equals 100% of the aggregate scheduled debt service on the Local
Obligations. Annual debt service for each of the Local Obligations has been structured so that
Maximum Special Taxes levied on property categorized as Developed Property in the applicable
Taxing Jurisdiction for Fiscal Year 2013 -14, less the applicable Taxing Jurisdiction's
Administrative Expense Requirement and assuming no delinquencies, would generate in each
Fiscal Year not less than 110% of debt service payable with respect to such Local Obligations.
See "THE COMMUNITY FACILITIES DISTRICTS."
SECURITY FOR THE BONDS
General
As described below, the Bonds are payable from Revenues, consisting primarily of
amounts received by the Authority as the result of its acquisition of the Local Obligations.
The Bonds are special obligations of the Authority payable solely from and secured
solely by the Revenues. The Bonds are not a debt or liability of the City, the County, the
State of California or any political subdivisions thereof other than the Authority to the
limited extent described in this Official Statement. The faith and credit of the Authority are
not pledged to secure the payment of Bonds, nor are any of its members liable therefor,
nor in any event shall the Bonds or any interest or redemption premium thereunder be
payable out of any funds or properties other than those of the Authority as set forth in the
Indenture. The Authority has no taxing power.
Revenues and Flow of Funds
Bonds; Revenues. The Bonds are secured by a first lien on and pledge of all of the
Revenues. So long as any of the Bonds are Outstanding, the Revenues will not be used for any
purpose except as is expressly permitted by the Indenture.
Collection by the Trustee. The Trustee will collect and receive all of the Revenues, and
any Revenues and collected or received by the Authority will be deemed to be held, and to have
been collected or received, by the Authority as the agent of the Trustee and shall forthwith be
paid by the Authority to the Trustee. The Trustee is also entitled to and will take all steps, actions
and proceedings reasonably necessary in its judgment to enforce, either jointly with the Authority
or separately, all of the rights of the Authority and all of the obligations of the City and the Districts
under the Local Obligations.
Deposit of Revenues. All Revenues derived from the Local Obligations will be promptly
deposited by the Trustee upon receipt thereof in the Revenue Fund. Any Revenues which
represent the payment of delinquent principal of or interest on an issue of Local Obligations will
immediately be deposited to the Reserve Fund to the extent necessary to replenish, to the extent
the Reserve Fund deficiency resulted from the delinquency in the payment of scheduled debt
service on such Local Obligations, the amount in the Reserve Fund to the Reserve Requirement,
with any amount in excess of that needed to replenish the Reserve Fund to be deposited to the
Revenue Fund for transfer as provided in the Indenture.
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Application of Revenues. On each Interest Payment Date, the Trustee shall transfer
from the Revenue Fund, and deposit into the following respective accounts for the Bonds, the
following amounts in the following order of priority, the requirements of each such account
(including the making up of any deficiencies in any such account resulting from lack of Revenues
sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any
transfer is made to any account subsequent in priority:
Interest Account. On each Interest Payment Date, the Trustee will deposit in the
Interest Account an amount required to cause the aggregate amount on deposit in the
Interest Account to equal the amount of interest becoming due and payable on such
Interest Payment Date on all Outstanding Bonds on such date. All moneys in the Interest
Account will be used and withdrawn by the Trustee solely for the purpose of paying interest
on the Bonds as it shall become due and payable (including accrued interest on any Bonds
redeemed prior to maturity). In the event that the amounts on deposit in the Interest
Account on any Interest Payment Date, after any transfers from the Reserve Fund, are
insufficient for any reason to pay the aggregate amount of interest then coming due and
payable on the Outstanding Bonds, the Trustee will apply such amounts to the payment
of interest on each of the Outstanding Bonds on a pro rata basis.
Principal Account. On each March 1, the Trustee will deposit in the Principal
Account an amount equal to one -half of the principal amount of the Bonds that will become
due and payable on the next succeeding September 1 or required to be redeemed on
such date. On each September 1 on which principal of the Bonds will be payable, the
Trustee will deposit in the Principal Account an amount required to cause the aggregate
amount on deposit in the Principal Account to equal the principal amount of, and premium
(if any) on, the Bonds coming due and payable on such date, or required to be redeemed
on such date; provided, however, that no amount will be deposited to effect an optional
redemption unless the Trustee has first received a certificate of an Independent
Accountant certifying that such deposit to effect an optional redemption of the Bonds will
not impair the ability of the Authority to make timely payment of the principal of and interest
on the Bonds, assuming for such purposes that the City and the Districts continue to make
timely payments on all Local Obligations not then in default. All moneys in the Principal
Account will be used and withdrawn by the Trustee solely for the purpose of (i) paying the
principal of the Bonds at the maturity thereof or (ii) paying the principal of and premium (if
any) on any Bonds upon the redemption thereof.
Reserve Fund. On each Interest Payment Date on which the balance in the
Reserve Fund is less than the Reserve Requirement, after making deposits required into
the Interest Account and the Principal Account, the Trustee shall transfer from the
Revenue Fund an amount sufficient to increase the balance in the Reserve Fund to the
Reserve Requirement by depositing the amount necessary to make the various accounts
therein equal to, together, the Reserve Requirement, provided the value of the moneys
deposited therein, as invested, will be valued at market value on such transfer date for
purposes of making such determination.
Deficiencies. If on any Interest Payment Date the amount on deposit in the Revenue
Fund is inadequate to make the transfers described above as a result of a payment default on an
issue of Local Obligations, the Trustee will immediately notify the issuer of such Local Obligations
of the amount needed to make the required deposits described above under "Application of
Revenues." In the event that following such notice the Trustee receives additional payments from
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the issuer of such Local Obligation to cure such shortfall, the Trustee shall deposit such amounts
to the Revenue Fund for application in accordance with the Indenture.
Deposit into Rebate Fund. On each Interest Payment Date after making the transfers
described above, upon receipt of a Request of the Authority to do so, the Trustee will transfer
from the Revenue Fund to the Rebate Fund for deposit in the accounts therein the amounts
specified in such Request.
Surplus Fund. On September 1 of each year, after making the deposits described above,
the Trustee will transfer all amounts remaining on deposit in the Revenue Fund to the Surplus
Fund.
Reserve Fund
An account for each issue of Local Obligations will be established in the Reserve Fund
(each, an "Account "). The Reserve Requirement will initially be deposited into the following
Accounts in an amount equal to the portion of the Reserve Requirement initially allocable to each
such Account:
$
in the CFD No. 2003 -2 Account
$
in the CFD No. 2004 -3 -1 Account
• $
in the CFD No. 2004 -3 -2 Account
• $
in the CFD No. 2005 -1 Account
$
in the CFD No. 2005 -2 Account
$
in the CFD No. 2005 -6 Account
$
in the CFD No. 2006 -2 Account
In the event that the amount of the Reserve Requirement is changed, the Trustee will,
upon receipt of a Request of the Authority, adjust the shares of each Account to reflect the new
Reserve Requirement.
Subject to the limitations set forth in the following paragraph, moneys in the Reserve Fund
will be used to pay the principal of and interest on the Bonds when the moneys in the Interest
Account and the Principal Account of the Revenue Fund are insufficient for that purpose. In
addition, amounts in the Reserve Fund may be applied (i) in connection with an optional
redemption or defeasance of Bonds, (ii) when the balance therein equals the principal and interest
due on the Bonds to and including maturity, or (iii) when amounts in certain accounts of the
Reserve Fund are transferred to the Interest Account and the Principal Account as a credit against
the payments due on the Local Obligations on the transfer dates specified below.
If the amounts in the Interest Account or the Principal Account of the Revenue Fund are
insufficient to pay the principal of or interest on the Bonds when due or mandatory sinking fund
payments on the Bonds when due, the Trustee shall withdraw from the applicable Reserve
Account or Reserve Accounts an amount equal to the deficiency resulting from the delinquency
in the payment of scheduled debt service on the applicable series of Local Obligations and
transfer such amount to the Interest Account, the Principal Account of the Revenue Fund or both,
as applicable. If there are insufficient funds on deposit in a Reserve Account to cover a deficiency
resulting from the delinquency in the payment of scheduled debt service on the applicable series
of Local Obligations, the Trustee shall withdraw from each of the other Reserve Accounts a share
of such insufficiency based upon the proportion of the amount in a Reserve Account to the total
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amount on deposit in the Reserve Fund and transfer such amounts to the Interest Account, the
Principal Account of the Revenue Fund or both, as applicable.
Upon the transfer by the Trustee to the Reserve Fund of delinquent Revenues, such
Revenues shall be allocated to the Reserve Accounts as follows:
First, to the Reserve Account for any series of Local Obligations, other than the Reserve
Account to which such delinquent Revenues relate, that amount necessary to increase the
amount on deposit in such account to the applicable Proportionate Share of the Reserve
Requirement if the deficiency in the amount on deposit in such account resulted from draws on
such account due to delinquencies in the payment of scheduled debt service on that series of
Local Obligations from which the Local Obligations Delinquency Revenues were received. In the
event that such delinquent Revenues are not sufficient to increase the amount on deposit in each
of applicable Reserve Accounts to the applicable Proportionate Share of the Reserve
Requirement, a Proportionate Share of such delinquent Revenues shall be deposited in each
such Reserve Account.
Second, after increasing the amount on deposit in each applicable Reserve Account to
the applicable Proportionate Share of the Reserve Requirement pursuant to the first step, to the
Reserve Account for the series of Local Obligations from which the delinquent Revenues were
received that amount necessary to replenish the amount on deposit in such Reserve Account to
the applicable Proportionate Share of the Reserve Requirement.
Third, after making all deposits pursuant to the first and second steps, the remaining
delinquent Revenues, if any, shall be transferred to the Revenue Fund.
Surplus Fund
Any amounts transferred to the Surplus Fund will no longer be considered Revenues and
will not be pledged to repay the Bonds. So long as Local Obligations are outstanding, on
September 1 of each year after setting aside any amount specified in a Request of the Authority
as necessary to pay Administrative Expenses, all of the remaining balance, if any, in the Surplus
Fund will be transferred by the Trustee to the City Treasurer for credit to the special tax fund of
the Districts, and each District shall be credited a percentage of the total amount available on
each September 1 that is equal to the percentage that its outstanding Local Obligations represent
of all outstanding Local Obligations held by the Trustee as of the date of disbursement.
In the event that the Local Obligations have been prepaid or defeased in whole, then any
amounts in the Surplus Fund may be used by the Authority for any lawful purpose, including, but
not limited to, the payment of expenses of the Authority, the City or the Districts relating to the
Bonds, the Local Obligations, the Districts, or any other purpose as specified in a Request of the
Authority delivered to the Trustee.
No Additional Bonds Except to Refund Bonds
The Authority may issue Additional Bonds secured on a parity with the Bonds ( "Additional
Bonds "), in such principal amount as shall be determined by the Authority, pursuant to a
Supplemental Indenture adopted or entered into by the Authority, but only for the purpose of
refunding the Bonds or Additional Bonds.
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Additional Bonds may only be issued subject to the following conditions precedent
established by the Indenture:
(a) The Authority shall be in compliance with all covenants set forth in the Indenture
and all Supplemental Indentures.
(b) The proceeds of such Additional Bonds will be applied to accomplish a refunding
of all or a portion of the Bonds or any Additional Bonds Outstanding.
(c) The Supplemental Indenture providing for the issuance of such Additional Bonds
must provide that interest thereon will be payable on September 1 and March 1, and principal
thereof will be payable on September 1 in any year in which principal is payable.
(d) Prior to the delivery of any Additional Bonds, a written certificate must be provided
to the Authority and the Trustee by an Independent Financial Consultant which certifies that the
Annual Debt Service in each Bond Year on the Additional Bonds does not exceed the Annual
Debt Service in each Bond Year on the Bonds defeased or redeemed with the proceeds of such
Additional Bonds.
(e) The Supplemental Indenture providing for the issuance of Additional Bonds may
provide for the establishment of separate funds and accounts.
(f) No Event of Default has occurred and be continuing with respect to the Bonds or
any of the Local Obligations.
(g) The Authority will deliver to the Trustee a written Certificate of the Authority
certifying that the conditions precedent to the issuance of such Additional Bonds set forth in
subsections (a), (b), (c), (d) and (f) above have been satisfied and that, upon the issuance of such
Additional Bonds an amount equal to the Reserve Requirement, as adjusted (if necessary) to
reflect the issuance of such Additional Bonds will be on deposit in the Reserve Fund.
SECURITY FOR THE LOCAL OBLIGATIONS
General
Each Local Obligation is a limited obligation of the applicable District payable solely from
Net Special Taxes (defined below) collected in the Taxing Jurisdiction and amounts deposited by
the District in the Special Tax Fund (exclusive of the Administrative Expense Account). Each
District's limited obligation to pay the principal of, premium, if any, and interest on the applicable
Local Obligations from Net Special Taxes collected in the Taxing Jurisdiction and amounts in the
Special Tax Fund is absolute and unconditional.
No Local Obligation (and no Parity Bonds issued under the Local Obligation Bond
Indenture relating to the Local Obligations, each a "Local Obligation Parity Bond ") is a legal or
equitable pledge, charge, lien or encumbrance upon any of the District's property, or upon any of
its income, receipts or revenues, except the Net Special Taxes collected in the applicable Taxing
Jurisdiction and other amounts in the Special Tax Fund.
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The Special Taxes levied in one District may not be used to pay debt service on the
Local Obligations of another District. Similarly, Special Taxes levied in one Improvement
Area may not be used to pay debt service of another Improvement Area, and vice versa, or
the Local Obligations of another District.
Except for the Net Special Taxes for each District, neither the credit nor the taxing
power of the District or the City is pledged for the payment of the Local Obligations or
related interest, and no Owner of the Bonds may compel the exercise of taxing power by
a District or the forfeiture of any of its property. The principal of and interest on the Local
Obligations and premiums upon the redemption thereof, if any, are not a debt of any
District or the City, the State of California or any of its political subdivisions within the
meaning of any constitutional or statutory limitation or restriction.
Special Taxes; Gross Special Taxes; Net Special Taxes
The "Special Taxes" for each Taxing Jurisdiction are levied and collected according to
the rate and method of apportionment (each, a "Rate and Method ") established for such Taxing
Jurisdiction. See Appendix A — "INFORMATION REGARDING THE COMMUNITY FACILITIES
DISTRICTS" and Appendix D — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL
TAXES FOR EACH TAXING JURISDICTION."
The "Net Special Taxes" pledged by each District to the related Local Obligations (and
any related Parity Bonds) is defined in the Local Obligation Bond Indentures as "Gross Special
Taxes" minus amounts set aside to pay Administrative Expenses. See " -- Administrative Expense
Requirement' below.
"Gross Special Taxes" is defined as the amount of all Special Taxes received by the
District, together with the proceeds collected from the sale of property pursuant to the foreclosure
provisions of the related Local Obligation Bond Indenture for the delinquency of such Special
Taxes remaining after the payment of all costs related to the foreclosure actions.
Each District covenants in the Local Obligation Bond Indenture relating to its Local
Obligations that it will receive all Special Taxes in trust for the Owners of the related Local
Obligations, and will instruct the Treasurer to deposit all Special Taxes with the Fiscal Agent
immediately upon their apportionment to the District, and the District shall have no beneficial right
or interest in the amounts so deposited except as provided by the Local Obligation Bond
Indenture.
Except for the portion of any prepayment of Special Taxes to be deposited into the
Redemption Account [or the Improvement Fund, as applicable] established under the applicable
Local Obligation Bond Indenture, the Fiscal Agent under the Local Obligation Bond Indenture will,
on each date on which the Special Taxes are received from the District, deposit the Special Taxes
in the Special Tax Fund to be held in trust for the Authority as the owner of the related Local
Obligations. The Fiscal Agent will transfer the Special Taxes on deposit in the Special Tax Fund
on the dates and in the amounts set forth in the Local Obligation Bond Indenture, in the following
order of priority, to:
(1) The Administrative Expense Account up to the Administrative Expense
Requirement;
(2) The Interest Account of the Special Tax Fund;
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(3) The Principal Account of the Special Tax Fund;
(4) The Reserve Account up to the District's Proportionate Share of the Reserve
Requirement;
(5) The Redemption Account of the Special Tax Fund; and
(6) The Surplus Fund.
The Special Tax is collected in the manner and at the same time as ad valorem property
taxes are collected and is subject to the same penalties and the same procedure, sale, and lien
priority in case of delinquency as is provided for ad valorem property taxes.
Administrative Expense Requirement
The Fiscal Agent will deposit the first available Special Taxes from the Special Tax Fund
to the Administrative Expense Fund in an amount such that the total amounts transferred to the
Administrative Expense Fund in any Bond Year do not exceed the Administrative Expense
Requirement.
Set forth below is the initial Administrative Expense Requirement for each Taxing
Jurisdiction:
Taxing Jurisdiction
CFD No. 2003 -2
CFD No. 2004 -3 -1
CFD No. 2004 -3 -2
CFD No. 2005 -1
CFD No. 2005 -2
CFD No. 2005 -6
CFD No. 2006 -2
Administrative Expense Requirement
The Administrative Expense Requirement for each Taxing Jurisdiction is subject to
increase under the applicable Local Obligation Bond Indenture. See Appendix B — "SUMMARY
OF PRINCIPAL LEGAL DOCUMENTS."
Local Obligation Parity Bonds
Each Local Obligation Bond Indenture authorizes the applicable District to issue additional
bonds secured by Net Special Taxes on a parity with the related Local Obligations but only for
the purpose of refunding all or a portion of the Local Obligations or Local Obligation Parity Bonds
of such District. For a description of the conditions established in each Local Obligation Bond
Indenture for the issuance of Local Obligation Parity Bonds, see Appendix B — "SUMMARY OF
PRINCIPAL LEGAL DOCUMENTS."
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Priority of Lien
Each installment of the Special Taxes and any interest and penalties thereon, constitutes
a lien on the parcel of land on which it was imposed until the same is paid. Such lien is co -equal
to and independent of the lien for general taxes, any other community facilities district special
taxes and the lien securing special assessments. See "THE COMMUNITY FACILITIES
DISTRICTS — The Districts in the Aggregate."
Covenants of the Districts
In each Local Obligation Bond Indenture, each District covenants as follows, among other
things:
Punctual Payment. It will duly and punctually pay or cause to be paid the principal of
and interest on each related Local Obligation (and any related Local Obligation Parity Bond)
issued under its Local Obligation Bond Indenture, together with the premium, if any to the extent
that Net Special Taxes and other amounts pledged under the Local Obligation Bond Indenture
are available therefor.
Against Encumbrance. It will not mortgage or otherwise encumber, pledge or place any
charge upon any of the Net Special Taxes except as provided in the related Local Obligation Bond
Indenture, and will not issue any obligation or security having a lien or charge upon the Net Special
Taxes superior to or on a parity with the related Local Obligations (other than related Local
Obligation Parity Bonds). Nothing in the Local Obligation Bond Indenture prevents the District
from issuing or incurring indebtedness which is payable from a pledge of Net Special Taxes which
is subordinate in all respects to the pledge of Net Special Taxes to repay the related Local
Obligations and the related Local Obligation Parity Bonds.
Levy of Special Tax. So long as any Local Obligations or Local Obligation Parity Bonds
are Outstanding, the legislative body of the District will levy the related Special Tax in an amount
sufficient, together with other amounts on deposit in the Special Tax Fund and available for such
purpose, to pay the principal of and interest on such Local Obligations and any such Local
Obligation Parity Bonds when due, and the applicable Administrative Expense Requirement (the
"Special Tax Requirement "). Each District further covenants that it will take no actions that would
discontinue or cause the discontinuance of the Special Tax levy or the District's authority to levy
the Special Tax for so long as the related Local Obligations and any related Local Obligation
Parity Bonds are outstanding.
Commence Foreclosure Proceedings. The District covenants for the benefit of the
Owners of the Local Obligations (which is the Authority) and any Local Obligation Parity Bonds
that it:
(i) will commence judicial foreclosure proceedings against parcels with delinquent
Special Taxes in excess of $5,000 by the October 1 following the close of each
Fiscal Year in which such Special Taxes were due, and
(ii) will commence judicial foreclosure proceedings against all parcels with delinquent
Special Taxes by the October 1 following the close of each Fiscal Year in which it
receives Special Taxes in an amount which is less than 95% of the total Special
Tax levied and the amount on deposit in the applicable Reserve Account is at less
than the Proportionate Share of the Reserve Requirement, and
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(iii) will diligently pursue such foreclosure proceedings until the delinquent Special
Taxes are paid; provided that, notwithstanding the foregoing, the District may elect
to defer foreclosure proceedings on any parcel so long as the amount in the
Reserve Fund is at least equal to the Reserve Requirement.
Each District may, but is not obligated to, advance funds from any source of legally
available funds in order to maintain the applicable Reserve Account of the Reserve Fund.
Each District covenants that it will deposit the net proceeds of any foreclosure and any
other Delinquency Proceeds in the related Special Tax Fund and will apply such proceeds
remaining after the payment of the Administrative Expense Requirement to pay any delinquent
installments of principal and interest on the Local Obligations of the District and any Local
Obligation Parity Bonds of the District and to make current payments of principal and interest on
the Local Obligations of the District and any Local Obligation Parity Bonds of the District.
Reduction of Maximum Special Taxes. Each District covenants that it will not initiate
proceedings to reduce the maximum Special Tax rates for the applicable Taxing Jurisdiction,
unless, in connection therewith, (i) the District receives a certificate from one or more Independent
Financial Consultants which, when taken together, certify that, on the basis of the parcels of land
and improvements existing in the Taxing Jurisdiction as of the July 1 preceding the reduction, the
maximum amount of the Special Tax which may be levied on then existing Developed Property
(as defined in the Rate and Method then in effect in the Taxing Jurisdiction) in each Bond Year
for any related Local Obligations and Local Obligation Parity Bonds Outstanding will equal at least
110% of the sum of the estimated Administrative Expenses and gross debt service in each Bond
Year on all related Local Obligations and any related Local Obligation Parity Bonds to remain
Outstanding after the reduction is approved, (ii) the District finds that any reduction made under
such conditions will not adversely affect the interests of the Owners of the related Local
Obligations and any related Local Obligation Parity Bonds, and (iii) the District is not delinquent
in the payment of the principal of or interest on the related Local Obligations and any related Local
Obligation Parity Bonds. For purposes of estimating Administrative Expenses for the foregoing
calculation, the Independent Financial Consultants shall compute the Administrative Expenses
for the current Fiscal Year and escalate that amount by 2% in each subsequent Fiscal Year.
THE COMMUNITY FACILITIES DISTRICTS
The Districts in the Aggregate
Introduction. Set forth under this caption is certain information describing the Taxing
Jurisdictions in the aggregate. Appendix A contains separate sections on each Taxing
Jurisdiction. Although the Authority and the Districts believe the information with respect to the
Taxing Jurisdictions in the aggregate is relevant to an informed decision to purchase the Bonds,
investors should be aware that the debt service on one Local Obligation may not be used to make
up any shortfall in the debt service on another Local Obligation. Moreover, the parcels in each of
the Taxing Jurisdictions are taxed according to that Taxing Jurisdiction's specific Rate and
Method, and the Special Taxes may only be applied to pay the debt service on the Local
Obligations of the Taxing Jurisdiction in which they are levied and not on the debt service of any
other Local Obligations. See Appendix D — "RATE AND METHOD OF APPORTIONMENT OF
SPECIAL TAXES FOR EACH TAXING JURISDICTION."
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Potential investors should also be aware that Special Taxes are levied against individual
parcels within each Taxing Jurisdiction and that any such parcel may have a value -to -lien ratio
less than the overall value -to -lien ratio for such Taxing Jurisdiction and less than the value -to -lien
ratio of the Taxing Jurisdictions in the aggregate.
Development Status. As of November 7, 2014, there were 2,687 dwelling units
completed and sold to individual homeowners, 113 parcels in various stages of development and
67 parcels remaining undeveloped. The table below summarizes the total dwelling units
completed and sold to individual homeowners as of December 16, 2014 and total number of
dwelling units expected at buildout within each of the Taxing Jurisdictions.
TABLE 3
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
THE TAXING JURISDICTIONS IN AGGREGATE
DEVELOPMENT STATUS AS OF DECEMBER 16, 2014
Total Acres
Sold of Total
Percent Sold
Taxing Approximate Dwelling Parcels Under Undeveloped Undeveloped Developed
to Individual
Jurisdiction Gross Acres Units0) Development(2) Parcels (3) Land(4) ParcelsP
Homeowners(6)
CFD No. 2003 -2 205.90 806 0 3 64.37 806
100.00%
CFD No. 2004 -3 -1 94.65 497 12 0 0 509
97.64
CFD No. 2004 -3 -2 94.05 512 50 0 0 562
91.10
CFD No. 2005 -1 35.53 233 0 0 0 233
100.00
CFD No. 2005 -2 79.95 340 49 53 0 389
87.40
CFD No. 2005 -6 13.36 144 0 0 0 144
100.00
CFD No. 2006 -2 15.37 155 13 0 0 168
92.26
Totals: 538.81 2,687 124 56 64.37 2,811
95.59%
(') Equals the estimated number of completed dwelling units no longer owned by developers as of March 1, 2014.
(2) Parcels for which building permits have been obtained as of March 1, 2014, but which have not been completed and
conveyed to purchasers.
(3) Parcels with no building permits obtained as of March 1, 2014.
(4) Equals Acreage of Parcels with no building permits obtained as of March 1, 2014.
(5) Total Developed Parcels includes Sold Dwelling Units and Parcels Under Development with building permits as
of
March 1, 2014
(5) Equals the Sold Dwelling Units column divided by the Total Parcels column, expressed as a percentage.
Source: Albert A. Webb Associates.
Delinquencies. The City, along with other local agencies, has participated in a program
in which it sold receivables representing certain delinquent special taxes and assessments (the
"Receivables ") for fiscal years 2008 -09 through 2014 -15 to the California Statewide Communities
Development Authority ( "CSCDA ") at a purchase price at least equal to 100% of the principal
amount of the Receivables sold. The Receivables have included certain delinquent Special Taxes
with respect to the Taxing Jurisdictions. CSCDA financed the purchase through the issuance of
multiple series of certificates of participation to a private investor; the certificates represent an
interest in the Receivables purchased from the City and the other participating local
agencies. Although the City anticipates that it will participate in this program for future fiscal years,
there is no assurance that it will do so, or that any such Receivables sold in the future will
represent delinquent Special Taxes with respect to the Taxing Jurisdictions. See "SPECIAL RISK
FACTORS — Special Tax Delinquencies."
Value -To -Lien Ratios. The assessed values of all of the taxable property in the Taxing
Jurisdictions, as established by the County Assessor for Fiscal Year 2013 -14, was $678,226,344.
The direct and overlapping land secured special tax and assessment bonded indebtedness
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(including the Local Obligations but excluding general obligation bonded indebtedness) within the
Taxing Jurisdictions as of December 16, 2014 was approximately $19,846,285. The following table
sets forth the aggregate assessed value -to -lien ratios of all the taxable property in the Taxing
Jurisdictions based on the Fiscal Year 2013 -14 assessed value and all direct and overlapping
land secured special tax and assessment bonded indebtedness (including the applicable Local
Obligations for each Taxing Jurisdiction but excluding general obligation bonded indebtedness)
on a Taxing Jurisdiction by Taxing Jurisdiction basis.
Table 4 will be updated in the Authority's Annual Report made pursuant to its Continuing
Disclosure Certificate to set forth the estimated assessed value -to -lien ratios of taxable property
within each of the Taxing Jurisdictions.
TABLE 4
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
THE TAXING JURISDICTIONS IN AGGREGATE
ASSESSED VALUE -TO -LIEN RATIOS
Direct and
Assessed
Taxing Local Overlapping Assessed
Value -to -Lien
Jurisdictions Obligationsffl* DebtM Total Debt* Value(3)
Ratio(')*
CFD No. 2003 -2 $25,555,000 $6,017,002 $31,572,002 $208,234,239
6.60:1
CFD No. 2004 -3 -1 22,000,000 7,668,410 29,668,410 122,670,463
4.13:1
CFD No. 2004 -3 -2 23,170,000 1,527,588 24,697,588 142,339,275
5.76:1
CFD No. 2005 -1 8,505,000 12,054 8,517,054 51,970,691
6.10:1
CFD No. 2005 -2(5) 22,095,000 2,468,710 24,563,710 102,100,164
4.16:1
CFD No. 2005 -6 3,075,000 0 3,075,000 18,813,823
6.12:1
CFD No. 2006 -2 6,675,000 4,832 6,679,832 32,097,689
4.81:1
Totals: $111,075,000 $17,698,596 $128,773,596 $678,226,344
5.27:1
* Preliminary; subject to change.
(1) Based on aggregate principal amount of the Local Obligations.
(2) Does not include any general obligation bonded indebtedness applicable to the Taxing Jurisdictions.
(3) Reflects Fiscal Year 2014 -15 assessed value of all taxable property in the Taxing Jurisdictions.
(4) Calculated by dividing the Assessed Value column by the Total Debt column.
(5) Does not include Fiscal Year 2014 -15 assessed value of three undeveloped parcels, as the value is insignificant
and it is unlikely that the parcels will be developed or taxed to pay local obligations.
(5) Includes Fiscal Year 2014 -15 assessed value of sixty four Approved parcels which are taxable at the
Ad- Valorem, however are not likely to be taxed to pay local obligations until such time as they become
Developed.
Source: Albert A. Webb Associates.
-25-
The following table sets forth the number of Taxing Jurisdictions and dwelling units within
the Taxing Jurisdictions which will be levied to pay debt service on the Local Obligations by Bond
Year through September 1, 2038, the final maturity date of the Bonds.
TABLE 5
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
THE TAXING JURISDICTIONS IN AGGREGATE
BY BOND YEAR
Bond Year
No. of
Share
Fiscal Year
Total
Assessed
Ending
Taxing
of
Dwelling
2014 -15
Overlapping
Value to
September 1
Jurisdictions
Bonds
Units
Assessed Value
Debt*
Lien Ratio*
2015
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2016
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2017
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2018
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2019
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2020
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2021
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2022
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2023
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2024
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2025
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2026
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2027
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2028
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2029
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2030
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2031
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2032
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2033
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2034
7
100%
2,811
$678,226,794
$128,773,596
5.27:1
2035
6
100%
2,811
$678,226,794
$128,773,596
5.27:1
2036
2
93%
2,302
$555,556,331
$99,105,186
5.61:1
2037
2
91%
1,368
$350,573,514
$56,269,590
6.23:1
2038
1
89%
806
$208,234,239
$31,572,002
6.60:1
* Preliminary; subject to change.
Source: Albert A. Webb Associates
-26-
Average Effective Tax Rates. The following table sets forth the average effective tax
rates for completed dwelling units within each of the Taxing Jurisdictions.
TABLE 6
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
THE TAXING JURISDICTIONS IN AGGREGATE
AVERAGE DWELLING UNIT EFFECTIVE TAX RATES
Top Taxpayers within the Taxing Jurisdictions. There is no single taxpayer within the
Taxing Jurisdictions that is expected to be responsible for more than 9.38% of the Special Taxes
that are levied to pay debt service on a Local Obligation. None of the property owners in the
Taxing Jurisdictions will provide continuing disclosure.
The following table sets forth the value -to -lien ratio for property owned by developers
within each of the Taxing Jurisdictions.
-27-
Average Other
Average
Average
Average Ad
Taxes and
Effective Tax
Assessed Value —
Average Taxing
Valorem Taxes
Assessments Per
Rate -
Taxing
Completed
Jurisdiction
Per Completed
Completed
Completed
Jurisdictions
Dwelling Unit
Special Tax
Dwelling Unit
Dwelling Unit
Dwelling Unit
CFD No. 2003 -2
$258,355.14
$2,445.19
$2,550.12
$602.43
2.17%
CFD No. 2004 -3 -1
246,821.86
4,053.12
2,384.73
611.35
2.86
CFD No. 2004 -3 -2
278,006.40
3,913.79
2,521.76
609.88
2.53
CFD No. 2005 -1
223,050.18
2,804.27
2,211.95
673.31
2.55
CFD No. 2005 -2
300,294.60
4,277.84
2,379.88
728.84
2.46
CFD No. 2005 -6
130,651.55
1,589.58
1,296.06
227.99
2.38
CFD No. 2006 -2
207,081.86
2,922.11
1,888.24
763.16
2.69
Source: Albert A. Webb Associates.
Top Taxpayers within the Taxing Jurisdictions. There is no single taxpayer within the
Taxing Jurisdictions that is expected to be responsible for more than 9.38% of the Special Taxes
that are levied to pay debt service on a Local Obligation. None of the property owners in the
Taxing Jurisdictions will provide continuing disclosure.
The following table sets forth the value -to -lien ratio for property owned by developers
within each of the Taxing Jurisdictions.
-27-
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For additional information concerning the top taxpayers within each of the Taxing
Jurisdictions, see the "Estimated Value -to -Lien Ratios for Top Ten Taxpayers" section for each
Taxing Jurisdiction in Appendix A — "INFORMATION REGARDING THE COMMUNITY
FACILITIES DISTRICTS." For additional information concerning each of the Taxing Jurisdictions,
see Appendix A — "INFORMATION REGARDING THE COMMUNITY FACILITIES DISTRICTS."
-30-
SPECIAL RISK FACTORS
The purchase of the Bonds involves certain investment risks which are discussed
throughout this Official Statement. Each prospective investor should make an independent
evaluation of all information presented in this Official Statement in order to make an informed
investment decision. Particular attention should be given to the factors described below which,
among others, could affect the payment of debt service on the Bonds in general.
Risks of Real Estate Secured Investments Generally
Because the timely payment of debt service on the Bonds will be dependent upon the
timely payment of the Local Obligations and the timely payment of the Local Obligations will be
dependent upon the timely payment of Special Taxes, which are secured ultimately by the taxable
property within the Taxing Jurisdictions, the Bond Owners will be subject to the risks generally
incident to an investment secured by real estate, including, without limitation, (i) adverse changes
in local market conditions, such as changes in the market value of real property in and around the
vicinity of the Taxing Jurisdictions, the supply of or demand for competitive properties in such
area, and the market value of residential property or buildings and /or sites in the event of sale or
foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules
(including, without limitation, zoning laws and laws relating to endangered species and hazardous
materials) and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes
and floods), which may result in uninsured losses.
The Bonds are Limited Obligations of the Authority
The Bonds are limited obligations of the Authority payable only from amounts pledged
under the Indenture, which consist primarily of payments made to the Trustee on the Local
Obligations and amounts in the Reserve Fund. Funds for the payment of the principal of and the
interest on the Local Obligations are derived only from payments of Special Taxes. The amount
of Special Taxes that are collected could be insufficient to pay principal of and interest on the
Local Obligations due to non - payment of the Special Taxes levied or due to insufficient proceeds
received from a judicial foreclosure sale of land within the Taxing Jurisdictions following
delinquency. A District's legal obligation with respect to any delinquent Special Taxes is limited
to the institution of judicial foreclosure proceedings under certain circumstances with respect to
any parcels for which Special Taxes is delinquent. The Bonds cannot be accelerated in the event
of any default.
Failure by owners of the parcels within the Taxing Jurisdictions to pay Special Tax
installments when due, delay in foreclosure proceedings, or the inability of the Districts to sell
parcels which have been subject to foreclosure proceedings for amounts sufficient to cover the
delinquent installments of Special Taxes levied against such parcels may result in the inability of
the Districts to make full or timely payments of debt service on the Local Obligations, which may,
in turn, result in the depletion of the Reserve Fund and the inability of the Authority to make full
or timely payment on the Bonds.
No Obligation of City
The Local Obligations and the interest thereon, and in turn, the Bonds, are not payable
from the general funds of the City. Except with respect to the Special Taxes, neither the credit
-31-
nor the taxing power of the Districts is pledged for the payment of the Local Obligations or the
interest thereon, and except to compel a levy of the Special Taxes securing the Local Obligations,
no Owner of the Bonds may compel the exercise of any taxing power by the Districts or force the
forfeiture of any property of the Districts. The principal of, premium, if any, and interest on the
Bonds are not a debt of the Districts or a legal or equitable pledge, charge, lien or encumbrance
upon any of the Districts' property or upon any of the Districts' income, receipts or revenues,
except the Revenues and other amounts pledged under the Indenture.
Potential Early Redemption of Bonds from Prepayments
Property owners within the Taxing Jurisdictions are permitted to prepay their Special
Taxes at any time. Such prepayments will result in a redemption of Local Obligations on the first
March 1 or September 1 which is more than 30 days following the receipt of the prepayment. The
proceeds of the Local Obligations so redeemed will then be used to make a mandatory
redemption of the Bonds. The Bonds will be called on a pro rata basis from the proceeds of the
Local Obligations redeemed from prepayments. See "THE BONDS — Redemption — Special
Redemption."
Payment of Special Taxes is not a Personal Obligation of the Property Owners
Property Owners are not personally obligated to pay their respective Special Taxes.
Rather, the Special Taxes are obligations only against the respective parcels against which they
are levied. If, after a default in the payment of the Special Tax and a foreclosure sale, the resulting
proceeds are insufficient, taking into account other obligations also constituting a lien against the
parcel, the School District has no personal recourse against the parcel owner.
Assessed Valuations
The Authority has not commissioned an appraisal of the parcels in the Districts in
connection with the issuance of the Bonds. The estimated valuation of the land in the Taxing
Jurisdictions provided in this Official Statement is based only on the County Assessor's values.
No assurance can be given that any of the land in the Taxing Jurisdictions could be sold
for the assessed value if it should become delinquent and subject to foreclosure proceedings.
Assessed values do not necessarily represent market values. Article XIIIA of the
California Constitution (Proposition 13) defines "full cash value" to mean "the County assessor's
valuation of real property as shown on the 1975/76 roll under `full cash value', or, thereafter, the
appraised value of real property when purchased or newly constructed or when a change in
ownership has occurred after the 1975 assessment," subject to exemptions in certain
circumstances of property transfer or reconstruction. The "full cash value" is subject to annual
adjustment to reflect increases, not to exceed 2% for any year, or decreases in the consumer
price index or comparable local data, or to reflect reductions in property value caused by damage,
destruction or other factors. Because of the general limitation to 2% per year in increases in full
cash value of properties that remain in the same ownership, the County tax roll does not reflect
values uniformly proportional to actual market values. Moreover, as a result of declines in the
market value of properties in recent years, assessed valuations of many properties in the County
have declined.
-32-
Land Values
The value of land within the Taxing Jurisdictions is an important factor in evaluating the
investment quality of the Bonds. In the event that a property owner defaults in the payment of
Special Tax installment, a District's only remedy is to judicially foreclose on that property.
Prospective purchasers of the Bonds should not assume that the property within the Taxing
Jurisdictions could be sold for the assessed values described in this Official Statement at a
foreclosure sale for delinquent Special Tax installments or for an amount adequate to pay
delinquent Special Tax installments.
The actual market value of the property is subject to future events such as downturn in
the economy, occurrences of certain acts of nature and the decisions of various governmental
agencies as to land use, all of which could adversely impact the value of the land in the Taxing
Jurisdictions which is the security for the Local Obligations, which secure the Bonds. As
discussed herein, many factors could adversely affect property values or prevent or delay further
land development within the Taxing Jurisdictions.
Natural Disasters
The land within the Taxing Jurisdictions, like all California communities, may be subject to
unpredictable seismic activity, fires, floods or other natural disasters. The occurrence of one of these
natural disasters in a Taxing Jurisdiction could result in substantial damage to properties in such
Taxing Jurisdiction which, in turn, could substantially reduce the value of such properties and could
affect the ability or willingness of the property owners to pay their Special Taxes. Any major damage
to structures as a result of natural disasters could result in a greater reliance on undeveloped property
in the payment of Special Taxes.
Hazardous Substances
The value of a parcel may be reduced as a result of the presence of a hazardous
substance. In general, the owners and operators of a parcel may be required by law to remedy
conditions of the parcel relating to releases or threatened releases of hazardous substances. The
Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980,
sometimes referred to as "CERCLA" or the "Superfund Act," is the most well -known and widely
applicable of these laws, but California laws with regard to hazardous substances are also
stringent and similar. Under many of these laws, the owner or operator is obligated to remedy a
hazardous substance condition of property whether or not the owner or operator has anything to
do with creating or handling the hazardous substance. The effect, therefore, should any of the
taxed parcels be affected by a hazardous substance, is to reduce the marketability and value of
the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner,
will become obligated to remedy the condition just as is the seller.
Further, it is possible that liabilities may arise in the future with respect to any of the parcels
resulting from the existence, currently, on the parcel of a substance presently classified as
hazardous but which has not been released or the release of which is not presently threatened,
or may arise in the future resulting from the existence, currently on the parcel of a substance not
presently classified as hazardous but which may in the future be so classified. Further, such
liabilities may arise not simply from the existence of a hazardous substance but from the method
of handling it. All of these possibilities could significantly affect the value of a parcel that is
realizable upon a delinquency.
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None of the Authority, the Districts or the City has knowledge of any hazardous substances
being located on the property within the Taxing Jurisdictions; however, such entities have not
conducted any investigation with respect to hazardous substances within the Taxing Jurisdictions.
Parity Taxes and Special Assessments
Property within the Taxing Jurisdictions is subject to taxes and other charges levied by
several other public agencies. See the discussion of direct and overlapping indebtedness under
the heading Appendix A - "INFORMATION REGARDING THE COMMUNITY FACILITIES
DISTRICTS." Neither the Authority, the Districts nor the City has control over the ability of other
entities and districts to issue indebtedness secured by special taxes or assessments payable from
all or a portion of the property within the Districts.
The Special Taxes and any penalties thereon will constitute a lien against the lots and
parcels of land on which they will be annually imposed until they are paid. Such lien is on a parity
with the lien of all special taxes and special assessments levied by other agencies and is co -equal
to and independent of the lien for general ad valorem property taxes regardless of when they are
imposed upon the same property. The Special Taxes have priority over all existing and future
private liens imposed on the property. See " — Bankruptcy and Foreclosure" below.
None of the Authority, the Districts or the City has control over the ability of other entities
and districts to issue indebtedness secured by special taxes, ad valorem taxes or assessments
payable from all or a portion of the property within the Taxing Jurisdictions. In addition, the
landowners within the Taxing Jurisdictions may, without the consent or knowledge of the
Authority, the Districts or the City, petition other public agencies to issue public indebtedness
secured by special taxes, ad valorem taxes or assessments. Any such special taxes, ad valorem
taxes or assessments may have a lien on such property on a parity with the Special Taxes and
could reduce the estimated value -to -lien ratios for property within the Taxing Jurisdictions
described in this Official Statement.
Payment of the Special Tax is not a Personal Obligation of the Owners
An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather,
the Special Tax is an obligation which is secured only by a lien against the taxable parcel. If the
proceeds received from the sale of a taxable parcel following a Special Tax delinquency are not
sufficient, taking into account other liens imposed by public agencies, to pay the full amount of
the Special Tax delinquency, the District has no recourse against the owner of the parcel.
Disclosures to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Special Tax may be affected
by whether or not the owner was given due notice of the Special Tax authorization at the time the
owner purchased the parcel, was informed of the amount of the Special Tax on the parcel should
the Special Tax be levied at the maximum tax rate and the risk of such a levy and, at the time of
such a levy, has the ability to pay it as well as pay other expenses and obligations. The City has
caused a notice of the Special Tax that may be levied against the taxable parcels in each Tax
Jurisdiction to be recorded in the Office of the Recorder for the County. While title companies
normally refer to such notices in title reports, there can be no guarantee that such reference will
be made or, if made, that a prospective purchaser or lender will consider such Special Tax
obligation in the purchase of a property within the Districts or lending of money thereon.
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The Mello -Roos Act requires the subdivider (or its agent or representative) of a subdivision
to notify a prospective purchaser or long -term lessor of any lot, parcel, or unit subject to a
Mello -Roos special tax of the existence and maximum amount of such special tax using a
statutorily prescribed form. California Civil Code Section 1102.6b requires that in the case of
transfers other than those covered by the above requirement, the seller must at least make a
good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed
by statute. Failure by an owner of the property to comply with the above requirements, or failure
by a purchaser or lessor to consider or understand the nature and existence of the Special Tax,
could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax
when due.
Special Tax Delinquencies
Under provisions of the Mello -Roos Act, the Special Taxes, from which funds necessary
for the payment of principal of and interest on the Local Obligations and, thus, the Bonds are
derived, are customarily billed to the properties within each District on the ad valorem property
tax bills sent by the County to owners of such properties. The Mello -Roos Act currently provides
that such Special Tax installments are due and payable, and bear the same penalties and interest
for non - payment, as do ad valorem property tax installments.
See "SECURITY FOR THE LOCAL OBLIGATIONS — Covenants of the Districts —
Commence Foreclosure Proceedings," for a discussion of the provisions which apply, and
procedures which each District is obligated to follow under the Local Obligation Bond Indentures,
in the event of delinquencies in the payment of Special Taxes. See " — Bankruptcy and
Foreclosure" below for a discussion of limitations on the District's ability to foreclose on the lien
of the Special Taxes in certain circumstances.
Insufficiency of Special Taxes
Notwithstanding that the maximum Special Taxes that may be levied in the Taxing
Jurisdictions exceeds debt service due on the Local Obligations, the Special Taxes collected
could be inadequate to make timely payment of debt service either because of nonpayment or
because property becomes exempt from taxation.
The Rate and Method of Apportionment of Special Tax governing the levy of the Special
Taxes within each Taxing Jurisdiction expressly exempts up to a specified number of acres of
property owned by public entities, homeowner associations, churches and other specified owners.
If for any reason property within a Taxing Jurisdiction becomes exempt from taxation by reason
of ownership by a non - taxable entity such as the federal government, another public agency or
other organization determined to be exempt, subject to the limitations of the maximum authorized
rates, the Special Tax will be reallocated to the remaining taxable properties within such Taxing
Jurisdiction. This could result in certain owners of property paying a greater amount of the Special
Tax and could have an adverse impact upon the ability and willingness of the owners of such
property to pay the Special Tax when due.
The Mello -Roos Act provides that, if any property within a Taxing Jurisdiction not otherwise
exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by
gift or devise, the Special Tax will continue to be levied on and enforceable against the public
entity that acquired the property. In addition, the Mello -Roos Act provides that, if property subject
to the Special Tax is acquired by a public entity through eminent domain proceedings, the
obligation to pay the Special Tax with respect to that property is to be treated as if it were a special
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assessment and be paid from the eminent domain award. The constitutionality and operation of
these provisions of the Mello -Roos Act have not been tested in the courts. Due to problems of
collecting taxes from public agencies, if a substantial portion of land within a Taxing Jurisdiction
became exempt from the Special Tax because of public ownership, or otherwise, the maximum
Special Taxes which could be levied upon the remaining taxable property therein might not be
sufficient to pay principal of and interest on the related Local Obligations when due and a default
could occur with respect to the payment of such principal and interest, and, in turn, a default could
occur in the payment of the principal and interest on the Bonds.
In addition, the Districts' ability to increase Special Tax levies on residential property to
make up for delinquencies for prior fiscal years is limited by Government Code § 53321(d), which
provides that the special tax levied against any parcel for which an occupancy permit for private
residential use has been issued may not be increased as a consequence of delinquency or default
by the owner of any other parcel by more than 10% above the amount that would have been
levied in such fiscal year had there never been any such delinquencies or defaults.
FDIC /Federal Government Interests in Properties
General. The ability of the Districts to foreclose the lien of delinquent unpaid Special Tax
installments may be limited with regard to properties in which the Federal Deposit Insurance
Corporation (the "FDIC "), the Drug Enforcement Agency, the Internal Revenue Service, or other
federal agency has or obtains an interest.
Federal courts have held that, based on the supremacy clause of the United States
Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot
foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal
government interest.
The supremacy clause of the United States Constitution reads as follows: "This
Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and
all Treaties made, or which shall be made, under the Authority of the United States, shall be the
supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in
the Constitution or Laws of any State to the contrary notwithstanding."
This means that, unless Congress has otherwise provided, if a federal governmental entity
owns a parcel that is subject to Special Taxes within the Taxing Jurisdictions but does not pay
taxes and assessments levied on the parcel (including Special Taxes), the applicable state and
local governments cannot foreclose on the parcel to collect the delinquent taxes and
assessments.
Moreover, unless Congress has otherwise provided, if the federal government has a
mortgage interest in the parcel and a District wishes to foreclose on the parcel as a result of
delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold
for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special
Taxes and preserve the federal government's mortgage interest. In Rust v. Johnson (9th Circuit;
1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National
Mortgage Association ( "FNMA ") is a federal instrumentality for purposes of this doctrine, and not
a private entity, and that, as a result, an exercise of state power over a mortgage interest held by
FNMA constitutes an exercise of state power over property of the United States.
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The Districts have not undertaken to determine whether any federal governmental entity
currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the
parcels subject to the Special Taxes within the Taxing Jurisdictions, and therefore expresses no
view concerning the likelihood that the risks described above will materialize while the Bonds are
outstanding.
FDIC. In the event that any financial institution making any loan which is secured by real
property within the Taxing Jurisdictions is taken over by the FDIC, and prior thereto or thereafter
the loan or loans go into default, resulting in ownership of the property by the FDIC, then the ability
of the Districts to collect interest and penalties specified by State law and to foreclose the lien of
delinquent unpaid Special Taxes may be limited.
The FDIC's policy statement regarding the payment of state and local real property taxes
(the "Policy Statement ") provides that property owned by the FDIC is subject to state and local
real property taxes only if those taxes are assessed according to the property's value, and that
the FDIC is immune from real property taxes assessed on any basis other than property value.
According to the Policy Statement, the FDIC will pay its property tax obligations when they
become due and payable and will pay claims for delinquent property taxes as promptly as is
consistent with sound business practice and the orderly administration of the institution's affairs,
unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will pay
claims for interest on delinquent property taxes owed at the rate provided under state law, to the
extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any
amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts.
If any property taxes (including interest) on FDIC -owned property are secured by a valid lien (in
effect before the property became owned by the FDIC), the FDIC will pay those claims. The
Policy Statement further provides that no property of the FDIC is subject to levy, attachment,
garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permit
a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's
consent.
The Policy Statement states that the FDIC generally will not pay non -ad valorem taxes,
including special assessments, on property in which it has a fee interest unless the amount of tax
is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the
validity of any lien to the extent it purports to secure the payment of any such amounts. Special
taxes imposed under the Mello -Roos Act and a special tax formula which determines the special
tax due each year are specifically identified in the Policy Statement as being imposed each year
and therefore covered by the FDIC's federal immunity. The Ninth Circuit issued a ruling on August
28, 2001 in which it determined that the FDIC, as a federal agency, is exempt from Mello -Roos
special taxes.
The Districts are unable to predict what effect the application of the Policy Statement would
have in the event of a delinquency in the payment of Special Taxes on a parcel within the Taxing
Jurisdictions in which the FDIC has or obtains an interest, although prohibiting the lien of the
Special Taxes to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the
number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could
cause a draw on the Reserve Fund and perhaps, ultimately, if enough property were to become
owned by the FDIC, a default in payment on the Bonds.
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Bankruptcy and Foreclosure
In the event of a delinquency in the payment of the Special Taxes, a District, under certain
circumstances, is required to commence enforcement proceedings as described under the
heading "SECURITY FOR THE LOCAL OBLIGATIONS — Covenants of the Districts." However,
prosecution of such proceedings could be delayed due to crowded local court calendars, dilatory
legal tactics, or bankruptcy. It is also possible that a District will be unable to realize proceeds in
an amount sufficient to pay the applicable delinquency. Moreover, the ability of the Districts to
commence and prosecute enforcement proceedings may be limited by bankruptcy, insolvency
and other laws generally affecting creditors' rights (such as the Soldiers' and Sailors' Relief Act
of 1940) and by the laws of the State relating to judicial and non - judicial foreclosure. Although
bankruptcy proceedings would not cause the liens of the Special Taxes to become extinguished,
bankruptcy of a property owner could result in a delay in the enforcement proceedings because
federal bankruptcy laws provide for an automatic stay of foreclosure and tax sale proceedings.
Any such delay could increase the likelihood of delay or default in payment of the principal of and
interest on the Local Obligations.
The various legal opinions delivered in connection with the issuance of the Bonds,
including Bond Counsel's approving legal opinion, are qualified as to the enforceability of the
Bonds, the Indenture, the Local Obligations and the Local Obligation Bond Indentures by
reference to bankruptcy, reorganization, moratorium, insolvency and other laws affecting the
rights of creditors generally or against public corporations such as the Districts.
No Acceleration Provision
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the
event of a payment default or other default under the terms of the Bonds or the Indenture.
Pursuant to the Indenture, an Owner of the Bonds is given the right for the equal benefit and
protection of all owners similarly situated to pursue certain remedies described in Appendix B —
"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — SUMMARY OF AUTHORITY
INDENTURE — EVENTS OF DEFAULT AND REMEDIES."
Limitations on Remedies
Remedies available to the Owners of the Bonds may be limited by a variety of factors and
may be inadequate to assure the timely payment of principal of and interest on the Bonds or to
preserve the exclusion from gross income for federal income tax purposes of interest on the
Bonds.
Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the
Indenture to the extent that enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting
generally the enforcement of creditors' rights, by equitable principles, by the exercise of judicial
discretion and by limitations on remedies against public agencies in the State. The lack of
availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or
modification of the rights of the owners of the Bonds.
Loss of Tax Exemption
As discussed under the caption "LEGAL MATTERS — Tax Matters," interest on the Bonds
could become includable in gross income for purposes of federal income taxation retroactive to
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the date the Bonds were issued, as a result of future acts or omissions of the Authority, the City
or the Districts in violation of covenants in the Indenture or the Local Obligation Bond Indentures,
respectively. Legislative changes have been proposed in Congress, which, if enacted, would
result in additional federal income tax being imposed on certain owners of tax - exempt state or
local obligations, such as the Bonds. The introduction or enactment of any of such changes could
adversely affect the market value or liquidity of the Bonds. Should such an event of taxability
occur, the Bonds are not subject to a special redemption and will remain outstanding until maturity
or until redeemed under one of the other redemption provisions contained in the Indenture.
IRS Audit of Tax - Exempt Bond Issues
The Internal Revenue Service (the "IRS ") has initiated an expanded program for the
auditing of tax - exempt bond issues, including both random and targeted audits. It is possible that
the Bonds will be selected for audit by the IRS. It is also possible that the market value of such
Bonds might be affected as a result of such an audit of such Bonds (or by an audit of similar bonds
or securities).
Impact of Legislative Proposals, Clarifications of the Code and Court Decisions on Tax
Exemption
Future legislative proposals, if enacted into law, clarification of the Code (as defined
herein) or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to
federal income taxation or to be subject to or exempted from state income taxation, or otherwise
prevent Bond owners from realizing the full current benefit of the tax status of such interest.
For example, various proposals have been made in Congress and by the President which,
if enacted, would subject interest on bonds that is otherwise excludable from gross income for
federal income tax purposes, including interest on the Bonds, to a tax payable by certain
bondholders that are individuals, estates or trusts with adjusted gross income in excess of certain
specified thresholds.
The introduction or enactment of any such legislative proposals, clarification of the Code
or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective
purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed
federal or state tax legislation, regulations or litigation.
Limited Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds, or, if a
secondary market exists, that the Bonds can be sold for any particular price. Although the
Authority has committed to provide certain financial information and operating data on an annual
basis, there can be no assurance that such information will be available to Beneficial Owners of
the Bonds on a timely basis. The failure to provide the required annual information does not give
rise to monetary damages but merely an action for specific performance. Occasionally, because
of general market conditions, lack of current information, the absence of a credit rating, or adverse
history or economic prospects connected with a particular issue, secondary marketing practices
in connection with a particular issue are suspended or terminated. Additionally, prices of issues
for which a market is being made will depend upon then prevailing circumstances. Such prices
could be substantially different from the original purchase price.
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Proposition 218
An initiative measure commonly referred to as the "Right to Vote on Taxes Act" (the
"Initiative ") was approved by the voters of the State of California at the November 5, 1996 general
election. The Initiative added Article XIIIC and Article XIIID to the California Constitution.
According to the "Title and Summary" of the Initiative prepared by the California Attorney General,
the Initiative limits "the authority of local governments to impose taxes and property- related
assessments, fees and charges." The provisions of the Initiative continue to be interpreted by
the courts. The Initiative could potentially impact the Special Taxes available to the Districts to
pay the principal of and interest on the Local Obligations as described below.
Among other things, Section 3 of Article XIII states that "... the initiative power shall not
be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment,
fee or charge." The Mello -Roos Act provides for a procedure which includes notice, hearing,
protest and voting requirements to alter the rate and method of apportionment of an existing
special tax. However, the Mello -Roos Act prohibits a legislative body from adopting any resolution
to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any
debt incurred pursuant to the Mello -Roos Act unless such legislative body determines that the
reduction or termination of the special tax would not interfere with the timely retirement of that
debt. On August 1, 1997, a bill was signed into law by the Governor of the State enacting
Government Code Section 5854, which states that:
Section 3 of Article XIIIC of the California Constitution, as adopted at the
November 5, 1996, general election, shall not be construed to mean that any
owner or beneficial owner of a municipal security, purchased before or after that
date, assumes the risk of, or in any way consents to, any action by initiative
measure that constitutes an impairment of contractual rights protected by
Section 10 of Article I of the United States Constitution.
Accordingly, although the matter is not free from doubt, it is likely that the Initiative has not
conferred on the voters the power to repeal or reduce the Special Taxes if such reduction would
interfere with the timely retirement of the Local Obligations.
It may be possible, however, for voters or the City Council of the City, acting as the
legislative body of each District, to reduce the Special Taxes in a manner which does not interfere
with the timely repayment of the Local Obligations, but which does reduce the maximum amount
of Special Taxes that may be levied in any year below the existing levels. Therefore, no
assurance can be given with respect to the levy of Special Taxes for Administrative Expenses.
Furthermore, no assurance can be given with respect to the future levy of the Special Taxes in
amounts greater than the amount necessary for the timely retirement of the Local Obligations.
Nevertheless, to the maximum extent that the law permits it to do so, each District will covenant
in each Local Obligation Bond Indenture executed by it that it will not initiate proceedings under
the Mello -Roos Act to reduce the maximum Special Tax rates in a Taxing Jurisdiction below an
amount equal to 110% of the debt service for the Local Obligations of such Taxing Jurisdiction in
each Bond Year. Each District also will covenant in each Local Obligation Bond Indenture
executed by it that, in the event an initiative is adopted which purports to alter the Rate and Method
for its Taxing Jurisdictions, it will commence and pursue legal action in order to preserve its ability
to comply with the foregoing covenant. However, no assurance can be given as to the
enforceability of the foregoing covenants.
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The interpretation and application of the Initiative will ultimately be determined by the
courts with respect to a number of the matters discussed above. For example, in August 2014, in
City of San Diego. v. Melvin Shapiro, an Appellate Court invalidated an election held by the City
of San Diego to authorize the levying of special taxes on hotels city -wide pursuant to a San Diego
charter ordinance creating a convention center facilities district which specifically defined the
electorate to consist solely of (1) the owners of real property in San Diego on which a hotel is
located, and (2) the lessees of real property owned by a governmental entity on which a hotel is
located. The court held that such landowners and lessees are neither "qualified electors" of the
special tax district for purposes of Articles XIII A, Section 4 of the California Constitution, nor a
proper "electorate" under Article XIIIC, Section 2(d) of the California Constitution. The court
specifically noted that the decision did not require the Court to consider the distinct question of
whether landowner voting to impose special taxes under Section 53326(b) of the Act (which was
the nature of the voter approval through which the Taxing Jurisdictions were formed) violates the
California Constitution in districts that lack sufficient registered voters to conduct an election
among registered voters. Accordingly, this case should have no effect on the levy of the Special
Taxes.
It is not possible at this time to predict with certainty the outcome of such determination or
the timeliness of any remedy afforded by the courts. See "SPECIAL RISK FACTORS —
Limitations on Remedies."
Ballot Initiatives
Articles XIII A, XIII B, XIII C and XIII D, all of which placed certain limitations on the power
of local agencies to tax, collect and expend revenues, were adopted pursuant to measures
qualified for the ballot pursuant to California's constitutional initiative process and the State
Legislature has in the past enacted legislation which has altered the spending limitations or
established minimum funding provisions for particular activities. From time to time, other initiative
measures could be adopted by California voters or legislation enacted by the legislature. The
adoption of any such initiative or legislation might place limitations on the ability of the State, the
City, or the Districts to increase revenues or to increase appropriations or on the ability of the
landowners within the Districts to complete proposed future development.
LEGAL MATTERS
Tax Matters
In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport
Beach, California ( "Bond Counsel "), under existing statutes, regulations, rulings and judicial
decisions, and assuming the accuracy of certain representations and compliance with certain
covenants and requirements described herein, interest on the Bonds is excluded from gross
income for federal income tax purposes and is not an item of tax preference for purposes of
calculating the federal alternative minimum tax imposed on individuals and corporations. In the
further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal
income tax. Bond Counsel notes that, with respect to corporations, interest on the Bonds may be
included as an adjustment in the calculation of alternative minimum taxable income which may
affect the alternative minimum tax liability of such corporations.
The difference between the issue price of a Bond (the first price at which a substantial
amount of the Bonds of the same maturity is to be sold to the public) and the stated redemption
price at maturity with respect to such Bond constitutes original issue discount. Original issue
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discount accrues under a constant yield method, and original issue discount will accrue to a Bond
Owner before receipt of cash attributable to such excludable income. The amount of original
issue discount deemed received by the Bond Owner will increase the Bond Owner's basis in the
Bond. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the
owner of a Bond is excluded from the gross income of such owner for federal income tax
purposes, is not an item of tax preference for purposes of the federal alternative minimum tax
imposed on individuals and corporations, and is exempt from State of California personal income
tax.
Bond Counsel's opinion as to the exclusion from gross income of interest (and original
issue discount) on the Bonds is based upon certain representations of fact and certifications made
by the City and others and is subject to the condition that the Districts comply with all requirements
of the Internal Revenue Code of 1986, as amended (the "Code "), that must be satisfied
subsequent to the issuance of the Bonds to assure that interest (and original issue discount) on
the Bonds will not become includable in gross income for federal income tax purposes. Failure
to comply with such requirements of the Code might cause the interest (and original issue
discount) on the Bonds to be included in gross income for federal income tax purposes retroactive
to the date of issuance of the Bonds. The Districts have covenanted to comply with all such
requirements.
The amount by which a Bond Owner's original basis for determining loss on sale or
exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on
maturity (or on an earlier call date) constitutes amortizable Bond premium, which must be
amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bond
Owner's basis in the applicable Bond (and the amount of tax - exempt interest received), and is
not deductible for federal income tax purposes. The basis reduction as a result of the amortization
of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the
Owner for an amount equal to or less (under certain circumstances) than the original cost of the
Bond to the Owner. Purchasers of the Bonds should consult their own tax advisors as to the
treatment, computation and collateral consequences of amortizable Bond premium.
The IRS has initiated an expanded program for the auditing of tax - exempt bond issues,
including both random and targeted audits. It is possible that the Bonds will be selected for audit
by the IRS. It is also possible that the market value of the Bonds might be affected as a result of
such an audit of the Bonds (or by an audit of other similar bonds). No assurance can be given
that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not
change the Code (or interpretation thereof) subsequent to the issuance of the Bonds to the extent
that it adversely affects the exclusion from gross income of interest (and original issue discount)
on the Bonds or their market value.
SUBSEQUENT TO THE EXECUTION AND DELIVERY OF THE BONDS, THERE MIGHT
BE FEDERAL, STATE OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY
INTERPRETATIONS OF FEDERAL, STATE OR LOCAL LAW) THAT AFFECT THE FEDERAL,
STATE OR LOCAL TAX TREATMENT OF THE INTEREST ON THE BONDS OR THE MARKET
VALUE OF THE BONDS. LEGISLATIVE CHANGES HAVE BEEN PROPOSED IN CONGRESS,
WHICH, IF ENACTED, WOULD RESULT IN ADDITIONAL FEDERAL INCOME TAX BEING
IMPOSED ON CERTAIN OWNERS OF TAX - EXEMPT STATE OR LOCAL OBLIGATIONS,
SUCH AS THE BONDS. THE INTRODUCTION OR ENACTMENT OF ANY OF SUCH
CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE
BONDS. NO ASSURANCE CAN BE GIVEN THAT, SUBSEQUENT TO THE EXECUTION AND
DELIVERY OF THE BONDS, SUCH CHANGES (OR OTHER CHANGES) WILL NOT BE
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INTRODUCED OR ENACTED OR INTERPRETATIONS WILL NOT OCCUR. BEFORE
PURCHASING ANY OF THE BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT
THEIR TAX ADVISORS REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR
REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX
CONSEQUENCES RELATING TO THE BONDS.
Bond Counsel's opinions may be affected by actions taken (or not taken) or events
occurring (or not occurring) after the date of issuance of the Bonds. Bond Counsel has not
undertaken to determine, or to inform any person, whether any such actions or events are taken
or do occur. The Indenture, the Local Obligation Bond Indentures and the Tax Certificate relating
to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond
Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the exclusion
from gross income of interest (and original issue discount) on the Bonds for federal income tax
purposes with respect to any Bond if any such action is taken or omitted based upon the advice
of counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation.
Although Bond Counsel has rendered an opinion that interest (and original issue discount)
on the Bonds is excluded from gross income for federal income tax purposes provided that the
Districts continue to comply with certain requirements of the Code, the ownership of the Bonds
and the accrual or receipt of interest (and original issue discount) with respect to the Bonds may
otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding
any such tax consequences. Accordingly, before purchasing any of the Bonds, all potential
purchasers should consult their tax advisors with respect to collateral tax consequences relating
to the Bonds.
Should interest on the Bonds (including any original issue discount) become includable in
gross income for federal income tax purposes, the Bonds are not subject to early redemption and
will remain outstanding until maturity or until redeemed in accordance with the Indenture.
See Appendix E — "FORM OF BOND COUNSEL OPINION" for a form of the opinion to
be provided by Bond Counsel on the date of issuance of the Bonds.
Absence of Litigation
The Authority. The Authority will certify at the time the Bonds are issued that no litigation
is pending or threatened concerning the validity of the Bonds and that no action, suit or proceeding
is known by the Authority to be pending that would restrain or enjoin the delivery of the Bonds, or
contest or affect the validity of the Bonds or any proceedings of the Authority taken with respect
to the Bonds or the Local Obligations.
The Districts. Each of the Districts will certify at the time the Bonds are issued that no
litigation is pending or threatened concerning the validity the Local Obligations and that no action,
suit or proceeding is known by such District to be pending that would restrain or enjoin the delivery
of the Local Obligations, or contest or affect the validity of the Local Obligations or any
proceedings of such District taken with respect to the Local Obligations.
Legal Opinion
Certain proceedings in connection with the issuance of the Bonds are subject to the
approval as to their legality of Stradling Yocca Carlson & Rauth, a Professional Corporation,
Newport Beach, California, Bond Counsel for the Authority in connection with the issuance of the
-43-
Bonds. The opinion of Bond Counsel approving the validity of the Bonds substantially in the form
attached as Appendix E hereto will be attached to each Bond. Bond Counsel's employment is
limited to a review of legal procedures required for the approval of the Bonds and to rendering an
opinion as to the validity of the Bonds and the exemption of interest on the Bonds from income
taxation. Bond Counsel expresses no opinion to the Owners of the Bonds as to the accuracy,
completeness or fairness of this Official Statement or other offering materials relating to the Bonds
and expressly disclaims any duty to do so.
Payment of the fees of Bond Counsel, Disclosure Counsel and Underwriters' Counsel is
contingent upon issuance of the Bonds.
MISCELLANEOUS
Rating
Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc.
( "Standard & Poor's ") is expected to assign its municipal bond rating of "_"to the Bonds. Such
rating reflects only the views of Standard & Poor's and an explanation of the significance of such
rating may be obtained from Standard & Poor's. There is no assurance that such rating will
continue for any given period of time or that such rating will not be revised downward or withdrawn
entirely by S &P, if in its judgment circumstances so warrant. Any such downward revision or
withdrawal of such rating may have an adverse effect on the market price of the Bonds.
Verification of Mathematical Accuracy
, independent accountants, upon delivery of the Bonds, will deliver a report
on the mathematical accuracy of certain computations, contained in schedules provided to them
which were prepared by the Underwriters, relating to the sufficiency of moneys and securities
deposited into the Escrow Funds to pay, when due, the principal, whether at maturity or upon
prior prepayment, interest and prepayment premium requirements of the Prior Bonds.
The report of will include the statement that the scope of its engagement is
limited to verifying the mathematical accuracy of the computations contained in such schedules
provided to it, and that it has no obligation to update its report because of events occurring, or
data or information coming to its attention, subsequent to the date of its report.
Underwriting
The Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated and Brandis
Tallman LLC (collectively, the "Underwriters ") at a purchase price of $ , (representing
the par amount of the Bonds, less underwriters' discount of $ and plus net original issue
premium of $ ).
The purchase contract relating to the Bonds among the Authority, the Districts and the
Underwriters provides that all Bonds will be purchased if any are purchased, and that the
obligation to make such purchase is subject to certain terms and conditions set forth in said
purchase contract, including, but not limited to, the approval of certain legal matters by counsel.
-44-
Continuing Disclosure
Authority Continuing Disclosure. The Authority will execute a continuing disclosure
certificate in the form attached hereto as Appendix F for the benefit of the Owners and Beneficial
Owners of the Bonds to provide certain financial information and operating data relating to the
Authority and the Taxing Jurisdictions (the "Annual Report") and to provide notices of the
occurrence of certain enumerated events (the "Listed Events "). The Annual Report and notices
of Listed Events will be filed by [Urban Futures, Inc.] as the initial dissemination agent (the
"Dissemination Agent ") on the Electronic Municipal Market Access System of the Municipal
Securities Rulemaking Board ( "EMMA "). The specific nature of the information to be included in
the Annual Reports and the notices of Listed Events is set forth in Appendix F — "FORM OF
CONTINUING DISCLOSURE CERTIFICATE." The Continuing Disclosure Certificate will be
executed and delivered by the Authority in order to assist the Underwriter in complying with SEC
Rule 15c2- 12(b)(5) (the "Rule "). The Annual Reports are to be filed by the Authority no later than
February 15 of each year. The first Annual Report will be due February 1, 2016.
It should be noted that the Authority is required to file certain financial statements with the
Annual Reports. This requirement has been included in the certificate solely to satisfy the
provisions of the Rule. The inclusion of this information does not mean that the Bonds are secured
by any resources or property of the Authority other than as described in this Official Statement.
See "SECURITY FOR THE BONDS," "SECURITY FOR THE LOCAL OBLIGATIONS" and
"SPECIAL RISK FACTORS." It should also be noted that the Listed Events that the Authority has
agreed to report includes items which have absolutely no application whatsoever to the Bonds.
These items have been included in the list solely to satisfy the requirements of the Rule. Thus,
any implication from the inclusion of these items in the list to the contrary notwithstanding, there
are no credit enhancements applicable to the Bonds, and there are no credit or liquidity providers
with respect to the Bonds.
The Continuing Disclosure Certificate will inure solely to the benefit of any Dissemination
Agent, the Underwriters and Owners or Beneficial Owners from time to time of the Bonds. A
default under the Continuing Disclosure Certificate is not a default under the Indenture and the
sole remedy following a default is an action to compel specific performance by the Authority with
the terms of the Continuing Disclosure Certificate.
No Property Owner Continuing Disclosure. None of the property owners in the Taxing
Jurisdictions will provide continuing disclosure.
History of Continuing Disclosure Compliance. The Authority and the City have existing
continuing disclosure undertakings. In the previous five years, the Authority and the City have
failed to make certain required filings under their existing undertakings. Specifically, [TO COME
UPON RECEIPT OF CONTINUING DISCLOSURE AUDIT].
Additional Information
References are made herein to certain documents and reports which are brief summaries
thereof which do not purport to be complete or definitive, and reference is made to such
documents and reports for full and complete statements of the contents thereof.
Any statements in this Official Statement involving matters of opinion, whether or not
expressly so stated, are intended as such and not as representations of fact. This Official
-45-
Statement is not to be construed as a contract or agreement between the Authority and the
purchasers or Owners of any of the Bonds.
The execution and delivery of this Official Statement has been duly authorized by the
Authority and the Districts.
LAKE ELSINORE PUBLIC FINANCING CITY OF LAKE ELSINORE COMMUNITY
AUTHORITY FACILITIES DISTRICT NO. 2003-2
(CANYON HILLS)
13
COMMUNITY FACILITIES DISTRICT NO
2004-3 (ROSETTA CANYON)
By:
COMMUNITY FACILITIES DISTRICT NO.
2005-2 (ALBERHILL RANCH)
By:
COMMUNITY FACILITIES DISTRICT NO.
2006-2 (VISCAYA)
go
By:
COMMUNITY FACILITIES DISTRICT NO.
2004-3 (ROSETTA CANYON)
By:
COMMUNITY FACILITIES DISTRICT NO.
2005-6 (CITY CENTER TOWNHOMES)
in
-46-
APPENDIX A
INFORMATION REGARDING THE COMMUNITY FACILITIES DISTRICTS
CFD NO. 2003 -2 AND IMPROVEMENT AREA B
Location and Description. CFD No. 2003 -2 and Improvement Area B therein were
formed by the City in January, 2004 to finance the acquisition and construction of public streets,
streetscape, park and recreation facilities, storm drain, fire station, and other city facilities,
including water and sewer facilities and fees of the Elsinore Valley Municipal Water District.
Improvement Area B of CFD No. 2003 -2 includes 806 taxable parcels. Improvement Area B of
CFD No. 2003 -2 is 95% developed ([add definition of "developed "]); 700 completed single -
family detached homes have been conveyed to individual homeowners.
Assigned Special Taxes. Table 1 below sets forth the current Assigned Special Taxes
that may be levied on the property within Improvement Area B of CFD No. 2003 -2 in fiscal year
2015 -16 based on the development status within Improvement Area B of CFD No. 2003 -2 as of
December 16, 2014. The Special Taxes in Improvement Area B of CFD No. 2003 -2 may not be
levied after the 2037 -38 fiscal year. The final maturity of the Local Obligations of Improvement
Area B of CFD No. 2003 -2 is September 1, 2036.
A -1
ZONE 2
ZONE 3
TABLE 1
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2003 -2
IMPROVEMENT AREA B
ASSIGNED SPECIAL TAXES
(1) Includes an estimated $55,000 in administrative fees.
Source: Albert A. Webb Associates.
For the complete text of the Rate and Method of Improvement Area B of CFD No. 2003-
2, see Appendix D - "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
EACH TAXING JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of
Improvement Area B of CFD No. 2003 -2 are numerous overlapping local agencies providing
public services. The approximate amount of the direct and overlapping debt secured by a tax or
assessment on the parcels within Improvement Area B of CFD No. 2003 -2 for Fiscal Year 2014-
15 is shown in Table 2 below.
A -2
Projected
Total Projected
Assigned
Fiscal Year
Fiscal Year
Tax
Special
2015-16
2015 -16
Percent
Clas
Residential
No. of
Tax Per
Special Tax
Special Tax
of Zone
Land Use
s
Floor Area
Units
Unit
Levy per Unit
Levy(')
Total
Single Family Unit
D1
Less than 1,175
0
$1,300
$0
$0
0.00%
Single Family Unit
D2
1,175 - 1,324
0
1,415
0
0
0.00
Single Family Unit
D3
1,325 - 1,549
0
1,603
0
0
0.00
Single Family Unit
D4
1,550 - 1,649
27
1,718
1,558
42,063
3.69
Single Family Unit
D5
1,650 - 1,749
15
1,833
1,661
24,921
2.19
Single Family Unit
D6
1,750 - 1,949
192
1,899
1,721
330,468
28.99
Single Family Unit
D7
1,950 - 2,199
28
1,963
1,780
49,835
4.37
Single Family Unit
D8
2,200 - 2,449
98
2,194
1,989
194,929
17.10
Single Family Unit
D9
2,450 - 2,699
52
2,309
2,094
108,873
9.55
Single Family Unit
D10
2,700 - 2,949
40
2,426
2,199
87,979
7.72
2,950 or
Single Family Unit
D11
greater
125
2,656
2,408
300,947
26.40
Apartment Unit
APT1
N/A
0
761
0
0
0.00
Non - Residential
Unit
NR1
N/A
0
6,341
0
0
0.00
577
$1,140,016
100.00%
Single Family Unit
D1
Less than 1,175
0
$1,023
$0
$0
0.00%
Single Family Unit
D2
1,175 - 1,324
0
1,139
0
0
0.00
Single Family Unit
D3
1,325 - 1,549
0
1,327
0
0
0.00
Single Family Unit
D4
1,550 - 1,649
0
1,442
0
0
0.00
Single Family Unit
D5
1,650 - 1,749
3
1,556
1,411
4,232
1.03
Single Family Unit
D6
1,750 - 1,949
28
1,622
1,471
41,175
10.02
Single Family Unit
D7
1,950 -2,199
39
1,669
1,513
59,457
14.47
Single Family Unit
D8
2,200 -2,449
37
1,888
1,712
63,343
15.41
Single Family Unit
D9
2,450 - 2,699
35
1,997
1,811
63,380
15.42
Single Family Unit
D10
2,700 - 2,949
42
2,162
1,960
82,334
20.03
2,950 or
Single Family Unit
D11
greater
45
2,379
2,157
97,063
23.62
Apartment Unit
APT1
N/A
0
761
0
0
0.00
Non - Residential
Unit
NR1
N/A
0
6,341
0
0
0.00
229
$410,984
100.00%
Grand Total
806
$1,551,000
(1) Includes an estimated $55,000 in administrative fees.
Source: Albert A. Webb Associates.
For the complete text of the Rate and Method of Improvement Area B of CFD No. 2003-
2, see Appendix D - "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
EACH TAXING JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of
Improvement Area B of CFD No. 2003 -2 are numerous overlapping local agencies providing
public services. The approximate amount of the direct and overlapping debt secured by a tax or
assessment on the parcels within Improvement Area B of CFD No. 2003 -2 for Fiscal Year 2014-
15 is shown in Table 2 below.
A -2
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Value -To -Lien Ratios. The Authority has obtained the assessed values of all of the
[developed] taxable property in Improvement Area B of CFD No. 2003 -2 (806 parcels in total), as
established by the County Assessor for Fiscal Year 2014 -15, which total is $208,234,239. The
direct and overlapping land secured special tax and assessment bonded indebtedness (excluding
general obligation bonded indebtedness) within Improvement Area B of CFD No. 2003 -2 as of
December 10, 2014 was approximately $36,395,953. The assessed value -to -lien ratio of the
property within Improvement Area B of CFD No. 2003 -2, based on the Fiscal Year 2014 -15
assessed values, the aggregate principal amount of the CFD No. 2003 -2 Bonds and the estimated
direct and overlapping land secured special tax and assessment bonded indebtedness (excluding
general obligation bonded indebtedness) within Improvement Area B of CFD No. 2003 -2 equals
approximately 6.18- to -1.*
Value -to -lien Ratios by Category. The following table summarizes the assessed value -
to -lien ratios within Improvement Area B of CFD No. 2003 -2 by value -to -lien category.
TABLE 3
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2003 -2
IMPROVEMENT AREA B
DISTRIBUTION OF ASSESSED VALUE -TO- SPECIAL TAX BURDEN RATIOS
* Preliminary; subject to change.
O) Special Tax Burden includes Outstanding Overlapping Land Secured Debt.
(2) Fiscal year 2014 -15 assessed value.
(3) Includes an estimated $55,000 in administrative fees.
Source: Albert A. Webb Associates.
Historical Assessed Valuation. The following table represents the historical assessed
valuation of the taxable property in Improvement Area B of CFD No. 2003 -2 as shown on the
County Assessor's roll for fiscal years 2010 -11 through 2014 -15.
Preliminary, subject to change.
A -4
Total
Estimated Fiscal
Assessed Value to
No. of
Percent of
Assessed
Percent of
Year 2015 -16
Percent
Special Tax Burden(')*
Parcels
Total
Value(2)
Total
Special Tax Levy(3)
of Total
Less than 1
10
1.24%
$39,059
0.02%
$17,049
1.10%
Between 1 - 2.99:1
56
6.95
4,114,130
1.98
93,590
6.03
Between 3 - 4.99:1
62
7.69
13,092,847
6.29
132,230
8.53
Between 5 - 6.99:1
412
51.12
102,534,691
49.24
787,657
50.78
Between 7 - 8.99:1
257
31.89
85,402,409
41.01
506,064
32.63
Between 9 - 9.99:1
9
1.12
3,051,103
1.47
14,411
0.93
Total
806
100.00%
$208,234,239
100.00%
$1,551,000
100.00%
* Preliminary; subject to change.
O) Special Tax Burden includes Outstanding Overlapping Land Secured Debt.
(2) Fiscal year 2014 -15 assessed value.
(3) Includes an estimated $55,000 in administrative fees.
Source: Albert A. Webb Associates.
Historical Assessed Valuation. The following table represents the historical assessed
valuation of the taxable property in Improvement Area B of CFD No. 2003 -2 as shown on the
County Assessor's roll for fiscal years 2010 -11 through 2014 -15.
Preliminary, subject to change.
A -4
TABLE 4
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2003 -2
IMPROVEMENT AREA B
ASSESSED VALUATION HISTORY
(FISCAL YEARS 2010 -11 THROUGH 2014 -15)
Fiscal Year
Land Assessed
Valuation
2010 -11
$40,056,993
2011 -12
43,811,127
2012 -13
44,392,880
2013 -14
48,115,560
2014 -15
60,369,377
Source: Albert A. Webb Associates
Structure Assessed
Valuation
$64,041,242
69,267,792
74,539,980
94,056,716
147, 864, 862
Total Assessed
Valuation
$104,098,235
113,078,919
118,932,860
142,172,276
208,234,239
Estimated Value -to -Lien Ratios for Top Ten Taxpayers. The following table
summarizes the assessed value -to -lien ratios within Improvement Area B of CFD No. 2003 -2 for
its top ten taxpayers.
TABLE 5
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2003 -2
IMPROVEMENT AREA B
ESTIMATED VALUE -TO -LIEN FOR TOP 10 TAXPAYERS
* Preliminary; subject to change.
Excludes General Obligation Bonded indebtedness applicable within Improvement Area B of CFD No. 2003 -2.
Source: Albert A. Webb Associates.
[Add description of Richmond American development status]
A -5
Percent
of
Projected
Total
Estimated
Projected
Fiscal
Overlapping
Fiscal
Year
Fiscal Year
Land
Value -
Year 2015-
2015 -16
2014 -15
Secured
to-
16 Special
Special
Assessed
Bonded
Lien
Property Owner
Parcels
Tax
Tax
Value
Debt(')*
Ratio*
RICHMOND AMERICAN HOMES OF MARYLAND INC
71
$122,409
7.89%
$8,676,996
$2,491,754
3.48:1
PARDEE HOMES
35
59,262
3.82
5,493,209
1,206,329
4.55:1
FLYNN FRANK F
4
9,422
0.61
988,694
191,798
5.15:1
LASH JON EDWARD
2
3,442
0.22
454,592
70,073
6.49:1
11-12 PROP WEST
2
3,442
0.22
472,571
70,073
6.74:1
DUDZIAK EDWARD D
2
4,815
0.31
772,789
98,017
7.88:1
INDIVIDUAL OWNER
1
2,408
0.16
256,156
49,008
5.23:1
INDIVIDUAL OWNER
1
2,094
0.13
326,000
42,619
7.65:1
INDIVIDUAL OWNER
1
2,094
0.13
310,000
42,619
7.27:1
INDIVIDUAL OWNER
1
2,408
0.16
288,881
49,008
5.89:1
Subtotal
120
211,796
13.66
18,039,888
4,311,299
4.18:1
All Others
686
1,339,204
86.34
190,194,351
27,260,703
6.98:1
Totals
806
$1,551,000
100.00%
$208,234,239
$31,572,002
6.60:1
* Preliminary; subject to change.
Excludes General Obligation Bonded indebtedness applicable within Improvement Area B of CFD No. 2003 -2.
Source: Albert A. Webb Associates.
[Add description of Richmond American development status]
A -5
Delinquencies. The following table is a summary of Special Tax levies, collections and
delinquency rates in Improvement Area B of CFD No. 2003 -2 for Fiscal Years 2010 -11 through
the first installment of Fiscal Year 2014 -15.
TABLE 6
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2003 -2
IMPROVEMENT AREA B
SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES
FISCAL YEARS 2010 -11 THROUGH 2014 -15
Delinquencies at Fiscal Year End (1)(3) Delinquencies as of November 19, 2014 (2)
Fiscal
Amount Parcels Parcels Amount Percent Parcels Amount
Percent
Year
Levied Levied Delinquent Delinquent Delinquent Delinquent Delinquent Delinquent
2010 -11
$1,314,879 655 9 $19,441 1.48% 0 $0
0.00%
2011 -12
1,333,116 655 11 29,556 2.22 0 0
0.00
2012 -13
1,309,063 655 5 8,760 0.67 2 3,646
0.28
2013 -14
1,462,764 724 18 32,534 2.22 4 7,986
0.55
2014 -15
1,615,065 772 N/A N/A N/A N/A N/A
N/A
As of fiscal year end of year levied as provided by the continuing disclosure reports.
(2) Delinquency data as of November 19, 2014 provided by the County and Albert A. Webb Associates. Information
for fiscal year 2010 -2011 through fiscal year 2013 -14 for Improvement Area B of CFD No. 2003 -2 provided by the
continuing disclosure reports provided as of June 30 of fiscal year levied.
(3) Fiscal Year 2014 -15 fiscal year end data is not yet available.
Source: The Riverside County Assessor's Office; the City and Albert A. Webb Associates (as noted).
A -6
CFD NO. 2004 -3 AND IMPROVEMENT AREA
Location and Description. CFD No. 2004 -3 and Improvement Area 1 therein were
formed by the City in March, 2005 to finance the acquisition and construction of public streets,
streetscape, storm drain, sewer, domestic water, reclaimed water, fire station and other city
facilities, including City fees and fees of the Elsinore Valley Municipal Water District. Improvement
Area 1 of CFD No. 2004 -3 includes 509 taxable parcels. Improvement Area 1 of CFD No. 2004-
2 is 100% developed [define]; 497 completed single - family detached homes have been conveyed
to individual homeowners.
Assigned Special Taxes. Table 7 below sets forth the current Assigned Special Taxes
that may be levied on the property within Improvement Area 1 of CFD No. 2004 -3 in fiscal year
2015 -16 based on the development status within Improvement Area 1 of CFD No. 2004 -3 as of
December 16, 2014. The Special Taxes in Improvement Area 1 of CFD No. 2004 -3 may not be
levied after the 2045 -46 fiscal year. The final maturity of the Local Obligations of Improvement
Area B of CFD No. 2003 -2 is September 1, 2035.
IGdI
ZONE 1
ZONE 2
TABLE 7
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2004 -3
IMPROVEMENT AREA 1
ASSIGNED SPECIAL TAXES
(1) Includes an estimated $55,000 in administrative fees
Source: Albert A. Webb Associates.
For the complete text of the Rate and Method of Improvement Area 1 of CFD No. 2004 -3,
see Appendix D - "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
EACH TAXING JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of
Improvement Area 1 of CFD No. 2004 -3 are numerous overlapping local agencies providing
public services. The approximate amount of the direct and overlapping debt secured by a tax or
assessment on the parcels within Improvement Area 1 of CFD No. 2004 -3 for Fiscal Year 2014-
15 is shown in Table 8 below.
_:
Projected
Assigned
Fiscal Year
Total Projected
Special
2015-16
Fiscal Year
Percent
Residential
No. of
Tax Per
Special Tax
2015 -16 Special
of Zone
Land Use
Tax Class
Floor Area
Units
Unit
Levy per Unit
Tax Levy0)
Total
Single Family Unit
D1
Less than 1,700
18
$2,519
$2,309
$41,562
6.02%
Single Family Unit
D2
1,700 - 1,950
0
2,585
0
0
0.00
Single Family Unit
D3
1,951 -2,200
17
2,651
2,429
41,299
5.98
Single Family Unit
D4
2,201 -2,450
41
2,851
2,612
107,110
15.52
Single Family Unit
D5
2,451 - 2,700
1
2,928
2,683
2,683
0.39
Single Family Unit
D6
2,701 - 2,950
111
3,004
2,753
305,626
44.27
Single Family Unit
D7
2,951 -3,200
66
3,175
2,910
192,078
27.82
Single Family Unit
D8
3,200 - 3,450
0
3,285
0
0
0.00
Single Family Unit
D9
3,451 - 3,700
0
3,394
0
0
0.00
Single Family Unit
D10
3,701 - 3,950
0
3,504
0
0
0.00
Single Family Unit
Dl l
3,950 or greater
0
3,613
0
0
0.00
Non - Residential
Unit
NR1
N/A
0
17,477
0
0
0.00
254
$690,358
100.00%
Single Family Unit
D1
Less than 1,700
0
$2,839
$0
$0
0.00%
Single Family Unit
D2
1,700 - 1,950
0
2,951
0
0
0.00
Single Family Unit
D3
1,951 -2,200
25
3,050
2,795
69,881
8.60
Single Family Unit
D4
2,201 -2,450
23
3,133
2,871
66,032
8.13
Single Family Unit
D5
2,451 - 2,700
56
3,280
3,006
168,348
20.72
Single Family Unit
D6
2,701 - 2,950
45
3,368
3,087
138,901
17.09
Single Family Unit
D7
2,951 - 3,200
0
3,510
3,510
0
0.00
Single Family Unit
D8
3,200 - 3,450
40
3,652
3,347
133,863
16.47
Single Family Unit
D9
3,451 - 3,700
31
3,822
3,503
108,596
13.36
Single Family Unit
D10
3,701 - 3,950
0
3,890
0
0
0.00
Single Family Unit
D11
3,950 or greater
35
3,958
3,628
126,971
15.63
Non - Residential
Unit
NR1
N/A
0
17,118
0
0
0.00
255
$812,592
100.00%
Grand Total
509
$1,502,950
(1) Includes an estimated $55,000 in administrative fees
Source: Albert A. Webb Associates.
For the complete text of the Rate and Method of Improvement Area 1 of CFD No. 2004 -3,
see Appendix D - "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
EACH TAXING JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of
Improvement Area 1 of CFD No. 2004 -3 are numerous overlapping local agencies providing
public services. The approximate amount of the direct and overlapping debt secured by a tax or
assessment on the parcels within Improvement Area 1 of CFD No. 2004 -3 for Fiscal Year 2014-
15 is shown in Table 8 below.
_:
TABLE 8
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2004 -3
IMPROVEMENT AREA 1
DIRECT AND OVERLAPPING DEBT
AS OF DECEMBER 10, 2014
I. Assessed Value $122,670,463
2014 -2015 Equalized Roll Assessed Valuation
Land Secured Bond Indebtedness
Outstanding Direct and
Parcels in
Amount
Overlapping Bonded Debt
Type
Issued
Outstanding
%Applicable
CFD 2004 -3 IA 1(3)
Applicable
LAKE ELSINORE USD CFD 2005 -1 IAA
CFD
$6,480,000
$6,125,000
100%
509
$6,125,000
CFD 98 -1 TEMESCAL VALLEY PROJECT
CFD
25,890,013
24,476,459
6
509
1,535,647
RIVERSIDE COUNTY FLOOD CONTROL BENEFIT
ASSESSMENT ZONE NO. 3
AD
5,715,000
1,705,000
0
144
7,763
CFD 2004 -3 IMP AREA 1
CFD
22,635,000
22,000,000
100
509
22,000,000
TOTAL LAND SECURED BONDED DEBT0)
$29,668,410
Authorized but Unissued Direct and
Parcels in
Amount
Overlapping Indebtedness
Type
Authorized
Unissued
% Applicable
CFD 2004 -3 IA 1 3
Applicable
LAKE ELSINORE USD CFD 2005 -1 IA A
CFD
$10,500,000
$4,020,000
100%
509
$4,020,000
CFD 98 -1 TEMESCAL VALLEY PROJECT
CFD
25,890,013
0
6
509
0
RIVERSIDE COUNTY FLOOD CONTROL BENEFIT
ASSESSMENT ZONE NO, 3
AD
8,000,000
2,285,000
0
144
10,403
CFD 2004 -3 IMP AREA 1
CFD
23,000,000
0 (Z)
100
509
0
TOTAL UNISSUED LAND SECURED
INDEBTEDNESS O)
$10,403
TOTAL OUTSTANDING AND UNISSUED LAND
SECURED INDEBTEDNESS
$29,678,813
III. General Obligation Bond Indebtedness
Outstanding Direct and
Parcels in
Amount
Overlapping Bonded Debt
Type
Issued
Outstanding
%Applicable
CFD 2004 -31A 1(3)
Applicable
METROPOLITAN WATER DEBT SERVICE
GO
$850,000,000
$132,275,000
0.005%
509
$7,009
TOTAL GENERAL OBLIGATION BONDED DEBT
$7,009
Authorized but Unissued Direct and
Parcels in
Amount
Overlapping Indebtedness
Tvpe
Authorized
Unissued
%Applicable
CFD 2004 -3 IA 10)
Applicable
METROPOLITAN WATER DEBT SERVICE
GO
$850,000,000
$0
0.005%
509
$0
TOTAL UNISSUED GENERAL OBLIGATION
INDEBTEDNESS M
$0
TOTAL OUTSTANDING AND UNISSUED GENERAL
OBLIGATION INDEBTEDNESS
$7,009
TOTAL OF ALL OUTSTANDING DIRECT AND
OVERLAPPING BONDED DEBT $29,675,419
TOTAL OF ALL OUTSTANDING AND UNISSUED
DIRECT AND OVERLAPPING INDEBTEDNESS $29,685,822
IV. Ratios to 2014 -2015 Assessed Valuation
Outstanding Land Secured Bonded Debt* 4.13:1
Total Outstanding Bonded Debt* 4.131
" Preliminary; subject to change.
0) Albert A. Webb Associates is not aware of any additional bonded debt for parcels in Improvement Area 1 of CFD No. 2004 -3 for
fiscal year 2014 -2015.
(2) Additional bonds will be issued for refunding only.
(3) All parcels have subdivided into 509 individual parcels for fiscal year 2014 -15.
Source: Albert A. Webb Associates.
A -9
Value -To -Lien Ratios. The Authority has obtained the assessed values of all of the
taxable property in Improvement Area 1 of CFD No. 2004 -3 (509 parcels in total), as established
by the County Assessor for Fiscal Year 2014 -15, which total is $122,670,463. The direct and
overlapping land secured special tax and assessment bonded indebtedness (excluding general
obligation bonded indebtedness) within Improvement Area 1 of CFD No. 2004 -3 as of December
10, 2014 was approximately $29,685,822. The assessed value -to -lien ratio of the property within
Improvement Area 1 of CFD No. 2004 -3, based on the Fiscal Year 2014 -15 assessed values, the
aggregate principal amount of the CFD No. 2004 -3 Bonds and the estimated direct and
overlapping land secured special tax and assessment bonded indebtedness (excluding general
obligation bonded indebtedness) within Improvement Area 1 of CFD No. 2004 -3 equals
approximately 4.13- to -1.*
Value -to -lien Ratios by Category. The following table summarizes the assessed value -
to -lien ratios within Improvement Area 1 of CFD No. 2004 -3 by value -to -lien category.
TABLE 9
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2004 -3
IMPROVEMENT AREA 1
DISTRIBUTION OF ASSESSED VALUE -TO- SPECIAL TAX BURDEN RATIOS
Assessed Value to
Total
Estimated Fiscal
Special Tax
No. of
Percent of
Assessed
Percent
Year 2015 -16
Percent of
Burden(')
Parcels
Total
Value(')
of Total
Special Tax Levy(3)
Total
Between 1 - 1.99:1
12
2.36%
$819,421
0.67%
$35,316
2.35%
Between 2 - 2.99:2
1
0.20
196,522
0.16
3,347
0.22
Between 3 - 3.99:1
222
43.61
45,883,558
37.40
645,539
42.95
Between 4 - 4.99:1
203
39.88
54,346,295
44.30
611,429
40.68
Between 5 - 5.99:1
71
13.95
21,424,667
17.47
207,318
13.79
Total
509
100.00%
$122,670,463
100.00%
$1,502,950
100.00%
* Preliminary; subject to change.
0) Special Tax Burden includes outstanding overlapping land secured debt.
(2) Fiscal year 2014 -15 assessed value.
(3) Includes an estimated $55,000 in administrative fees.
Source: Albert A. Webb Associates.
Preliminary, subject to change.
A -10
Historical Assessed Valuation. The following table represents the historical assessed
valuation of the taxable property in Improvement Area 1 of CFD No. 2004 -3 as shown on the
County Assessor's roll for fiscal years 2010 -11 through 2014 -15.
TABLE 10
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2004 -3
IMPROVEMENT AREA 1
ASSESSED VALUATION HISTORY
(FISCAL YEARS 2010 -11 THROUGH 2014 -15)
Land Assessed Structure Assessed Total Assessed
Fiscal Year Valuation Valuation Valuation
2010 -11
$32,391,828
2011 -12
32,800,827
2012 -13
33,113,773
2013 -14
34,658,022
2014 -15
37,808,143
Source: Albert A. Webb Associates.
$71,727,320
73,469,492
72,628,874
76,047,795
84,862,320
A -11
$104,119,148
106,270,319
105,742,647
110,705,817
122,670,463
Estimated Value -to -Lien Ratios for Top Ten Taxpayers. The following table
summarizes the assessed value -to -lien ratios within Improvement Area 1 of CFD No. 2004 -3 for
its top ten taxpayers.
TABLE 11
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2004 -3
IMPROVEMENT AREA 1
ESTIMATED VALUE -TO -LIEN FOR TOP 10 TAXPAYERS
* Preliminary; subject to change.
0) Excludes General Obligation Bonded indebtedness applicable within Improvement Area 1 of CFD No. 2004 -3.
Source: Albert A. Webb Associates.
A -12
Percent
of
Projected
Total
Projected
Fiscal
Estimated
Fiscal
Year
Fiscal Year
Overlapping
Year 2015-
2015 -16
2014 -15
Land Secured
Value -to-
16 Special
Special
Assessed
Bonded
Lien
Property Owner
Parcels
Tax
Tax
Value
Debt')
Ratio`
RICHMOND AMERICAN HOMES OF
MARYLAND INC
12
$35,316
2.35%
$819,421
$697,149
1.18:1
THR CALIF
4
11,125
0.74
841,298
219,617
3.83:1
20131 IH BORROWER
2
5,840
0.39
409,929
115,284
3.56:1
BUTTAR SURJIT
2
5,507
0.37
536,115
108,704
4.93:1
EIDEH FERAS
2
6,381
0.42
688,000
125,964
5.46:1
WU PO YUN
2
5,549
0.37
416,946
109,531
3.81:1
INDIVIDUAL OWNER
1
3,006
0.20
223,197
59,343
3.76:1
INDIVIDUAL OWNER
1
2,795
0.19
194,337
55,179
3.52:1
INDIVIDUAL OWNER
1
3,087
0.21
245,603
60,932
4.03:1
INDIVIDUAL OWNER
1
2,910
0.19
236,356
57,449
4.11:1
Subtotal
28
81,517
5.42
4,611,202
1,609,152
2.87:1
All Others
499
1,421,433
94.58
118,059,261
28,059,258
4.21:1
Totals
509
$1,502,950
100.00%
$122,670,463
$29,668,410
4.13:1
* Preliminary; subject to change.
0) Excludes General Obligation Bonded indebtedness applicable within Improvement Area 1 of CFD No. 2004 -3.
Source: Albert A. Webb Associates.
A -12
Delinquencies. The following table is a summary of Special Tax levies, collections and
delinquency rates in Improvement Area B of CFD No. 2003 -2 for Fiscal Years 2010 -11 through
the first installment of Fiscal Year 2014 -15.
TABLE 12
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2004 -3
IMPROVEMENT AREA 1
SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES
FISCAL YEARS 2010 -11 THROUGH 2014 -15
Delinquencies as of November 19, 2014
Parcels
Amount
Percent
Delinquencies at Fiscal Year End (1)(3)
Fiscal
Amount
Parcels
Parcels
Amount
Percent
Year
Levied
Levied
Delinquent
Delinquent
Delinquent
2010 -11
$1,418,597
509
11
$39,493
2.78%
2011 -12
1,477,910
509
16
55,140
3.73
2012 -13
1,477,914
509
10
37,562
2.54
2013 -14
1,505,271
509
15
28,068
1.86
2014 -15
1,550,601
509
N/A
N/A
N/A
Delinquencies as of November 19, 2014
Parcels
Amount
Percent
Delinquent
Delinquent
Delinquent
0
$0
0.00%
0
0
0.00
1
2,708
0.18
4
8,266
0.55
N/A
N/A
N/A
(1) As of fiscal year end of year levied provided by the continuing disclosure reports.
(2) Delinquency data as of November 19, 2014 provided by the County and Albert A. Webb Associates. Information
for Fiscal Year 2010 -2011 through Fiscal Year 2013 -14 for Improvement Area 1 of CFD 2004 -3 provided by the
continuing disclosure reports provided as of June 30 of fiscal year end levied.
(3) Fiscal Year 2014 -15 data is not yet available.
Source: The Riverside County Assessor's Office; the City and Albert A. Webb Associates (as noted).
A -13
CFD NO. 2004 -3 AND IMPROVEMENT AREA 2
Location and Description. CFD No. 2004 -3 and Improvement Area 2 therein were
formed by the City in March, 2005 to finance the acquisition and construction of public streets,
streetscape, storm drain, sewer, domestic water, reclaimed water, fire station and other city
facilities, including City fees and fees of the Elsinore Valley Municipal Water District. Improvement
Area 2 of CFD No. 2004 -3 includes 562 taxable parcels. Improvement Area 2 of CFD No. 2004-
3 is 100% developed with 512 completed single - family detached homes which had been
conveyed to individual homeowners.
Assigned Special Taxes. Table 13 below sets forth the current Assigned Special Taxes
that may be levied on the property within Improvement Area 2 of CFD No. 2004 -3 in fiscal year
2015 -16 based on the development status within Improvement Area 2 of CFD No. 2004 -3 as of
December 16, 2014. The Special Taxes in Improvement Area 2 of CFD No. 2004 -3 may not be
levied after the 2045 -46 fiscal year. The final maturity of the Local Obligations of Improvement
Area 2 of CFD No. 2004 -3 is September 1, 2037.
A -14
TABLE 13
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2004 -3
IMPROVEMENT AREA 2
ASSIGNED SPECIAL TAXES
(1) One parcel (APN 349550003 -1) prepaid Special Taxes on November 4, 2012
(2) Includes an estimated $55,000 in administrative fees.
Source: Albert A. Webb Associates.
For the complete text of the Rate and Method of Improvement Area 2 of CFD No. 2004 -3,
see Appendix D - "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
EACH TAXING JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of
Improvement Area 2 of CFD No. 2004 -3 are numerous overlapping local agencies providing
public services. The approximate amount of the direct and overlapping debt secured by a tax or
assessment on the parcels within Improvement Area 2 of CFD No. 2004 -3 for Fiscal Year 2014-
15 is shown in Table 14 below.
A -15
Total
Projected
Projected
Fiscal
Fiscal
Year
Year
Assigned
2015-16
2015 -16
Special
Special
Special
Percent
Tax
Residential
No. of
Tax Per
Tax Levy
Tax
of Zone
ZONE 1 Land Use
Class
Floor Area
Units0)
Unit
per Unit
Levy(z)
Total
Single Family Unit
D1
Less than 1,700
0
$2,797
$0
$0
0.00%
Single Family Unit
D2
1,700 - 1,950
0
2,868
0
0
0.00
Single Family Unit
D3
1,951 -2,200
23
2,940
2,143
49,297
7.44
Single Family Unit
D4
2,201 -2,450
34
3,158
2,302
78,274
11.81
Single Family Unit
D5
2,451 - 2,700
44
3,242
2,363
103,977
15.69
Single Family Unit
D6
2,701 - 2,950
93
3,325
2,424
225,439
34.03
Single Family Unit
D7
2,951 - 3,200
56
3,512
2,560
143,355
21.64
Single Family Unit
D8
3,200 - 3,450
8
3,631
2,647
21,174
3.20
Single Family Unit
D9
3,451 -3,700
15
3,750
2,734
41,005
6.19
Single Family Unit
D10
3,701 - 3,950
0
3,869
0
0
0.00
Single Family Unit
D11
3,950 or greater
0
3,988
0
0
0.00
Non - Residential Unit
NR1
N/A
0
21,719
0
0
0.00
273
$662,521
100.00%
ZONE 2 Single Family Unit
D1
Less than 1,700
0
3,158
$0
$0
0.00%
Single Family Unit
D2
1,700 - 1,950
0
3,277
0
0
0.00
Single Family Unit
D3
1,951 -2,200
0
3,377
0
0
0.00
Single Family Unit
D4
2,201 - 2,450
21
3,467
2,527
53,075
6.32
Single Family Unit
D5
2,451 -2,700
27
3,627
2,644
71,399
8.50
Single Family Unit
D6
2,701 - 2,950
44
3,724
2,715
119,453
14.22
Single Family Unit
D7
2,951 - 3,200
1
3,867
2,819
2,819
0.34
Single Family Unit
D8
3,200 - 3,450
86
4,011
2,924
251,480
29.94
Single Family Unit
D9
3,451 - 3,700
64
4,198
3,060
195,857
23.32
Single Family Unit
D10
3,701 - 3,950
0
4,272
0
0
0.00
Single Family Unit
D11
3,950 or greater
46
4,346
3,168
145,747
17.35
Non - Residential Unit
NR1
N/A
0
20,423
0
0
0.00
289
$839,829
100.00%
Grand Total
562
$1,502,350
(1) One parcel (APN 349550003 -1) prepaid Special Taxes on November 4, 2012
(2) Includes an estimated $55,000 in administrative fees.
Source: Albert A. Webb Associates.
For the complete text of the Rate and Method of Improvement Area 2 of CFD No. 2004 -3,
see Appendix D - "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
EACH TAXING JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of
Improvement Area 2 of CFD No. 2004 -3 are numerous overlapping local agencies providing
public services. The approximate amount of the direct and overlapping debt secured by a tax or
assessment on the parcels within Improvement Area 2 of CFD No. 2004 -3 for Fiscal Year 2014-
15 is shown in Table 14 below.
A -15
TABLE 14
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2004 -3
IMPROVEMENT AREA 2
DIRECT AND OVERLAPPING DEBT
AS OF DECEMBER 10, 2014
I. Assessed Value
2014 -2015 Equalized Roll Assessed Valuation
Land Secured Bond Indebtedness
Outstanding Direct and
Overlapping Bonded Debt
LAKE ELSINORE USD CFD 2005 -1 IA B
CFD 98 -1 TEMESCAL VALLEY PROJECT
RIVERSIDE COUNTY FLOOD CONTROL BENEFIT
ASSESSMENT ZONE NO. 3
CFD 2004 -3 IMP AREA 2
TOTAL LAND SECURED BONDED DEBTM
Authorized but Unissued Direct and
Overlapping Indebtedness
LAKE ELSINORE USD CFD 2005 -1 IA B
CFD 98 -1 TEMESCAL VALLEY PROJECT
RIVERSIDE COUNTY FLOOD CONTROL BENEFIT
ASSESSMENT ZONE NO, 3
CFD 2004 -3 IMP AREA 2
TOTAL UNISSUED LAND SECURED INDEBTEDNESS M
TOTAL OUTSTANDING AND UNISSUED LAND
SECUREDINDEBTEDNESS
III. General Obligation Bond Indebtedness
Outstanding Direct and
Overlapping Bonded Debt
METROPOLITAN WATER DEBT SERVICE
TOTAL GENERAL OBLIGATION BONDED DEBT (1)
Authorized but Unissued Direct and
Overlapping Indebtedness
METROPOLITAN WATER DEBT SERVICE
TOTAL UNISSUED GENERAL OBLIGATION
INDEBTEDNESSO)
TOTAL OUTSTANDING AND UNISSUED GENERAL
OBLIGATION INDEBTEDNESS
Tvpe Issued Outstanding
GO $850,000,000 $132,275,000
Type Authorized Unissued
GO $850,000,000 $0
Parcels in
% Applicable CFD 2004 -3 IA 2(3)
0.006% 562
Parcels in
%Applicable CFD 2004 -3 IA 2(3)
0.006% 562
$142,339,275
Amount
Applicable
$0
1,499, 300
28,288
24, 715, 000
$26,242,588
Amount
Applicable
$11,500,000
0
37,910
0
$37,910
$26,280,498
Amount
Applicable
$8,133
$8,133
Amount
Applicable
$0
$0
$8,133
TOTAL OF ALL OUTSTANDING DIRECT AND
OVERLAPPING BONDED DEBT $26,260,721
TOTAL OF ALL OUTSTANDING AND UNISSUED DIRECT
AND OVERLAPPING INDEBTEDNESS $26,288,631
IV. Ratios to 2014 -2015 Assessed Valuation
Outstanding Land Secured Bonded Debt" 5.42:1
Total Outstanding Bonded Debt` 5.42:1
Preliminary; subject to change.
0) Albert A. Webb Associates is not aware of any additional bonded debt for parcels in Improvement Area 2 of CFD No. 2004 -3 for fiscal
year 2014 -2015.
(2)Additional bonds will be issued for refunding only.
(3) All parcels have subdivided into 563 individual parcels for fiscal year 2014 -15 for Improvement Area 2. One parcel (APN 349550003-
1) prepaid Special Taxes on November 4, 2012.
Source: Albert A. Webb Associates.
Value -To -Lien Ratios. The Authority has obtained the assessed values of all of the
taxable property in Improvement Area B of CFD No. 2004 -3 (562 parcels in total), as established
A -16
Parcels in
Type
Issued
Outstanding
% Applicable
CFD 2004 -3 IA 20)
CFD
$0
$0
100%
562
CFD
25,890,013
24,476,459
6
495
AD
5,715,000
1,705,000
2
538
CFD
23,460,000
24,715,000
100
562
Parcels in
Type
Authorized
Unissued
%Applicable
CFD 2004 -3 IA 2(3)
CFD
$11,500,000
$11,500,000
100%
562
CFD
25,890,013
0
6
495
AD
8,000,000
2,285,000
2
538
CFD
33,000,000
0(2)
100
562
Tvpe Issued Outstanding
GO $850,000,000 $132,275,000
Type Authorized Unissued
GO $850,000,000 $0
Parcels in
% Applicable CFD 2004 -3 IA 2(3)
0.006% 562
Parcels in
%Applicable CFD 2004 -3 IA 2(3)
0.006% 562
$142,339,275
Amount
Applicable
$0
1,499, 300
28,288
24, 715, 000
$26,242,588
Amount
Applicable
$11,500,000
0
37,910
0
$37,910
$26,280,498
Amount
Applicable
$8,133
$8,133
Amount
Applicable
$0
$0
$8,133
TOTAL OF ALL OUTSTANDING DIRECT AND
OVERLAPPING BONDED DEBT $26,260,721
TOTAL OF ALL OUTSTANDING AND UNISSUED DIRECT
AND OVERLAPPING INDEBTEDNESS $26,288,631
IV. Ratios to 2014 -2015 Assessed Valuation
Outstanding Land Secured Bonded Debt" 5.42:1
Total Outstanding Bonded Debt` 5.42:1
Preliminary; subject to change.
0) Albert A. Webb Associates is not aware of any additional bonded debt for parcels in Improvement Area 2 of CFD No. 2004 -3 for fiscal
year 2014 -2015.
(2)Additional bonds will be issued for refunding only.
(3) All parcels have subdivided into 563 individual parcels for fiscal year 2014 -15 for Improvement Area 2. One parcel (APN 349550003-
1) prepaid Special Taxes on November 4, 2012.
Source: Albert A. Webb Associates.
Value -To -Lien Ratios. The Authority has obtained the assessed values of all of the
taxable property in Improvement Area B of CFD No. 2004 -3 (562 parcels in total), as established
A -16
by the County Assessor for Fiscal Year 2014 -15, which total is $142,339,275. The direct and
overlapping land secured special tax and assessment bonded indebtedness (excluding general
obligation bonded indebtedness) within Improvement Area 2 of CFD No. 2004 -3 as of December
10 2014 was approximately $26,288,631. The assessed value -to -lien ratio of the property within
Improvement Area 2 of CFD No. 2004 -3, based on the Fiscal Year 2014 -15 assessed values, the
aggregate principal amount of the CFD No. 2004 -3 Bonds and the estimated direct and
overlapping land secured special tax and assessment bonded indebtedness (excluding general
obligation bonded indebtedness) within Improvement Area 2 of CFD No. 2004 -3 equals
approximately 5.42- to -1.*
Value -to -lien Ratios by Category. The following table summarizes the assessed value -
to -lien ratios within Improvement Area 2 of CFD No. 2004 -3 by value -to -lien category.
TABLE 15
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2004 -3
IMPROVEMENT AREA 2
DISTRIBUTION OF ASSESSED VALUE -TO- SPECIAL TAX BURDEN RATIOS
Assessed Value to No. of Percent of
Special Tax Burden(')* Parcels (Z) Total
Total Assessed
Value(')
Percent of
Total
Estimated
Fiscal Year
2015 -16
Special Tax
Levy (4)
Percent of
Total
Between 1 - 2.99:1 26 4.63%
$1,723,105
1.21%
$65,560
4.36%
Between 3 - 4.99:1 117 20.82
23,605,018
16.58
312,185
20.78
Between 5 - 6.99:1 317 56.41
84,888,955
59.64
861,739
57.36
Between 7 - 8.99:1 98 17.44
30,650,748
21.53
2513,413
16.87
Between 9 - 10.99:1 4 0.71
1,471,449
1.03
9,452
0.63
Total 562 100.00%
$142,339,275
100.00%
$1,502,350
100.00%
* Preliminary; subject to change.
0) Special Tax Burden includes outstanding overlapping land secured debt.
(Z) One parcel (APN 349550003 -1) prepaid Special Taxes
on November 4, 2012.
(3) Fiscal year 2014 -15 assessed value.
(4) Includes an estimated $55,000 in administrative fees.
Source: Albert A. Webb Associates.
Historical Assessed Valuation. The following table represents the historical assessed
valuation of the taxable property in Improvement Area 2 of CFD No. 2004 -3 as shown on the
County Assessor's roll for fiscal years 2010 -11 through 2014 -15.
Preliminary, subject to change.
A -17
TABLE 16
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2004 -3
IMPROVEMENT AREA 2
ASSESSED VALUATION HISTORY
(FISCAL YEARS 2010 -11 THROUGH 2014 -15)
Fiscal Year
Land Assessed
Valuation
Structure Assessed
Valuation
Total Assessed
Valuation
2010 -11
$35,617,522
$67,575,263
$103,192,785
2011 -12
36,550,450
70,410,851
106,961,301
2012 -13
35,947,659
69,703,536
105,651,195
2013 -14
36,643,145
74,838,566
111,481,711
2014 -15
43,306,178
99,033,097
142,339,275
Source: Albert A. Webb Associates.
Fiscal Year
Estimated Value -to -Lien Ratios for Top Ten Taxpayers. The following table
summarizes the assessed value -to -lien ratios within Improvement Area 2 of CFD No. 2004 -3 for
its top ten taxpayers.
TABLE 17
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2004 -3
IMPROVEMENT AREA 2
ESTIMATED VALUE -TO -LIEN FOR TOP 10 TAXPAYERS
* Preliminary; subject to change.
' Excludes general obligation bonded indebtedness applicable within Improvement Area 2 of CFD No. 2004 -3.
Source. Albert A. Webb Associates.
[Describe Richmond America development status]
Delinquencies. The following table is a summary of Special Tax levies, collections and
delinquency rates in Improvement Area 2 of CFD No. 2004 -3 for Fiscal Years 2010 -11 through
the first installment of Fiscal Year 2014 -15.
A -18
Percent of
Projected
Estimated
Projected
Total
Overlapping
Fiscal
Fiscal
Fiscal Year
Land
Value -
Year2015-
Year 2015-
2014 -15
Secured
to-
16 Special
16 Special
Assessed
Bonded
Lien
Property Owner
Parcels
Tax
Tax
Value
Debt(')*
Ratio*
RICHMOND AMERICAN HOMES OF MARYLAND INC
50
$127,217
8.47%
$9,086,273
$2,222,185
4.09:1
SECRETARY HOUSING & URBAN DEV OF WASH DC
2
5,571
0.37
508,000
97,312
5.22:1
HSU LIN HUA
2
6,093
0.41
507,926
106,424
4.77:1
WU JIUN TSONG
2
6,121
0.41
525,649
106,911
4.92:1
INDIVIDUAL OWNER
1
2,715
0.18
210,048
47,422
4.43:1
INDIVIDUAL OWNER
1
2,302
0.15
229,022
40,214
5.70:1
INDIVIDUAL OWNER
1
3,168
0.21
331,286
55,345
5.99:1
INDIVIDUAL OWNER
1
2,560
0.17
295,000
44,716
6.60:1
INDIVIDUAL OWNER
1
2,302
0.15
215,346
40,214
5.36:1
INDIVIDUAL OWNER
1
3,060
0.20
281,262
53,456
5.26:1
Subtotal
62
161,109
10.72
12,189,812
2,814,198
4.33:1
All Others
500
1,341,241
89.28
130,149,463
23,428,390
5.56:1
Totals
562
$1,502,350
100.00%
$142,339,275
$26,242,588
5.42:1
* Preliminary; subject to change.
' Excludes general obligation bonded indebtedness applicable within Improvement Area 2 of CFD No. 2004 -3.
Source. Albert A. Webb Associates.
[Describe Richmond America development status]
Delinquencies. The following table is a summary of Special Tax levies, collections and
delinquency rates in Improvement Area 2 of CFD No. 2004 -3 for Fiscal Years 2010 -11 through
the first installment of Fiscal Year 2014 -15.
A -18
TABLE 18
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2004 -3
IMPROVEMENT AREA 2
SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES
FISCAL YEARS 2010 -11 THROUGH 2014 -15
Delinquencies as of November 19, 2014 (3)
Parcels
Amount
Percent
Delinquencies at Fiscal Year End (1)(2)
Fiscal
Amount
Parcels
Parcels
Amount
Percent
Year
Levied
Levied(4)
Delinquent
Delinquent
Delinquent
2010 -11
$1,740,740
522
8
$30,873
1.77%
2011 -12
1,740,741
522
20
69,418
3.99
2012 -13
1,771,681
521
8
43,856
2.48
2013 -14
1,810,426
563
11
27,817
1.54
2014 -15
1,548,043
562
N/A
N/A
N/A
Delinquencies as of November 19, 2014 (3)
Parcels
Amount
Percent
Delinquent
Delinquent
Delinquent
0
$0
0.00%
0
0
0.00
3
4,813
0.27
2
6,643
0.37
N/A
N/A
N/A
(1) As of fiscal year end of year levied provided by the continuing disclosure reports.
(2) Fiscal year 2014 -15 data is not yet available.
(3) Delinquency data as of November 19, 2014 provided by the County and Albert A. Webb Associates. Information
for fiscal year 2010 -2011 through fiscal year 2013 -14 provided by the continuing disclosure reports provided as of
June 30 of fiscal year levied.
(1) One parcel (APN 349550003 -1) prepaid Special Taxes on November 4, 2012.
Source: The Riverside County Assessor's Office; the City and Albert A. Webb Associates (as noted).
A -19
CFD NO. 2005 -1
Location and Description. CFD No. 2005 -1 was formed by the City in January, 2005 to
finance the acquisition and /or construction of streets, streetscape, parks, City fees, and fees of
the Elsinore Valley Municipal Water District. CFD No. 2005 -1 includes 233 taxable parcels. CFD
No. 2005 -1 is 100% developed; 233 completed single - family detached homes have been
conveyed to individual homeowners.
Assigned Special Taxes. Table 19 below sets forth the current Assigned Special Taxes
that may be levied on the property within CFD No. 2005 -1 in fiscal year 2015 -16 based on the
development status within CFD No. 2005 -1 as of December 16, 2014. The Special Taxes in CFD
No. 2005 -1 may not be levied after the 2043 -44 fiscal year. The final maturity of the Local
Obligations of CFD No. 2005 -1 is September 1, 2036.
TABLE 19
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -1
ASSIGNED SPECIAL TAXES
For the complete text of the Rate and Method of CFD No. 2005 -1, see Appendix D —
"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR EACH TAXING
JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of CFD No.
2005 -1 are numerous overlapping local agencies providing public services. The approximate
amount of the direct and overlapping debt secured by a tax or assessment on the parcels within
CFD No. 2005 -1 for Fiscal Year 2014 -15 is shown in Table 20 below.
A -20
Total
Projected
Projected
Assigned
Fiscal Year
Fiscal Year
Special
2015-16
2015 -16
Tax
Residential Floor
No. of
Tax Per
Special Tax
Special Tax
Percent
Land Use
Class
Area
Units
Unit
Levy per Unit
Levy(')
of Total
Single Family Unit
D1
Less than 1,801
24
$2,372
$2,129
$51,096
7.84%
Single Family Unit
D2
1,801 - 2,050
75
2,590
2,325
174,364
26.76
Single Family Unit
D3
2,051 -2,300
55
3,167
2,842
156,329
23.99
Single Family Unit
D4
2,301 -2,550
40
3,559
3,195
127,785
19.61
Single Family Unit
D5
Greater than 2,551
39
4,060
3,644
142,127
21.81
Non - Residential Unit
NR1
N/A
0
21,649
0
0
0.00
Totals
233
$651,700
100.00%
(1) Includes an estimated $40,000 in administrative
fees.
Source: Albert A.
Webb Associates.
For the complete text of the Rate and Method of CFD No. 2005 -1, see Appendix D —
"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR EACH TAXING
JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of CFD No.
2005 -1 are numerous overlapping local agencies providing public services. The approximate
amount of the direct and overlapping debt secured by a tax or assessment on the parcels within
CFD No. 2005 -1 for Fiscal Year 2014 -15 is shown in Table 20 below.
A -20
TABLE 20
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -1
DIRECT AND OVERLAPPING DEBT
AS OF DECEMBER 10, 2014
I. Assessed Value
2014 -2015 Equalized Roll Assessed Valuation
Land Secured Bond Indebtedness
Outstanding Direct and
Overlapping Bonded Debt
RIVERSIDE COUNTY FLOOD CONTROL BENEFIT
ASSESSMENT ZONE NO. 3
CFD 2005 -1 SERENITY
TOTAL LAND SECURED BONDED DEBT')
Authorized but Unissued Direct and
Overlapping Indebtedness
RIVERSIDE COUNTY FLOOD CONTROL BENEFIT
ASSESSMENT ZONE NO. 3
CFD 2005 -1 SERENITY
TOTAL UNISSUED LAND SECURED
INDEBTEDNESSM
TOTAL OUTSTANDING AND UNISSUED LAND
SECUREDINDEBTEDNESS
III. General Obligation Bond Indebtedness
Outstanding Direct and
Overlapping Bonded Debt
METROPOLITAN WATER DEBT SERVICE
TOTAL GENERAL OBLIGATION BONDED DEBT
Authorized but Unissued Direct and
Overlapping Indebtedness
METROPOLITAN WATER DEBT SERVICE
TOTAL UNISSUED GENERAL OBLIGATION
INDEBTEDNESS O)
TOTAL OUTSTANDING AND UNISSUED GENERAL
OBLIGATION INDEBTEDNESS
$51,970,691
$2,970
TOTAL OF ALL OUTSTANDING DIRECT AND
OVERLAPPING BONDED DEBT $8,520,024
TOTAL OF ALL OUTSTANDING AND UNISSUED
DIRECT AND OVERLAPPING INDEBTEDNESS $11,356,178
IV. Ratios to 2014 -2015 Assessed Valuation
Outstanding Land Secured Bonded Debt* 6.10:1
Total Outstanding Bonded Debt* 6.10:1
* Preliminary; subject to change.
0 )Albert A. Webb Associates is not aware of any additional bonded debt for parcels in CFD No. 2005 -1 for fiscal year 2014 -2015.
(2) Additional bonds will be issued for refunding only.
(')All parcels have subdivided into 233 individual parcels for fiscal year 2014 -15.
Source: Albert A. Webb Associates.
Value -To -Lien Ratios. The Authority has obtained the assessed values of all of the
taxable property in CFD No. 2005 -1 (233 parcels in total), as established by the County Assessor
for Fiscal Year 2014 -15, which total is $51,970,691. The direct and overlapping land secured
special tax and assessment bonded indebtedness (excluding general obligation bonded
indebtedness) within CFD No. 2005 -1 as of December 10, 2014 was approximately $11,356,178.
The assessed value -to -lien ratio of the property within CFD No. 2005 -1, based on the Fiscal Year
2014 -15 assessed values, the aggregate principal amount of the CFD No. 2005 -1 Bonds and the
A -21
Parcels in
Amount
Type
Issued
Outstanding
%Applicable
CFD 2005 -10)
Applicable
AD
$5,715,000
$1,705,000
1%
233
$12,054
CFD
9,180,000
8,505,000
100
233
8,505,000
$8,517,054
Parcels in
Amount
Type
Authorized
Unissued
%Applicable
CFD 2005 -1(3)
Applicable
AD
$8,000,000
$2,285,000
1%
233
$16,154
CFD
12,000,000
2,820,000(2)
100
233
2,820,000
$2,836,154
$11,353,208
Parcels in
Amount
Type
Issued
Outstanding
%Applicable
CFD 200541)
Applicable
GO
$850,000,000
$132,275,000
0.002%
233
$2,970
$2,970
Parcels in
Amount
Type
Authorized
Unissued
%Applicable
CFD 2005 -1(3)
Applicable
GO
$850,000,000
$0
0.002%
233
$0
$0
$2,970
TOTAL OF ALL OUTSTANDING DIRECT AND
OVERLAPPING BONDED DEBT $8,520,024
TOTAL OF ALL OUTSTANDING AND UNISSUED
DIRECT AND OVERLAPPING INDEBTEDNESS $11,356,178
IV. Ratios to 2014 -2015 Assessed Valuation
Outstanding Land Secured Bonded Debt* 6.10:1
Total Outstanding Bonded Debt* 6.10:1
* Preliminary; subject to change.
0 )Albert A. Webb Associates is not aware of any additional bonded debt for parcels in CFD No. 2005 -1 for fiscal year 2014 -2015.
(2) Additional bonds will be issued for refunding only.
(')All parcels have subdivided into 233 individual parcels for fiscal year 2014 -15.
Source: Albert A. Webb Associates.
Value -To -Lien Ratios. The Authority has obtained the assessed values of all of the
taxable property in CFD No. 2005 -1 (233 parcels in total), as established by the County Assessor
for Fiscal Year 2014 -15, which total is $51,970,691. The direct and overlapping land secured
special tax and assessment bonded indebtedness (excluding general obligation bonded
indebtedness) within CFD No. 2005 -1 as of December 10, 2014 was approximately $11,356,178.
The assessed value -to -lien ratio of the property within CFD No. 2005 -1, based on the Fiscal Year
2014 -15 assessed values, the aggregate principal amount of the CFD No. 2005 -1 Bonds and the
A -21
estimated direct and overlapping land secured special tax and assessment bonded indebtedness
(excluding general obligation bonded indebtedness) within CFD No. 2005 -1 equals approximately
6.10- to -1.*
Value -to -lien Ratios by Category. The following table summarizes the assessed value -
to -lien ratios within CFD No. 2005 -1 by value -to -lien category.
TABLE 21
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -1
DISTRIBUTION OF ASSESSED VALUE -TO- SPECIAL TAX BURDEN RATIOS
* Preliminary; subject to change
(' )Special Tax Burden includes outstanding overlapping land secured debt.
(2) Fiscal year 2014 -15 assessed value.
(3) Includes an estimated $40,000 in administrative fees.
Source: Albert A. Webb Associates.
Preliminary, subject to change.
A -22
.;
Estimated
Fiscal Year
Total
2015 -16
Assessed Value to
No. of
Percent of
Assessed
Percent
Special Tax
Percent
Special Tax Burden(')*
Parcels
Total
Value (2)
of Total
Levy (3)
of Total
Between 3 - 4.99:1
38
16.31%
$7,454,953
14.34%
$125,869
19.31%
Between 5 - 6.99:1
141
60.52
31,596,868
60.80
403,227
61.87
Between 7 - 8.99:1
54
23.18
12,918,870
24.86
122,604
18.81
Total
233
100.00%
$51,970,691
100.00%
$651,700
100.00%
* Preliminary; subject to change
(' )Special Tax Burden includes outstanding overlapping land secured debt.
(2) Fiscal year 2014 -15 assessed value.
(3) Includes an estimated $40,000 in administrative fees.
Source: Albert A. Webb Associates.
Preliminary, subject to change.
A -22
.;
Historical Assessed Valuation. The following table represents the historical assessed
valuation of the taxable property in CFD No. 2005 -1 as shown on the County Assessor's roll for
fiscal years 2010 -11 through 2014 -15.
TABLE 22
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -1
ASSESSED VALUATION HISTORY
(FISCAL YEARS 2010 -11 THROUGH 2014 -15)
Land Assessed
Fiscal Year Valuation
2010 -11
$12,022,540
2011 -12
12,811,113
2012 -13
12,651,510
2013 -14
13,163,451
2014 -15
15, 335,477
Structure Assessed
Valuation
$27,887,141
30,510,520
30,128,446
31,564,592
36,635,214
Source: Albert A. Webb Associates.
Total Assessed
Valuation
$39,909,681
43,321,633
42,779,956
44,728,043
51,970,691
Estimated Value -to -Lien Ratios for Top Ten Taxpayers. The following table
summarizes the assessed value -to -lien ratios within CFD No. 2005 -1 for its top ten taxpayers.
TABLE 23
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -1
ESTIMATED VALUE -TO -LIEN FOR TOP 10 TAXPAYERS
Preliminary; subject to change.
M Excludes general obligation bonded indebtedness applicable within CFD No. 2005 -1
Source: Albert A. Webb Associates.
Delinquencies. The following table is a summary of Special Tax levies, collections and
delinquency rates in CFD No. 2005 -1 for Fiscal Years 2010 -11 through the first installment of
Fiscal Year 2014 -15.
A -23
Percent of
Projected
Projected Total
Fiscal Year
Estimated
Fiscal Year
Fiscal Year
2014 -15
Overlapping Land
Value -to-
2015-16 Special
2015 -16 Special
Assessed
Secured Bonded
Lien
Property Owner
Parcels
Tax
Tax
Value
Debt(''
Ratio`
Individual Owner
1
$3,195
0.49%
$288,000
$41,749
6.90:1
Individual Owner
1
3,644
0.56
287,000
47,627
6.03:1
Individual Owner
1
3,195
0.49
283,000
41,750
6.78:1
Individual Owner
1
3,644
0.56
281,000
47,627
5.90:1
Individual Owner
1
3,195
0.49
281,000
41,750
6.73:1
Individual Owner
1
3,195
0.49
279,000
41,750
6.68:1
Individual Owner
1
3,644
0.56
278,000
47,627
5.84:1
Individual Owner
1
3,195
0.49
278,000
41,750
6.66:1
Individual Owner
1
3,195
0.49
278,000
41,750
6.66:1
Individual Owner
1
3,195
0.49
278,000
41,750
6.66:1
Subtotal
10
33,295
5.11
2,811,000
435,132
6.46:1
All Others
223
618,405
94.89
49,159,691
8,081,922
6.08:1
Totals
233
$651,700
100.00%
$51,970,691
$8,517,054
6.10:1
Preliminary; subject to change.
M Excludes general obligation bonded indebtedness applicable within CFD No. 2005 -1
Source: Albert A. Webb Associates.
Delinquencies. The following table is a summary of Special Tax levies, collections and
delinquency rates in CFD No. 2005 -1 for Fiscal Years 2010 -11 through the first installment of
Fiscal Year 2014 -15.
A -23
TABLE 24
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -1
SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES
FISCAL YEARS 2010 -11 THROUGH 2014 -15
Delinquencies at Fiscal Year End (1)(3)
Fiscal
Amount
Parcels
Parcels
Amount
Percent
Year
Levied
Levied
Delinquent
Delinquent
Delinquent
2010 -11
$645,145
233
5
$12,227
1.90%
2011 -12
670,830
233
8
26,214
3.91
2012 -13
670,832
233
3
4,947
0.74
2013 -14
668,253
233
15
28,068
4.20
2014 -15
689,417
233
N/A
N/A
N/A
Delinquencies as of November 19, 2014 (Z)
Parcels
Amount
Percent
Delinquent
Delinquent
Delinquent
0
$0
0.00%
0
0
0.00
1
1,463
0.22
2
3,841
0.57
N/A
N/A
N/A
(1) As of fiscal year end of year levied provided by the continuing disclosure reports as of end of fiscal year levied.
(Z) Delinquency data as of November 19, 2014 provided by the County and Albert A. Webb Associates. Information
for fiscal year 2010 -2011 through fiscal year 2013 -14 provided by the continuing disclosure reports provided as of
June 30 of year levied.
(3) Fiscal year 2014 -15 year end data is not yet available.
Source: The Riverside County Assessor's Office; the City and Albert A. Webb Associates (as noted).
A -24
CFD NO. 2005 -2 AND IMPROVEMENT AREA A
Location and Description. CFD No. 2005 -2 and Improvement Area A therein were
formed by the City in September, 2005 to the acquisition and /or construction of street,
streetscape, and storm drain improvements and park /recreational improvements, City fees, and
fees and improvements of the Elsinore Valley Municipal Water District and improvements of the
California Department of Transportation. Improvement Area A of CFD No. 2005 -2 includes 389
taxable parcels. Improvement Area A of CFD No. 2005 -2 is 86% developed [define]; 340
completed single - family detached homes have been conveyed to individual homeowners.
Assigned Special Taxes. Table 25 below sets forth the current Assigned Special Taxes
that may be levied on the property within Improvement Area A of CFD No. 2005 -2 in fiscal year
2015 -16 based on the development status within Improvement Area A of CFD No. 2005 -2 as of
December 16, 2014. The Special Taxes in Improvement Area A of CFD No. 2005 -2 may not be
levied after the 2041 -42 fiscal year. The final maturity of the Local Obligations of Improvement
Area A of CFD No. 2005 -2 is September 1, 2036.
TABLE 25
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -2
IMPROVEMENT AREA A
ASSIGNED SPECIAL TAXES
Land Use
Tax
Class
Residential Floor
Area
No. of
Units
Assigned
Special Tax
Per Unit
Projected Fiscal
Year 2015- 16
Special Tax
Levy per Unit
Total
Projected
Fiscal Year
2015 -16
Special Tax
Levy0)
Percent of
Total
Single Family Unit
D1
Less than 1,850
14
$3,290
$2,955
$41,375
2.88%
Single Family Unit
D2
1,851 -2,050
36
3,461
3,109
111,921
7.79
Single Family Unit
D3
2,051 - 2,550
76
3,848
3,457
262,711
18.30
Single Family Unit
D4
2,551 - 3,150
205
4,031
3,621
742,301
51.70
Single Family Unit
D5
3,151 - 3,650
22
5,115
4,595
101,082
7.04
Single Family Unit
D6
Greater than 3,650
36
5,457
4,902
176,460
12.29
Approved
A
Approved property
53
25,492
0
0
0.00
Apartment Unit
APT1
N/A
0
25,492
0
0
0.00
Non - Residential Unit
NR1
N/A
0
25,492
0
0
0.00
Totals
442
$1,435,850
100.00%
Includes an estimated $55,000 in administrative fees.
Source: Albert A. Webb
Associates.
For the complete text of the Rate and Method of Improvement Area A of CFD No. 2005-
2, see Appendix D - "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
EACH TAXING JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of
Improvement Area A of CFD No. 2005 -2 are numerous overlapping local agencies providing
public services. The approximate amount of the direct and overlapping debt secured by a tax or
assessment on the parcels within Improvement Area A of CFD No. 2005 -2 for Fiscal Year 2015-
16 is shown in Table 26 below.
A -25
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Value -To -Lien Ratios. The Authority has obtained the assessed values of all of the
taxable property in Improvement Area A of CFD No. 2005 -2 (442 parcels in total), as established
by the County Assessor for Fiscal Year 2014 -15, which total is $102,100,614. The direct and
overlapping land secured special tax and assessment bonded indebtedness (excluding general
obligation bonded indebtedness) within Improvement Area A of CFD No. 2005 -2 as of December
10, 2014 was approximately $24,569,544. The assessed value -to -lien ratio of the property within
Improvement Area A of CFD No. 2005 -2, based on the Fiscal Year 2014 -15 assessed values, the
aggregate principal amount of the CFD No. 2005 -2 Bonds and the estimated direct and
overlapping land secured special tax and assessment bonded indebtedness (excluding general
obligation bonded indebtedness) within Improvement Area A of CFD No. 2005 -2 equals
approximately 4.16- to -1.*
Value -to -lien Ratios by Category. The following table summarizes the assessed value -
to -lien ratios within Improvement Area A of CFD No. 2005 -2 by value -to -lien category.
TABLE 27
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -2
IMPROVEMENT AREA A
DISTRIBUTION OF ASSESSED VALUE -TO- SPECIAL TAX BURDEN RATIOS
* Preliminary; subject to change.
0 )Special Tax Burden includes outstanding overlapping land secured debt.
(Z) Fiscal year 2014 -15 assessed value.
(3) Includes an estimated $55,000 in administrative fees.
Source: Albert A. Webb Associates.
Preliminary; subject to change.
A -1
Estimated
Total
Fiscal Year
Assessed Value to
No, of
Percent of
Assessed
Percent of
2015 -16 Special
Percent of
Special Tax Burden0)*
Parcels
Total
Value(Z)
Total
Tax Levy(3)
Total
Less than 1
12
3.08%
$612,360
0.60%
$47,130
3.28%
Between 1 - 2.99:1
29
7.46
3,294,770
3.23
104,055
7.25
Between 3 - 4.99:1
249
64.01
66,769,022
65.40
936,474
65.22
Between 5 - 6.99:1
99
25.45
31,424,462
30.78
348,191
24.25
Total
389
100.00%
$102,100,614
100.00%
$1,435,850
100.00%
* Preliminary; subject to change.
0 )Special Tax Burden includes outstanding overlapping land secured debt.
(Z) Fiscal year 2014 -15 assessed value.
(3) Includes an estimated $55,000 in administrative fees.
Source: Albert A. Webb Associates.
Preliminary; subject to change.
A -1
Historical Assessed Valuation. The following table represents the historical assessed
valuation of the taxable property in Improvement Area A of CFD No. 2005 -2 as shown on the
County Assessor's roll for fiscal years 2010 -11 through 2015 -16.
TABLE 28
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -2
IMPROVEMENT AREA A
ASSESSED VALUATION HISTORY
(FISCAL YEARS 2010 -11 THROUGH 2014 -15
Fiscal Year
Land Assessed
Valuation
Structure Assessed
Valuation
Total Assessed
Valuation
2010 -11
$16,179,423
$45,424,031
$61,603,454
2011 -12
21,588,464
46,908,629
68,497,093
2012 -13
23,142,438
47,491,456
70,633,894
2013 -14
24,417,861
57,784,979
82,202,840
2014 -15
27,749,771
74,350,843
102,100,614
Source: Albert A. Webb Associates.
Estimated Value -to -Lien Ratios for Top Ten Taxpayers. The following table
summarizes the assessed value -to -lien ratios within Improvement Area A of CFD No. 2005 -2 for
its top ten taxpayers.
TABLE 29
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -2
IMPROVEMENT AREA A
ESTIMATED VALUE -TO -LIEN FOR TOP 10 TAXPAYERS
* Preliminary; subject to change.
M Excludes general obligation bonded indebtedness applicable within Improvement Area A of CFD No. 2005 -2.
Source: Albert A. Webb Associates.
A -2
Percent of
Projected
Estimated
Projected
Total
Overlapping
Fiscal
Fiscal Year
Fiscal Year
Land
Year 2015-
2015 -16
2014 -15
Secured
Value -
16 Special
Special
Assessed
Bonded
to -Lien
Property Owner
Parcels
Tax
Tax
Value
Debt(')*
Ratio*
RYLAND HOMES OF CALIF INC
36
$134,657
9.38%
$5,533,727
$2,303,630
2.40:1
KB HOME COASTAL INC
13
43,384
3.02
953,485
742,190
1.28:1
BANYAS MICHAEL
2
7,078
0.49
516,333
121,081
4.26:1
LUNA EDMO L
2
7,078
0.49
532,943
121,081
4.40:1
THR CALIF
2
6,576
0.46
450,031
112,505
4.00:1
INDIVIDUAL OWNER
1
3,457
0.24
205,929
59,136
3.48:1
INDIVIDUAL OWNER
1
3,109
0.22
272,000
53,185
5.11:1
INDIVIDUAL OWNER
1
3,621
0.25
311,980
61,946
5.04:1
INDIVIDUAL OWNER
1
3,621
0.25
240,788
61,946
3.89:1
INDIVIDUAL OWNER
1
3,621
0.25
352,500
61,946
5.69:1
Subtotal
60
216,201
15.06
9,369,716
3,698,645
2.53:1
All Others
329
1,219,649
84.94
92,730,875
20,865,065
4,44:1
Totals
389
$1,435,850
100.00%
$102,100,591
$24,563,710
4.16:1
* Preliminary; subject to change.
M Excludes general obligation bonded indebtedness applicable within Improvement Area A of CFD No. 2005 -2.
Source: Albert A. Webb Associates.
A -2
[Describe Ryland development status]
Delinquencies. The following table is a summary of Special Tax levies, collections and
delinquency rates in Improvement Area A of CFD No. 2005 -2 for Fiscal Years 2010 -11 through
the first installment of Fiscal Year 2014 -15.
TABLE 30
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -2
IMPROVEMENT AREA A
SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES
FISCAL YEARS 2010 -11 THROUGH 2014 -15
Delinquencies as of November 19, 2014 (2)
Parcels
Amount
Percent
Delinquencies at Fiscal Year End()()
Fiscal
Amount
Parcels
Parcels
Amount
Percent
Year
Levied
Levied
Delinquent
Delinquent
Delinquent
2010 -11
$1,629,057
427
3
$15,753
0.97%
2011 -12
1,659,130
427
9
39,367
2.37
2012 -13
1,695,398
427
17
123,208
7.27
2013 -14
1,655,268
442
14
38,529
2.33
2014 -15
1,707,591
442
N/A
N/A
N/A
Delinquencies as of November 19, 2014 (2)
Parcels
Amount
Percent
Delinquent
Delinquent
Delinquent
0
$0
0.00%
0
0
0.00
4
12,739
0.75
3
12,994
0.79
N/A
N/A
N/A
(1) As of fiscal year end of year levied provided by the continuing disclosure reports.
(2) Delinquency data as of November 19, 2014 provided by the County and Albert A. Webb Associates. Information
for fiscal year 2010 -2011 through fiscal year 2013 -14 provided by the continuing disclosure reports provided as of
June 30 of year levied.
(3) Fiscal year 2014 -15 data is not yet available.
Source: The Riverside County Assessor's Office; the City and Albert A. Webb Associates (as noted).
A -3
CFD NO. 2005 -6
Location and Description. CFD No. 2005 -6 was formed by the City in September, 2005
to finance the acquisition and construction of public streets, streetscape, park and recreation
facilities, storm drain, fire station, and other city facilities, including City fees and water and sewer
facilities and fees of the Elsinore Valley Municipal Water District. CFD No. 2005 -6 includes 144
taxable parcels. CFD No. 2005 -6 is 100% developed; 144 completed single - family detached
homes have been conveyed to individual homeowners.
Assigned Special Taxes. Table 31 below sets forth the current Assigned Special Taxes
that may be levied on the property within CFD No. 2005 -6 in fiscal year 2015 -16 based on the
development status within CFD No. 2005 -6 as of December 16, 2014. The Special Taxes in CFD
No. 2005 -6 may not be levied after the 2042 -43 fiscal year. The final maturity of the Local
Obligations of CFD No. 2005 -6 is September 1, 2022.
TABLE 31
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -6
ASSIGNED SPECIAL TAXES
For the complete text of the Rate and Method of CFD No. 2005 -6, see Appendix D —
"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR EACH TAXING
JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of CFD
No. 2005 -6 are numerous overlapping local agencies providing public services. The approximate
amount of the direct and overlapping debt secured by a tax or assessment on the parcels within
CFD No. 2005 -6 for Fiscal Year 2014 -15 is shown in Table 32 below.
A -4
Total
Projected
Projected
Fiscal
Fiscal
Year
Year
Assigned
2015-16
2015 -16
Special
Special
Special
Residential Floor
No. of
Tax Per
Tax Levy
Tax
Percent
Land Use
Tax Class
Area
Units
Unit
per Unit
Levy0)
of Total
Single Family Unit
D1
Less than 1,000
0
$1,441
$0
$0
0.00%
Single Family Unit
D2
1,000 - 1,199
48
1,625
1,334
64,047
27.98
Single Family Unit
D3
1,200 - 1,399
48
2,025
1,663
79,807
34.87
Single Family Unit
D4
1,400 - 1,499
48
2,158
1,772
85,045
37.15
Single Family Unit
D5
Greater than 1,449
0
2,242
0
0
0.00
Apartment Unit
APT
N/A
0
23,529
0
0
0.00
Non - Residential Unit
NR1
N/A
0
23,529
0
0
0.00
Totals
144
$228,900
100.00%
(1) Includes an estimated $35,000 in administrative fees.
Source: Albert A.
Webb Associates.
For the complete text of the Rate and Method of CFD No. 2005 -6, see Appendix D —
"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR EACH TAXING
JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of CFD
No. 2005 -6 are numerous overlapping local agencies providing public services. The approximate
amount of the direct and overlapping debt secured by a tax or assessment on the parcels within
CFD No. 2005 -6 for Fiscal Year 2014 -15 is shown in Table 32 below.
A -4
TOTAL OF ALL OUTSTANDING DIRECT AND
OVERLAPPING BONDED DEBT $3,076,075
TOTAL OF ALL OUTSTANDING AND UNISSUED
DIRECT AND OVERLAPPING INDEBTEDNESS $3,076,075
IV. Ratios to 2014 -2015 Assessed Valuation
Outstanding Land Secured Bonded Debt' 6.12:1
Total Outstanding Bonded Debt* 6.12:1
Preliminary; subject to change.
O)Albert A. Webb Associates is not aware of any additional bonded debt for parcels in CFD No. 2005 -6 for Fiscal Year 2014 -15.
(2) Additional bonds will be issued for refunding only.
(')All parcels have subdivided into 144 individual parcels for fiscal year 2014 -15.
Source: Albert A. Webb Associates.
Value -To -Lien Ratios. The Authority has obtained the assessed values of all of the
taxable property in CFD No. 2005 -6 (144 parcels in total), as established by the County Assessor
for Fiscal Year 2014 -15, which total is 18,813,823. The direct and overlapping land secured
special tax and assessment bonded indebtedness (excluding general obligation bonded
indebtedness) within CFD No. 2005 -6 as of December 10, 2014 was approximately $3,076,075.
The assessed value -to -lien ratio of the property within CFD No. 2005 -6, based on the Fiscal Year
2014 -15 assessed values, the aggregate principal amount of the CFD No. 2005 -6 Bonds and the
estimated direct and overlapping land secured special tax and assessment bonded indebtedness
A -5
TABLE 32
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -6
DIRECT
AND OVERLAPPING DEBT
AS OF DECEMBER 10, 2014
I. Assessed Value
$18,813,823
2014 -2015 Equalized Roll Assessed Valuation
II. Land Secured Bond Indebtedness
Outstanding Direct and
Parcels in
Amount
Overlapping Bonded Debt
Type Issued Outstanding
% Applicable
CFD 2005 41I
Applicable
CFD 2005 -6 CITY CENTER TOWNHOMES
CFD $3,525,000 $3,075,000
100%
144
$3,075,000
TOTAL LAND SECURED BONDED DEBTO)
$3,075,000
Authorized but Unissued Direct and
Parcels in
Amount
Overlapping Indebtedness
Type Authorized Unissued
%Applicable
CFD 2005 -60)
Applicable
CFD 2005 -6 CITY CENTER TOWNHOMES
CFD $5,000,000 $0 (2)
100%
144
$0
TOTAL UNISSUED LAND SECURED INDEBTEDNESS O)
$0
TOTAL OUTSTANDING AND UNISSUED LAND
SECURED INDEBTEDNESS
$3,075,000
III. General Obligation Bond Indebtedness
Outstanding Direct and
Parcels in
Amount
Overlapping Bonded Debt
Type Issued Outstanding
% Applicable
CFD 2005 -60)
Applicable
METROPOLITAN WATER DEBT SERVICE
GO $850,000,000 $132,275,000
0.001%
144
$1,075
TOTAL GENERAL OBLIGATION BONDED DEBT
$1,075
Authorized but Unissued Direct and
Parcels in
Amount
Overlapping Indebtedness
Type Authorized Unissued
%Applicable
CFD 2005 -613>
Applicable
METROPOLITAN WATER DEBT SERVICE
GO $850,000,000 $0
0.001%
144
$0
TOTAL UNISSUED GENERAL OBLIGATION
INDEBTEDNESS O)
$0
TOTAL OUTSTANDING AND UNISSUED GENERAL
OBLIGATION INDEBTEDNESS
$1,075
TOTAL OF ALL OUTSTANDING DIRECT AND
OVERLAPPING BONDED DEBT $3,076,075
TOTAL OF ALL OUTSTANDING AND UNISSUED
DIRECT AND OVERLAPPING INDEBTEDNESS $3,076,075
IV. Ratios to 2014 -2015 Assessed Valuation
Outstanding Land Secured Bonded Debt' 6.12:1
Total Outstanding Bonded Debt* 6.12:1
Preliminary; subject to change.
O)Albert A. Webb Associates is not aware of any additional bonded debt for parcels in CFD No. 2005 -6 for Fiscal Year 2014 -15.
(2) Additional bonds will be issued for refunding only.
(')All parcels have subdivided into 144 individual parcels for fiscal year 2014 -15.
Source: Albert A. Webb Associates.
Value -To -Lien Ratios. The Authority has obtained the assessed values of all of the
taxable property in CFD No. 2005 -6 (144 parcels in total), as established by the County Assessor
for Fiscal Year 2014 -15, which total is 18,813,823. The direct and overlapping land secured
special tax and assessment bonded indebtedness (excluding general obligation bonded
indebtedness) within CFD No. 2005 -6 as of December 10, 2014 was approximately $3,076,075.
The assessed value -to -lien ratio of the property within CFD No. 2005 -6, based on the Fiscal Year
2014 -15 assessed values, the aggregate principal amount of the CFD No. 2005 -6 Bonds and the
estimated direct and overlapping land secured special tax and assessment bonded indebtedness
A -5
(excluding general obligation bonded indebtedness) within CFD No. 2005 -6 equals approximately
6.12 -to -1. *
Value -to -lien Ratios by Category. The following table summarizes the assessed value -
to -lien ratios within CFD No. 2005 -6 by value -to -lien category.
TABLE 33
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -6
DISTRIBUTION OF ASSESSED VALUE -TO- SPECIAL TAX BURDEN RATIOS
* Preliminary; subject to change.
0) Special Tax Burden includes outstanding overlapping land secured debt.
(2) Fiscal year 2014 -15 assessed value.
(3) Includes an estimated $35,000 in administrative fees.
Source: Albert A. Webb Associates.
Historical Assessed Valuation. The following table represents the historical assessed
valuation of the taxable property in CFD No. 2005 -6 as shown on the County Assessor's roll for
fiscal years 2010 -11 through 2014 -15.
TABLE 34
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -6
ASSESSED VALUATION HISTORY
(FISCAL YEARS 2010 -11 THROUGH 2014 -15)
Land Assessed Structure Assessed Total Assessed
Fiscal Year Valuation Valuation Valuation
2010 -11 $4,651,310 $11,870,381 $16,521,691
2011 -12 5,177,733 11,574,409 1 6,752,142
2012 -13 5,257,339 11,183,761 16,441,100
2013 -14 5,523,563 11,882,115 17,405,678
2014 -15 5,818,417 12,995,406 18,813,823
Source: Albert A. Webb Associates.
Preliminary, subject to change.
A -6
Estimated Fiscal
Assessed Value to
Total
Year 2015 -16
Special Tax
No. of
Percent of
Assessed
Percent of
Special Tax
Percent of
Burden *0)
Parcels
Total
Value(')
Total
Levy(3)
Total
Between 4 - 5.99:1
83
57.64%
$9,964,424
52.96%
$134,925
58.95%
Between 6 - 7.99:1
61
42.36
8,849,399
47.04
93,975
41.05
Total
144
100.00%
$18,813,823
100.00%
$228,900
100.00%
* Preliminary; subject to change.
0) Special Tax Burden includes outstanding overlapping land secured debt.
(2) Fiscal year 2014 -15 assessed value.
(3) Includes an estimated $35,000 in administrative fees.
Source: Albert A. Webb Associates.
Historical Assessed Valuation. The following table represents the historical assessed
valuation of the taxable property in CFD No. 2005 -6 as shown on the County Assessor's roll for
fiscal years 2010 -11 through 2014 -15.
TABLE 34
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -6
ASSESSED VALUATION HISTORY
(FISCAL YEARS 2010 -11 THROUGH 2014 -15)
Land Assessed Structure Assessed Total Assessed
Fiscal Year Valuation Valuation Valuation
2010 -11 $4,651,310 $11,870,381 $16,521,691
2011 -12 5,177,733 11,574,409 1 6,752,142
2012 -13 5,257,339 11,183,761 16,441,100
2013 -14 5,523,563 11,882,115 17,405,678
2014 -15 5,818,417 12,995,406 18,813,823
Source: Albert A. Webb Associates.
Preliminary, subject to change.
A -6
Estimated Value -to -Lien Ratios for Top Ten Taxpayers. The following table
summarizes the assessed value -to -lien ratios within CFD No. 2005 -6 for its top ten taxpayers.
TABLE 35
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -6
ESTIMATED VALUE -TO -LIEN FOR TOP 10 TAXPAYERS
* Preliminary; subject to change.
M Excludes General Obligation Bonded indebtedness applicable within CFD No. 2005 -6.
Source: Albert A. Webb Associates.
A -7
Overlapping
Percent of
Land Secured
Projected
Bond Debt
Projected
Total Fiscal
Fiscal Year
Estimated
Fiscal Year
Year 2015-
2014 -15
CFD No.
Value -
2015-16
16 Special
Assessed
2005 -6
to -Lien
Property Owner
Special Tax
Tax
Value
Debt(')*
Ratio*
Parcels
Individual Owner
$1,772
0.77%
$182,000
$23,802
7.65:1
1
Individual Owner
1,772
0.77
182,000
23,802
7.65:1
1
Individual Owner
1,772
0.77
182,000
23,802
7.65:1
1
Individual Owner
1,772
0.77
182,000
23,802
7.65:1
1
Individual Owner
1,772
0.77
182,000
23,802
7.65:1
1
Individual Owner
1,772
0.77
182,000
23,802
7.65:1
1
Individual Owner
1,772
0.77
182,000
23,802
7.65:1
1
Individual Owner
1,772
0.77
182,000
23,802
7.65:1
1
Individual Owner
1,772
0.77
178,578
23,802
7.50:1
1
Individual Owner
1,772
0.77
178,578
23,802
7.50:1
1
Subtotal
17,718
7.74
1,813,156
238,016
7.62:1
10
All Others
211,182
92.26
17,000,667
2,836,984
5.99:1
134
Totals
$228,900
100.00%
$18,813,823
$3,075,000
6.12:1
144
* Preliminary; subject to change.
M Excludes General Obligation Bonded indebtedness applicable within CFD No. 2005 -6.
Source: Albert A. Webb Associates.
A -7
Delinquencies. The following table is a summary of Special Tax levies, collections and
delinquency rates in CFD No. 2005 -6 for Fiscal Years 2010 -11 through the first installment of
Fiscal Year 2014 -15.
TABLE 36
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2005 -6
SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES
FISCAL YEARS 2010 -11 THROUGH 2014 -15
Delinquencies as of November 19, 2014 (2)
Parcels
Amount
Percent
Delinquencies at Fiscal Year End (1)(3)
Fiscal
Amount
Parcels
Parcels
Amount
Percent
Year
Levied
Levied
Delinquent
Delinquent
Delinquent
2010 -11
$254,346
144
4
$6,141
2.41%
2011 -12
259,539
144
5
10,373
4.00
2012 -13
262,668
144
2
10,320
3.93
2013 -14
257,706
144
7
9,618
3.73
2014 -15
261,518
144
N/A
N/A
N/A
Delinquencies as of November 19, 2014 (2)
Parcels
Amount
Percent
Delinquent
Delinquent
Delinquent
0
$0
0.00%
0
0
0.00
0
0
0.00
4
6,613
2.57
N/A
N/A
N/A
(1) As of fiscal year end of year levied provided by the continuing disclosure reports.
(2) Delinquency data as of November 19, 2014 provided by the County and Albert A. Webb Associates. Information
for fiscal year 2010 -2011 through fiscal year 2013 -14 provided by the continuing disclosure reports provided as of
June 30 of year levied.
(3) Fiscal year 2014 -15 fiscal year end data is not yet available.
Source: The Riverside County Assessor's Office; the City and Albert A. Webb Associates (as noted).
A -8
CFD NO. 2006 -2
Location and Description. CFD No. 2006 -2 was formed by the City in April, 2006 to
finance the acquisition and construction of street, streetscape, and flood control improvements,
City fees, and fees and improvements of the Elsinore Valley Municipal Water District. CFD
No. 2006 -2 includes 168 taxable parcels. CFD No. 2006 -2 is 100% developed; 155 completed
single - family detached homes have been conveyed to individual homeowners.
Assigned Special Taxes. Table 37 below sets forth the current Assigned Special Taxes
that may be levied on the property within CFD No. 2006 -2 in fiscal year 2015 -16 based on the
development status within CFD No. 2006 -2 as of December 16, 2014. The Special Taxes in CFD
No. 2006 -2 may not be levied after the 2045 -46 fiscal year. The final maturity of the Local
Obligations of Improvement Area B of CFD No. 2003 -2 is September 1, 2036
TABLE 37
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2006 -2
ASSIGNED SPECIAL TAXES
For the complete text of the Rate and Method of CFD No. 2006 -2, see Appendix D —
"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR EACH TAXING
JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of CFD
No. 2006 -2 are numerous overlapping local agencies providing public services. The approximate
amount of the direct and overlapping debt secured by a tax or assessment on the parcels within
CFD No. 2006 -2 for Fiscal Year 2014 -15 is shown in Table 38 below.
A -9
Projected
Fiscal
Total
Year
Projected
Assigned
2015-16
Fiscal Year
Special
Special
2015 -16
Tax
Residential Floor
No. of
Tax Per
Tax Levy
Special Tax
Percent
Land Use
Class
Area
Units
Unit
per Unit
Levy(')
of Total
Single Family Unit
D1
Less than 1,550
26
$2,923
$2,393
$62,216
13.76%
Single Family Unit
D2
1,550 - 1,949
35
3,141
2,572
90,004
19.90
Single Family Unit
D3
1,950 - 2,349
53
3,305
2,705
143,379
31.70
Single Family Unit
D4
Greater than 2,349
54
3,545
2,902
156,700
34.65
Non - Residential Unit
NR1
N/A
0
35,424
0
0
0.00
Totals
168
$452,300
100.00%
(1) Includes an estimated
$35,000 in administrative fees.
Source: Albert A. Webb Associates.
For the complete text of the Rate and Method of CFD No. 2006 -2, see Appendix D —
"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR EACH TAXING
JURISDICTION."
Estimated Direct and Overlapping Indebtedness. Within the boundaries of CFD
No. 2006 -2 are numerous overlapping local agencies providing public services. The approximate
amount of the direct and overlapping debt secured by a tax or assessment on the parcels within
CFD No. 2006 -2 for Fiscal Year 2014 -15 is shown in Table 38 below.
A -9
TABLE 38
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2006 -2
DIRECT AND OVERLAPPING DEBT
AS OF DECEMBER 10, 2014
I. Assessed Value
2014 -2015 Equalized Roll Assessed
Valuation
II. Land Secured Bond Indebtedness
Outstanding Direct and
Overlapping Bonded Debt
RIVERSIDE COUNTY FLOOD CONTROL
BENEFIT ASSESSMENT ZONE NO. 3
CFD 2006 -2 VISCAYA
TOTAL LAND SECURED BONDED DEBT)')
Authorized but Unissued Direct and
Overlapping Indebtedness
RIVERSIDE COUNTY FLOOD CONTROL
BENEFIT ASSESSMENT ZONE NO. 3
CFD 2006 -2 VISCAYA
TOTAL UNISSUED LAND SECURED
INDEBTEDNESS)')
TOTAL OUTSTANDING AND UNISSUED
LAND SECURED INDEBTEDNESS
$32,097,689
III. General Obligation Bond Indebtedness
Outstanding Direct and Parcels in
Overlapping Bonded Debt Type Issued Outstanding % Applicable CFD 2006 -20)
METROPOLITAN WATER DEBT SERVICE GO $850,000,000 $132,275,000 0.001% 168
TOTAL GENERAL OBLIGATION BONDED
DEBT )')
Authorized but Unissued Direct and
Overlapping Indebtedness
METROPOLITAN WATER DEBT SERVICE
TOTAL UNISSUED GENERAL OBLIGATION
INDEBTEDNESS')
TOTAL OUTSTANDING AND UNISSUED
GENERAL OBLIGATION INDEBTEDNESS
Parcels in
Type Authorized Unissued % Applicable CFD 2006 -20)
GO $850,000,000 $0 0.001% 168
$6,686,308
Amount
Applicable
$1,834
$1,834
Amount
Applicable
$0
$0
$1,834
TOTAL OF ALL OUTSTANDING DIRECT AND
OVERLAPPING BONDED DEBT $6,681,666
TOTAL OF ALL OUTSTANDING AND
UNISSUED DIRECT AND OVERLAPPING
INDEBTEDNESS $6,688,142
IV. Ratios to 2014 -2015 Assessed
Valuation
Outstanding Land Secured Bonded Debt* 4.81:1
Total Outstanding Bonded Debt* 4.81:1
* Preliminary; subject to change.
(' )Albert A. Webb Associates is not aware of any additional bonded debt for parcels in CFD No. 2006 -2 for fiscal year 2014 -2015.
(2) Additional bonds will be issued for refunding only.
')All parcels have subdivided into 168 individual parcels for fiscal year 2014 -15.
Source: Albert A. Webb Associates.
A -10
Parcels in
Amount
Type
Issued
Outstanding
% Applicable
CFD 2006 -2(3)
Applicable
AD
$5,715,000
$1,705,000
0%
155
$4,832
CFD
7,290,000
6,675,000
100
168
6,675,000
$6,679,832
Parcels in
Amount
Type
Authorized
Unissued
% Applicable
CFD 2006 -20)
Applicable
AD
$8,000,000
$2,285,000
0%
155
$6,476
CFD
7,500,000
0 (2)
100
168
0
$6,476
III. General Obligation Bond Indebtedness
Outstanding Direct and Parcels in
Overlapping Bonded Debt Type Issued Outstanding % Applicable CFD 2006 -20)
METROPOLITAN WATER DEBT SERVICE GO $850,000,000 $132,275,000 0.001% 168
TOTAL GENERAL OBLIGATION BONDED
DEBT )')
Authorized but Unissued Direct and
Overlapping Indebtedness
METROPOLITAN WATER DEBT SERVICE
TOTAL UNISSUED GENERAL OBLIGATION
INDEBTEDNESS')
TOTAL OUTSTANDING AND UNISSUED
GENERAL OBLIGATION INDEBTEDNESS
Parcels in
Type Authorized Unissued % Applicable CFD 2006 -20)
GO $850,000,000 $0 0.001% 168
$6,686,308
Amount
Applicable
$1,834
$1,834
Amount
Applicable
$0
$0
$1,834
TOTAL OF ALL OUTSTANDING DIRECT AND
OVERLAPPING BONDED DEBT $6,681,666
TOTAL OF ALL OUTSTANDING AND
UNISSUED DIRECT AND OVERLAPPING
INDEBTEDNESS $6,688,142
IV. Ratios to 2014 -2015 Assessed
Valuation
Outstanding Land Secured Bonded Debt* 4.81:1
Total Outstanding Bonded Debt* 4.81:1
* Preliminary; subject to change.
(' )Albert A. Webb Associates is not aware of any additional bonded debt for parcels in CFD No. 2006 -2 for fiscal year 2014 -2015.
(2) Additional bonds will be issued for refunding only.
')All parcels have subdivided into 168 individual parcels for fiscal year 2014 -15.
Source: Albert A. Webb Associates.
A -10
Value -To -Lien Ratios. The Authority has obtained the assessed values of all of the
taxable property in CFD No. 2006 -2 (168 parcels in total), as established by the County Assessor
for Fiscal Year 2014 -15, which total is $32,097,689. The direct and overlapping land secured
special tax and assessment bonded indebtedness (excluding general obligation bonded
indebtedness) within CFD No. 2006 -2 as of December 10, 2014 was approximately $6,688,142.
The assessed value -to -lien ratio of the property within CFD No. 2006 -2, based on the Fiscal Year
2014 -15 assessed values, the aggregate principal amount of the CFD No. 2006 -2 Bonds and the
estimated direct and overlapping land secured special tax and assessment bonded indebtedness
(excluding general obligation bonded indebtedness) within CFD No. 2006 -2 equals approximately
4.81- to -1.*
Value -to -lien Ratios by Category. The following table summarizes the assessed value -
to -lien ratios within CFD No. 2006 -2 by value -to -lien category.
TABLE 39
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2006 -2
DISTRIBUTION OF FISCAL YEAR 2015 -16
ASSESSED VALUE -TO- SPECIAL TAX BURDEN RATIOS
Assessed Value
to Special Tax
Burden(')*
No. of
Parcels
Percent of
Total
Total
Assessed
Value(2)
Percent of
Total
Estimated Fiscal
Year 2015 -16
Special Tax
Levy(3)
Percent of
Total
Less than 1:1
13
7.74%
$421,495
1.31%
$34,420
7.61%
Between 1 -
2.99:1
0
0.00
0
0.00
0
0.00
Between 3 -
4.99:1
80
47.62
14,345,722
44.69
215,404
47.62
Between 5 -
6.99:1
75
44.64
17,330,472
53.99
202,476
44.77
Total
168
100.00%
$32,097,689
100.00%
$452,300
100.00%
* Preliminary; subject to change.
(') Special Tax Burden includes outstanding overlapping land secured debt.
(2) Fiscal year 2014 -15 assessed value.
(3) Includes an estimated $35,000 in administrative fees.
Source: Albert A. Webb Associates.
Preliminary, subject to change.
A -11
Historical Assessed Valuation. The following table represents the historical assessed
valuation of the taxable property in CFD No. 2006 -2 as shown on the County Assessor's roll for
fiscal years 2010 -11 through 2014 -15.
TABLE 40
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2006 -2
ASSESSED VALUATION HISTORY
(FISCAL YEARS 2010 -11 THROUGH 2014 -15)
Land Assessed Structure Assessed Total Assessed
Fiscal Year Valuation Valuation Valuation
2010 -11 $8,450,189 $17,832,678 $26,282,867
2011 -12 9,402,178 17,945,087 27,347,265
2012 -13 9,783,027 17,634,870 27,417,897
2013 -14 10,429,715 18,528,500 28,958,215
2014 -15 11,355,508 20,742,181 32,097,689
Source: Albert A. Webb Associates.
Estimated Value -to -Lien Ratios for Top Ten Taxpayers. The following table
summarizes the assessed value -to -lien ratios within CFD No. 2006 -2 for its top ten taxpayers.
TABLE 41
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2006 -2
ESTIMATED VALUE -TO -LIEN FOR TOP 10 TAXPAYERS
* Preliminary; subject to change.
M Excludes general obligation bonded indebtedness applicable within CFD No. 2006 -2.
Source: Albert A. Webb Associates.
[Describe Corman development status]
A -12
Percent of
Projected
Estimated
Total
Overlapping
Projected
Fiscal
Fiscal Year
Land
Fiscal Year
Year 2015-
2014 -15
Secured
Value -
2015-16
16 Special
Assessed
Bonded
to -Lien
Property Owner
Parcels
Special Tax
Tax
Value
Debt(')*
Ratio*
CORMAN LEIGH TOZAI LAKESHORE
13
$34,420
7.61%
$421,495
$508,336
0.83:1
MONDINO RODNEY
2
4,964
1.10
317,634
73,318
4.33:1
GAM RESOURCES
2
5,411
1.20
391,769
79,906
4.90:1
INDIVIDUAL OWNER
1
2,705
0.60
204,398
39,953
5.12:1
INDIVIDUAL OWNER
1
2,705
0.60
251,134
39,953
6.29:1
INDIVIDUAL OWNER
1
2,572
0.57
173,739
37,978
4.57:1
INDIVIDUAL OWNER
1
2,902
0.64
221,125
42,856
5.16:1
INDIVIDUAL OWNER
1
2,705
0.60
209,044
39,953
5.23:1
INDIVIDUAL OWNER
1
2,705
0.60
165,748
39,953
4.15:1
INDIVIDUAL OWNER
1
2,902
0.64
231,103
42,856
5.39:1
Subtotal
24
63,991
14.15
2,587,189
945,064
2.74:1
All Others
144
388,309
85.85
29,510,500
5,734 769
5.15:1
Totals
168
$452,300
100.00%
$32,097,689
$6,679,832
4.81:1
* Preliminary; subject to change.
M Excludes general obligation bonded indebtedness applicable within CFD No. 2006 -2.
Source: Albert A. Webb Associates.
[Describe Corman development status]
A -12
Delinquencies. The following table is a summary of Special Tax levies, collections and
delinquency rates in CFD No. 2006 -2 for Fiscal Years 2010 -11 through the first installment of
Fiscal Year 2014 -15.
TABLE 42
LAKE ELSINORE PUBLIC FINANCE AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 2006 -2
SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES
FISCAL YEARS 2010 -11 THROUGH 2014 -15
Delinquencies at Fiscal Year End (1)(3) Delinquencies as of November 19, 2014 (2)
Fiscal Amount Parcels Parcels Amount Percent Parcels Amount
Percent
Year Levied Levied Delinquent Delinquent Delinquent Delinquent Delinquent
Delinquent
2010 -11 $497,477 168 14 $76,435 15.36% 0 $0
0.00%
2011 -12 510,443 168 17 123,208 24.14 0 0
0.00
2012 -13 520,652 168 17 123,208 23.66 0 0
0.00
2013 -14 531,773 168 18 53,577 10.08 14 43,883
8.25
2014 -15 541,683 168 N/A N/A N/A N/A N/A
N/A
(') As of fiscal year end of year levied provided by the continuing disclosure reports.
(Z) Delinquency data as of November 19, 2014 provided by the County and Albert A. Webb Associates. Information for
fiscal year 2010 -2011 through fiscal year 2013 -14 provided by the continuing disclosure reports provided as of
June 30
of year levied.
(3) Fiscal Year 2014 -15 fiscal year end data is not yet available.
Source: The Riverside County Assessor's Office; the City and Albert A. Webb Associates (as noted).
A -13
APPENDIX B
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
B -1
APPENDIX C
DEMOGRAPHIC INFORMATION REGARDING THE CITY OF LAKE ELSINORE
AND THE COUNTY OF RIVERSIDE
The Bonds do not represent a lien or charge against the funds or property of the City of
Lake Elsinore (the "City') or the County of Riverside (the "County'). The following information is
provided only to give prospective investors an overview of the general economic condition of the
City and the County.
The City
Background Information. The City was founded in 1883 and incorporated as a general
law city effective April 23, 1888 in San Diego County. In 1893, the Elsinore Valley, previously
located in San Diego County, became part of the County. The City encompasses approximately
43 square miles, with over 10 miles of Lake Shore, and is located at the southwestern end of the
County, 73 miles east of downtown Los Angeles and 74 miles north of downtown San Diego. As
of June 30, 2014, the City of Lake Elsinore's population was approximately 56,718.
Organization. The City operates under a Council- Manager form of municipal
government. policy- making and legislative authority are vested in the City Council consisting of
five members elected bi- annually at -large to four -year alternating terms. The Mayor is selected
by the City Council from among its members. The City Council appoints a City Manager who is
responsible for the day -to -day administration of City business and the coordination of all
departments of the City. The City Council members and the expiration dates of their respective
terms are as follows:
Name Office
Term
Expires
Natasha Johnson
Mayor
November 2016
Steve Manos
Mayor Pro Tern
November 2016
Daryl Hickman
Council Member
November 2018
Brian Tisdale
Council Member
November 2018
Robert E. Magee
Council Member
November 2016
The County
Background Information. The County was organized in 1893 from territory in San
Bernardino and San Diego Counties and encompasses over 7,200 square miles. The County is
bordered on the north by San Bernardino County, on the east by the State of Arizona, on the
South by San Diego and Imperial Counties and on the west by Orange and Los Angeles Counties.
The County is the fourth largest county in California and there are 21 incorporated cities in the
County.
Organization. The County is a general law county divided into five supervisorial
districts on the basis of registered voters and population. The County is governed by a five
member Board of Supervisors who serve alternating four -year terms. The chairman is elected
by the Board members.
County administration includes appointed and elected officials, boards, commissions, and
committees which assist the Board of Supervisors. The County provides a wide range of services
C -1
to residents, including police and fire protection, medical and health services, education, library
services, judicial institutions, and public assistance programs.
Services. Some municipal services are provided by the County on a contract basis to
incorporated cities within its boundaries. These services are designed to allow cities to contract
for certain municipal services such as police and fire protection without incurring the cost of
creating city departments and facilities. Services are provided to the cities at cost by the County.
Population
The population of the City as of June 30, 2014 was approximately 56,718. The largest
cities in the County are the cities of Riverside, Moreno Valley, Corona, Temecula, Hemet, Indio,
Murrieta, Cathedral City and Palm Springs. The areas of most rapid population growth continue
to be those more populated and industrialized cities in the western and central regions of the
County and the southwestern unincorporated region of the County between Sun City and
Temecula.
The table below sets forth annual population figures for cities located within the County
for each of the years listed.
COUNTY OF RIVERSIDE
POPULATION OF CITIES (AS OF JANUARY 1)
Calendar Years 2010 through 2014
City
2010
2011
2012
2013
2014
Banning
29,492
29,723
30,051
30,177
30,325
Beaumont
36,468
38,034
38,967
39,787
40,876
Blythe
20,882
20,063
20,440
19,609
18,992
Calimesa
7,847
7,910
8,022
8,096
8,231
Canyon Lake
10,550
10,606
10,721
10,771
10,826
Cathedral City
51,093
51,400
52,108
52,350
52,595
Coachella
40,508
41,339
42,030
42,795
43,633
Corona
151,858
153,047
154,986
156,864
159,132
Desert Hot Springs
25,886
27,277
27,721
27,835
28,001
Eastvale
0
54,090
55,770
57,266
59,185
Hemet
78,295
79,309
80,330
80,899
81,537
Indian Wells
4,947
4,990
5,050
5,083
5,137
Indio
75,263
76,817
78,299
81,415
82,398
Jurupa Valley
0
0
96,746
97,272
97,774
Lake Elsinore
51,448
52,294
53,183
55,444
56,718
La Quinta
37,044
37,688
38,190
38,412
39,032
Menifee
77,902
79,139
80,832
82,314
83,716
Moreno Valley
1 92,599
194,451
197,088
198,183
199,258
Murrieta
103,066
104,051
105,301
105,860
106,425
Norco
27,069
26,968
27,123
26,632
26,582
Palm Desert
48,215
48,920
49,619
49,962
50,417
Palm Springs
44,480
44,829
45,415
45,724
46,135
Perris
67,607
69,506
70,392
70,983
72,103
Rancho Mirage
17,165
17,399
17,556
17,643
17,745
Riverside
302,597
306,069
309,409
312,035
314,034
San Jacinto
43,881
44,421
44,938
45,229
45,563
Temecula
99,757
101,255
103,404
104,907
106,289
Wildomar
32,393
32,414
32,818
33,182
33,718
Balance of County
501,380
451,722
357,700
358,924
363,590
Incorporated
1,678,312
1,754,009
1. 876,509
1,896,729
1,916,377
County Total
2,179,692
2,205,731
2,234,209
2,255,653
2,279,967
Source. State of California Department of Finance, Demographic Research Unit
C -2
Effective Buying Income
"Effective Buying Income" is defined as personal income less personal tax and nontax
payments, a number often referred to as "disposable" or "after -tax" income. Personal income is
the aggregate of wages and salaries, other labor- related income (such as employer contributions
to private pension funds), proprietor's income, rental income (which includes imputed rental
income of owner - occupants of non -farm dwellings), dividends paid by corporations, interest
income from all sources, and transfer payments (such as pensions and welfare assistance).
Deducted from this total are personal taxes (federal, state and local), nontax payments (fines,
fees, penalties, etc.) and personal contributions to social insurance. According to U.S.
government definitions, the resultant figure is commonly known as "disposable personal income."
The following table summarizes the total effective buying income for the City, the County,
the State and the United States for the period 2009 through 2013.
Effective Buying Income
For Calendar Years 2009 through 2013
Year
Area
Total Effective
Buying Income
(000's Omitted)
Median Household
Effective Buying
Income
2009
City of Lake Elsinore
$ 860,328
$45,826
County of Riverside
41,337,770
47,080
California
844,823,319
49,736
United States
6,571,536,768
43,252
2010
City of Lake Elsinore
$ 887,513
$43,665
County of Riverside
38,492,225
44,253
California
801,393,028
47,177
United States
6,365,020,076
41,368
2011
City of Lake Elsinore
$ 823,005
$43,961
County of Riverside
39,981,683
44,116
California
814,578,458
47,062
United States
6,438,704,664
41,253
2012
City of Lake Elsinore
$ 846,888
$45,195
County of Riverside
40,157,310
43,860
California
864,088,828
47,307
United States
6,737,867,730
41,358
2013
City of Lake Elsinore
$ 852,698
$45,712
County of Riverside
40,293,518
44,784
California
858,676,636
48,340
United States
6,982,757,379
43,715
Source: The Nielsen Company (US), Inc
Principal Employers
The tables below show the principal employers located in the City and the County for fiscal
year 2012 -13.
C -3
CITY OF LAKE ELSINORE
PRINCIPAL EMPLOYERS
Source: City of Lake Elsinore 'Comprehensive Annual Financial Report' for the
year ending June 30, 2013.
COUNTY OF RIVERSIDE
PRINCIPAL EMPLOYERS
Percentage of
Number of
Total
Employer
Employees
Employment
Lake Elsinore Unified School District
2,429
13.65%
M & M Framing
350
1.97
Stater Brothers
314
1.76
Costco
244
1.37
Walmart
225
1.26
Elsinore Valley Municipal Water District
160
0.90
Home Depot
135
0.76
Target
134
0.75
Cardenas Market
125
0.70
Lowe's
109
0.61
Totals
4,225
23.74%
Source: City of Lake Elsinore 'Comprehensive Annual Financial Report' for the
year ending June 30, 2013.
COUNTY OF RIVERSIDE
PRINCIPAL EMPLOYERS
Source: County of Riverside 'Comprehensive Annual Financial Report' for the
year ending June 30, 2013.
C -4
Percentage of
Number of
Total
Employer
Employees
Employment
County of Riverside
18,728
2.23%
March Air Reserve Base
9,000
1.07
Stater Brothers Market
6,900
0.82
Walmart
5,681
0.68
University of California Riverside
5,497
0.65
Riverside Unified School District
5,000
0.60
Corona -Norco Unified School District
4,633
0.55
Kaiser Permanente Riverside Medical Center
4,500
0.54
Moreno Valley Unified School District
3,355
0.40
Hemet Unified School District
3,270
0.39
Total
66,564
8.65%
Source: County of Riverside 'Comprehensive Annual Financial Report' for the
year ending June 30, 2013.
C -4
Commercial Activity
In 2009, the State Board of Equalization converted the business codes of sales and use
tax permit holders to North American Industry Classification System codes. As a result of the
coding change, retail stores data for 2009 and 2010 is not comparable to that of prior years.
Commercial activity is an important factor in the County's economy. Much of the County's
commercial activity is concentrated in central business districts or small neighborhood commercial
centers in cities. There are eight regional shopping malls in the County: Riverside Plaza, Galleria
at Tyler (Riverside), Palm Springs Mall, Desert Fashion Mall, Indio Fashion Mall, Hemet Valley
Mall, Palm Desert Town Center and Moreno Valley Mall at Towngate. There are also two factory
outlet malls (Desert Hills Factory Stores and Lake Elsinore Outlet Center) and over 200 area
centers in the County. Summaries of historic taxable sales within the City and the County during
the past five years in which data is available are shown in the following tables.
Total taxable sales during the first two quarters of calendar year 2013 in the City were
reported to be $336,759,000, a 3.79% increase over the total taxable sales of $324,468,000
reported during the first two quarters of calendar year 2012.
CITY OF LAKE ELSINORE
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in thousands)
Retail Stores
Total All Outlets
Number Taxable
of Permits Transactions
1,173
Number
Taxable
560,924
of Permits
Transactions
2008
653
$588,697
2009 0)
778
514,746
2010 0)
863
546,623
2011 i1>
897
578,301
2012 0)
923
604,846
Total All Outlets
Number Taxable
of Permits Transactions
1,173
$639,732
1,112
560,924
1,197
599,836
1,248
634,553
1,274
665,409
(1) Not comparable to prior years. "Retail" category now includes "Food Services."
Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).
Total taxable sales during the first two quarters of calendar year 2013 in the County were
reported to be $14,760,926,000, a 8.47% increase over the total taxable sales of $13,608,623,000
reported during the first two quarters of calendar year 2012.
C -5
COUNTY OF RIVERSIDE
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in thousands)
Retail Stores
Total All Outlets
Number Taxable
Number
Taxable
of Permits Transactions
of Permits Transactions
2008
23,604 $18,689,249
46,272
$26,003,595
2009 0)
29,829 16,057,488
42,765
22,227,877
2010 0)
32,534 16,919,500
45,688
23,152,780
2011 (1)
33,398 18,576,285
46,886
25,641,497
2012 0)
34,683 20,016,668
48,316
28,096,009
(1)
Not comparable to prior years. "Retail" category now includes
"Food Services."
Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).
C -5
Construction Trends
Provided below are the building permits and valuations for the City and the County, for
calendar years 2009 through 2013.
Permit Valuation
New Single- family
New Multi- family
Res. Alterations /Additions
Total Residential
New Commercial
New Industrial
New Other
Com. Alterations /Additions
Total Nonresidential
New Dwelling Units
COUNTY OF RIVERSIDE
CITY OF LAKE ELSINORE
(Valuations in thousands)
2009
Total Building Permit Valuations
2011
(Valuations in thousands)
$914,057.4
$647,070.8
2009
2010
2011
Permit Valuation
94,427.5
188,468.9
1,053,694.1
New Single- family
$18,730.1
$57,633.7 $12,168.7
191,323.7
New Multi- family
1,170.1
0.0
8,020.6
Res. Alterations /Additions
3,850.1
704.7
1,872.4
Total Residential
23,750.3
58,338.4
22,061.7
New Commercial
0.0
0.0
206.8
New Industrial
0.0
0.0
0.0
New Other
1,299.7
1,591.4
0.0
Com. Alterations /Additions
136.6
370.9
1,859.0
Total Nonresidential
1,436.4
1,962.3
2,065.8
New Dwelling Units
Single Family
106
318
67
Multiple Family
11
0
113
TOTAL
117
318
180
Source: Construction Industry Research Board, Building Permit Summary.
Permit Valuation
New Single- family
New Multi- family
Res. Alterations /Additions
Total Residential
New Commercial
New Industrial
New Other
Com. Alterations /Additions
Total Nonresidential
New Dwelling Units
COUNTY OF RIVERSIDE
Total Building Permit Valuations
(Valuations in thousands)
2009
2010
2011
$892,790.0
$914,057.4
$647,070.8
75,756.1
71,151.9
113,170.4
85,148.0
94,427.5
188,468.9
1,053,694.1
1,079,636.8
948,710.1
94,651.4
191,323.7
166,714.4
12,277.6
6,685.5
10,000.0
107,332.1
98,104.6
16,576.8
162.557.5
243,265.5
297,356.4
376,818.7
539,379.4
490,647.6
2012
$71,061.9
0.0
858.0
71,919.9
4,701.2
0.0
40.0
3.300.5
8,041.7
401
0
401
2013
$113,359.4
0.0
502.0
113, 861.4
2,520.7
0.0
440.8
1.310.5
4,272.0
685
0
685
2012 2013
$904,156.2
$1,138,738.1
87,878.6
138,636.0
87,370.5
98,219.3
1,079,405.3
1,375,593.4
508,192.8
263,837.7
26,432.5
141,184.4
11,115.5
109,795.2
171,263.2
369.502.4
717,004.0
884,319.7
Single Family 3,431 4,031 2659 3,720 4,716
Multiple Family 759 526 1,061 909 1,427
TOTAL 4,190 4,557 3,720 4,629 6,143
Source: Construction Industry Research Board, Building Permit Summary.
C -6
Agriculture
Agriculture remains a leading source of income in the County. Principal agricultural
products are nursery, milk, table grapes, hay, bell peppers, eggs, lemons, avocados and dates.
There are four areas in the County that account for all the agricultural activity: the
Riverside /Corona and San Jacinto /Temecula Valley Districts in the western portion of the County,
the Coachella Valley in the central portion and the Palo Verde Valley near the County's eastern
border.
The climate and soil in Temecula /Rancho California are particularly favorable for growing
avocado, grapes, and citrus crops. Avocados are produced on the majority of the agricultural
land in the Santa Rosa Division. Grapes occupy approximately one -half of the agricultural land
in the Rancho California Division and citrus occupies approximately one -third of agricultural land
in the Rancho California Division.
The table below summarizes the value of agricultural production in the County for the
years 2009 through 2013.
Citrus
Trees and Vine
Vegetables, Melons,
Miscellaneous
Field and Seed
Crops
Nursery
Total Crop Valuation
Livestock and
Poultry Valuation
Grand Total
COUNTY
OF RIVERSIDE
VALUE OF
AGRICULTURAL
PRODUCTION
2009
2010
2011
2012
2013
$101,652,000
$140,500,922
$119,942,513
125,711,000
142,404,000
191,682,600
164,993,960
232,649,262
217,214,000
232,536,000
221,286,700
292,002,337
278,628,295
286,234,000
340,407,000
69,699,800
81,328,229
149,198,052
147,352,000
154,582,000
206,499,900
169,341,300
200,154,964
190,878,000
191,215,000
801,082,500
857,720,124
990,225,736
976,577,000
1,068,121,000
214,672,800 235,926,225 292,030,380 276,553,000 259,683,000
$1,015,755,300 $1,093,646,349 $1,282,256,116 $1,253,130,000 $1,327,804,000
Source: County of Riverside, 2013 Agricultural Production Report.
Transportation
Easy access to job opportunities in the County and nearby Los Angeles, Orange and San
Diego Counties is important to the County's employment figures. Several major freeways and
highways provide access between the County and all parts of Southern California. The Riverside
Freeway (State Route 91) extends southwest through Corona and connects with the Orange
County freeway network in Fullerton. Interstate 10 traverses the width of the County, the
western -most portion of which links up with major cities and freeways in the eastern part of Los
Angeles County and the southern part of San Bernardino County. Interstate 15 and 215 extend
north and then east to Las Vegas, and south to San Diego. The Moreno Valley Freeway (U.S.
60) provides an alternate (to Interstate 10) east -west link to Los Angeles County.
Currently, Metrolink provides commuter rail service to Los Angeles and Orange Counties
from several stations in the County. Freight service to major west coast and national markets is
provided by two transcontinental railroads — Burlington Northern /Santa Fe and Union Pacific.
C -7
Truck service is provided by several common carriers, making available overnight delivery service
to major California cities.
Transcontinental bus service is provided by Greyhound Lines. Intercounty, intercity and
local bus service is provided by the Riverside Transit Agency to western County cities and
communities. The SunLine Transit Agency provides local bus service throughout the Coachella
Valley, including the cities of Palm Springs and Indio. The City of Banning also operates a local
bus system.
The County seat, located in the City of Riverside, is within 20 miles of the Ontario
International Airport in neighboring San Bernardino County. This airport is operated by the Los
Angeles Department of Airports. Four major airlines schedule commercial flight service at Palm
Springs Regional Airport. County- operated general aviation airports include those in Thermal,
Hemet, Blythe and French Valley. The cities of Riverside, Corona and Banning also operate
general aviation airports. There is a military base at March Air Force Base, which converted from
an active duty base to a reserve -only base on April 1, 1996. Plans for joint military and civilian
use of the base thereafter are presently being formulated by the March AFB Joint Powers
Authority, comprised of the County and the Cities of Riverside, Moreno Valley and Perris.
Education
There are four elementary school districts, one high school district, eighteen unified (K -12)
school districts and four community college districts in the County. Ninety -five percent of all K -12
students attend schools in the unified school districts. The three largest unified districts are
Riverside Unified School District, Moreno Valley Unified School District and Corona -Norco Unified
School District.
There are eight two -year community college campuses located in the communities of
Riverside, Moreno Valley, Norco, San Jacinto, Menifee, Coachella Valley and Palo Verde Valley.
There are also two universities and a four -year college located in the City of Riverside — the
University of California, Riverside, La Sierra University and California Baptist College.
C -8
APPENDIX D
RATE AND METHOD OF APPORTIONMENT
OF SPECIAL TAXES FOR
EACH TAXING JURISDICTION
D -1
APPENDIX E
FORM OF BOND COUNSEL OPINION
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APPENDIX F
FORM OF CONTINUING DISCLOSURE CERTIFICATE
THIS CONTINUING DISCLOSURE CERTIFICATE ( "Disclosure Certificate "), dated as of
June 1, 2013, is executed and delivered by the LAKE ELSINORE PUBLIC FINANCING
AUTHORITY (the "Issuer ") in connection with the issuance of $ aggregate principal
amount the Lake Elsinore Public Financing Authority Local Agency Revenue Refunding Bonds,
Series 2015 (the "Bonds "). The Bonds are being issued pursuant to an Indenture of Trust, dated
as of February 1, 2015 (the "Indenture "), by and between MUFG Union Bank, N.A., as trustee
(the "Trustee "), and the Issuer.
The Issuer covenants and agrees as follows:
Section 1. Purpose of the Disclosure Agreement. This Disclosure Certificate is being
executed and delivered by the Issuer for the benefit of the Owners and Beneficial Owners of the
Bonds and in order to assist the Underwriters in complying with Rule 15c2- 12(b)(5) of the
Securities and Exchange Commission.
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which
apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this
Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and as
described in, Section 3 and 4 of this Disclosure Certificate.
"Annual Report Date" means not later than December 31 of each year.
"City" means the City of Lake Elsinore.
"Dissemination Agent" means or any successor Dissemination Agent
designated in writing by the City and which has filed with the City a written acceptance of such
designation.
"Districts" means, collectively, the following:
(a) Community Facilities District No. 2003 -02 (Canyon Hills) of the City,
(b) Community Facilities District No. 2004 -3 (Rosetta Canyon) of the City,
(c) Community Facilities District No. 2005 -1 (Serenity) of the City,
(d) Community Facilities District No. 2005 -2 (Alberhill Ranch) of the City,
(e) Community Facilities District No. 2005 -6 (City Center Townhomes) of the City,
(f) Community Facilities District No. 2006 -2 (Viscaya) of the City ,
"Listed Events" means any of the events listed in Section 5(a) of this Disclosure Certificate.
"Local Obligations" means, collectively, the following:
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(a) Community Facilities District No. 2003 -2 (Canyon Hills) Improvement Area B 2015
Special Tax Refunding Bonds,
(b) Community Facilities District No. 2004 -3 (Rosetta Canyon) Improvement Area No.
1 2015 Special Tax Refunding Bonds,
(c) Community Facilities District No. 2004 -3 (Rosetta Canyon) Improvement Area No.
2 2015 Special Tax Refunding Bonds,
(d) Community Facilities District No. 2005 -1 (Serenity) 2015 Special Tax Refunding
Bonds,
(e) Community Facilities District No. 2005 -2 (Alberhill Ranch) Improvement Area A
2015 Special Tax Refunding Bonds,
(f) Community Facilities District No. 2005 -6 (City Center Townhomes) 2015 Special
Tax Refunding Bonds,
(g) Community Facilities District No. 2006 -2 (Viscaya) 2015 Special Tax Refunding
Bonds.
"MSRB" means the Municipal Securities Rulemaking Board, which has been designated
by the Securities and Exchange Commission as the sole repository of disclosure information for
purposes of the Rule, or any other repository of disclosure information that may be designated by
the Securities and Exchange Commission as such for purposes of the Rule in the future.
"Official Statement" means the final official statement executed by the City in connection
with the issuance of the Bonds.
"Participating Underwriter" means Stifel, Nicolaus & Company, Incorporated, the original
underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.
"Rule" means Rule 15c2- 12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as it may be amended from time to time.
Section 3. Provision of Annual Reports.
(a) The Issuer shall, or shall cause the Dissemination Agent to, not later than the
Annual Report Date, commencing February 15, 2016, with the report for the 2014 -15 fiscal year,
provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that
is consistent with the requirements of Section 4 of this Disclosure Certificate. The filing of the
Official Statement shall serve as the first Annual Report. Not later than 15 Business Days prior
to the Annual Report Date, the Issuer shall provide the Annual Report to the Dissemination Agent
(if other than the Issuer). If by 15 Business Days prior to the Annual Report Date the
Dissemination Agent (if other than the Issuer) has not received a copy of the Annual Report, the
Dissemination Agent shall contact the Issuer to determine if the Issuer is in compliance with the
previous sentence. The Annual Report may be submitted as a single document or as separate
documents comprising a package, and may include by reference other information as provided in
Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Issuer
may be submitted separately from the balance of the Annual Report, and later than the Annual
Report Date, if not available by that date. If the Issuer's fiscal year changes, it shall give notice
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of such change in the same manner as for a Listed Event under Section 5(c). The Issuer shall
provide a written certification with each Annual Report furnished to the Dissemination Agent to
the effect that such Annual Report constitutes the Annual Report required to be furnished by the
Issuer hereunder.
(b) If the Issuer does not provide (or cause the Dissemination Agent to provide) an
Annual Report by the Annual Report Date, the Issuer shall provide (or cause the Dissemination
Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in
substantially the form attached as Exhibit A.
(c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then - applicable
rules and electronic format prescribed by the MSRB for the filing of annual continuing
disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City
certifying that the Annual Report has been provided pursuant to this Disclosure Certificate,
and stating the date it was provided.
Section 4. Content of Annual Reports. The Issuer's Annual Report shall contain or
incorporate by reference the following:
(a) Financial Statements. The Issuer's audited financial statements prepared in
accordance with generally accepted accounting principles as promulgated to apply to
governmental entities from time to time by the Governmental Accounting Standards Board. If the
Issuer's audited financial statements are not available by the Annual Report Date, the Annual
Report shall contain unaudited financial statements in a format similar to the financial statements
contained in the final Official Statement, and the audited financial statements shall be filed in the
same manner as the Annual Report when they become available.
(b) Financial and Operating Data. Unless otherwise provided in the audited financial
statements filed on or before the Annual Report Date, financial information and operating data
with respect to the City for the preceding fiscal year, substantially similar to that provided in the
corresponding tables in the Official Statement:
(i) the principal amount of the Bonds outstanding as of the September 2
preceding the filing of the Annual Report;
(ii) the balance in each fund under the Indenture and the Reserve
Requirement as of the September 2 preceding the filing of the Annual Report;
(iii) any changes to the Rates and Methods of Apportionment of the Special
Taxes approved or submitted to the qualified electors for approval prior to the filing of the
Annual Report and a description of any parcels for which the Special Taxes have been
prepaid in the Fiscal Year for which the Annual Report is being prepared;
(iv) if the assessed valuation of a District has decreased from the amount
stated in the Official Statement, an update of the estimated assessed value -to -lien ratio
for the Districts (and with respect to the applicable Improvement Area) substantially in the
form of Table 4 in the Official Statement based upon the most recent Special Tax levy
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preceding the date of the Annual Report and on the assessed values of property for the
current fiscal year;
(v) the percentage of the maximum Special Taxes levied by the Districts with
respect to each series of Local Obligations;
(vi) the status of any foreclosure actions being pursued by the Districts with
respect to delinquent Special Taxes;
(vii) a table showing by District (and with respect to the applicable Improvement
Area) the total Special Taxes levied and the total Special Taxes collected for the prior
fiscal year and the total Special Taxes that remain unpaid for each prior fiscal year in which
Special Taxes were levied and the number of delinquent parcels in each District (and with
respect to the applicable Improvement Area); and
(viii) any information not already included under (i) through (viii) above that the
Issuer is required to file in its annual report to the California Debt and Investment Advisory
Commission pursuant to the provisions of the Mello -Roos Community Facilities Act of
1982, as amended.
(c) In addition to any of the information expressly required to be provided under this
Disclosure Certificate, the Issuer shall provide such further material information, if any, as may be
necessary to make the specifically required statements, in the light of the circumstances under
which they are made, not misleading.
(d) Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the Issuer or related public entities,
which are available to the public on the MSRB's Internet web site or filed with the Securities and
Exchange Commission. The Issuer shall clearly identify each such other document so included
by reference.
Section 5. Reporting of Significant Events.
(a) The Issuer shall give, or cause to be given, notice of the occurrence of any of the
following Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non - payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform.
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue
(IRS Form 5701 -TEB) or other material notices or determinations with
respect to the tax status of the security, or other material events affecting
the tax status of the security.
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(7) Modifications to rights of security holders, if material.
(8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the
securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the Issuer or other
obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the
Issuer or an obligated person, or the sale of all or substantially all of the
assets of the Issuer or an obligated person (other than in the ordinary
course of business), the entry into a definitive agreement to undertake such
an action, or the termination of a definitive agreement relating to any such
actions, other than pursuant to its terms, if material.
(14) Appointment of a successor or additional trustee or the change of name of
a trustee, if material.
(b) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, the
Issuer shall, or shall cause the Dissemination Agent (if not the Issuer) to, file a notice of such
occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner
not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the
foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given
under this subsection any earlier than the notice (if any) of the underlying event is given to holders
of affected Bonds under the Indenture.
(c) The Issuer acknowledges that the events described in subparagraphs (a)(2),
(a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the
qualifier "if material" and that subparagraph (a)(6) also contains the qualifier "material" with
respect to certain notices, determinations or other events affecting the tax status of the Bonds.
The Issuer shall cause a notice to be filed as set forth in paragraph (b) above with respect to any
such event only to the extent that it determines the event's occurrence is material for purposes of
U.S. federal securities law. Whenever the Issuer obtains knowledge of the occurrence of any of
these Listed Events, the Issuer will as soon as possible determine if such event would be material
under applicable federal securities law. If such event is determined to be material, the Issuer will
cause a notice to be filed as set forth in paragraph (b) above.
(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12)
above is considered to occur when any of the following occur: the appointment of a receiver,
fiscal agent, or similar officer for the Issuer in a proceeding under the United States Bankruptcy
Code or in any other proceeding under state or federal law in which a court or governmental
authority has assumed jurisdiction over substantially all of the assets or business of the Issuer, or
if such jurisdiction has been assumed by leaving the existing governing body and officials or
officers in possession but subject to the supervision and orders of a court or governmental
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authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation
by a court or governmental authority having supervision or jurisdiction over substantially all of the
assets or business of the Issuer.
Section 6. Identifying Information for Filings with the MSRB. All documents provided to
the MSRB under the Disclosure Certificate shall be accompanied by identifying information as
prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The Issuer's obligations under this
Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Issuer
shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).
Section 8. Dissemination Agent. The Issuer may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate,
and may discharge any Dissemination Agent, with or without appointing a successor
Dissemination Agent. The initial Dissemination Agent shall be . Any
Dissemination Agent may resign by providing 30 days' written notice to the Issuer.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure
Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or
5(a), it may only be made in connection with a change in circumstances that arises from
a change in legal requirements, change in law, or change in the identity, nature, or status
of an obligated person with respect to the Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in
the opinion of nationally recognized bond counsel, have complied with the requirements
of the Rule at the time of the primary offering of the Bonds, after taking into account any
amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of the
Bonds in the manner provided in the Indenture for amendments to the Indenture with the
consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel,
materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is
amended pursuant to the provisions hereof, the first Annual Report filed pursuant hereto
containing the amended operating data or financial information shall explain, in narrative form,
the reasons for the amendment and the impact of the change in the type of operating data or
financial information being provided.
If an amendment is made to this Disclosure Certificate modifying the accounting principles
to be followed in preparing financial statements, the Annual Report for the year in which the
change is made shall present a comparison between the financial statements or information
prepared on the basis of the new accounting principles and those prepared on the basis of the
former accounting principles. The comparison shall include a qualitative discussion of the
differences in the accounting principles and the impact of the change in the accounting principles
on the presentation of the financial information, in order to provide information to investors to
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enable them to evaluate the ability of the Issuer to meet its obligations. To the extent reasonably
feasible, the comparison shall be quantitative.
A notice of any amendment made pursuant to this Section 9 shall be filed in the same
manner as for a Listed Event under Section 5(c).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed
to prevent the Issuer from disseminating any other information, using the means of dissemination
set forth in this Disclosure Certificate or any other means of communication, or including any other
information in any Annual Report or notice of occurrence of a Listed Event, in addition to that
which is required by this Disclosure Certificate. If the Issuer chooses to include any information
in any Annual Report or notice of occurrence of a Listed Event in addition to that which is
specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this
Disclosure Certificate to update such information or include it in any future Annual Report or notice
of occurrence of a Listed Event.
Section 11. Default. If the Issuer fails to comply with any provision of this Disclosure
Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take
such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the Issuer to comply with its obligations under this
Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event
of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event
of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel
performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure
Certificate, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers,
directors, employees and agents, harmless against any loss, expense and liabilities which they
may incur arising out of or in the exercise or performance of its powers and duties hereunder,
including the costs and expenses (including attorneys fees) of defending against any claim of
liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct.
The Dissemination Agent shall have no duty or obligation to review any information provided to it
by the Issuer hereunder, and shall not be deemed to be acting in any fiduciary capacity for the
Issuer, the Bond holders or any other party. The obligations of the Issuer under this Section shall
survive resignation or removal of the Dissemination Agent and payment of the Bonds.
(b) The Dissemination Agent shall be paid compensation by the Issuer for its services
provided hereunder in accordance with its schedule of fees as amended from time to time, and
shall be reimbursed for all expenses, legal fees and advances made or incurred by the
Dissemination Agent in the performance of its duties hereunder.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the
Issuer, the Dissemination Agent, the Participating Underwriter and the holders and beneficial
owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 14. Counterparts. This Disclosure Certificate may be executed in several
counterparts, each of which shall be regarded as an original, and all of which shall constitute one
and the same instrument.
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Date: , 2015
AGREED AND ACCEPTED:
as Dissemination Agent
M
Name:
Title:
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LAKE ELSINORE PUBLIC FINANCING
AUTHORITY
M
Name:
Title:
EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Lake Elsinore Public Financing Authority
Name of Issue: Lake Elsinore Public Financing Authority Local Agency Revenue
Bonds, Series 2015
Date of Issuance: , 2015
NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with respect
to the above -named Bonds as required by the Indenture, dated as of 1, 2015,
by and between the Issuer and MUFG Union Bank, N.A. , as trustee. The City anticipates that the
Annual Report will be filed by
Dated:
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DISSEMINATION AGENT:
By:
Its:
APPENDIX G
DTC AND THE BOOK - ENTRY -ONLY SYSTEM
The information in this section concerning DTC and DTC's book -entry only system has
been obtained from sources that the Authority believes to be reliable, but the Authority takes no
responsibility for the completeness or accuracy thereof. The following description of the
procedures and record keeping with respect to beneficial ownership interests in the Bonds,
payment of principal, premium, if any, accreted value and interest on the Bonds to DTC
Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in
the Bonds and other related transactions by and between DTC, the DTC Participants and the
Beneficial Owners is based solely on information provided by DTC to the Authority which the
Authority believes to be reliable, but the Authority and the Underwriters do not and cannot make
any independent representations concerning these matters and do not take responsibility for the
accuracy or completeness thereof. Neither the DTC, Direct Participants, Indirect Participants nor
the Beneficial Owners should rely on the foregoing information with respect to such matters, but
should instead confirm the same with DTC or the DTC Participants, as the case may be.
The Depository Trust Company ( "DTC "), New York, New York, will act as securities
depository for the Bonds. The Bonds will be issued as fully- registered securities registered in the
name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by
an authorized representative of DTC. One fully- registered Bond will be issued for each annual
maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be
deposited through the facilities of DTC.
DTC, the world's largest securities depository, is a limited - purpose trust company
organized under the New York Banking Law, a "banking organization" within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues,
corporate and municipal debt issues, and money market instruments (from over 100 countries)
that DTC's participants ( "Direct Participants ") deposit with DTC. DTC also facilitates the post
trade settlement among Direct Participants of sales and other securities transactions in deposited
securities, through electronic computerized book -entry transfers and pledges between Direct
Participants' accounts. This eliminates the need for physical movement of securities certificates.
Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is a wholly -owned
subsidiary of The Depository Trust & Clearing Corporation ( "DTCC "). DTCC is the holding
company for DTC, National Securities Clearing Corporation and Fixed Income Clearing
Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its
regulated subsidiaries. Access to the DTC system is also available to others such as both U.S.
and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations
that clear through or maintain a custodial relationship with a Direct Participant, either directly or
indirectly ( "Indirect Participants "). DTC has a Standard & Poor's rating of AA +. The DTC Rules
applicable to its Participants are on file with the Securities and Exchange Commission. More
information about DTC can be found at www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest
of each actual purchaser of each Bond ( "Beneficial Owner ") is in turn to be recorded on the Direct
and Indirect Participants' records. Beneficial Owners will not receive written confirmation from
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DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers
of ownership interests in the Bonds are to be accomplished by entries made on the books of
Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive Bonds representing their ownership interests in Bonds, except in the event that use of the
book -entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may
be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their
registration in the name of Cede & Co. or such other DTC nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's
records reflect only the identity of the Direct Participants to whose accounts such Bonds are
credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants
will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may
wish to take certain steps to augment the transmission to them of notices of significant events
with respect to the Bonds, such as prepayments, tenders, defaults, and proposed amendments
to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the
nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial
Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to
the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity
are being prepaid, DTC's practice is to determine by lot the amount of the interest of each Direct
Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with
respect to Bonds unless authorized by a Direct Participant in accordance with DTC's MMI
Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts Bonds are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to
Cede & Co., or such other nominee as may be requested by an authorized representative of DTC.
DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and
corresponding detail information from the District or the Trustee, on payable date in accordance
with their respective holdings shown on DTC's records. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Trustee, or the District, subject
to any statutory or regulatory requirements as may be in effect from time to time. Payment of
redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee
as may be requested by an authorized representative of DTC) is the responsibility of the District
or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of
Direct and Indirect Participants.
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A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through
its Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct
Participant to transfer the Participant's interest in the Bonds, on DTC's records, to the Trustee.
The requirement for physical delivery of Bonds in connection with an optional tender or a
mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are
transferred by Direct Participants on DTC's records and followed by a book -entry credit of
tendered Bonds to the Trustee's DTC account.
DTC may discontinue providing its services as depository with respect to the Bonds at any
time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the
event that a successor depository is not obtained, physical certificates are required to be printed
and delivered.
The District may decide to discontinue use of the system of book -entry only transfers
through DTC (or a successor securities depository). In that event, Bonds will be printed and
delivered to DTC.
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